EXHIBIT 4.1
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 31st day of October, 1997, by and among AmClyde Engineered Products,
Inc., a Delaware corporation ("Seller"), Xxxxxxx X. Xxxx, Xx., the majority
shareholder of Seller ("Shareholder"), AEPI Acquisition, Inc., a Delaware
corporation ("Buyer"), and Halter Marine Group, Inc., a Delaware corporation
("Parent").
WHEREAS, Seller engages in the business of custom designing, engineering
and, through subcontractors, manufacturing of revolver and pedestal cranes for
ships, barges, offshore drilling rigs and other applications, winches, bulk
unloaders and related materials handling equipment, and pulling and jacking
systems, prooftest and related equipment (the "Business");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to buy from
Seller, substantially all of the assets of the Business;
WHEREAS, Parent is the ultimate parent corporation of Buyer and intends to
guarantee Buyer's obligations hereunder and indemnify Seller and Shareholder;
and
WHEREAS, Shareholder is the majority shareholder of Seller (and on or
before Closing will become the sole shareholder of Seller) and intends to
guarantee Seller's obligations hereunder and indemnify Buyer and Parent.
NOW, THEREFORE, for and in consideration of the mutual representations,
warranties, covenants and agreements hereinafter set forth and other good and
valuable consideration, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of Assets. Seller will sell, convey, transfer,
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assign and deliver to Buyer, and Buyer will acquire and accept from Seller, at
the Closing (as that term is defined in Section 9.1), the following assets and
properties, free and clear of any and all options, pledges, mortgages, security
interests, liens, charges, adverse claims, rights, restrictions, burdens and
encumbrances whatsoever ("Encumbrances"):
(a) All of the personal property and other tangible assets and
properties of Seller, wherever located and whether or not described or referred
to herein, including, without limitation, all equipment, machinery, tools,
vehicles, inventories (including raw materials, work-in-process, finished goods
(other than finished goods delivered by Seller to others under consignment),
supplies in store, maintenance items and parts (which hereinafter shall
sometimes be collectively referred to as the "Inventory")), prepaid accounts and
prepaid expenses, furniture, fixtures, fixed assets, books, reports and records
(including customer lists);
(b) The customer accounts, contracts, leases, arrangements and
commitments listed on Schedule 1.1A and no others;
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(c) All intangible properties and rights (other than contracts,
leases, arrangements and commitments not listed on Schedule 1.1A), wherever
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located and whether or not described or referred to herein, including, without
limitation, all know-how, trade secrets, technology, all patents and patent
applications and rights and licenses thereunder, trade names (including the
names "AmClyde Engineered Products" and "AmCane"), trademark registrations and
applications, common law trademarks, servicemarks, copyrights and copyright
registrations and applications, engineering drawings and customer files and the
goodwill related to trade names, trademarks and servicemarks;
(d) All licenses, permits, certificates and authorizations relating
to the Business operations of Seller;
(e) All cash, deposits, bank accounts, certificates of deposit,
securities (including, without limitation, all the stock of AmCane Company, a
Minnesota corporation, "AmCane"), accounts receivable, evidences of indebtedness
and choses-in-action of Seller; and
(f) Any other property or right, tangible or intangible, of Seller
used in the Business (other than contracts, leases, arrangements and commitments
not listed on Schedule 1.1A) (the items in (a) through (f) hereof hereinafter
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collectively referred to as the "Assets");
provided, however, that Seller will not sell, convey, transfer, assign or
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deliver to Buyer, and Buyer will not acquire from Seller, the items listed on
Schedule 1.1B (collectively, the "Excluded Assets").
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1.2 Transfer and Conveyance. Seller shall execute and deliver to Buyer
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at the Closing a Xxxx of Sale and Assignment in substantially the form attached
hereto as Exhibit A and all such other assignments, endorsements and instruments
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of transfer as shall be necessary or appropriate to carry out the intent of this
Agreement and as shall be sufficient to vest in Buyer title to all of the Assets
and all right, title and interest of Seller thereto.
1.3 Assumption of Certain Obligations. Effective at the Closing and
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subject to the terms set forth herein, at the Closing Buyer shall assume and be
liable for (a) all liabilities of Seller that are disclosed on Seller's
September 20, 1997 balance sheet and all trade accounts payable, accrued
expenses and other liabilities that arise from such date through the Closing
Date (as defined below) to the extent they were or are incurred in the ordinary
course of business and in compliance with the terms of this Agreement, but with
respect to Seller's indebtedness to Firstar Bank, only to the extent of
$10,000,000 in the aggregate (including principal and accrued interest) and
specifically excluding (i) all expenses incurred in connection with the
transactions contemplated hereby, (ii) all liabilities and obligations relating
to the AmJet Services Division of Seller, (iii) all liabilities and obligations
relating to the operation of AmJet Aircraft Corporation, a Minnesota
corporation, (iv) all liabilities and obligations relating to the Excluded
Assets, and (v) all liabilities and obligations under the "Grid Note" described
in the 60-Ton Portal Crane Agreement, as defined below; and (b) Seller's
obligations to render performance arising after the Closing Date under, or
otherwise accruing after the Closing Date under, the contracts, leases,
arrangements and commitments listed on Schedule 1.1A (but not any obligation for
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performance or obligation or liability of Seller for default
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or nonperformance under said contracts, leases, arrangements and commitments
arising prior to the Closing)(collectively, the "Assumed Liabilities"). Buyer
will not assume and will not be liable for any debts, contracts, leases,
liabilities, arrangements, commitments, obligations, restrictions or duties of
Seller, other than as specified in the preceding sentence. Buyer shall execute
and deliver to Seller at the Closing an Assumption Agreement in substantially
the form attached hereto as Exhibit B.
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ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. The purchase price for the Assets (the "Purchase
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Price") shall be (i) $10,000,000 cash (the "Cash Consideration") and (ii)
614,234 shares of common stock, $.01 par value of Parent ("Halter Stock") (the
"Stock Consideration").
2.2 Additional Consideration at Closing. To the extent the outstanding
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balance of Seller's indebtedness owing to Firstar Bank on the Closing Date,
including accrued interest thereon (the "Bank Debt Balance"), is less than
$10,000,000, Buyer shall pay to Seller on the Closing Date as additional
consideration an amount equal to the difference between $10,000,000 and the Bank
Debt Balance, but not to exceed $500,000 (the "Additional Consideration").
2.3 Allocation of Purchase Price. Seller and Buyer agree to file all
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income tax returns or reports, including without limitation, IRS Form 8954, for
their respective taxable years in which the Closing occurs to reflect an
allocation of the Purchase Price and other consideration in a manner consistent
with Exhibit H attached hereto and not to take any position inconsistent
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therewith before any governmental agency charged with the collection of Taxes or
in any judicial proceeding relating solely to tax reporting.
2.4 Contingent Payments. Seller shall be entitled to additional
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consideration hereunder (the "Contingent Payment"), which shall be payable as
follows:
(a) Seller shall be entitled to an annual payment in an amount (not
to exceed $500,000 per year) equal to 25% of the difference between (i) the
annual AmClyde EBITDA (as defined below) and (ii) $7,500,000 (but only to the
extent such difference is a positive number) (the "EBITDA Contingent Payment").
Such EBITDA Contingent Payment, if any, shall be due and payable within ninety
(90) days following the conclusion of Buyer's fiscal year-end and shall continue
each year for a period of six (6) fiscal years, with the first payment, if any,
based on Buyer's operations for the fiscal year ended March 31, 1999. For
purposes hereof, (i) "EBITDA" shall mean net income before interest, taxes,
depreciation and amortization (not taking into account, however, any
amortization or depreciation which results from the transaction contemplated
hereby or a write-up of the assets by Buyer as a result thereof) and (ii)
"AmClyde EBITDA" shall mean Buyer's EBITDA that is generated from the
consolidated operation of AmCane and the Business utilizing the Assets, but
shall specifically exclude any proceeds from the sale of the AmCane. Buyer
agrees that, for the time period beginning with the date of Closing and ending
on March 31, 2004, Buyer (i) will operate the Business as a separate division or
subsidiary of Parent, (ii) will not include in the
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Business any expenses (including general overhead expenses of Parent or Buyer or
any affiliate of either such entity) not arising from the operation of the
Business, (iii) will provide Seller with separate financial statements of such
division or subsidiary for the fiscal years 1999 through 2004 and, on the
request of and at the sole expense of Seller, will submit any such financial
statement to an audit by a recognized accounting firm engaged by Seller and
reasonably acceptable to Buyer, and (iv) will include in the Business all
revenues of the type currently generated by the Business.
(b) If Buyer sells the assets or stock of AmCane at any time prior to
the third anniversary of the Closing Date in one transaction or a series of
related transactions and the Net Proceeds (as defined below) from such sale
exceed $3,000,000, Seller shall be entitled to an amount equal to 50% of the Net
Proceeds in excess of $3,000,000 (the "AmCane Contingent Payment"). The AmCane
Contingent Payment, if any, shall be due and payable within sixty (60) days
following the consummation of the sale of AmCane described above. For purposes
hereof, "Net Proceeds" shall mean the aggregate cash proceeds received by Buyer
from the sale of AmCane described above less (i) all capital contributions and
debt funded by Buyer, Parent or Halter Marine, Inc. with respect to the
operations of AmCane (without the double counting of expenses funded by capital
contributions or debt), (ii) the amount of any unpaid intercorporate charges due
Buyer, Parent or Halter Marine, Inc. from AmCane (less the amount of any unpaid
intercorporate charges due AmCane from Buyer, Parent or Halter Marine, Inc.),
and (iii) all expenses of Buyer (excluding income taxes) related to such sale.
(c) Seller shall be entitled to earn the Contingent Payment pursuant
to any combination of the EBITDA Contingent Payments and the AmCane Contingent
Payment, but in no event shall the amount owing by Buyer under this Section 2.4
for the Contingent Payment exceed $3,000,000 in the aggregate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
Each of Seller and Shareholder, jointly and severally, represents and
warrants to Buyer and Parent with respect to the Business and the Assets (but
not the Excluded Assets) as follows:
3.1 Due Organization and Qualification. Seller is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own, lease or
operate its properties and to carry on its business as it is presently being
operated and in the place where such properties are owned, leased or operated
and such business is conducted.
3.2 Title. Seller has good title to all of the Assets, free and clear of
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any and all Encumbrances except as set forth on Schedule 3.2. Upon conveyance
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of the Assets to Buyer by Seller at the Closing, Buyer will acquire and hold
good title to all of the Assets, free and clear of any and all Encumbrances.
Seller does not currently nor has ever owned any real property, except Seller
has owned, but does not currently own, a tract of real property in or around
King of Prussia, Pennsylvania.
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3.3 Inventory. The Inventory consists of current items of a quality and
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quantity that are usable or marketable in the ordinary course of the business of
Seller, and items of Inventory not usable in the business of Seller have been
written down in value in accordance with the normal business practice of Seller
to estimated net realizable market values.
3.4 Properties. Set forth on Schedule 3.4 is a description of (i) all
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vehicles owned or leased by Seller and included among the Assets (showing motor
vehicle identification numbers and whether owned or leased), (ii) all production
and warehouse machinery and equipment owned or leased by Seller and included
among the Assets and (iii) all physical properties (other than the types of
properties referred to in (i) and (ii) above), real, personal or mixed, owned by
or leased to Seller and included among the Assets, having an original cost in
excess of $5,000 (exclusive of Inventory). Seller enjoys peaceable possession of
all properties owned or leased by it. Except for the stock of AmCane and AmJet
Aircraft Corporation, Seller is not a shareholder, stockholder, member, manager,
partner, grantor, beneficiary or other form of owner of any corporation, limited
liability company, partnership (general, limited, registered limited liability
or other form of partnership), trust or other entity.
3.5 Trademarks, Etc. Schedule 3.5 lists the domestic and foreign trade
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names, trademarks, service marks, trademark registrations and applications,
service xxxx registrations and applications, patents, patent applications, and
copyright registrations and applications owned by Seller and patent licenses and
software licenses granted to or by Seller and used by Seller in the operation of
its business (collectively, the "Intellectual Property") and comprising a
portion of the Assets, which Schedule indicates whether each item of
Intellectual Property is owned by or licensed to or by Seller, and if licensed,
the licensor. Unless otherwise indicated on Schedule 3.5, to Seller's knowledge
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Seller has the right to use and license the Seller-owned Intellectual Property
and to transfer and convey the Seller-owned Intellectual Property. Each item
constituting part of the Seller-owned Intellectual Property has been, to the
extent indicated on Schedule 3.5, registered with, filed in or issued by, as the
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case may be, the United States Patent and Trademark Office or such other
government entity, domestic or foreign, as is indicated on Schedule 3.5; all
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such registrations, filings and issuances remain in full force and effect to the
extent indicated under "status" on Schedule 3.5; and all maintenance fees and
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other maintenance charges with respect thereto are current. Except as stated on
Schedule 3.5: (i) there are no pending proceedings challenging validity or
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ownership or adverse claims made or, to the best knowledge of Seller and
Shareholder, threatened against Seller with respect to the Intellectual
Property; (ii) there has been no litigation commenced or threatened in writing
within the past five (5) years with respect to the Seller-owned Intellectual
Property or the rights of Seller therein; (iii) to the knowledge of Seller and
Shareholder, neither Seller nor Shareholder is aware of any facts that would
cause any Seller-owned Intellectual Property to be invalid or unenforceable, and
(iv) neither Seller nor Shareholder has any knowledge that (a) the Intellectual
Property or the use thereof by Seller or by Buyer after the Closing in the same
manner as Seller used it or held it for use prior to Closing infringes or
otherwise violates rights of third parties in any trade names, trademarks,
service marks, trademark or service xxxx registrations or applications, patents,
patent applications, patent licenses or copyright registrations or applications
("Third Party Intellectual Property"), or (b) such Third Party Intellectual
Property or its use by others or any other conduct of a third party infringes
upon or violates the Seller-owned Intellectual Property.
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3.6 Permits. Seller holds all licenses, franchises, permits and other
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governmental authorizations, including permits, titles (including, without
limitation, motor vehicle titles and current registrations), fuel permits,
licenses, franchises and certificates, the absence of any of which could
reasonably be expected to have a material adverse effect on the business,
operations properties, assets or condition (financial or otherwise) results of
operations or prospects of Seller, the Assets or the Business (a "Material
Adverse Effect") (the "Material Permits"). An accurate list and summary
description is set forth on Schedule 3.6 hereto of all such Material Permits.
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Except as set forth in Schedule 3.6, the Material Permits are valid and may be
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transferred to Buyer at the Closing, and Seller has not received any notice that
any governmental authority intends to cancel, terminate or not renew any such
Material Permit. Seller has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in applicable permits, licenses, orders, approvals, variances, rules and
regulations and is not in violation of any of the foregoing except where such
noncompliance or violation would not have a Material Adverse Effect. Except as
specifically provided on Schedule 3.6, the transactions contemplated by this
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Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to Seller or to Buyer after
the Closing by, any such Material Permits.
3.7 Compliance with Laws. Seller (i) has complied with all laws,
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regulations, licensing requirements and orders applicable to its business or
personnel, the noncompliance with which could reasonably be expected to have a
Material Adverse Effect, (ii) has filed with the proper authorities all
statements and reports required by the laws, regulations, licensing requirements
and orders to which it or any of its employees (because of their activities on
behalf of their employer) is subject, the failure of which to file could
reasonably be expected to have a Material Adverse Effect.
3.8 Material Contracts. Set forth on Schedule 3.8 is a list of all
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contracts, agreements, arrangements or commitments (the following, "Material
Contracts") that relate to: (i) the employment of any person other than
personnel employed at the pleasure of Seller in the ordinary course of its
business at rates of compensation and on terms consistent with good business
practice; (ii) collective bargaining with, or any representation of any
employees by, any labor union or association; (iii) the acquisition of services,
supplies, equipment or other personal property involving more than $25,000 or
that is not terminable by Seller upon not more than thirty (30) days' notice
without obligation on the part of Seller; (iv) the purchase or sale of real
property; (v) distribution, agency or construction; (vi) lease of real or
personal property as lessor or lessee or sublessor or sublessee; (vii) lending
or advancing of funds other than the extension of credit to trade purchasers in
the ordinary course of Seller's business consistent with past business practice;
(viii) borrowing of funds or receipt of credit other than by Seller in the
ordinary course of business consistent with good business practice and except
for trade payables in amounts and on terms consistent with past practice; (ix)
incurring of any obligation or liability except for transactions engaged in by
Seller in the ordinary course of business consistent with good business
practice; (x) the sale of personal property (other than sales of Inventory in
the ordinary course of business consistent with good business practice) or
services under which payments due after October 3, 1997 exceed $25,000; and (xi)
any matter or transaction not in the ordinary course of the business of Seller
or that is inconsistent with the past business practice of Seller.
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3.9 Contract Defaults. Seller is not in default in any respect under any
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Material Contract, and such Material Contracts are legal, valid and binding
obligations of the respective parties thereto in accordance with their terms
and, except to the extent reflected in Schedule 3.8, have not been amended; and
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no defenses, offsets or counterclaims thereto have been asserted or, to the best
knowledge of Seller and Shareholder, may be made by any party thereto other than
Seller, nor has Seller waived any substantial rights thereunder.
3.10 Litigation. Set forth on Schedule 3.10 is a list of all actions,
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suits, proceedings, investigations or grievances pending against Seller or, to
the best knowledge of Seller and Shareholder, threatened against Seller,
Seller's business or any property or rights of Seller, at law or in equity or
before or by any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign ("Agencies"). None of the actions, suits, proceedings or investigations
listed on Schedule 3.10 either (i) results or would, if adversely determined,
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have a Material Adverse Effect or (ii) affects or would, if adversely
determined, affect the right or ability of Seller to carry on its business
substantially as now conducted. Seller is not subject to any continuing court
or Agency order, writ, injunction or decree applicable specifically to the
Assets, the business operations of Seller or employees of Seller, or in default
with respect to any order, writ, injunction or decree of any court or Agency
with respect to the Assets, its business, operations or employees.
3.11 Corporate Power and Authority. The execution, delivery and
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performance of this Agreement by Seller, and all other agreements by and among
the parties, and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by all requisite corporate action and no
further action or approval is required in order to permit Seller to consummate
the transactions contemplated hereby and thereby. This Agreement constitutes,
and all other agreements by and among the parties, when executed and delivered
in accordance with the terms thereof, will constitute the legal, valid and
binding obligations of Seller and Shareholder, enforceable in accordance with
their terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, (ii) the remedy of specific performance and injunctive relief
are subject to certain equitable defenses and to the discretion of the court
before which any proceedings may be brought and (iii) rights to indemnification
hereunder may be limited under applicable securities laws (the "Equitable
Exceptions"). Seller and Shareholder have full power, authority and legal right
to enter into this Agreement, and all other agreements by and among the parties,
and to consummate the transactions contemplated hereby and thereby. The making
and performance of this Agreement, and all other agreements by and among the
parties, and the consummation of the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof will not (a) conflict
with the Certificate of Incorporation or the Bylaws of Seller, (b) result in any
breach or termination of, or constitute a default under, or constitute an event
that with notice or lapse of time, or both, would become a default under, or
result in the creation of any Encumbrance upon any of the Assets under, or
create any rights of termination, cancellation or acceleration in any person
under, any Material Contract, or violate any order, writ, injunction or decree,
to which Seller is a party, by which any of the Assets, business or operations
of Seller may be bound or affected or under which any of the Assets, business or
operations of Seller receive benefits, (c) result in the loss or adverse
modification of any license, franchise, permit or other authorization granted to
or otherwise held by
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Seller and related to its business operations or (d) result in the violation of
any provisions of law applicable to Seller, the violation of which could have an
adverse effect upon the Assets, business or operations of Seller.
3.12 Financial Statements and Results of Operations.
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(a) Seller has previously furnished to Buyer true, correct and
complete copies of the audited balance sheet of Seller as of December 28, 1996,
and the related statements of operations, shareholders' equity and cash flows
for the three (3) fiscal years then ended, as reviewed by Simma, Flottenmesch &
Orensten, Ltd., certified public accountants, together with Seller's unaudited
balance sheet, management's statements of operations and shareholders' equity
for the 9-month period ended September 20, 1997 (collectively, the "Financial
Statements"). The Financial Statements (i) are accurate and in accordance with
the books and records and accounting methods of Seller, (ii) constitute true,
full and complete disclosure of the financial position and results of
operations of Seller as of the dates and for the periods indicated and (iii)
except for the lack of footnotes in the financial statements for the 9-month
period ended September 20, 1997, have been prepared in accordance with GAAP
consistently applied throughout the periods involved. Except as may be set
forth on the Financial Statements or otherwise disclosed herein, there are no
liabilities, contingent or otherwise, by which Seller or any of the Assets or
the Business may be bound or affected other than those incurred in the ordinary
course of business consistent with good business practice none of which could
have a Material Adverse Effect. Seller has previously permitted Buyer full
access to papers pertaining to the Financial Statements, including those work
papers in the possession of or prepared by Simma, Flottenmesch & Orensten, Ltd.
(b) Except to the extent (and not in excess of the amounts) reflected
in the September 20, 1997 balance sheet included in the Financial Statements or
as disclosed on Schedule 3.12, Seller does not have any liabilities or
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obligations of any nature, whether absolute, accrued, unmatured, contingent or
otherwise that did not arise in the ordinary course of business from and after
September 20, 1997, or any unsatisfied judgments.
(c) Since September 20, 1997, Seller has not made any payments in
respect of dividends or redemptions or other distributions to its shareholders
except for distributions with respect to federal and state income tax
liabilities associated with the equity ownership of Seller and a dividend of
$44,333.37 paid on or about September 24, 1997.
(d) Seller's average annual EBITDA for the three year period ending
June 30, 1997, after adjustment for non-recurring expenses, is not less than
$6,500,000 per year.
(e) Except as disclosed on its balance sheet dated September 20,
1997, as of September 20, 1997 Seller had not received any revenue for goods or
services to be rendered after the Closing Date.
3.13 Employee Benefits. Each employee benefit plan within the meaning of
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Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained or contributed to by Seller or any of its Group Members
(as defined below) (collectively, the "Plans")
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is listed on Schedule 3.13, is in substantial compliance with applicable law and
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has been administered and operated in all material respects in accordance with
its terms. Each Plan that is intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service (the "IRS") and no event has occurred and no
condition exists that could be expected to result in the revocation of any such
determination. No event that constitutes a "reportable event" (within the
meaning of Section 4043(b) of ERISA) for which the 30-day notice requirement has
not been waived by the Pension Benefit Guaranty Corporation (the "PBGC") has
occurred with respect to any Plan. No Plan is subject to Title IV of ERISA, and
neither Seller nor any Group Member has made any contributions to or
participated in any "multiple employer plan" (within the meaning of the Code or
ERISA) or "multi-employer plan" (as defined in Section 4001(a)(3) of ERISA).
Full payment has been made of all amounts that Seller was required under the
terms of the Plans to have paid as contributions to such Plans on or prior to
the date hereof (excluding any amounts not yet due) and all amounts properly
accrued to date as liabilities of Seller that have not been paid have been
properly recorded on the Financial Statements, and no Plan that is subject to
Part 3 of Subtitle B of Title 1 of ERISA has incurred any "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived. Neither Seller and, to the best knowledge of
Seller and Shareholder, no other "disqualified person" or "party in interest"
(within the meaning of Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively) has engaged in any transactions in connection with any Plan
that could be expected to result in the imposition of a material penalty
pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of ERISA or
a tax pursuant to Section 4975(a) of the Code. No material claim, action,
proceeding, or litigation has been made, commenced or, to the best knowledge of
Seller and Shareholder, threatened with respect to any Plan (other than for
benefits payable in the ordinary course and PBGC insurance premiums). No Plan or
related trust owns any securities in violation of Section 407 of ERISA. Neither
Seller nor any Group Member has incurred any liability or taken any action, or
has any knowledge of any action or event, that could cause it to incur any
liability (i) under Section 412 of the Code or Title IV of ERISA with respect to
any "single employer plan" (within the meaning of Section 4001(a)(15) of ERISA),
(ii) on account of a partial or complete withdrawal (within the meaning of
Section 4205 and 4203 of ERISA, respectively) with respect to any "multi-
employer plan" (within the meaning of Section 3(37) of ERISA), (iii) on account
of unpaid contributions to any such multi-employer plan, or (iv) to provide
health benefits or other non-pension benefits to retired or former employees,
except as specifically required by Section 4980B(f) of the Code. Except as set
forth in Schedule 3.13, neither the execution and delivery of this Agreement by
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Seller nor the consummation of the transactions contemplated hereby will (i)
entitle any current or former employee of Seller to severance pay, unemployment
compensation or any similar payment, (ii) accelerate the time of payment or
vesting, or increase the amount of, any compensation due to any such employee or
former employee, or (iii) directly or indirectly result in any payment made or
to be made to or on behalf of any person to constitute a "parachute payment"
(within the meaning of Section 280G of the Code). For purposes of this
Agreement, "Group Member" shall mean any member of any "affiliated service
group" as defined in Section 414(m) of the Code that includes Seller, any member
of any "controlled group of corporations" as defined in Section 1563 of the Code
that includes Seller, or any member of any group of "trades or businesses under
common control" as defined by Section 414(c) of the Code that includes Seller.
No employee or former employee of Seller has elected COBRA coverage.
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3.14 Employees; Employee Relations.
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(a) Schedule 3.14 sets forth (i) the name and current annual salary
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(or rate of pay) and other compensation (including, without limitation, normal
bonus, profit-sharing and other compensation) now payable by Seller to each
employee whose current total annual compensation or estimated compensation is
$50,000 or more, (ii) any increase to become effective after the date of this
Agreement in the total compensation or rate of total compensation payable by
Seller to each such person, (iii) any increase to become payable after October
3, 1997 by Seller to employees other than those specified in clause (i) of this
Section 3.14(a), (iv) all presently outstanding loans and advances (other than
routine travel advances to be repaid or formally accounted for within sixty (60)
days) made by Seller to, or made to Seller by, any director, officer or
employee, (v) all other transactions between Seller and any director, officer or
employee of Seller since September 20, 1997, and (vi) all accrued but unpaid
vacation pay owing to any officer or employee that is not disclosed on the
Financial Statements.
(b) Except as disclosed on Schedule 3.14, Seller is not a party to,
-------------
nor bound by, the terms of any collective bargaining agreement, and Seller has
not experienced any material labor difficulties during the last five (5) years.
Except as set forth on Schedule 3.14, there are no labor disputes existing, or
-------------
to the best knowledge of Seller and Shareholder, threatened involving, by way of
example, strikes, work stoppages, slowdowns, picketing, or any other
interference with work or production, or any other concerted action by
employees. No charges or proceedings before the National Labor Relations Board,
or similar agency, exist, or to the best knowledge of Seller and Shareholder,
are threatened.
(c) Seller's relationship with its respective employees is good.
Except as disclosed on Schedule 3.14, Seller is not a party to any employment
-------------
contract with any individual or employee, either express or implied. No legal
proceedings, charges, complaints or similar actions exist under any federal,
state or local laws affecting the employment relationship including, but not
limited to: (i) anti-discrimination statutes such as Title VII of the Civil
Rights Act of 1964, as amended (or similar state or local laws prohibiting
discrimination because of race, sex, religion, national origin, age and the
like); (ii) the Fair Labor Standards Act or other federal, state or local laws
regulating hours of work, wages, overtime and other working conditions; (iii)
requirements imposed by federal, state or local governmental contracts such as
those imposed by Executive Order 11246; (iv) state laws with respect to tortious
employment conduct, such as slander, harassment, false light, invasion of
privacy, negligent hiring or retention, intentional infliction of emotional
distress, assault and battery, or loss of consortium; or (v) the Occupational
Safety and Health Act, as amended, as well as any similar state laws, or other
regulations respecting safety in the workplace; and to the best knowledge of
Seller and Shareholder, no proceedings, charges, or complaints are threatened
under any such laws or regulations and no facts or circumstances exist that
would give rise to any such proceedings, charges, complaints, or claims, whether
valid or not. Seller is in full compliance with the provisions of the Americans
with Disabilities Act (the "ADA"). Seller is not subject to any settlement or
consent decree with any present or former employee, employee representative or
any government or Agency relating to claims of discrimination or other claims in
respect to employment practices and policies; and no government or Agency has
issued a judgment,
-10-
order, decree or finding with respect to the labor and employment practices
(including practices relating to discrimination) of Seller.
(d) Seller has not incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state laws. Seller
has not laid off more than ten percent (10%) of its employees at any single site
of employment in any ninety (90) day period during the twelve (12) month period
ending September 30, 1997.
3.15 Consents. No consent, approval, authorization or order of any court,
--------
Agency or any other person or under any Material Contract is required in order
to permit Seller to consummate the transactions contemplated by this Agreement.
3.16 Insurance. Seller is insured with responsible insurers in respect of
---------
its properties against business risks normally insured against by companies in
similar lines of business. Set forth on Schedule 3.16 attached hereto is a
-------------
summary description of all policies of fire, casualty, liability, workers'
compensation and other forms of insurance and all fidelity bonds held by Seller
(including insurer, named insured, type of coverage, limits of insurance,
required deductibles or co-payments, annual premiums and expiration dates).
3.17 Taxes. Seller has duly filed all federal, state, county, local and
-----
other excise, franchise, property, payroll, income, capital stock, sales and use
and other tax returns that are required to be filed by it and such returns are
true, correct and complete in all respects. Seller has paid all taxes which
have become due or have been assessed against it or the Assets and all taxes,
penalties and interest which any taxing authority has proposed or asserted to be
owing. All tax liabilities to which the properties of Seller may have been
subjected have been discharged except for taxes assessed but not yet payable.
There are no tax claims presently being asserted against Seller or the Assets
and Seller knows of no basis for any such claim. Seller has not granted any
extension to any taxing authority of the limitation period during which any tax
liability may be asserted thereby.
3.18 Business Relations. Schedule 3.18 contains an accurate list of all
------------------ -------------
significant customers of the Business (i.e., those customers representing 5% or
more of Seller's revenues for the twelve (12) months ended December 28, 1996).
Except as set forth in Schedule 3.18, Seller has not experienced any
-------------
difficulties in obtaining any inventory items necessary to the operation of its
business, and, to the best knowledge of Seller and Shareholder, no such shortage
of supply of inventory items is threatened or pending. Seller is not required
to provide any bonding or other financial security arrangements in any material
amount in connection with any transactions with any of its customers or
suppliers.
3.19 Environmental Laws and Regulations. To the best knowledge of Seller
----------------------------------
and Shareholder, Seller does not have any liability with respect to any of the
real estate Leases to be assumed hereunder which resulted from a violation of
Environmental Requirements. "Environmental Requirements" shall mean all laws,
statutes, rules, regulations, ordinances, guidance documents, judgments,
decrees, orders, agreements and other restrictions and requirements (whether now
or hereafter in effect) of any governmental authority, including, without
limitation, federal, state
-11-
and local authorities, relating to the regulation or protection of human health
and safety, natural resources, conservation, the environment, or the storage,
treatment, disposal, transportation, handling or other management of industrial
or solid waste, hazardous waste, hazardous or toxic substances or chemicals, or
pollutants.
3.20 Accounts Receivable; Evidences of Indebtedness. Set forth on
----------------------------------------------
Schedule 3.20 is a list of all accounts receivable, promissory notes, contract
-------------
rights, commercial paper, debt securities and other rights to receive money
reflected as assets of Seller in the Financial Statements and through September
20, 1997 ("Receivables"), showing the name of the account debtor, maker or
obligor, the unpaid balance, the age of the Receivable and, if applicable, the
maturity date, the interest rate and the collateral securing the obligation.
All Receivables reflected in the Financial Statements or acquired since that
date are legal, valid and binding obligations of the obligors, and neither
Seller nor Shareholder has any knowledge of any fact impairing the
collectability of such Receivables in accordance with their terms. The reserves
for doubtful receivables and uncollectible accounts reflected in the Financial
Statements were established in accordance with GAAP and, taken collectively (but
not necessarily taken individually), are sufficient to provide for any losses
which may arise in connection with the collection of such Receivables. Since
September 20, 1997, Seller has not (i) written off, cancelled, committed or
become obligated to cancel or write off any Receivables; (ii) disposed of or
transferred any Receivables except through the collection thereof in accordance
with their terms; or (iii) acquired or permitted to be created any Receivables
except in the ordinary course of its business consistent with past practice.
3.21 Absence of Certain Changes or Events. Since December 28, 1996,
------------------------------------
Seller has not (i) suffered any extraordinary losses or waived any rights of
substantial value; (ii) amended its Certificate of Incorporation or Bylaws;
(iii) made any change in its mode of management or any change in its method of
operation or method of accounting; (iv) made or become obligated to make any
capital expenditures other than such expenditures or commitments not exceeding
$300,000 in the aggregate, which expenditures are listed on Schedule 3.21; (v)
-------------
suffered any event or circumstance that could have a Material Adverse Effect;
(vi) entered into any transaction, except in the ordinary course of its business
consistent with good business practice; (vii) received any notice of any claim
asserted against it by any Agency that could have a Material Adverse Effect; or
(viii) incurred or agreed to incur any material obligation outside the ordinary
course of business that has not heretofore been disclosed in writing to Buyer.
3.22 True, Correct and Complete Information. All written agreements,
--------------------------------------
lists, schedules, instruments, exhibits, documents, certificates, reports,
statement and other writings furnished to Buyer pursuant hereto or in connection
with this Agreement or the transactions contemplated hereby are and will be
complete and accurate in all material respects. No representation or warranty
by Seller or Shareholder contained in this Agreement, in the schedules attached
hereto or in any certificate furnished or to be furnished by Seller or
Shareholder to Buyer in connection herewith or pursuant hereto contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary in order to make any statement contained herein or
therein not misleading. There is no fact known to Seller or Shareholder that
has specific application to Seller, the Business or the Assets (other than
general economic or industry conditions) and that materially adversely affects
or, as far as Seller or Shareholder can reasonably foresee, materially
threatens, the
-12-
assets, business, prospects, financial condition, or results of operations of
Seller, the Business or the Assets that has not been set forth in this Agreement
or any schedule hereto.
3.23 Availability of Documents. Seller has made available for inspection
-------------------------
by Buyer at the offices of Seller true, correct and complete copies of its
Certificate of Incorporation and Bylaws and all contracts, leases, arrangements,
commitments and documents referred to herein or in any Schedule referred to
herein, in each case together with all amendments and supplements thereto.
3.24 Broker's and Finder's Fees. Neither Seller nor Shareholder has made
--------------------------
any agreement with any person, or taken any action which would cause any person,
to become entitled to an agent's, broker's or finder's fee or commission in
connection with the transactions contemplated by this Agreement.
3.25 Information Furnished. Seller and Shareholder each acknowledge that
---------------------
Parent has previously furnished to them true and complete copies of Parent's (i)
Annual Report for the fiscal year ended March 31, 1997, which includes a Form
10-K as filed with the Securities and Exchange Commission (the "Commission"),
(ii) Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997,
as filed with the Commission, (iii) current reports on Form 8-K, as filed with
the Commission, regarding each of the acquisition of Texas Drydock, Inc., the
completion of Parent's Rule 144A offering of convertible subordinated debt, the
3-for-2 stock split in the form of a stock dividend and the pending acquisitions
involving Utility Steel Fabrication, Inc., Xxxxx Xxxxxx, Inc. and Seller, and
(iv) Proxy Statement for its Annual Meeting on July 15, 1997 (the documents in
Clauses (i)-(iv) are collectively referred to herein as the "SEC Documents").
3.26 Investment Representations.
--------------------------
(a) Each of Seller and Shareholder either is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933 as amended (the "Securities Act") or, either alone or
with a purchaser representative, has such knowledge and experience in financial
and business matters that it or he is capable of evaluating the merits and risks
of the investment in the Halter Stock.
(b) Each of Seller and Shareholder understands and agrees that the
issuance of shares of Halter Stock to Seller upon consummation of the
transactions contemplated hereby will not be registered under the Securities Act
and the certificates representing such shares will be imprinted with a legend
indicating that such shares have not been registered under the Securities Act or
any state securities laws.
(c) Except as provided herein, Seller is acquiring the shares of
Halter Stock that it will receive upon the Closing for Seller's own account and
not with a view to distribution thereof in violation of the Securities Act.
Seller intends to distribute some of the Halter Stock to Xxxxxxx X. Xxxxxxx
("Juelich") in redemption of his stock in Seller and may distribute some of the
Halter Stock to Shareholder as a dividend or in a partial or total liquidation
of Seller.
3.27 Representations and Warranties with Regard to AmCane.
----------------------------------------------------
-13-
(a) Due Organization and Qualification. AmCane is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Minnesota, and has all requisite corporate power and authority to own, lease or
operate its properties and to carry on its business as it is presently being
operated and in the place where such properties are owned, leased or operated
and such business is conducted.
(b) Physical Properties. Set forth on Section (b) of Schedule 3.27 is
------------------- -------------
a description of (i) all vehicles owned or leased by AmCane (showing motor
vehicle identification numbers and whether owned or leased), (ii) all production
and warehouse machinery and equipment owned or leased by AmCane and (iii) all
physical properties (other than the types of properties referred to in (i) and
(ii) above), real, personal or mixed, owned by or leased to AmCane, having an
original cost in excess of $5,000 (exclusive of inventory). AmCane enjoys
peaceable possession of all properties owned or leased by it.
(c) Trademarks, Etc. Section (c) of Schedule 3.27 lists the domestic
---------------- -------------
and foreign trade names, trademarks, service marks, trademark registrations and
applications, service xxxx registrations and applications, patents, patent
applications, patent licenses, software licenses and copyright registrations and
applications owned by AmCane or used thereby in the operation of its business
(collectively, the "AmCane Intellectual Property"). The patents listed in
Section (c) of Schedule 3.27 are registered in the name of Intercane World
-------------
Corporation Ltd. ("Intercane"), but were acquired by AmCane pursuant to a letter
agreement dated June 25, 1997, and AmCane has beneficial ownership thereof and
the legal right to have such registrations assigned to it. Unless otherwise
indicated on Section (c) of Schedule 3.27, to Seller's knowledge AmCane has the
-------------
right to use and license the AmCane Intellectual Property and to transfer and
convey the AmCane Intellectual Property. Each item constituting part of the
AmCane Intellectual Property has been, to the extent indicated on Section (c) of
Schedule 3.27, registered with, filed in or issued by, as the case may be, the
-------------
United States Patent and Trademark Office or such other government entity,
domestic or foreign, as is indicated on Section (c) of Schedule 3.27; to
-------------
Seller's knowledge all such registrations, filings and issuances remain in full
force and effect to the extent indicated on Section (c) of Schedule 3.27; and
-------------
all maintenance fees and other maintenance charges with respect thereto are
current. Except as stated on Section (c) of Schedule 3.27, there are no pending
-------------
proceedings challenging validity or ownership or adverse claims made or, to the
best knowledge of AmCane, Seller and Shareholder, threatened against AmCane with
respect to the AmCane Intellectual Property; there has been no litigation
commenced or threatened in writing within the past five (5) years with respect
to the AmCane Intellectual Property or the rights of AmCane therein; and none of
AmCane, Seller or Shareholder has any knowledge that (i) the AmCane Intellectual
Property or the use thereof by AmCane after the Closing in the same manner as
AmCane used it or held it for use prior to Closing infringes or otherwise
violates rights of third parties in any trade names, trademarks, service marks,
trademark or service xxxx registrations or applications, patents, patent
applications, patent licenses or copyright registrations or applications ("Third
Party AmCane Intellectual Property"), or (ii) such Third Party AmCane
Intellectual Property or its use by others or any other conduct of a third party
infringes upon the AmCane Intellectual Property.
(d) Permits. AmCane holds all licenses, franchises, permits and other
-------
governmental authorizations, including permits, titles (including, without
limitation, motor vehicle
-14-
titles and current registrations), fuel permits, licenses, franchises and
certificates, the absence of any of which could reasonably be expected to have a
material adverse effect on the business, operations properties, assets or
condition (financial or otherwise) results of operations or prospects of AmCane
(an "AmCane Material Adverse Effect") (the "AmCane Material Permits"). An
accurate list and summary description is set forth on Section (d) of Schedule
--------
3.27 hereto of all such AmCane Material Permits.
----
(e) Compliance with Laws. AmCane (i) has complied with all laws,
--------------------
regulations, licensing requirements and orders applicable to its business, the
noncompliance with which could reasonably be expected to have a AmCane Material
Adverse Effect, (ii) has filed with the proper authorities all statements and
reports required by the laws, regulations, licensing requirements and orders to
which it is subject, the failure of which to file could reasonably be expected
to have a AmCane Material Adverse Effect.
(f) Material Contracts. Set forth on Section (f) of Schedule 3.27 is
------------------ -------------
a list of all contracts, agreements, arrangements or commitments (the following,
"AmCane Material Contracts") that relate to: (i) the acquisition of services,
supplies, equipment or other personal property involving more than $25,000 or
that is not terminable by AmCane upon not more than thirty (30) days' notice
without obligation on the part of AmCane; (ii) the purchase or sale of real
property; (iii) distribution, agency or construction; (iv) lease of real or
personal property as lessor or lessee or sublessor or sublessee; (v) lending or
advancing of funds other than the extension of credit to trade purchasers in the
ordinary course of AmCane's business consistent with past business practice;
(vi) borrowing of funds or receipt of credit other than by AmCane in the
ordinary course of business consistent with good business practice and except
for trade payables in amounts and on terms consistent with past practice; (vii)
incurring of any obligation or liability except for transactions engaged in by
AmCane in the ordinary course of business consistent with good business
practice; (viii) the sale of personal property (other than sales of inventory in
the ordinary course of business consistent with good business practice) or
services under which payments due after the date of this Agreement exceed
$25,000; and (ix) any matter or transaction not in the ordinary course of the
business of AmCane or that is inconsistent with the past business practice of
AmCane.
(g) Contract Defaults. Except to the extent reflected in Section (g)
-----------------
of Schedule 3.27, AmCane is not in default in any respect under any AmCane
-------------
Material Contract, and such AmCane Material Contracts are legal, valid and
binding obligations of the respective parties thereto in accordance with their
terms and, except to the extent reflected in Section (g) of Schedule 3.27, have
-------------
not been amended; and no defenses, offsets or counterclaims thereto have been
asserted or to the best knowledge of AmCane, Seller and Shareholder, may be
made, by any party thereto other than AmCane nor has AmCane waived any
substantial rights thereunder.
(h) Litigation. Set forth on Section (h) of Schedule 3.27 is a list
---------- -------------
of all actions, suits, proceedings, investigations or grievances pending against
AmCane or, to the best knowledge of AmCane, Seller and Shareholder, threatened
against AmCane, AmCane's business or any property or rights of AmCane, at law or
in equity or before or by any court or Agency. None of the actions, suits,
proceedings or investigations listed on Section (h) of Schedule 3.27 either (i)
-------------
results or would, if adversely determined, have an AmCane Material Adverse
Effect or (ii) affects or would, if
-15-
adversely determined, affect the right or ability of AmCane to carry on its
business substantially as now conducted. AmCane is not subject to any continuing
court or Agency order, writ, injunction or decree applicable specifically to the
business operations of AmCane, or in default with respect to any order, writ,
injunction or decree of any court or Agency with respect to its business,
operations or employees.
(i) Employee Benefits. AmCane does not now have, and has never had,
-----------------
any employee benefit plan within the meaning of ERISA.
(j) Employees; Employee Relations. AmCane does not now have, and has
-----------------------------
never had, any employees. AmCane is not a party to any employment contract with
any individual or employee, either express or implied. AmCane has entered into
the consulting agreements listed on Section (f) of Schedule 3.27.
-------------
(k) Taxes. AmCane has duly filed all federal, state, county, local
-----
and other excise, franchise, property, payroll, income, capital stock, sales and
use and other tax returns that are required to be filed by it and such returns
are true, correct and complete in all respects. AmCane has paid all taxes which
have become due or have been assessed against it or its assets and all taxes,
penalties and interest which any taxing authority has proposed or asserted to be
owing. All tax liabilities to which the properties of AmCane may have been
subjected have been discharged except for taxes assessed but not yet payable.
There are no tax claims presently being asserted against AmCane or its assets
and AmCane, Seller and Shareholder knows of no basis for any such claim. AmCane
has not granted any extension to any taxing authority of the limitation period
during which any tax liability may be asserted thereby.
(l) Business Relations. Section (l) of Schedule 3.27 contains an
------------------ -------------
accurate list of all significant customers of the AmCane's business (i.e., those
customers representing 5% or more of AmCane's revenues for the twelve (12)
months ended December 28, 1996).
(m) Environmental Laws and Regulations. To the best knowledge of
----------------------------------
AmCane, Seller and Shareholder, AmCane does not have any liability with respect
to any violation of Environmental Requirements.
(n) Accounts Receivable; Evidences of Indebtedness. Set forth on
----------------------------------------------
Section (n) of Schedule 3.27 is a list of all accounts receivable, promissory
-------------
notes, contract rights, commercial paper, debt securities and other rights to
receive money reflected as assets of AmCane in the Financial Statements and
through September 20, 1997 ("AmCane Receivables"), showing the name of the
account debtor, maker or obligor, the unpaid balance, the age of the AmCane
Receivable and, if applicable, the maturity date, the interest rate and the
collateral securing the obligation.
(o) Absence of Certain Changes or Events. AmCane began business on or
------------------------------------
about July 1, 1997, when it acquired the interests of Seller and Intercane in
the AmCane Joint Venture. Except as described on Section (o) of Schedule 3.27,
-------------
since July 1, 1997, AmCane has not (i) suffered any extraordinary losses or
waived any rights of substantial value; (ii) amended its Certificate of
Incorporation or Bylaws; (iii) made any change in its mode of management or any
change in its
-16-
method of operation or method of accounting; (iv) made or become obligated to
make any capital expenditures other than such expenditures or commitments not
exceeding $300,000 in the aggregate; (v) suffered any event or circumstance that
could have a AmCane Material Adverse Effect; (vi) entered into any transaction,
except in the ordinary course of its business consistent with good business
practice; (vii) received any notice of any claim asserted against it by any
Agency that could have a AmCane Material Adverse Effect; or (viii) incurred or
agreed to incur any material obligation outside the ordinary course of business
that has not heretofore been disclosed in writing to Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Each of Buyer and Parent, jointly and severally, represents and warrants to
Seller and Shareholder as follows:
4.1 Organization and Authority.
--------------------------
(a) Each of Buyer and Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to own or lease its respective
properties and to carry on its business as it is presently being operated and in
the place where such properties are owned or leased and such business is
conducted. The execution, delivery and performance of this Agreement by each of
Buyer and Parent, and all other agreements by and among the parties, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all requisite corporate action and no further action or
approval is required in order to permit Buyer and Parent to consummate the
transactions contemplated hereby and thereby. This Agreement constitutes, and
all other agreements by and among the parties, when executed and delivered in
accordance with the terms thereof, will constitute the legal, valid and binding
obligations of each of Buyer and Parent, enforceable in accordance with their
terms, subject to the Equitable Exceptions. Each of Buyer and Parent has full
power, authority and legal right to enter into this Agreement and all other
agreements by and among the parties and to consummate the transactions
contemplated hereby and thereby. The making and performance of this Agreement,
and all other agreements by and among the parties, and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof will not (i) conflict with the respective Certificate of
Incorporation or Bylaws of Buyer or Parent, (ii) result in any breach or
termination of, or constitute a default under, or constitute an event which with
notice or lapse of time, or both, would become a default under, or result in the
creation of any Encumbrance upon any asset of Buyer or Parent under, or create
any rights of termination, cancellation or acceleration in any person under, any
contract, lease, arrangement or commitment, or violate any order, writ,
injunction or decree, to which Buyer or Parent is a party or by which Buyer or
Parent or its respective assets, business or operations may be bound or affected
or under which Buyer, Parent or their respective assets, business or operations
receive benefits, (iii) result in the loss or adverse modification of any
material license, franchise, permit or other authorization granted to or
otherwise held by Buyer or Parent that is material to the business or financial
condition of Buyer and Parent or (iv) result in the violation of any provisions
of law
-17-
applicable to Buyer or Parent, the violation of which could have a material
adverse effect upon the business, operations or assets of Buyer and Parent,
taken as a whole.
4.2 Consents. Except for the approval of the registration of the Halter
--------
Stock by the Commission, the approval of the American Stock Exchange, Inc. for
the listing of the Halter Stock and the approval of all filings under the HSR
Act, as defined below, no consent, approval, authorization or order of any
court, Agency or any other person is required in order to permit Buyer or Parent
to consummate the transactions contemplated by this Agreement.
4.3 Broker's and Finder's Fees. Neither Buyer nor Parent has made any
--------------------------
agreement with any person, or taken any action which would cause any person, to
become entitled to an agent's, broker's or finder's fee or commission in
connection with the transactions contemplated by this Agreement.
4.4 Litigation. There is no pending or, to the knowledge of Buyer and
----------
Parent, threatened litigation in any court or any proceeding before any Agency
(i) in which it is sought to restrain, prohibit, invalidate or obtain damages in
respect of the consummation of the purchase and sale of the Assets or the other
transactions contemplated hereby, (ii) that could, if adversely determined,
result in any material adverse change in the business, operations or assets or
the condition, financial or otherwise, or results of operations of Buyer and
Parent, taken as a whole, or (iii) that could, if adversely determined, have a
material adverse effect on the right or ability of Buyer or Parent to carry on
its respective business substantially as now conducted.
4.5 Halter Stock. The Halter Stock to be delivered to Seller at the
------------
Closing shall when issued constitute valid and legally issued shares of Buyer,
fully paid and nonassessable, and except as set forth in this Agreement, (a)
will be owned free and clear of all Liens created by Buyer, and (b) will be
legally equivalent in all respects to the Halter Stock issued and outstanding as
of the date hereof, except for the right to acquire additional shares pursuant
to the 3-for-2 stock split in the form of a stock dividend announced before the
date of this Agreement.
4.6 Employees. Buyer represents that it presently intends to offer
---------
employment to all of the employees of Seller; provided, however, that Buyer
shall have no such obligation to offer such employment to Seller's employees.
4.7 Capitalization. As of October 3, 1997, the authorized capital stock
--------------
of Parent consists of (i) 50,000,000 shares, $.01 par value of common stock of
which on the date hereof approximately 18,451,600 shares are issued and
outstanding and (ii) 50,000,000 shares of preferred stock, $.01 par value, of
which no shares are issued and outstanding on the date hereof. All outstanding
shares of capital stock of Parent have been duly authorized and validly issued
and are fully paid and nonassessable. Except as disclosed in the SEC Documents,
there are no plans, agreements or other arrangements pursuant to which any
options, warrants or other rights to acquire shares of capital stock from Buyer
are outstanding. Except as disclosed in the SEC Documents, other than the
shares of capital stock of Parent described above, there are outstanding (i) no
shares of capital stock or other voting securities of Parent, (ii) no securities
of Parent convertible into or exchangeable for shares of capital stock or voting
securities of Parent, and (iii) no phantom stock,
-18-
options or other rights to acquire from Parent, and no obligation of Parent to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Parent.
ARTICLE V
COVENANTS OF SELLER AND SHAREHOLDER
Each of Seller and Shareholder, jointly and severally, covenants and agrees
with Buyer and Parent as follows:
5.1 Affirmative Covenants. From October 3, 1997 to the Closing Date,
---------------------
Seller will operate the Business only in the usual, regular and ordinary course
of business consistent with good business practices, and will use all reasonable
efforts to: (i) preserve intact its business organization and the Assets; (ii)
maintain its properties, machinery and equipment in good operating condition and
repair; (iii) continue all existing policies of insurance (or comparable
insurance) in full force and effect up to and including the Closing Date (and
will not cancel any such insurance or take (or fail to take) any action that
would enable the insurers under such policies to avoid liability for claims
arising out of any occurrence prior to the Closing Date without the prior
written consent of Buyer); (iv) use all reasonable efforts to keep available the
services of its present officers, employees and agents; (v) use all reasonable
efforts to preserve its present relationships with lending and other financial
institutions, suppliers and customers; and (vi) maintain its books, accounts and
records in the usual, regular and ordinary manner on a basis consistently
applied. Seller or Shareholder will notify Buyer in writing within five (5)
business days of learning of any facts, event or circumstance that is reasonably
likely to have a Material Adverse Effect.
5.2 Negative Covenants. From October 3, 1997 to the Closing Date, Seller
------------------
will not, without the prior written consent of Buyer: (i) with regard to
employees utilized in the Business, make any increase in the compensation
payable or to become payable by it to any employee or contribute or make any
commitment to or representation that it will contribute any amounts to any bonus
or other employee benefit plan for employees of Seller except as required by law
or by the terms of any such plan in the ordinary course of business consistent
with good business practices; (ii) make any amendment to its Certificate of
Incorporation, Bylaws or other organizational documents; (iii) make any material
change in the character of the Business; (iv) incur any obligation or liability
(fixed or contingent) with regard to the Business except in the ordinary course
of business consistent with good business practices; (v) discharge or satisfy
any Encumbrance or pay any obligation or liability (fixed or contingent) with
regard to the Business other than in the ordinary course of business consistent
with good business practices; (vi) mortgage, pledge, transfer or otherwise
dispose of or subject to any Encumbrance any of the Assets, except in the
ordinary course of business consistent with good business practices; (vii)
acquire any assets or properties with regard to the Business, except in the
ordinary course of business consistent with good business practices; (viii)
cancel or compromise any material debt or claim with regard to the Business;
(ix) waive or release any rights of material value with regard to the Business;
(x) transfer, grant or terminate contract, lease, arrangement or commitment
rights under any concessions, leases, licenses, agreements, patents, patent
licenses, inventions, trademarks, trade names, service marks, trade dress
-19-
or copyrights or registrations or licenses thereof or applications therefor or
with respect to any know-how or other proprietary or trade rights with regard to
the Business; (xi) modify or change in any material respect or terminate any
existing contract, lease, arrangement or commitment required to be listed on
Schedule 1.1A; (xii) undertake any material borrowing of any nature whatsoever
-------------
with regard to the Business other than in the ordinary course of business
consistent with good business practices; (xiii) make any loans or extensions of
credit with regard to the Business, except in the ordinary course of business
consistent with good business practices; (xiv) make or become obligated to make
any capital expenditures or enter into commitments therefor with regard to the
Business exceeding $300,000 in the aggregate; (xv) sell, discount or otherwise
dispose of any Receivables; (xvi) permit the Bank Debt Balance to exceed
$10,000,000, unless discharged on the Closing Date; (xvii) make any payments in
respect of dividends or redemptions or other distributions to its shareholders
except for (A) distributions with respect to federal and state income tax
liabilities associated with the equity ownership of Seller and (B) the
redemption of the stock of Xxxxxxx Xxxxxxx, provided that such redemption is
made solely from the Cash Consideration and the Stock Consideration to be
received hereunder, and (xviii) take any action, the purpose or effect of which
is to shift income from post-closing periods to the pre-closing period or to
defer expenses from the pre-closing period to post-closing periods which action
is not in the ordinary course of business, consistent with past practice.
5.3 Access to Properties and Records. Seller will keep Buyer advised of
--------------------------------
all material developments relevant to the consummation of the transactions
contemplated hereby and will cooperate fully in permitting Buyer to make a full
investigation of the business, properties, financial condition and investments
of Seller during regular business hours and upon reasonable notice and in
bringing about the consummation of the transactions contemplated hereby. Seller
will, during regular business hours and upon reasonable notice, afford to Buyer
and its representatives full access to the offices, buildings, real properties,
machinery and equipment, inventory and supplies, records, files, books of
account, tax returns, agreements and commitments, corporate record books and
stock books and personnel of Seller, and will permit Buyer and its
representatives to contact and interview Seller's personnel, suppliers, vendors,
referral sources and any other persons that Buyer shall reasonably determine to
be necessary for it to make a full investigation of the Business. Seller will
furnish to Buyer all such further information concerning the business and
affairs of Seller as Buyer may reasonably request. Seller will update by
amendment or supplement each of the Schedules referred to herein and any other
disclosure in writing from Seller required by this Agreement to be disclosed in
writing by Seller to Buyer promptly upon any change in the information set forth
in such Schedules or other disclosures, and Seller hereby represents and
warrants that such Schedules and such written disclosures, as so amended or
supplemented, shall be true, correct and complete as of the date or dates
thereof; provided, however, that the inclusion of any information in any such
-------- -------
amendment or supplement, not included in the original Schedule or other
disclosure at or prior to the date of this Agreement, shall not limit or impair
any right which Buyer might otherwise have to terminate this Agreement pursuant
to Section 11.1(c) due to the failure to satisfy the condition in Section 7.1.
No investigation pursuant to this Section 5.3 shall affect any representations
or warranties or the conditions to the obligations of Buyer to consummate the
transactions contemplated hereby. In the event of the termination of this
Agreement, Buyer will deliver to Seller all documents, work papers and other
material (including copies thereof) obtained by Buyer or on its behalf from
Seller as a result of this Agreement or in connection herewith, whether so
obtained
-20-
before or after the execution hereof and, if the transactions contemplated
hereby are not consummated, Buyer will hold such information in confidence until
such time as such information is otherwise publicly available.
5.4 Employees of Seller. Seller shall pay all salaries and wages to all
-------------------
employees of Seller employed on the Closing Date, and effective on the Closing
Date shall terminate all such employees. Seller shall pay all wages, salaries
and bonuses which are payable to Seller's employees prior to the Closing Date.
Seller shall maintain through the Closing Date all currently-existing medical,
dental, 401(k), life insurance, and any other welfare or benefit plans for its
employees. Seller shall make all workers' compensation payments due on or before
the Closing Date.
5.5 Approvals of Third Parties. As soon as practicable after the date
--------------------------
hereof, each of Seller and Shareholder will use all reasonable efforts to secure
all necessary consents, approvals and clearances of third parties that shall be
required to consummate the transactions contemplated hereby and will otherwise
use all reasonable efforts to cause the consummation of such transactions in
accordance with the terms and conditions of this Agreement.
5.6 Notices. Seller will timely give all notices required to be given
-------
relating to the transactions contemplated hereby, including without limitation,
(i) notices to employees and (ii) any notices required or requested to be given
to all creditors and claimants against Seller.
5.7 Access to Books and Records. Seller agrees to provide Buyer, its
---------------------------
accountants, counsel and other representatives, during normal business hours and
upon reasonable notice, for a period of four (4) years after the Closing Date,
access to the books, records, income tax returns, contracts and other underlying
data and documentation of Seller relating to the period prior to the Closing
Date and to make available to Buyer personnel of Seller in Buyer's review
thereof for the purpose of enabling them to determine and calculate any tax
liabilities in connection with the Assets. Seller agrees that, for such four-
year period, it will preserve and keep intact all such books and records.
5.8 No Solicitation of Offers. Each of Seller and Shareholder covenants
-------------------------
and agrees that it or he will not solicit, entertain, encourage or assist any
acquisition proposal with respect to the purchase or exchange of the Assets or
any portion thereof, or with respect to any proposed merger, consolidation, sale
of securities or other acquisition involving Seller, by or with any person other
than Buyer until November 30, 1997.
5.9 Release of Financing Statements. Seller shall obtain and file in the
-------------------------------
appropriate jurisdictions Termination Statements property executed by any
parties holding a security interest or other Encumbrance with respect to the
Assets as identified by lien searches conducted with respect to Seller and the
Assets.
5.10 HSR Filing. Seller shall in cooperation with Buyer file with the
----------
Federal Trade Commission and the Department of Justice any notifications
required to be filed under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX Xxx") and the rules and regulations
-21-
promulgated thereunder with respect to the transactions contemplated hereby;
provided, that Buyer shall pay the required fees with respect to the applicable
filings under the HSR Act.
5.11 Change of Name. Seller agrees to change its name to a name not using
--------------
the word "AmClyde" within 60 days of the date of Closing and cooperate with
Buyer with a change of Buyer's name to a name using the word "AmClyde".
5.12 Maintenance of Existence. Seller shall maintain its existence as a
------------------------
Delaware corporation until its obligations under this Agreement are satisfied.
ARTICLE VI
COVENANTS OF BUYER AND PARENT
Each of Buyer and Parent, jointly and severally, covenants and agrees with
Seller and Shareholder as follows:
6.1 Furnishing of Information. Buyer will keep Seller advised of all
-------------------------
material developments relevant to the consummation of the transactions
contemplated hereby and will cooperate fully with Seller in bringing about the
consummation of the transactions contemplated hereby. Buyer will update by
amendment or supplement each of the Schedules referred to herein and any other
disclosure in writing from Buyer required by this Agreement to be disclosed in
writing by Buyer to Seller promptly upon any change in the information set forth
in such Schedules or other disclosures, and Buyer hereby represents and warrants
that such Schedules and such written disclosures, as so amended or supplemented,
shall be true, correct and complete as of the date or dates thereof; provided,
--------
however, that the inclusion of any information in any such amendment or
-------
supplement, not included in the original Schedule or other disclosure at or
prior to the date of this Agreement, shall not limit or impair any right which
Seller might otherwise have to terminate this Agreement pursuant to Section
11.1(c) due to the failure to satisfy the condition in Section 8.1. No
investigation pursuant to this Section 6.1 shall affect any representations or
warranties or the conditions to the obligations of Seller to consummate the
transactions contemplated hereby. In the event of the termination of this
Agreement, Seller will deliver to Buyer all documents, work papers and other
material (including copies thereof) obtained by Seller or on its behalf from
Buyer as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof and, if the transactions
contemplated hereby are not consummated, Seller will hold such information in
confidence until such time as such information is otherwise publicly available.
6.2 Approvals of Third Parties. As soon as practicable after the date
--------------------------
hereof, Buyer will use all reasonable efforts to cooperate with Seller and
Shareholder to secure all necessary consents, approvals and clearances of third
parties that shall be required to consummate the transactions contemplated
hereby and will otherwise use all reasonable efforts to cooperate with Seller
and Shareholder to cause the consummation of such transactions in accordance
with the terms and conditions of this Agreement.
-22-
6.3 Access to Books and Records. Buyer agrees to provide Seller, its
---------------------------
accountants, counsel and other representatives during normal business hours and
upon reasonable notice, for a period of four (4) years after the Closing Date,
access to the books, records, tax returns, contracts and other underlying data
and documentation of Buyer relating to the period prior to the Closing Date and
to make available to Seller personnel of Buyer in Seller's review thereof for
the purpose of enabling them to review any tax liabilities for such period.
Buyer agrees that, for such four-year period, it will preserve and keep intact
all such books and records.
6.4 Discharge of Assumed Liabilities. Subject to and upon the terms and
--------------------------------
conditions of this Agreement, Buyer shall pay, perform and discharge, according
to their terms, the Assumed Liabilities.
6.5 HSR Filing. Buyer and Parent shall in cooperation with Seller file
----------
with the Federal Trade Commission and the Department of Justice any
notifications required to be filed under the HSR Act and the rules and
regulations promulgated thereunder with respect to the transactions contemplated
hereby.
6.6 Registration of Halter Stock.
----------------------------
(a) Parent shall use all reasonable efforts to effect the
registration of the Halter Stock issued hereunder (the "Registrable Securities")
as soon as practicable after the Closing Date and in any event shall prepare and
file with the Commission, within ten (10) business days following the Closing
Date, a registration statement on Form S-3 (or another appropriate form) for the
offer and sale by Seller, Shareholder and Juelich (the "Holders") of the
Registrable Securities so issued (the "Shelf Registration Statement"); provided,
that if the Shelf Registration Statement is declared effective prior to December
10, 1997 (the "Effectiveness Target Date"), Holders shall not sell any
Registrable Securities pursuant to the Shelf Registration Statement prior to the
Effectiveness Target Date. In addition, Parent shall prepare and file all such
amendments and supplements to such Shelf Registration Statement and the
prospectus used in connection therewith as may be necessary to keep the Shelf
Registration Statement effective and in compliance with applicable law for a
period of not less than two (2) years following the Closing Date or such shorter
period which will terminate when all Registrable Securities have been sold (the
"Effectiveness Period") (but not before the expiration of the 90-day period
referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if
applicable). Notwithstanding the foregoing, Parent shall not be obligated to
effect any such registration pursuant to this Section 6.6 if Parent's counsel
delivers an opinion to Holders and Parent's registrar and transfer agent
reasonably satisfactory to counsel for Holders to the effect that the
Registrable Securities may be sold or distributed as planned by Holders without
registration. All expenses incident to Parent's performance or compliance with
this Section 6.6 shall be paid by Parent; provided, however, Holders shall be
responsible for and shall pay any underwriting, brokerage or selling agent's
fees, discounts or commissions, and shall be responsible for and pay all legal
fees and expenses of counsel to Holders or counsel to any underwriter or selling
agent. In connection with any underwritten offering to which Parent shall have
consented, Parent shall provide, or cause to be provided, such representations,
warranties, covenants, opinions, "cold comfort" letters, indemnifications,
opportunities for due diligence and other matters, and shall take all such other
reasonable actions, as are customary in underwritten public offerings of
securities.
-23-
(b) In the event the Shelf Registration Statement is not declared
effective by the Effectiveness Target Date, then within fifteen (15) business
days after receipt by Parent of a Price Protection Certificate (as defined
below) from a Holder within three hundred seventy-five (375) days after the
Closing Date Parent shall pay to such Holder an amount equal to the lesser of:
(i) the product of the Trading Price Spread (as defined below) (but only to the
extent such amount is a positive number) times the number of shares of Halter
Stock issued pursuant to Article II sold by such Holder as noted in the Price
Protection Certificate or (ii) the product of the Actual Price Spread (as
defined below) (but only to the extent such amount is a positive number) times
the number of shares of Halter Stock issued pursuant to Article II sold by such
Holder as noted in the Price Protection Certificate. For purposes hereof, the
"Trading Price Spread" shall mean the excess of (i) the average closing price of
the Halter Stock for the three trading days ending on the Effectiveness Target
Date as reported by the American Stock Exchange, Inc. ("AMEX") over (ii) the
average closing price of the Halter Stock for the three trading days ending on
the date immediately preceding the date upon which the Shelf Registration
Statement is declared effective as reported by AMEX. For purposes hereof, the
"Actual Price Spread" shall mean the excess of (i) the average closing price of
the Halter Stock for the three trading days ending on the Effectiveness Target
Date as reported by AMEX over (ii) the actual selling price of such shares
Halter Stock (without deduction for commission or fees of any nature) in an open
market brokers' transaction. For purposes hereof, the "Price Protection
Certificate" shall mean a certificate of a Holder containing all the information
required to calculate the amount to be paid by Parent, a recitation of
compliance by Holder with the provisions of this Section 6.6(b) and a brokers'
confirmation of sale or other documentation satisfactory to Parent evidencing
such Holders' sale of Halter Stock (including the date and sales price thereof).
Holder may deliver a Price Protection Certificate from time to time during the
375-day period after sales of Halter Stock are made by a Holder. Parent shall
have no obligation under this Section if Parent does not receive a Price
Protection Certificate within three hundred seventy-five (375) days after the
Closing Date.
(c) Notwithstanding anything to the contrary in Section 6.6(a), but
subject to compliance with Section 6.6(d), Parent may, by delivering written
notice to Holders, prohibit offers and sales of Registrable Securities pursuant
to the Shelf Registration Statement at any time if (A)(i) Parent is in the
possession of material non-public information relating to Parent, (ii) Parent
determines (based on advice of counsel) that such prohibition is necessary in
order to avoid a requirement to disclose such material non-public information to
the public and (iii) Parent determines in good faith that public disclosure of
such material non-public information would not be in the best interests of
Parent and its stockholders or (B)(i) Parent has made a public announcement
relating to an acquisition or business combination transaction including Parent
and/or one or more of its subsidiaries that is material to Parent and its
subsidiaries taken as a whole and (ii) Parent determines in good faith that (x)
offers and sales of Registrable Securities pursuant to the Shelf Registration
Statement prior to the consummation of such transaction (or such earlier date as
Parent shall determine) is not in the best interests of Parent and its
stockholders or (y) it would be impracticable at the time to obtain any
financial statements relating to such acquisition or business combination
transaction that would be required to be set forth in the Shelf Registration
Statement; provided, however, that upon (i) the public disclosure by Parent of
-------- -------
the material non-public information described in clause (A) of this paragraph or
(ii) the consummation, abandonment or termination of, or the availability of the
required financial statements with respect to, a transaction
-24-
described in clause (B) of this paragraph, the suspension of the use of the
Shelf Registration Statement pursuant to this Section 6.6(c) shall cease and the
Parent shall promptly notify Holders that dispositions of Registrable Securities
may be resumed.
(d) Parent and Holders agree that Holders will suffer damages if
Parent fails to fulfill its obligations pursuant to Section 6.6 hereof and that
it would not be possible to ascertain the extent of such damages. Accordingly,
in the event of such failure by Parent to fulfill such obligations, Parent
hereby agrees to pay liquidated damages ("Liquidated Damages") to each Holder.
If the prospectus contained in the Shelf Registration Statement ceases to be
usable (including as a result of a prohibition against sales of Registrable
Securities pursuant to Section 6.6(c) hereof) at any time during the
Effectiveness Period for a period of time which shall exceed 30 days in the
aggregate during any 365-day period (a "Registration Default"), then Parent
shall pay Liquidated Damages in cash to each Holder following occurrence of such
Registration Default in an amount equal to $.0024 per week per share (subject to
adjustment in the event of stock splits, stock recombination, stock dividends
and the like) of Registrable Securities then held by such Holder for each week
or portion thereof that the Registration Default continues (including the
original 30-day period constituting the Registration Default). The amount of
such Liquidated Damages will increase by additional $.0024 per week per share
(subject to adjustment as set forth above) of Registrable Securities then held
by such Holder for each subsequent 30-day period until all Registration Defaults
have been cured; provided, however, that Liquidated Damages shall not at any
-------- -------
time exceed $.0118 per week per share (subject to adjustment as set forth above)
of Registrable Securities then held by such Holder. Following the cure of all
Registration Defaults relating to any Registrable Securities, the accrual of
Liquidated Damages with respect to such Registrable Securities will cease. In
any event, Liquidated Damages will not be payable with respect to any period
following the expiration of the Effectiveness Period. A Registration Default
shall be cured on the date the Shelf Registration Statement is declared
effective or the prospectus contained therein again becomes usable.
(e) Parent may require Holders to furnish to Parent such
information regarding the distribution of Registrable Securities as is required
by law to be disclosed in the Shelf Registration Statement, and Parent may
exclude from the Shelf Registration Statement the Registrable Securities if
Holders fail to furnish such information within a reasonable time after
receiving such request. Each holder agrees to notify Parent as promptly as
practicable of any inaccuracy or change in information previously furnished by
such Holder to Parent or of the occurrence of any event as a result of which the
prospectus included in the Shelf Registration Statement contains or would
contain an untrue statement of a material fact regarding a Holder or such
Holder's intended method of distribution of Registrable Securities, or omits to
state any material fact regarding a Holder or such Holder's intended method of
distribution of Registrable Securities, necessary to make the statement therein,
in light of the circumstances then existing, not misleading and promptly furnish
to Parent any additional information required to correct and update any
previously furnished information or required so that such prospectus shall not
contain, with respect to a Holder or the distribution of the Registrable
Securities, an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
then existing, not misleading.
-25-
(f) Parent will indemnify and hold harmless Holders from and
against any and all loss, damage, liability, cost and expense to which the
Holders may become subject under the Securities Act or otherwise, insofar as
such losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that Parent will not be
liable in any such case and will be indemnified by Holder, to the extent that
any such loss, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by such Holder.
6.7 Employees. With regard to all employees of Seller (whether or not
---------
hired by Buyer on or following the Closing Date), Buyer shall pay, perform and
discharge, according to their terms, any accrued holiday, short-term disability,
sick, severance, termination, payment in lieu of notice and vacation pay to
which such employees are entitled or claim to be entitled as of the Closing Date
(including obligations arising from the termination of such employees by Seller
in anticipation of the transactions contemplated herein) and any additional
holiday, sick or vacation pay set forth in Schedule 6.7; provided that with
------------
regard to any former employee of Seller that is hired by Buyer, Buyer may
discharge its obligation hereunder to such employee by giving credit (in lieu of
a cash payment) to such employee for any such accrued items, subject to any
consent of such employee required by law. With regard to all employees of
Seller (whether or not hired by Buyer on or following the Closing Date), Buyer
shall pay, perform and discharge, according to their terms, any accrued wages,
salaries and bonuses which are accrued as of the Closing Date but payable after
the Closing Date. Buyer shall (i) pay when due all workers' compensation
payments incurred by Buyer with regard to its employees, (ii) pay when due all
wages, salaries and bonuses incurred by Buyer with regard to its employees, and
(iii) be responsible for all welfare and benefit plans maintained with regard to
its employees (including, without limitation, the provision for COBRA benefits
on a prospective basis).
6.8 Letters of Credit. As of the date of this Agreement, Firstar Bank of
-----------------
Minnesota, N.A. ("Firstar Bank") has issued on behalf of Seller the letters of
credit listed on Schedule 6.8 attached hereto (the "Letters of Credit"). Parent
------------
agrees to deliver to Firstar Bank at Closing a guarantee in form satisfactory to
Firstar Bank so as to enable Firstar Bank to release Seller from any and all
liabilities to Firstar Bank with respect to such letters of credit and to
release Seller's assets from all security interests in favor of Firstar Bank
with respect to such letters of credit.
6.9 Performance and Payment Bonds. As of the date of this Agreement,
-----------------------------
United States Fidelity and Guaranty Company ("USF&G") has issued on behalf of
Seller the performance and payment bonds listed on Schedule 6.9 attached hereto
------------
(the "Bonds"). Parent agrees to deliver to USF&G at Closing a guarantee,
assumption or other agreement in form satisfactory to USF&G so as to enable
USF&G to maintain the issuance of the Bonds.
-26-
6.10 Retention of Records and Access by Seller and Shareholder. Buyer
---------------------------------------------------------
agrees that for a period of five (5) years following the Closing Date Buyer will
use reasonable efforts to retain all of the records of Seller related to the
Assets that are transferred by Seller to Buyer pursuant to Section 9.2(b) above.
Buyer further agrees that from time to time during such five (5) year period
upon the prior written request of Seller or Shareholder Buyer will make such
records available to Seller or Shareholder for review by Seller or Shareholder
for any reasonable business or tax purpose of Seller or Shareholder and for
photocopying by and at the expense of Seller or Shareholder.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER AND PARENT
The obligations of Buyer and Parent to cause the purchase of the Assets and
the other transactions contemplated hereby to occur at Closing shall be subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions, except such conditions as Buyer and Parent may waive in writing:
7.1 Representations and Warranties of Seller and Shareholder. All of the
--------------------------------------------------------
representations and warranties of Seller and Shareholder contained in this
Agreement and in any Schedule or other disclosure in writing from Seller or
Shareholder shall have been true and correct in all material respects when made
(without regard to any subsequent amendment or supplement), and shall be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
7.2 Covenants of Seller and Shareholder. All of the covenants and
-----------------------------------
agreements herein on the part of Seller and Shareholder to be complied with or
performed on or before the Closing Date shall have been fully complied with and
performed.
7.3 Seller's Certificate. There shall be delivered to Buyer a
--------------------
certificate dated as of the Closing Date and signed by the President or a Vice
President of Seller and by Shareholder to the effect set forth in Sections 7.1
and 7.2, which certificate shall have the effect of a representation and
warranty made by each of Seller and Shareholder on and as of the Closing Date.
7.4 Noncompetition Agreements. Each of Seller, Shareholder and Juelich
-------------------------
shall have executed and delivered to Buyer a Noncompetition Agreement in
substantially the form attached hereto as Exhibit C-1, Exhibit C-2 and Exhibit
----------- ----------- -------
C-3, respectively (the "Noncompetition Agreements").
---
7.5 Employment Agreement. Juelich shall have executed and delivered to
--------------------
Buyer an Employment Agreement in substantially the form attached hereto as
Exhibit D (the "Employment Agreement").
---------
7.6 Escrow Agreement. Seller shall have executed and delivered to Buyer
----------------
an Escrow Agreement substantially in the form attached hereto as Exhibit E (the
---------
"Escrow Agreement").
-27-
7.7 No Casualty Losses. The Assets shall not have suffered any
------------------
destruction or damage by fire, explosion or other casualty or any taking by
eminent domain which has materially impaired the operation of the Assets or
otherwise had a Material Adverse Effect.
7.8 Certificates of Authorities. Seller shall have furnished to Buyer
---------------------------
(i) certificates of the Secretary of State of Delaware, dated as of a date not
more than twenty (20) days prior to the Closing Date, attesting to the
organization, existence and good standing of Seller, (ii) a copy, certified by
the Secretary of State of Delaware as of a date not more than twenty (20) days
prior to the Closing Date, of Seller's Certificate of Incorporation and all
amendments thereto, (iii) a copy, certified by the Secretary of Seller, of the
Bylaws of Seller, as amended and in effect at the Closing Date and (iv) a copy,
certified by an authorized officer of Seller, of resolutions duly adopted by
each of the Board of Directors and shareholders of Seller duly authorizing the
transactions contemplated in this Agreement.
7.9 Litigation. At the Closing Date, there shall not be pending or
----------
threatened any litigation in any court or any proceeding before any Agency, (i)
in which it is sought to restrain, invalidate, set aside or obtain damages in
respect of the consummation of the purchase and sale of the Assets or the other
transactions contemplated hereby, (ii) that could, if adversely determined,
result in any Material Adverse Effect, or (iii) as a result of which, in the
reasonable judgment of Buyer, Buyer would be deprived of the material benefits
of its ownership of the Assets.
7.10 Satisfactory to Buyer's Counsel. All actions, proceedings,
-------------------------------
instruments and documents required to carry out this Agreement or incidental
thereto and all other related matters shall have been satisfactory to Xxxxx
Xxxxxxx Rain Xxxxxxx (A Professional Corporation), Dallas, Texas, counsel for
Buyer.
7.11 Opinion of Seller's Counsel. Buyer shall have received the opinion
---------------------------
of Xxxxxx & Efron, P.A., counsel for Seller, dated the Closing Date, in form and
substance satisfactory to Buyer, with respect to the matters set forth on
Exhibit F-1. Buyer shall have received the opinion of Xxxxxx & Xxxxxxx, LLP,
-----------
counsel for Seller, dated the Closing Date, in form and substance satisfactory
to Buyer, with respect to the matters set forth on Exhibit F-2.
-----------
7.12 No Material Adverse Effect. There shall not have occurred any
--------------------------
Material Adverse Effect. Buyer shall receive a certificate from Seller, dated
as of the Closing Date and in form and substance satisfactory to Buyer, as to
the fulfillment of the conditions set forth in this Section 7.12.
7.13 HSR Approval. All applicable waiting periods and any extensions
------------
under the HSR Act shall have expired or otherwise been terminated.
7.14 Consents. Seller shall have obtained all orders, approvals, estoppel
--------
certificates or consents of third parties, including, without limitation, any
orders, approvals, certificates or consents deemed necessary by counsel to Buyer
that shall be required to consummate the transactions contemplated hereby,
including, without limitation, consents to the assignment of the Assumed
Liabilities listed on Schedule 1.1A.
-------------
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7.15 Juelich Investment Letter. Juelich shall have executed and delivered
-------------------------
to Parent an investment letter making substantially the same representations and
warranties as set forth in Sections 3.25 and 3.26 above and agreeing to be bound
by the provisions of Section 6.6 with respect to the Halter Stock to be received
by him from Seller.
7.16 60-Ton Portal Crane Agreement. Each of Seller, Shareholder and
-----------------------------
United Dominion Industries, Inc., a Delaware corporation ("UDI"), shall have
executed and delivered to Buyer a mutually satisfactory agreement regarding Navy
Prime Contract #N62471-82-C-1455 for Model NP60 Xxxxx Xxxxx and UDI Product
Liability Claims, as defined below, (the "60-Ton Portal Crane Agreement") and
all documents required to be delivered pursuant to the terms of the 60-Ton
Portal Crane Agreement.
7.17 Further Assurances. Each of Seller and Shareholder shall take all
------------------
such further action as may be reasonably requested by Buyer in order to
effectuate the consummation of the transactions contemplated by this Agreement.
If Buyer shall reasonably determine that any further conveyance, assignment or
other document or any further action is necessary to vest in it full title to
the Assets, Seller and Shareholder shall cause the appropriate officers to
execute and deliver all such instruments and take all such action as Buyer may
reasonably determine to be necessary.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER AND SHAREHOLDER
The obligations of Seller and Shareholder to cause the sale of the Assets
and the other transactions contemplated hereby to occur at Closing shall be
subject to the satisfaction on or prior to the Closing Date of all of the
following conditions, except such conditions as Seller and Shareholder may waive
in writing:
8.1 Representations and Warranties of Buyer and Parent. All of the
--------------------------------------------------
representations and warranties of Buyer and Parent contained in this Agreement
and in any Schedule or other disclosure in writing from Buyer shall have been
true and correct in all material respects when made (without regard to any
subsequent amendment or supplement), and shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on and as of the
Closing Date.
8.2 Covenants of Buyer and Parent. All of the covenants and agreements
-----------------------------
herein on the part of Buyer or Parent to be complied with or performed on or
before the Closing Date shall have been fully complied with and performed.
8.3 Certificate of Buyer and Parent. There shall be delivered to Seller
-------------------------------
and Shareholder a certificate dated as of the Closing Date and signed by the
President or a Vice President of Buyer and Parent to the effect set forth in
Sections 8.1 and 8.2, which certificate shall have the effect of a
representation and warranty made by Buyer and Parent on and as of the Closing
Date.
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8.4 Noncompetition Agreements. Buyer shall have executed and delivered
-------------------------
to Seller and to Shareholder the Noncompetition Agreements.
8.5 Employment Agreement. Buyer or an affiliate of Buyer shall have
--------------------
executed and delivered to Juelich the Employment Agreement.
8.6 Escrow Agreement. Buyer shall have executed and delivered to Seller
----------------
the Escrow Agreement.
8.7 Certificates of Authorities. Each of Buyer and Parent shall have
---------------------------
furnished to Seller (i) certificates of the Secretary of State of Delaware,
dated as of a date not more than twenty (20) days prior to the Closing Date,
attesting to the organization, existence and good standing of each of Buyer and
Parent, (ii) copies, certified by the Secretary of State of Delaware, as of a
date not more than twenty (20) days prior the Closing Date, of each of Buyer's
and Parent's respective Certificate of Incorporation and all amendments thereto,
(iii) a copy, certified by the Secretary of Buyer, of the Bylaws of Buyer, as
amended and in effect at the Closing Date, (iv) a copy, certified by the
Secretary of Parent, of the Bylaws of Parent, as amended and in effect at the
Closing Date and (v) copies, certified by authorized officers of each of Buyer
and Parent, of resolutions duly adopted by the respective Board of Directors of
Buyer and Parent duly authorizing the transactions contemplated in this
Agreement.
8.8 Satisfactory to Seller's Counsel. All actions, proceedings,
--------------------------------
instruments and documents required to carry out this Agreement or incidental
thereto and all other related legal matters shall have been satisfactory to
Xxxxxx & Xxxxxxx, LLP, counsel for Seller and Shareholder.
8.9 Opinion of Buyer's Counsel. Seller shall have received an opinion of
--------------------------
Xxxxx Xxxxxxx Rain Xxxxxxx, counsel for Buyer, dated the Closing Date, in form
and substance satisfactory to Seller, with respect to the matters set forth on
Exhibit G.
---------
8.10 HSR Approval. All applicable waiting periods and any extensions
------------
under the HSR Act shall have expired or otherwise been terminated.
8.11 Transfer of Juelich's Interest. Seller shall have acquired from
------------------------------
Juelich all of Juelich's equity interest in Seller.
8.12 60-Ton Portal Crane Agreement. Each of Buyer, Parent and UDI shall
-----------------------------
have executed and delivered to Seller the 60-Ton Portal Crane Agreement and all
documents required to be delivered pursuant to the terms of the 60-Ton Portal
Crane Agreement.
ARTICLE IX
CLOSING
9.1 Date and Place of Closing. Subject to satisfaction or waiver of the
-------------------------
conditions to the obligations of the parties, the purchase and sale of the
Assets pursuant to this Agreement shall be
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consummated at a closing (the "Closing") to be conducted by a mutual exchange of
documents or telecopies on October 31, 1997 or such other date as the parties
may mutually agree upon (the "Closing Date").
9.2 Performance by Seller and Shareholder. At the Closing, concurrently
-------------------------------------
with performance by Buyer of its obligations to be performed at the Closing:
(a) Conveyances. Seller shall execute and deliver to Buyer, in form
-----------
and substance acceptable to Buyer (i) a Xxxx of Sale and Assignment in
substantially the form attached hereto as Exhibit A conveying to Buyer all items
---------
of personalty included among the Assets, (ii) assignments of each of the
contracts, leases, arrangements and commitments listed on Schedule 1.1A and
-------------
(iii) all other assignments, endorsements and instruments of transfer as shall
be necessary or appropriate to carry out the intent of this Agreement and as
shall be sufficient to vest in Buyer title to all of the Assets and all right,
title and interest of Seller thereto. If requested by Buyer, such documents
shall be in a form suitable for recording.
(b) Records. Seller shall deliver to Buyer all documents, agreements,
-------
reports, books, records and accounts pertaining specifically to the Assets that
are in Seller's possession.
(c) Certificates. Seller and Shareholder shall execute and deliver to
------------
Buyer the certificates referred to in Sections 7.3 and 7.12.
(d) Noncompetition Agreements and Employment Agreement. Seller,
--------------------------------------------------
Shareholder and Juelich shall execute and deliver to Buyer the Noncompetition
Agreements and Juelich shall execute and deliver to Buyer the Employment
Agreement.
(e) Escrow Agreement. Seller shall execute and deliver to Buyer the
----------------
Escrow Agreement.
(f) Certificates of Authorities. Seller shall deliver to Buyer the
---------------------------
certificates of authorities referred to in Section 7.8.
(g) Opinion of Seller's Counsel. Seller shall deliver to Buyer the
---------------------------
opinions of its counsel, dated the Closing Date, as specified in Section 7.11.
(h) Consents. Seller shall deliver to Buyer the consents and
--------
approvals required by Section 7.14.
(i) Other Actions. Each of Seller and Shareholder shall take all
-------------
such other steps as may be necessary or appropriate to put Buyer in
actual and complete ownership and possession of the Assets.
9.3 Buyer's Performance. At the Closing, concurrently with the
-------------------
performance by Seller of its obligations to be performed at the Closing, Buyer
shall:
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(a) Purchase Price. Deliver to Seller the Cash Consideration and the
--------------
Additional Consideration, if any.
(b) Escrow Deposit. Deliver to Seller written instructions to
--------------
Parent's transfer agent to deliver to Escrow Agent, as named in the Escrow
Agreement, two certificates representing an aggregate 13,851 shares of Halter
Stock to be held pursuant to the Escrow Agreement.
(c) Halter Stock. Deliver to Seller written instructions to Parent's
------------
transfer agent to deliver to Seller a certificate representing 459,652 shares of
Halter Stock. Deliver to Seller written instructions to Parent's transfer agent
to deliver to Juelich, on behalf of Seller and for the benefit of Seller, a
certificate representing 140,731 shares of Halter Stock.
(d) Assumption Agreement. Execute and deliver to Seller the
--------------------
Assumption Agreement in substantially the form attached hereto as Exhibit B.
---------
(e) Escrow Agreement. Buyer shall execute and deliver to Seller the
----------------
Escrow Agreement.
(f) Certificate. Execute and deliver the certificate referred to in
-----------
Section 8.3.
(g) Noncompetition Agreement and Employment Agreement. Execute and
-------------------------------------------------
deliver to Seller, Shareholder and Juelich the Noncompetition Agreements and
either execute and deliver, or cause an affiliate of Buyer to execute and
deliver, to Juelich the Employment Agreement.
(h) Certificates of Authorities. Deliver to Seller the certificates
---------------------------
of authorities referred to in Section 8.7.
(i) Opinion of Buyer's and Parent' Counsel. Buyer and Parent shall
--------------------------------------
deliver to Buyer the opinion of their counsel, dated the Closing Date, as
specified in Section 8.9.
9.4 Other Instruments. In addition to the foregoing, Buyer, Seller and
-----------------
Shareholder agree as follows:
(a) Further Action by Seller and Shareholder. At any time and from
----------------------------------------
time to time, at or after the Closing, upon request of Buyer, each of Seller and
Shareholder shall do, execute, acknowledge and deliver or shall cause to be
done, executed, acknowledged and delivered all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances as may
reasonably be required in order to evidence, vest in and confirm to Buyer full
and complete title to, possession of, and the right to use and enjoy, the
Assets.
(b) Further Action by Buyer. At any time and from time to time,
-----------------------
at or the Closing, upon request of Seller or Shareholder, Buyer shall do,
execute, acknowledge and deliver or shall cause to be done, executed,
acknowledged and delivered all such further acts and assurances as may
reasonably be required in order to better assure and confirm to Seller and
Shareholder the
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assumption by Buyer of the obligations to render performance that are to be
assumed by Buyer pursuant to this Agreement.
ARTICLE X
INDEMNIFICATION AND POST-CLOSING MATTERS
10.1 Buyer's Losses. Each of Seller and Shareholder jointly and severally
--------------
agrees to indemnify and hold harmless Buyer and Parent, and each of their
directors, officers, employees, representatives, agents and attorneys from,
against, for and in respect of any and all damages (including, without
limitation, amounts paid in settlement with Seller's consent, which may not be
unreasonably withheld), penalties, fines, interest and monetary sanctions,
losses, obligations, liabilities, claims, deficiencies, costs and expenses,
including, without limitation, reasonable attorneys' fees and other costs and
expenses incident to any suit, action, investigation, claim or proceeding
(hereinafter referred to collectively as "Buyer's Losses") suffered, sustained,
incurred or required to be paid by any of them by reason of (i) any
representation or warranty made by Seller and Shareholder in or pursuant to this
Agreement (as amended or supplemented pursuant to Section 5.3) being untrue or
incorrect in any respect; (ii) any liability arising from or with respect to the
Assets through the Closing Date; (iii) any failure by Seller or Shareholder to
observe or perform its covenants and agreements set forth in this Agreement;
(iv) any failure by Seller or Shareholder to satisfy and discharge any other
liability or obligation not expressly assumed by Buyer pursuant to this
Agreement; (v) the items described in Schedule 3.10 hereof; or (vi) the failure
-------------
of Buyer to collect the full face amount of all accounts receivable of Seller
and AmCane as of the date of Closing (the "Receivables") net of applicable
reserves within 23 months from the date of Closing. With regard to Receivables,
Buyer will, upon receipt of cash payment from Seller, transfer to Seller unpaid
Receivables or portions thereof equal to such cash payment from Seller, and
Buyer shall remit to Seller any amounts received by Buyer with regard to such
transferred Receivables.
10.2 Seller's Losses. Each of Parent and Buyer jointly and severally
---------------
agrees to indemnify and hold harmless Seller and Shareholder and Seller's
directors, officers, employees, representatives, agents and attorneys from,
against, for and in respect of any and all damages (including, without
limitation, amounts paid in settlement with Buyer's consent, which may not be
unreasonably withheld), penalties, fines, interest and monetary sanctions,
losses, obligations, liabilities, claims, deficiencies, costs and expenses,
including, without limitation, reasonable attorneys' fees and other costs and
expenses incident to any suit, action, investigation, claim or proceeding
(hereinafter referred to collectively as "Seller's Losses") suffered, sustained,
incurred or required to be paid by either Seller or Shareholder by reason of (i)
any representation or warranty made by Buyer in or pursuant to this Agreement
(as amended or supplemented pursuant to Section 6.1) being untrue or incorrect
in any respect; (ii) any liability arising from or with respect to the Assets
after the Closing Date; (iii) any failure by Buyer to observe or perform its
covenants and arising from sales of goods manufactured or sold or services
provided by Buyer on or after the Closing Date; or (v) any failure by Buyer to
satisfy and discharge any liability or obligation expressly assumed by Buyer
pursuant to this Agreement.
10.3 Liability Relating to Pre-Closing Products and Services.
-------------------------------------------------------
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(a) Product Liability Claims. For purposes hereof, the term
------------------------
"Product Liability Claims" shall mean any and all liabilities, losses, claims,
judgments, awards, causes of action, suits, demands and obligations resulting
from, arising out of, or relating to personal injury, wrongful death, property
damage, breach of contract, economic loss, consequential damages, punitive
damages, incidental damages, product or service liability claims (including, but
without limitation to, negligence, gross negligence, strict liability, punitive
damages, failure to warn, breach of contract, implied warranty, express
warranty, Restatements of Torts Section 4.02A claims and any and all derivative
---------------------
claims such as loss of consortium and any and all contribution and indemnity
claims) involving products of the Business shipped or services (including, but
not limited to, engineering, design, installation, service and consulting)
performed by the Business prior to the Closing Date. For purposes hereof, the
term "UDI Product Liability Claims" shall mean those Product Liability Claims
for products of the Business shipped or services (including, but not limited to,
engineering, design, installation, service and consulting) performed by the
Business prior to October 14, 1989. For purposes hereof, the term "Seller
Product Liability Claims" shall mean those Product Liability Claims for products
of the Business shipped or services (including, but not limited to, engineering,
design, installation, service and consulting) performed by the Business on or
after October 14, 1989 but prior to the Closing Date.
(b) Seller Insurance. For purposes hereof, the term "Seller
----------------
Insurance" shall mean Seller's existing policy of insurance providing coverage
for Seller Product Liability Claims on the form(s) previously delivered by
Seller to Buyer at the level (in excess of the $1,000,000 retention) of
$1,000,000 in years 1989, 1990 and 1991; $5,000,000 in years 1992, 1993 and
1994; $8,000,000 in 1995; and $11,000,000 in 1996 and 1997).
(c) UDI Product Liability Claims. With respect to UDI Product
----------------------------
Liability Claims made before, on or after the date of Closing (none of which UDI
Product Liability Claims are being assumed by Buyer). Buyer's assistance of UDI
is documented in the 60-Ton Portal Crane Agreement and Buyer is receiving from
UDI the Indemnification Agreement pursuant to the 60-Ton Portal Crane Agreement.
Each of Seller and Buyer shall promptly notify each other party to this
Agreement in writing upon receipt of notice of a UDI Product Liability Claim.
(d) Seller Product Liability Claims. With respect to Seller Product
-------------------------------
Claims (none of which Seller Product Liability Claims are being assumed by
Buyer): (i) on or before Closing, Buyer shall purchase a single premium policy
of insurance on the form previously delivered by Buyer to Seller that provides
coverage to each of Buyer, Parent and Seller as named insureds for Seller
Product Liability Claims made during the period from the Closing Date through
October 15, 2007 for (a) all of Seller's existing $1,000,000 retention under the
Seller Insurance for Seller Product Liability Claims made after the Closing Date
with the exception of the first $250,000 of such retention and (b) an amount of
additional insurance for Seller Product Liability Claims effecting at least
$25,000,000 of coverage per occurrence and in the aggregate for each policy
period of the Seller Insurance; (ii) on or before Closing, Seller shall add
Buyer, Parent and Utility Steel, Inc., a Louisiana corporation, as additional
named insureds to the Seller Insurance for Seller Product Liability Claims made
before, on or after the Closing Date; (iii) within thirty (30) days of written
request by Seller from time-to-time, which shall include appropriate supporting
documentation, Buyer shall reimburse Seller (and, following the liquidation and
dissolution of Seller, Shareholder,
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provided Shareholder takes no action to increase or alter Buyer's exposure under
this Section 10.3) for all its third party out of pocket expenses incurred by
Seller in connection with its defense of a Seller Product Liability Claim
(whether made before, during or after the Closing Date) (including, without
limitation, reasonable attorneys' fees and other third party out of pocket
costs, expenses, judgments, damages, penalties, fines, interest, monetary
sanctions, losses, obligations, liabilities, claims, deficiencies and, to the
extent approved by Buyer, settlements incident to any suit, action,
investigation, claim or proceeding suffered, sustained, incurred or required to
be paid by Seller by reason of a Seller Product Liability Claim), provided that
such reimbursement obligation of Buyer shall be limited to $250,000 per Seller
Product Liability Claim; and (iv) at the end of the term of the insurance policy
described in (i) above, Buyer shall indemnify, defend and hold harmless Seller,
and its directors, officers, employees, representatives, agents and attorneys
(and, following the liquidation and dissolution of Seller, Shareholder, provided
Shareholder takes no action to increase or alter Buyer's exposure under this
Section 10.3) from, against, for and in respect of any and all damages
(including, without limitation, amounts paid in settlement with Buyer's consent,
which may not be unreasonably withheld), penalties, fines, interest and monetary
sanctions, losses, obligations, liabilities, claims, deficiencies, costs and
expenses, including, without limitation, reasonable attorneys' fees and other
costs and expenses incident to any suit, action, investigation, claim or
proceeding suffered, sustained, incurred or required to be paid by it by reason
of any underinsured Seller Product Liability Claims (such underinsurance to
include any retentions required by insurance) made before, during or after the
Closing Date, provided that such obligation of Buyer shall be limited to an
aggregate total of $25,000,000; and (v) each of Buyer and Seller shall not take
any action, or omit to take any action, that would modify, alter, waive, limit,
negate, void or otherwise negatively impact either Seller's or Buyer's insurance
coverage for Seller Product Liability Claims. Each of Seller and Buyer shall
promptly notify each other party to this Agreement in writing upon receipt of
notice of a Seller Product Liability Claim.
10.4 Notice of Loss. Except to the extent set forth in the next sentence,
--------------
a party to this Agreement shall not have any liability under the indemnity
provisions of this Agreement with respect to a particular matter unless a notice
setting forth in reasonable detail the breach which is asserted has been given
to the Indemnifying Party (as hereafter defined) and, in addition, if such
matter arises out of a suit, action, investigation or proceeding, such notice is
given promptly, but in any event within thirty (30) days after the Indemnified
Party (as hereafter defined) is given notice of the commencement of the suit,
action, investigation or proceeding. Notwithstanding the preceding sentence,
failure of the Indemnified Party to give notice hereunder shall not release the
Indemnifying Party from its obligations under this Article XI, except to the
extent the Indemnifying Party is actually prejudiced by such failure to give
notice. With respect to Buyer's Losses, Seller and Shareholder, jointly and
severally, shall be the Indemnifying Party and Buyer and Parent shall be the
Indemnified Party. With respect to Seller's Losses, Buyer and Parent shall be
the Indemnifying Party and Seller and Shareholder shall be the Indemnified
Party.
10.5 Right to Defend. Upon receipt of notice of any suit, action,
---------------
investigation, claim or proceeding for which indemnification might be claimed by
an Indemnified Party, the Indemnifying Party shall be entitled to defend,
contest or otherwise protect against such suit, action, investigation, claim or
proceeding at its own cost and expense, and the Indemnified Party must cooperate
in any such defense or other action. The Indemnified Party shall have the
right, but not the obligation, to
-35-
participate at its own expense in a defense thereof by counsel of its own
choosing, but the Indemnifying Party shall be entitled to control the defense
unless the Indemnified Party has relieved the Indemnifying Party from liability
with respect to the particular matter or the Indemnifying Party fails to assume
defense of the matter. In the event the Indemnifying Party shall fail to defend,
contest or otherwise protect in a timely manner against any such suit, action,
investigation, claim or proceeding, the Indemnified Party shall have the right,
but not the obligation, to defend, contest or otherwise protect against the same
and make any compromise or settlement thereof and recover the entire cost
thereof from the Indemnifying Party including reasonable attorneys' fees,
disbursements and all amounts paid as a result of such suit, action,
investigation, claim or proceeding or the compromise or settlement thereof;
provided, however, that the Indemnified Party must send a written notice to the
Indemnifying Party of any such proposed settlement or compromise, which
settlement or compromise the Indemnifying Party may reject, in its reasonable
judgment, within thirty (30) days of receipt of such notice. Failure to reject
such notice within such thirty (30) day period shall be deemed an acceptance of
such settlement or compromise. The Indemnified Party shall have the right to
effect a settlement or compromise over the objection of the Indemnifying Party;
provided, that if (i) the Indemnifying Party is contesting such claim in good
faith or (ii) the Indemnifying Party has assumed the defense from the
Indemnified Party, the Indemnified Party waives any right to indemnity therefor.
If the Indemnifying Party undertakes the defense of such matters, the
Indemnified Party shall not, so long as the Indemnifying Party does not abandon
the defense thereof, be entitled to recover from the Indemnifying Party any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than the reasonable costs of
investigation undertaken by the Indemnified Party with the prior written consent
of the Indemnifying Party.
10.6 Cooperation. Each of Buyer, Seller and Shareholder and each of their
-----------
affiliates, successors and assigns shall cooperate with each other in the
defense of any suit, action, investigation, proceeding or claim by a third party
and, during normal business hours, shall afford each other access to their books
and records and employees relating to such suit, action, investigation,
proceeding or claim and shall furnish each other all such further information
that they have the right and power to furnish as may reasonably be necessary to
defend such suit, action, investigation, proceeding or claim, including, without
limitation, reports, studies, correspondence and other documentation relating to
Environmental Protection Agency, Occupational Safety and Health Administration,
and Equal Employment Opportunity Commission matters.
10.7 Claim Against U.S. Government. Seller shall continue to pursue its
-----------------------------
claim against the United States Government with respect to a 135 ton crane
matter (the "Government Claim"), and Buyer shall cooperate with Seller in the
prosecution thereof, all as provided for in this Section 10.7. Buyer shall make
available to Seller the services of Xxxxxx Xxxxxx and Xxxx Xxxxxxxxx (who are
currently employed by Seller and will likely become employed by Buyer on the
Closing Date), or of individuals employed by Buyer who are the successors to the
positions that Messrs. Kalman and Xxxxxxxxx currently hold with respect to the
Business, for purposes of administering the Government Claim; provided, however,
that neither of such individuals, nor such successors shall be required to spend
more than 10% of their working time and attention in monitoring the Government
Claim. Further, Buyer shall loan, on an interest-free basis, amounts from time
to time expended by Seller in pursuing the Government Claim, not to exceed
$100,000 in the aggregate. As part of such
-36-
arrangement, Seller will pursue the Government Claim until it is resolved by
settlement or until the matter is set for trial, whichever shall first occur. If
the matter is set for trial without first being settled, Buyer and Seller shall
meet and shall evaluate the Government Claim, including the projected costs of
litigation, the time period involved in litigation, the likelihood of a positive
or a negative outcome as a result of litigation, and other factors. If, after
such meeting (the "Pre-Trial Meeting"), the parties mutually agree to pursue the
matter through trial, then Buyer shall commit to loan Seller such additional
funds to cover the cost of litigation, not limited by the $100,000 amount
referred to above, as the parties mutually agree to be reasonable to fund the
pursuit of the matter through trial. The Buyer is under no obligation to pursue
the matter through trial, provide the services of employees or fund additional
costs without its agreement, which can be given or withheld in its sole
discretion. To the extent Seller receives any settlement amount with respect to
the Government Claim or any judgment amount from litigation in which Buyer has
elected to participate as aforesaid with respect to the Government Claim, Seller
and Buyer agree that the proceeds from the Government Claim shall be distributed
as follows: (i) Seller shall first receive and pay over to Buyer as a loan
repayment an amount equal to all loans made by Buyer to Seller pursuant to this
Section 10.7 and (ii) Seller shall distribute to Buyer fifty percent (50%) of
the balance of the proceeds and shall retain the remaining fifty percent (50%)
balance of the proceeds. If, as a result of the Pre-Trial Meeting, Buyer does
not agree to pursue litigation on the basis described above, then Buyer shall
thereafter have no rights against Seller with respect to the proceeds of the
Government Claim (but Buyer shall retain rights against Seller with regard to
the collection of the loans to Seller under this Section) and Seller shall be
left with the decision to pursue the Government Claim at its sole cost and
expense. Any proceeds received by Seller with respect to the Government Claim,
through any judgment, settlement or otherwise, shall first be paid by Seller to
Buyer as a loan repayment. All unpaid loan amounts shall be due and payable by
Seller to Buyer upon the last to occur of the date of the settlement of the
matter, the date of the expiration of all appeal periods with respect to any
judgment entered in the matter and the date that Seller abandons its pursuit of
the Government Claim.
10.8 Survival of Representations, Warranties, Covenants and Agreements.
-----------------------------------------------------------------
All representations, warranties, covenants and agreements made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby shall
survive the Closing and shall continue in full force and effect thereafter
according to their terms without limit as to duration.
10.9 Limitation on Indemnification. Notwithstanding anything to the
-----------------------------
contrary herein, the liability of Seller and Shareholder under this Agreement
shall be limited such that Seller and Shareholder shall have no liability or
obligation to Buyer under Section 10.1 unless and until the amount of Buyer's
Losses incurred by Buyer in the aggregate exceed the sum of $300,000 and Seller
and Shareholder shall be responsible for Buyer's Losses only to the extent such
Buyer's Losses exceed $300,000 in the aggregate but in no event shall Seller and
Shareholder's collective liability hereunder exceed $10,000,000 in the
aggregate. Notwithstanding anything to the contrary herein, the liability of
Parent and Buyer under this Agreement shall be limited such that Parent and
Buyer shall have no liability or obligation to Seller and Shareholder under
Section 10.2 unless and until the amount of Seller's Losses incurred by Seller
and Shareholder in the aggregate exceed the sum of $500,000 and Parent and Buyer
shall be responsible for Seller's Losses only to the extent such Seller's Losses
exceed $500,000 in the aggregate but in no event shall Parent and Buyer's
collective
-37-
liability hereunder exceed $10,000,000 in the aggregate. Any claims to be made
under either Section 10.1 or 10.2 must be made on or before the second
anniversary of the date of the Closing.
10.10 Escrowed Shares. In the event that a claim by either Buyer or
---------------
Parent is to be satisfied by Escrow Agent distributing to Buyer or Parent shares
of Halter Stock held by Escrow Agent pursuant to the Escrow Agreement, then
either Seller or Shareholder shall have the right to pay cash to Buyer or
Parent, as appropriate, to satisfy the amount of such claim as determined by
settlement of the claim by the parties or a resolution of the claim by a final
judgment rendered by court or an arbitration award. Upon the receipt by Buyer
or Parent, as appropriate, of the cash payment of the amount of such claim as so
determined, then Buyer and Parent hereby agree that they shall join Seller and
Shareholder to (i) jointly instruct Escrow Agent to distribute to Seller that
number of shares of Halter Stock as is equal to the quotient of the cash payment
received by Buyer or Parent, as appropriate, divided by the closing price of
Halter Stock for the trading day immediately preceding the day that such payment
is received by the Buyer or Parent, as appropriate, as reported by the American
Stock Exchange, Inc. and (ii) jointly advise Escrow Agent that such claim, as so
determined, has been satisfied. Neither Buyer nor Parent shall make a claim
under the Escrow Agreement until notice has been given as required by Section
10.4.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated and abandoned at any
-----------
time on or prior to the Closing Date:
(a) By the consent in writing of Buyer, Parent, Seller and
Shareholder;
(b) By Buyer or Parent in writing if any of the material
conditions to the obligations of Buyer and Parent contained herein shall not
have been satisfied or, if unsatisfied, waived by Buyer and Parent as of the
Closing Date;
(c) By Seller or Shareholder in writing if any of the material
conditions to the obligations of Seller and Parent contained herein shall not
have been satisfied or, if unsatisfied, waived by Seller and Parent as of the
Closing Date; and
(d) By Buyer and Parent or Seller and Shareholder in writing if the
Closing shall not have occurred by November 30, 1997.
11.2 No Further Force or Effect. In the event of termination and
--------------------------
abandonment of this Agreement pursuant to the provisions of Section 11.1, this
Agreement shall be of no further force or effect, except for Sections 5.3, 6.1
and 12.1, which shall not be affected by termination of this Agreement.
-38-
ARTICLE XII
MISCELLANEOUS
12.1 Expenses. Buyer shall pay Seller's and Shareholder's expenses
--------
incurred in connection with the transactions contemplated hereby provided that
the Closing occurs but not to exceed $50,000 in the aggregate. Thereafter or if
the transactions are not consummated, Shareholder, on behalf of himself and
Seller on one hand and Buyer on the other shall each pay their own expenses in
connection with the transactions contemplated hereby, including, without
limitation, fees of its own counsel, auditors and other experts.
12.2 Guaranties by Parent and Shareholder. Parent does hereby guarantee
------------------------------------
all of Buyer's obligations under this Agreement (including indemnification
obligations). Shareholder does hereby guarantee all of Seller's obligations
under this Agreement (including indemnification obligations).
12.3 Entire Agreement. This Agreement (including the exhibits and
----------------
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof, and no party shall be liable or bound
to the other in any manner by any representations or warranties not set forth
herein.
12.4 Publicity. No party hereto shall issue any press release or make
---------
any public statement, in either case relating to or in connection with or
arising out of this Agreement or the matters contained herein, without obtaining
the prior written approval of the other parties hereto to the content and manner
of presentation and publication thereof, which consent shall not be unreasonably
withheld or delayed; provided, however, that the parties shall be entitled,
following reasonable prior written notice to the other party, to issue such
press releases and make such public statements as are, in the opinion of its
legal counsel, required by applicable law.
12.5 Successors and Assigns. This Agreement and the rights of the parties
----------------------
hereunder may not be assigned (except by operation of law), and the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties and their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of such agreements.
12.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
12.7 Headings. The headings of the paragraphs and subparagraphs of this
--------
Agreement are inserted for convenience of reference only and shall not be deemed
to constitute part of this Agreement or to affect the construction hereof.
12.8 Use of Certain Terms. As used in this Agreement, the words "herein,
--------------------
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular paragraph, subparagraph or other
subdivision.
-39-
12.9 Modification and Waiver. Any of the terms or conditions of this
-----------------------
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended by a written
instrument executed by Buyer and Parent and Seller and Shareholder. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by all of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.
12.10 Notices. All notices of communication required or permitted
-------
hereunder shall be in writing and may be given by (a) depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (b) delivering the same
in person to an officer or agent of such party, or (c) telecopying the same with
electronic confirmation of receipt.
(i) If to Seller AmClyde Engineered Products, Inc.
and/or c/o Xxxxxxx X. Xxxx, Xx.
Shareholder: #0 Xxxxxxxxx Xxxx
Xxxxx Xxxx
Xx. Xxxx, XX 00000
Telecopy No. (000) 000-0000
with copies to: Xxxxxx & Whitney, LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
(ii) If to Buyer Halter Marine Group, Inc.
and Parent: 00000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
with copies to: Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy Number: (000) 000-0000
or at such other address or counsel as any party hereto shall specify pursuant
to this Section 12.10 from time to time.
-40-
12.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE LAWS OF THE STATE OF MINNESOTA (WITHOUT GIVING EFFECT TO ITS CHOICE OF LAWS
PROVISIONS).
12.12 Time. Time is of the essence with respect to this Agreement.
----
12.13 Reformation and Severability. In case any provision of this
----------------------------
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
12.14 Remedies Cumulative. No right, remedy or election given by any term
-------------------
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
-41-
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed in counterparts all as of the date first above written.
SELLER:
AmClyde Engineered Products, Inc.
By: /s/ Xxxxxxx X. Xxxx, Xx.
---------------------------------
Printed Name: Xxxxxxx X. Xxxx, Xx.
-----------------------
Title: CEO
------------------------------
SHAREHOLDER:
/s/ Xxxxxxx X. Xxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxx, Xx.
BUYER:
AEPI Acquisition, Inc.
By: /s/ Xxxx X. Xxxx
---------------------------------
Printed Name: Xxxx X. Xxxx
-----------------------
Title: Executive Vice President
------------------------------
PARENT:
Halter Marine Group, Inc.
By: /s/ Xxxx X. Xxxx
---------------------------------
Printed Name: Xxxx X. Xxxx
-----------------------
Title: Executive Vice President
------------------------------
-42-
ASSET PURCHASE AGREEMENT
List of Schedules and Exhibits
SCHEDULES
---------
1.1A Assumed Contracts
1.1B Excluded Assets
3.2 Encumbrances
3.4 Physical Properties
3.5 Trademarks, Etc.
3.6 Permits
3.8 Contracts
3.10 Litigation
3.12 Unrecorded Liabilities
3.13 Employee Benefits
3.14 Employees
3.16 Insurance
3.18 Business Relations
3.19 Environmental Matters
3.20 Rights to Receive Money
3.21 Capital Expenditures
3.27 AmCane Schedule
6.7 Additional Holiday, Sick or Vacation Pay
6.8 Letters of Credit
6.9 Performance and Payment Bonds
EXHIBITS
--------
A Xxxx of Sale and Assignment
B Assumption Agreement
C-1 Noncompetition Agreement - Seller
C-2 Noncompetition Agreement - Shareholder
C-3 Noncompetition Agreement - Juelich
D Employment Agreement
E Escrow Agreement
F-1 Matters covered by Opinion of Seller's Counsel - Xxxxxx & Efron, P.A.
F-2 Matters covered by Opinion of Seller's Counsel - Xxxxxx & Whitney LLP
G Matters covered by Opinion of Buyer's Counsel
H Allocation of Purchase Price and Other Consideration
EXHIBIT A
XXXX OF SALE AND ASSIGNMENT
---------------------------
This Xxxx of Sale and Assignment (the "Assignment") is made as of the 31st
day of October, 1997 by AMCLYDE ENGINEERED PRODUCTS, INC., a Delaware
corporation ("Grantor"), to AEPI ACQUISITION, INC., a Delaware corporation
("Grantee").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Grantee,
Halter Marine Group, Inc., Grantor, and Xxxxxxx X. Xxxx, Xx., Grantor is to sell
to Grantee and Grantee is to purchase and accept as of the Closing the Assets
(other than the Excluded Assets) and the Assumed Liabilities;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby agrees as follows:
1. Assignment. Grantor hereby grants, bargains, sells, conveys, transfers,
----------
assigns, sets over and delivers unto Grantee, its successors and assigns,
effective as of the Closing Date, all right, title and interest of Grantor in
and to all of the Assets (other than the Excluded Assets) and the Assumed
Liabilities, to have and to hold said Assets and Assumed Liabilities hereby
conveyed to Grantee, its successors and assigns forever.
1. Assignment of Contracts Requiring Third Party Consent. Anything in
-----------------------------------------------------
this Assignment to the contrary notwithstanding, this Assignment shall not
constitute an agreement to assign any Asset or any claim or right, or any
benefit arising thereunder or resulting therefrom, if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any way adversely affect the rights of Grantee or Grantor
thereunder. If such consent is not obtained, or if an attempted assignment
thereof would be ineffective or would materially adversely affect the rights of
Grantor thereunder such that Grantee would not in fact receive all such rights,
Grantor and Grantee will cooperate in a mutually agreeable arrangement under
which Grantee would obtain substantially the same economic benefits that would
be obtained under an assignment thereof and assume the obligations thereunder in
accordance with the Asset Purchase Agreement, including subcontracting, sub-
licensing or sub-leasing to Grantee, or under which Grantor would enforce for
the benefit of Grantee, with Grantee assuming Grantor's obligations, any and all
rights of Grantor against a third party thereto.
2. Consents Pending at Closing. As of the date of this Assignment,
---------------------------
third party consents for the assignment of certain contracts held by Seller and
intended to be transferred to Buyer have not been obtained. These contracts,
listed under paragraph 1 of Schedule 1.1A to the
Asset Purchase Agreement, include the Global Marine contracts (Contract Nos.
5248 and 5239, the latter of which was formerly held by Interstate Services,
Inc.); the Mitsubishi Heavy Industries contract (Contract No. 5229); the Diamond
Offshore contracts (Contract Nos. 5230 and 5240); the GE Capital Modular Space
contracts (numbers 19 and 20 of Schedule 1.1A); and the North Carolina Ports
Authority contract (Contract No. 5250). Seller agrees to diligently pursue the
consents for the aforementioned contracts and, pending consent, Seller will take
all commercially reasonable action so as to give Buyer the benefit of such
contracts. In addition, consents are required for the contracts listed on
Schedule 1.1A, numbers 54 through 86 (relating to Unit Lucker master service and
dealer agreements). Of those contracts, Seller agrees to diligently pursue the
consents for contracts numbered 55, 58 and 68, and Seller will take all
commercially reasonable action so as to give Buyer the benefit of the contracts
for numbers 55, 58 and 68. The remaining contracts numbered 54 through 86 can
each be terminated upon 30 days' notice or less, and Seller does not intend to
pursue consents for those contracts.
3. Further Assurances. Grantor, at any time and from time to time, upon
------------------
the request of Grantee, shall do, execute, acknowledge and deliver all such
further acts, deeds, assignments, transfers, conveyances and the Assumed
Liabilities, powers of attorney and assurances as may be required to convey and
transfer the Assets and the Assumed Liabilities to Grantee.
4. Headings. Headings are for convenience of reference only and shall
--------
not in any manner affect the meaning or interpretation of this Assignment.
5. Asset Purchase Agreement. This Assignment is entered into pursuant
------------------------
to the Asset Purchase Agreement and is subject to the terms and conditions
thereof. Undefined capitalized terms will have the same meaning as those terms
have in the Asset Purchase Agreement.
6. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA (WITHOUT GIVING EFFECT TO ITS
CHOICE OF LAW PROVISIONS).
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
-2-
IN WITNESS WHEREOF, Grantor has caused this Assignment to be executed in
its corporate name by its duly authorized officer, on the day and year first
above written.
GRANTOR:
AMCLYDE ENGINEERED PRODUCTS, INC.
By: _______________________________________
Printed Name:_______________________________
Title:______________________________________
STATE OF______________ (S)
(S)
COUNTY OF__________ (S)
This instrument was acknowledged before me this _____ day of____________,
199__, by __________________________, _______________ of AMCLYDE ENGINEERED
PRODUCTS, INC., a _____________ corporation, on behalf of said corporation.
_______________________________________
Notary Public in and for the State of
_______________
My Commission Expires:
_______________ _______________________________________
Printed Name of Notary
-3-
EXHIBIT B
ASSUMPTION AGREEMENT
--------------------
This ASSUMPTION AGREEMENT is made as of the 31st day of October, 1997, by
and between AMCLYDE ENGINEERED PRODUCTS, INC., a Delaware corporation
("Seller"), and AEPI ACQUISITION, INC., a Delaware corporation ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
October 31, 1997, by and among Buyer, Halter Marine Group, Inc., a Delaware
corporation ("Parent"), Seller and Xxxxxxx X. Xxxx, Xx. (the "Asset Purchase
Agreement"), Seller is to convey to Buyer and Buyer is to accept and assume
effective as of the Effective Time the Assets (other than the Excluded Assets)
and the Assumed Liabilities;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer hereby agrees as follows:
1. Acceptance and Assumption. Buyer hereby accepts the foregoing
-------------------------
assignment and transfer of the Assets (other than the Excluded Assets), and
Buyer hereby assumes and agrees to pay, perform and discharge in due course the
Assumed Liabilities, subject to the provisions of the Asset Purchase Agreement.
2. Further Assurances. Buyer, at any time and from time to time, upon
------------------
the request of Seller, shall do, execute, acknowledge and deliver all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney and
assurances as may be required to assume the Assumed Liabilities.
3. Headings. Headings are for convenience of reference only and shall
--------
not in any manner affect the meaning or interpretation of this Assumption
Agreement.
4. Asset Purchase Agreement. This Assumption Agreement is entered into
------------------------
pursuant to the Asset Purchase Agreement and is subject to the terms and
conditions thereof. Undefined capitalized terms will have the same meaning as
those terms have in the Asset Purchase Agreement.
5. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA (WITHOUT GIVING
EFFECT TO ITS CHOICE OF LAWS PROVISIONS).
IN WITNESS WHEREOF, Buyer has caused this Assumption Agreement to be
executed in its corporate name by its duly authorized officer, on the day and
year first above written.
BUYER:
AEPI ACQUISITION, INC.
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
STATE OF ______________ (S)
(S)
COUNTY OF _____________ (S)
This instrument was acknowledged before me this _____ day of_____________,
199__, by ________________________, ___________ of AEPI ACQUISITION, INC., a
Delaware corporation, on behalf of said corporation.
________________________________________
Notary Public in and for the State of
_______________
My Commission Expires:
_______________ ________________________________________
Printed Name of Notary
-2-
Guarantee of Halter Marine Group, Inc.
--------------------------------------
Halter Marine Group, Inc., a Delaware corporation, does hereby guarantee
all of Buyer's obligations under this Assumption Agreement.
HALTER MARINE GROUP, INC.
By:______________________________________
Printed Name:____________________________
Title:___________________________________
STATE OF ______________ (S)
(S)
COUNTY OF _____________ (S)
This instrument was acknowledged before me this _____ day of_____________,
199__, by _____________________, _______________ of HALTER MARINE GROUP, INC., a
Delaware corporation, on behalf of said corporation.
________________________________________
Notary Public in and for the State of
_________________
My Commission Expires:
_______________ ________________________________________
Printed Name of Notary
-3-
EXHIBIT C-1
NONCOMPETITION AGREEMENT
------------------------
AMCLYDE ENGINEERED PRODUCTS, INC.
THIS NONCOMPETITION AGREEMENT (the "Agreement") made and entered into as of
the 31st day of October, 1997, by and between AEPI Acquisition, Inc., a Delaware
corporation ("Buyer"), and AmClyde Engineered Products, Inc., a Delaware
corporation ("Seller").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Buyer, Halter
Marine Group, Inc., a Delaware corporation ("Halter Marine"), Seller and Xxxxxxx
X. Xxxx, Xx. ("Shareholder"), Seller is to sell to Buyer and Buyer is to
purchase and accept as of the Closing the Assets (other than the Excluded
Assets) and the Assumed Liabilities (each as defined in the Asset Purchase
Agreement) (the "Acquisition");
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition thereunder, that Seller shall execute and deliver
this Agreement;
WHEREAS, the agreements of Seller hereunder are an important aspect of the
Acquisition, and Buyer would not consummate the Acquisition absent the execution
and delivery by Seller of this Agreement;
WHEREAS, Seller has been and is presently engaged in the business of custom
designing, engineering and, through subcontractors, manufacturing of revolver
and pedestal cranes for ships, barges, offshore drilling rigs and other
applications, winches, bulk unloaders and related materials handling equipment,
and pulling and jacking systems, prooftest and related equipment (the
"Business") in and around the world (the "Territory");
WHEREAS, Seller and Seller's affiliates have substantial financial
resources, experience in the Business and the ability to operate a business or
businesses that could compete with Buyer or Halter Marine in the Business or in
related businesses following the Closing; and
WHEREAS, the agreements of Seller hereunder are reasonable and necessary,
both in scope and duration, to protect the business and goodwill of Buyer that
will be acquired pursuant to the Asset Purchase Agreement, and Buyer would
suffer damages, including the loss of profits, if Seller or any of Seller's
affiliates engaged, directly or indirectly, in a competing business with Buyer.
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained herein, and of
other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and upon the terms and subject to the conditions hereinafter set
forth, the parties do hereby agree as follows:
1. Disclosure of Information. Seller agrees that for a period of thirty
-------------------------
(30) years following the date of this Agreement, without the prior written
consent of Buyer, Seller shall not, directly or indirectly, through any form of
ownership, in any individual or representative or affiliated capacity
whatsoever, except as may be required by law, reveal, divulge, disclose or
communicate to any person, firm, association, corporation or other entity in any
manner whatsoever information of any kind, nature or description relating to the
Business or the business of Buyer or Halter Marine concerning: (i) the names of
any prior or present suppliers or customers of Seller, Buyer or Halter Marine,
(ii) the prices for which Seller, Buyer or Halter Marine obtains or has obtained
products or services, (iii) the manner of operation of Seller, Buyer or Halter
Marine, (iv) the plans, trade secrets, or other data of any kind, nature or
description, whether tangible or intangible, of Seller, Buyer or Halter Marine,
or (v) any other financial, statistical or other information either (a) acquired
by Buyer from Seller or Shareholder or (b) designated or treated by Halter
Marine or Buyer as confidential or proprietary. The agreements set forth herein
shall not apply to any information that at the time of disclosure or thereafter
is generally available to and known by the public (other than as a result of a
disclosure directly or indirectly by Seller in violation of this Agreement), the
disclosure of which is required by law, regulation, order, decree or process or
is otherwise approved by Buyer or Halter Marine. Without regard to whether any
or all of the foregoing matters would be deemed confidential, material or
important, the parties hereto stipulate that as between them, the same are
important, material and confidential and gravely affect the effective and
successful conduct of the Business and its goodwill.
2. Noncompetition. Seller agrees that for a period of five (5) years
--------------
following the date of this Agreement, Seller shall not:
(i) Call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any past, existing or potential customers,
suppliers, businesses, or accounts of the Business in connection with any
business substantially similar to the Business in the Territory;
(ii) Without the prior written consent of Buyer, hire, attempt to
hire, contact or solicit with respect to hiring for Seller or on behalf of
any other person or entity any present or future employee of Buyer or
Halter Marine in the Business;
(iii) Engage in, or give any advice to any person, firm, partnership,
association, venture, corporation or other entity engaged in, a business
substantially similar to the Business in the Territory;
(iv) Lend credit, money or reputation for the purpose of establishing
or operating a business substantially similar to the Business in the
Territory;
-2-
(v) Do any act that Seller knew or should have known might injure
Buyer, Halter Marine or the Business; and
(vi) Without limiting the generality of the foregoing provisions,
conduct a business substantially similar to the Business under the name
"AmClyde Engineered Products, Inc." or any other trade names, trademarks or
service marks used by Seller in the Territory.
The covenants in subsections (i) through (vi) are intended to restrict
Seller from competing in any manner with Buyer, Halter Marine or the Business in
the activities that have heretofore been carried on by Seller. The obligations
set forth in subsections (i) through (vi) above shall apply to actions by
Seller, through any form of ownership, and whether as principal, agent,
employer, consultant, shareholder or holder of any equity security (beneficially
or as trustee of any trust), lender, partner, joint venturer or in any other
individual or representative or affiliated capacity whatsoever. However, none
of the foregoing shall prevent Seller from being the holder of either (a) stock,
debt or other interests in Halter Marine or (b) up to 5.0% in the aggregate of
any class of securities of any corporation (other than Halter Marine) engaged in
the activities described in subsections (i) through (vi) above, provided that
such securities are listed on a national securities exchange or reported on the
Nasdaq National Market or the Nasdaq Small Cap Market.
3. Enforcement of Covenants.
------------------------
(a) Seller acknowledges that a violation or attempted violation of
any of the covenants and agreements in Sections 1 and 2 above will cause such
damage to Buyer as will be irreparable, the exact amount of which would be
difficult to ascertain and for which there will be no adequate remedy at law,
and accordingly, Seller agrees that Buyer shall be entitled as a matter of right
to an injunction issued by any court of competent jurisdiction, restraining such
violation or attempted violation of such covenants and agreements by Seller, or
the affiliates, partners or agents of such Seller, as well as recover from
Seller any and all costs and expenses sustained or incurred by Buyer in
obtaining such an injunction, including, without limitation, reasonable
attorneys' fees. Seller agrees that no bond or other security shall be required
in connection with such injunction. Seller further agrees that the period of
restriction set forth in Sections 1 and 2 above shall be tolled during any
period of violation thereof by Seller. Any exercise by Buyer of its rights
pursuant to this Section 3 shall be cumulative and in addition to any other
remedies to which Buyer may be entitled. Each party represents and warrants that
it has been represented by counsel in the negotiation and execution of this
Agreement, including without limitation the provisions set forth above in this
Section 3(a) concerning the recovery of attorneys' fees.
(b) Seller understands and acknowledges that Buyer shall have the
right, in its sole discretion, to reduce the scope of any covenants set forth in
Sections 1 and 2, or any portion thereof, without Seller's consent, effective
immediately upon receipt by Seller of written notice thereof; and Seller agrees
that Seller shall comply forthwith with any covenant as so modified, which shall
be fully enforceable as so revised in accordance with the terms of this
Agreement.
-3-
4. Intellectual Property. Seller recognizes and agrees that, on and
---------------------
after the date hereof, Seller will not have the right to use for Seller's own
account any of the service marks, trademarks, trade names, licenses, procedures,
processes, labels, trade secrets or customer lists conveyed to Buyer in the
Acquisition.
5. Validity. To the extent permitted by applicable law, if it should
--------
ever be held that any provision contained herein does not contain reasonable
limitations as to time, geographical area or scope of activity to be restrained,
then the court so holding shall at the request of Buyer reform such provisions
to the extent necessary to cause them to contain reasonable limitations as to
time, geographical area and scope of activity to be restrained and to give the
maximum permissible effect to the intentions of the parties as set forth herein;
and the court shall enforce such provisions as so reformed. If, notwithstanding
the foregoing, any provision hereof is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
enforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision there shall be added
automatically by Buyer as a part hereof a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable, and the parties hereby agree to such provision.
6. Notice. Any notice, request, instruction, document or other
------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer: AEPI Acquisition, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
with copies to: Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Seller: Xxxxxxx X. Xxxx, Xx.
0 Xxxxxxxxx Xxxx
Xx. Xxxx, XX 00000
Telecopy No.: (000) 000-0000
-4-
with copies to: Xxxxxx & Whitney, LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
7. Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties hereto with respect to the matters covered hereby, and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
8. Modification and Waiver. No modification or amendment of any of the
-----------------------
terms, conditions or provisions in this Agreement may be made otherwise than by
written agreement signed by the parties hereto, except as provided in Sections
3(b) and 5 hereof. The waiver by any party to this Agreement of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party nor shall such waiver constitute a continuing
waiver.
9. Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests or obligations hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto, and any purported
assignment in violation of this Section 9 shall be null and void; provided,
however, that Buyer may assign its rights, interests and obligations hereunder
to Halter Marine or a subsidiary of Halter Marine.
10. Headings. The headings of the sections of this Agreement are
--------
inserted for convenience of reference only and shall not be deemed to constitute
part of this Agreement or to affect the construction hereof.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED AND
-------------
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
12. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, and such counterparts together
shall constitute one and the same instrument.
-5-
IN WITNESS WHEREOF, the parties have duly caused this Agreement to be
executed as of the date first above written.
BUYER:
AEPI ACQUISITION, INC.
By:_________________________________
Printed Name:
Title:
SELLER:
AMCLYDE ENGINEERED PRODUCTS, INC.
By:_________________________________
Printed Name:
Title:
-6-
EXHIBIT C-2
NONCOMPETITION AGREEMENT
------------------------
XXXXXXX X. XXXX, XX.
THIS NONCOMPETITION AGREEMENT (the "Agreement") made and entered into as of
the 31st day of October, 1997, by and between AEPI Acquisition, Inc., a Delaware
corporation ("Buyer"), and Xxxxxxx X. Xxxx, Xx. ("Shareholder").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Buyer, Halter
Marine Group, Inc., a Delaware corporation ("Halter Marine"), AmClyde Engineered
Products, Inc., a Delaware corporation of which Shareholder is the sole
shareholder ("Seller") and Shareholder, Seller is to sell to Buyer and Buyer is
to purchase and accept as of the Closing the Assets (other than the Excluded
Assets) and the Assumed Liabilities (each as defined in the Asset Purchase
Agreement) (the "Acquisition");
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition thereunder, that Shareholder shall execute and
deliver this Agreement;
WHEREAS, the agreements of Shareholder hereunder are an important aspect of
the Acquisition, and Buyer would not consummate the Acquisition absent the
execution and delivery by Shareholder of this Agreement;
WHEREAS, Shareholder, through Seller, has been and is presently engaged in
the business of custom designing, engineering and, through subcontractors,
manufacturing of revolver and pedestal cranes for ships, barges, offshore
drilling rigs and other applications, winches, bulk unloaders and related
materials handling equipment, and pulling and jacking systems, prooftest and
related equipment (the "Business") in and around the world (the "Territory");
WHEREAS, Shareholder and Shareholder's affiliates have substantial
financial resources, experience in the Business and the ability to operate a
business or businesses that could compete with Buyer or Halter Marine in the
Business or in related businesses following the Closing; and
WHEREAS, the agreements of Shareholder hereunder are reasonable and
necessary, both in scope and duration, to protect the business and goodwill of
Buyer that will be acquired pursuant to the Asset Purchase Agreement, and Buyer
would suffer damages, including the loss of profits, if Shareholder or any of
Shareholder's affiliates engaged, directly or indirectly, in a competing
business with Buyer.
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
1. Disclosure of Information. Shareholder agrees that for a period of
-------------------------
thirty (30) years following the date of this Agreement, without the prior
written consent of Buyer, Shareholder shall not, directly or indirectly, through
any form of ownership, in any individual or representative or affiliated
capacity whatsoever, except as may be required by law, reveal, divulge, disclose
or communicate to any person, firm, association, corporation or other entity in
any manner whatsoever information of any kind, nature or description concerning:
(i) the names of any prior or present suppliers or customers of Seller, Buyer or
Halter Marine, (ii) the prices for which Seller, Buyer or Halter Marine obtains
or has obtained products or services, (iii) the manner of operation of Seller,
Buyer or Halter Marine, (iv) the plans, trade secrets, or other data of any
kind, nature or description, whether tangible or intangible, of Seller, Buyer or
Halter Marine, or (v) any other financial, statistical or other information
either (a) acquired by Buyer from Seller or Shareholder or (b) designated or
treated by Halter Marine or Buyer as confidential or proprietary. While
Shareholder is a consultant to Buyer, Halter Marine or an affiliate thereof,
Shareholder shall not be restricted with regard to disclosures made by
Shareholder in the ordinary course of the performance of his duties as a
consultant to Buyer, Halter Marine or an affiliate thereof. The agreements set
forth herein shall not apply to any information that at the time of disclosure
or thereafter is generally available to and known by the public (other than as a
result of a disclosure directly or indirectly by Shareholder in violation of
this Agreement), the disclosure of which is required by law, regulation, order,
decree or process or is otherwise approved by Buyer or Halter Marine. Without
regard to whether any or all of the foregoing matters would be deemed
confidential, material or important, the parties hereto stipulate that as
between them, the same are important, material and confidential and gravely
affect the effective and successful conduct of the Business and its goodwill.
2. Noncompetition. Shareholder agrees that for a period of five (5)
--------------
years following the date of this Agreement, Shareholder shall not:
(i) Call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any past, existing or potential customers,
suppliers, businesses, or accounts of the Business in connection with any
business substantially similar to the Business in the Territory;
(ii) Without the prior written consent of Buyer, hire, attempt to
hire, contact or solicit with respect to hiring for Shareholder or on
behalf of any other person any present or future employee of Buyer or
Halter Marine in the Business;
(iii) Engage in, or give any advice to any person, firm, partnership,
association, venture, corporation or other entity engaged in, a business
substantially similar to the Business in the Territory;
-2-
(iv) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the Business
in the Territory;
(v) Do any act that Shareholder knew or should have known might
injure Buyer, Halter Marine or the Business; and
(vi) Without limiting the generality of the foregoing provisions,
conduct a business substantially similar to the Business under the name
"AmClyde Engineered Products, Inc." or any other trade names, trademarks or
service marks used by Seller in the Territory.
The covenants in subsections (i) through (vi) are intended to restrict
Shareholder from competing in any manner with Buyer, Halter Marine or the
Business in the activities that have heretofore been carried on by Seller. The
obligations set forth in subsections (i) through (vi) above shall apply to
actions by Shareholder, through any form of ownership, and whether as principal,
officer, director, agent, employee, employer, consultant, shareholder or holder
of any equity security (beneficially or as trustee of any trust), lender,
partner, joint venturer or in any other individual or representative or
affiliated capacity whatsoever. However, none of the foregoing shall prevent
Shareholder from being the holder of either (a) stock, debt or other interests
in Halter Marine or (b) up to 5.0% in the aggregate of any class of securities
of any corporation other than Halter Marine engaged in the activities described
in subsections (i) through (vi) above, provided that such securities are listed
on a national securities exchange or reported on the Nasdaq National Market or
the Nasdaq Small Cap Market.
3. Enforcement of Covenants.
------------------------
(a) Shareholder acknowledges that a violation or attempted violation
of any of the covenants and agreements in Sections 1 and 2 above will cause such
damage to Buyer as will be irreparable, the exact amount of which would be
difficult to ascertain and for which there will be no adequate remedy at law,
and accordingly, Shareholder agrees that Buyer shall be entitled as a matter of
right to an injunction issued by any court of competent jurisdiction,
restraining such violation or attempted violation of such covenants and
agreements by Shareholder, or the affiliates, partners or agents of such
Shareholder, as well as recover from Shareholder any and all costs and expenses
sustained or incurred by Buyer in obtaining such an injunction, including,
without limitation, reasonable attorneys' fees. Shareholder agrees that no bond
or other security shall be required in connection with such injunction.
Shareholder further agrees that the period of restriction set forth in Sections
1 and 2 above shall be tolled during any period of violation thereof by
Shareholder. Any exercise by Buyer of its rights pursuant to this Section 3
shall be cumulative and in addition to any other remedies to which Buyer may be
entitled. Each party represents and warrants that it has been represented by
counsel in the negotiation and execution of this Agreement, including without
limitation the provisions set forth above in this Section 3(a) concerning the
recovery of attorneys' fees.
-3-
(b) Shareholder understands and acknowledges that Buyer shall have
the right, in its sole discretion, to reduce the scope of any covenants set
forth in Sections 1 and 2, or any portion thereof, without Shareholder's
consent, effective immediately upon receipt by Shareholder of written notice
thereof; and Shareholder agrees that Shareholder shall comply forthwith with any
covenant as so modified, which shall be fully enforceable as so revised in
accordance with the terms of this Agreement.
4. Intellectual Property. Shareholder recognizes and agrees that, on
---------------------
and after the date hereof, Shareholder will not have the right to use for
Shareholder's own account any of the service marks, trademarks, trade names,
licenses, procedures, processes, labels, trade secrets or customer lists
conveyed to Buyer in the Acquisition.
5. Validity. To the extent permitted by applicable law, if it should
--------
ever be held that any provision contained herein does not contain reasonable
limitations as to time, geographical area or scope of activity to be restrained,
then the court so holding shall at the request of Buyer reform such provisions
to the extent necessary to cause them to contain reasonable limitations as to
time, geographical area and scope of activity to be restrained and to give the
maximum permissible effect to the intentions of the parties as set forth herein;
and the court shall enforce such provisions as so reformed. If, notwithstanding
the foregoing, any provision hereof is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
enforceable provision or by its severance herefrom. Furthermore, in lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
by Buyer as a part hereof a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable, and the parties hereby agree to such provision.
6. Notice. Any notice, request, instruction, document or other
------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer: AEPI Acquisition, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
-4-
with copies to: Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Shareholder: Xxxxxxx X. Xxxx, Xx.
0 Xxxxxxxxx Xxxx
Xx. Xxxx, XX 00000
Telecopy No.: (000) 000-0000
with copies to: Xxxxxx & Whitney, LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
7. Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties hereto with respect to the matters covered hereby, and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
8. Modification and Waiver. No modification or amendment of any of the
-----------------------
terms, conditions or provisions in this Agreement may be made otherwise than by
written agreement signed by the parties hereto, except as provided in Sections
3(b) and 5 hereof. The waiver by any party to this Agreement of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party nor shall such waiver constitute a continuing
waiver.
9. Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests or obligations hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto, and any purported
assignment in violation of this Section 9 shall be null and void; provided,
however, that Buyer may
-5-
assign its rights, interests and obligations hereunder to Halter Marine or a
subsidiary of Halter Marine.
10. Headings. The headings of the sections of this Agreement are
--------
inserted for convenience of reference only and shall not be deemed to constitute
part of this Agreement or to affect the construction hereof.
11. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED AND
-------------
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
12. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, and such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly caused this Agreement to be
executed as of the date first above written.
BUYER:
AEPI ACQUISITION, INC.
By:_________________________________
Printed Name:
Title:
SHAREHOLDER:
____________________________________
Xxxxxxx X. Xxxx, Xx.
-6-
EXHIBIT C-3
NONCOMPETITION AGREEMENT
------------------------
XXXXXXX X. XXXXXXX
THIS NONCOMPETITION AGREEMENT (the "Agreement") made and entered into as of
the 31st day of October 1997, by and between AEPI Acquisition, Inc., a Delaware
corporation ("Buyer"), and Xxxxxxx X. Xxxxxxx ("Promisor").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Buyer, Halter
Marine Group, Inc., a Delaware corporation ("Halter Marine"), AmClyde Engineered
Products, Inc., a Delaware corporation of which Promisor has been a shareholder
("Seller"), and the sole shareholder of Seller, Seller is to sell to Buyer and
Buyer is to accept and assume as of the Closing the Assets (other than the
Excluded Assets) and the Assumed Liabilities (each as defined in the Asset
Purchase Agreement) (the "Acquisition");
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition thereunder, that Promisor shall execute and deliver
this Agreement;
WHEREAS, the agreements of Promisor hereunder are an important aspect of
the Acquisition, and Buyer would not consummate the Acquisition absent the
execution and delivery by Promisor of this Agreement;
WHEREAS, Promisor has been and is presently engaged in the business of
custom designing, engineering and, through subcontractors, manufacturing of
revolver and pedestal cranes for ships, barges, offshore drilling rigs and other
applications, winches, bulk unloaders and related materials handling equipment,
and pulling and jacking systems, prooftest and related equipment (the
"Business") in and around the world (the "Territory");
WHEREAS, Promisor and Promisor's affiliates have substantial financial
resources, experience in the Business and the ability to operate a business or
businesses that could compete with Buyer or Halter Marine in the Business or in
related businesses following the Closing; and
WHEREAS, the agreements of Promisor hereunder are reasonable and necessary,
both in scope and duration, to protect the business and goodwill of Buyer that
will be acquired pursuant to the Asset Purchase Agreement, and Buyer would
suffer damages, including the loss of profits, if Promisor or any of Promisor's
affiliates engaged, directly or indirectly, in a competing business with Buyer.
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
1. Disclosure of Information. Promisor agrees that during the term of
-------------------------
Promisor's employment with Buyer and for a period of three (3) years following
the date of the termination of Promisor's employment with Buyer, without the
prior written consent of Buyer, Promisor shall not, directly or indirectly,
through any form of ownership, in any individual or representative or affiliated
capacity whatsoever, except as may be required by law, reveal, divulge, disclose
or communicate to any person, firm, association, corporation or other entity in
any manner whatsoever information of any kind, nature or description concerning:
(i) the names of any prior or present suppliers or customers of Seller, (ii) the
prices for which Seller obtains or has obtained products or services, (iii) the
manner of operation of Seller, (iv) the plans, trade secrets, or other data of
any kind, nature or description, whether tangible or intangible, of Seller, or
(v) any other financial, statistical or other information either (a) acquired by
Buyer from Seller or Shareholder or (b) designated or treated by Halter Marine
or Buyer as confidential or proprietary. While Promisor is an employee of, or
consultant to, Buyer, Halter Marine or an affiliate thereof, Promisor shall not
be restricted with regard to disclosures made by Promisor in the ordinary course
of the performance of his duties as an employee of, or consultant to, Buyer,
Halter Marine or an affiliate thereof. The agreements set forth herein shall
not apply to any information that at the time of disclosure or thereafter is
generally available to and known by the public (other than as a result of a
disclosure directly or indirectly by Promisor in violation of this Agreement),
the disclosure of which is required by law, regulation, order, decree or process
or is otherwise approved by Buyer or Halter Marine. Without regard to whether
any or all of the foregoing matters would be deemed confidential, material or
important, the parties hereto stipulate that as between them, the same are
important, material and confidential and gravely affect the effective and
successful conduct of the Business and its goodwill.
2. Noncompetition. Promisor agrees that during the term of Promisor's
--------------
employment with Buyer and for a period of three (3) years following the date of
the termination of Promisor's employment with Buyer, Promisor shall not perform
any of the following acts, except those acts as are on behalf and for the
benefit of Buyer:
(a) Call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any past, existing or potential customers,
suppliers, businesses, or accounts of the Business in connection with any
business substantially similar to the Business in the Territory;
(b) Hire, attempt to hire, contact or solicit with respect to hiring
for Promisor or on behalf of any other person any present employee of
Seller in the Business;
(c) Engage in, or give any advice to any person, firm, partnership,
association, venture, corporation or other entity engaged in, a business
substantially similar to the Business in the Territory;
-2-
(d) Lend credit, money or reputation for the purpose of establishing
or operating a business substantially similar to the Business in the
Territory;
(e) Do any act that Promisor knew or should have known might injure
Buyer, Halter Marine or the Business; and
(f) Without limiting the generality of the foregoing provisions,
conduct a business substantially similar to the Business in the Territory.
The covenants in subsections (i) through (vi) are intended to restrict
Promisor from competing in any manner with Buyer, Halter Marine or the Business
in the activities that have heretofore been carried on by Seller. The
obligations set forth in subsections (i) through (vi) above shall apply to
actions by Promisor, through any form of ownership, and whether as principal,
officer, director, agent, employee, employer, consultant, shareholder or holder
of any equity security (beneficially or as trustee of any trust), lender,
partner, joint venturer or in any other individual or representative or
affiliated capacity whatsoever. However, none of the foregoing shall prevent
Promisor from being the holder of either (a) stock, debt or other interests in
Halter Marine or (b) up to 5.0% in the aggregate of any class of securities of
any corporation (other than Halter Marine) engaged in the activities described
in subsections (i) through (vi) above, provided that such securities are listed
on a national securities exchange or reported on the Nasdaq National Market or
the Nasdaq Small Cap Market.
3. Enforcement of Covenants.
------------------------
(a) Promisor acknowledges that a violation or attempted violation of
any of the covenants and agreements in Sections 1 and 2 above will cause such
damage to Buyer as will be irreparable, the exact amount of which would be
difficult to ascertain and for which there will be no adequate remedy at law,
and accordingly, Promisor agrees that Buyer shall be entitled as a matter of
right to an injunction issued by any court of competent jurisdiction,
restraining such violation or attempted violation of such covenants and
agreements by Promisor, or the affiliates, partners or agents of such Promisor,
as well as recover from Promisor any and all costs and expenses sustained or
incurred by Buyer in obtaining such an injunction, including, without
limitation, reasonable attorneys' fees. In the event that Buyer is unsuccessful
in obtaining such an injunction, then Buyer shall reimburse Promisor for
reasonable attorneys' fees and court costs and expenses incurred by Promisor in
defending such action. Buyer agrees that a reasonable bond or other security
may be required by a court in connection with such injunction. Promisor further
agrees that the period of restriction set forth in Sections 1 and 2 above shall
be tolled during any period of violation thereof by Promisor. Any exercise by
Buyer of its rights pursuant to this Section 3 shall be cumulative and in
addition to any other remedies to which Buyer may be entitled. Each party
represents and warrants that it has been represented by counsel in the
negotiation and execution of this Agreement, including without limitation the
provisions set forth above in this Section 3(a) concerning the recovery of
attorneys' fees.
-3-
(b) Promisor understands and acknowledges that Buyer shall have the
right, in its sole discretion, to reduce the scope of any covenants set forth in
Sections 1 and 2, or any portion thereof, without Promisor's consent, effective
immediately upon receipt by Promisor of written notice thereof; and Promisor
agrees that Promisor shall comply forthwith with any covenant as so modified,
which shall be fully enforceable as so revised in accordance with the terms of
this Agreement.
4. Intellectual Property. Promisor recognizes and agrees that, on and
---------------------
after the date hereof, Promisor will not have the right to use for Promisor's
own account any of the service marks, trademarks, trade names, licenses,
procedures, processes, labels, trade secrets or customer lists conveyed to Buyer
in the Acquisition.
5. Validity. To the extent permitted by applicable law, if it should
--------
ever be held that any provision contained herein does not contain reasonable
limitations as to time, geographical area or scope of activity to be restrained,
then the court so holding shall at the request of Buyer reform such provisions
to the extent necessary to cause them to contain reasonable limitations as to
time, geographical area and scope of activity to be restrained and to give the
maximum permissible effect to the intentions of the parties as set forth herein;
and the court shall enforce such provisions as so reformed. If, notwithstanding
the foregoing, any provision hereof is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
enforceable provision or by its severance herefrom. Furthermore, in lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
by Buyer as a part hereof a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable, and the parties hereby agree to such provision.
6. Notice. Any notice, request, instruction, document or other
------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer: AEPI Acquisition, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
with copies to: Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
-4-
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Promisor: Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
with copies to: Holden & Xxxxxx
101 W. Xxxxxx X. Xxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
7. Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties hereto with respect to the matters covered hereby, and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
8. Modification and Waiver. No modification or amendment of any of the
-----------------------
terms, conditions or provisions in this Agreement may be made otherwise than by
written agreement signed by the parties hereto, except as provided in Sections
3(b) and 5 hereof. The waiver by any party to this Agreement of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party nor shall such waiver constitute a continuing
waiver.
9. Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests or obligations hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto, and any purported
assignment in violation of this Section 9 shall be null and void; provided,
however, that Buyer may assign its rights, interests and obligations hereunder
to Halter Marine or a subsidiary of Halter Marine.
10. Headings. The headings of the sections of this Agreement are
--------
inserted for convenience of reference only and shall not be deemed to constitute
part of this Agreement or to affect the construction hereof.
-5-
11. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED AND
-------------
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
12. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, and such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly caused this Agreement to be
executed as of the date first above written.
BUYER:
AEPI ACQUISITION, INC.
By:_______________________________
Printed Name:
Title:
PROMISOR:
__________________________________
Xxxxxxx X. Xxxxxxx
-6-
EXHIBIT D
EMPLOYMENT AGREEMENT
XXXXXXX X. XXXXXXX
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 31st day of October 1997, by and among AEPI Acquisition, Inc., a Delaware
corporation (the "Employer"), and Xxxxxxx X. Xxxxxxx ("Executive") and, solely
for purposes of Section 8.13 hereof, Halter Marine Group, Inc.
W I T N E S S E T H:
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Employer,
Halter Marine Group, Inc., a Delaware corporation ("Halter Marine"), AmClyde
Engineered Products, Inc., a Delaware corporation of which Executive has been a
shareholder ("Seller"), and the sole shareholder of Seller, Seller is to sell to
Employer and Employer is to purchase and accept as of the Closing the Assets
(other than the Excluded Assets) and the Assumed Liabilities (each as defined in
the Asset Purchase Agreement) (the "Acquisition");
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition thereunder, that Executive shall execute and deliver
this Agreement;
WHEREAS, Executive, in the course of his employment with Employer, will
become familiar with and aware of information as to Employer's and Halter
Marine's customers, specific manner of doing business, including the processes,
techniques and trade secrets utilized by Employer and Halter Marine, and future
plans with respect thereto, all of which has been and will be established and
maintained at great expense to Employer and Halter Marine; this information is a
trade secret and constitutes the valuable goodwill of Employer and Halter
Marine;
WHEREAS, Executive has been and is presently engaged in the business of
custom designing, engineering and, through subcontractors, manufacturing of
revolver and pedestal cranes for ships, barges, offshore drilling rigs and other
applications, winches, bulk unloaders and related materials handling equipment,
and pulling and jacking systems, prooftest and related equipment (the
"Business") in and around the world (the "Territory"); and
WHEREAS, the agreements of Executive hereunder are reasonable and
necessary, both in scope and duration, to protect the business and goodwill of
Employer that will be acquired pursuant to the Asset Purchase Agreement, and
Employer would suffer damages, including the loss of profits, if Executive or
any of Executive's affiliates engaged, directly or indirectly, in a competing
business with Employer.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
A G R E E M E N T S
ARTICLE 1.
EMPLOYMENT TERMS AND DUTIES
1.1 Employment. Employer hereby employs Executive, and Executive hereby
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accepts employment by Employer, upon the terms and conditions set forth in this
Agreement.
1.2 Term. The term of Executive's employment under this Agreement shall
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commence as of the date of this Agreement and shall terminate on that date which
is four (4) years after the date of this Agreement, subject to Article 5 of this
Agreement.
1.3 Duties. Executive will have such duties as are assigned or delegated
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to Executive by the Board of Directors or Chairman of the Board, and will
initially serve as President of Employer. Executive will devote his entire
business time, attention, skill, and energy to the business of Employer, will
use his best efforts to promote the success of Employer's business and will
cooperate fully with the Board of Directors in the advancement of the best
interests of Employer. Nothing in this Section, however, will prevent Executive
from engaging in additional activities in connection with personal investments
and community affairs that are not inconsistent with Executive's duties under
this Agreement.
ARTICLE 2.
COMPENSATION
2.1 Base Compensation. Executive will be paid an annual salary of Two
-----------------
Hundred Fifty Thousand Dollars ($250,000.00), subject to adjustment as provided
below (the "Base Compensation"), which will be payable in equal periodic
installments according to Employer's customary payroll practices, but no less
frequently than monthly. The Base Compensation will be reviewed by the Board of
Directors of Employer (or if applicable, the Board of Directors of the
corporation which is the parent of Employer), or a Compensation Committee
appointed by such Board of Directors, not less frequently than annually, and may
be adjusted upward or downward in the sole discretion of such Board of Directors
or Compensation Committee, but in no event will the Base Compensation be less
than Two Hundred Fifty Thousand Dollars ($250,000.00) per year, without
Executive's consent.
2.2 Incentive Compensation. As additional compensation (the "Incentive
----------------------
Compensation") for the services to be rendered by Executive pursuant to this
Agreement, on the first and second anniversary dates of this Agreement Employer
shall pay Executive each such year a bonus in an amount equal to One Hundred
Twenty-Five Thousand Dollars ($125,000.00). Executive may receive additional
incentive compensation as determined by Employer based on profitability,
personal performance and other factors.
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2.3 Options. Employer shall cause Halter Marine to issue to Executive
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qualified options for the purchase of up to Ninety Thousand (90,000) shares of
common stock of Halter Marine pursuant to the terms of the Halter Marine Group,
Inc. Amended and Restated 1996 Stock Option and Incentive Plan. Employer is an
affiliate of Halter Marine as of the date of this Agreement.
2.4 Benefits. Executive will, during the term of Executive's employment
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under the Agreement, be permitted to participate in such pension, profit
sharing, bonus, life insurance, hospitalization, major medical, and other
Executive benefit plans of Employer that may be in effect from time to time, to
the extent Executive is eligible under the terms of those plans (collectively,
the "Benefits").
ARTICLE 3.
FACILITIES AND EXPENSES
3.1 General. Employer will furnish Executive office space, equipment,
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supplies, and such other facilities and personnel as Employer deems necessary or
appropriate for the performance of Executive's duties under this Agreement.
Employer will pay Executive's dues in such professional societies and
organizations as the Chairman of the Board deems appropriate, and will pay on
behalf of Executive (or reimburse Executive for) reasonable expenses incurred by
Executive at the request of, or on the behalf of, Employer in the performance of
Executive's duties pursuant to this Agreement, and in accordance with Employer's
employment policies, including reasonable expenses incurred by Executive in
attending conventions, seminars, and other business meetings, in appropriate
business entertainment activities, and for promotional expenses. Executive must
file expense reports with respect to such expenses in accordance with Employer's
policies.
3.2 Automobile. Employer will include Executive in Employer's automobile
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allowance policy (currently for Executive $350 per month). Executive will own
his own automobile and maintain and insure it at his own expense, for his
business use in connection with his employment under this Agreement. Executive
will at his own expense maintain liability insurance on any automobile used in
connection with Employer's business.
ARTICLE 4.
VACATIONS AND HOLIDAYS
Executive will be entitled to a paid vacation during each fiscal year in
accordance with the vacation policies of Employer in effect for its executive
officers from time to time. Vacation must be taken by Executive at such time or
times as approved by the Chairman of the Board. Executive will also be entitled
to the paid holidays as set forth in Employer's policies. Vacation days and
holidays during any fiscal year of Employer that are not used by Executive
during such fiscal year may not be used in any subsequent fiscal year.
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ARTICLE 5.
TERMINATION
5.1 Events of Termination. Executive's Base Compensation and Incentive
---------------------
Compensation and any and all other rights of Executive under this Agreement or
otherwise as an employee of Employer will terminate:
(a) upon the death of Executive;
(b) upon the disability of Executive (as defined in Section 5.2)
immediately upon notice from either party to the other;
(c) for cause (as defined in Section 5.3), immediately upon notice
from Employer to Executive, or at such later time as such notice may specify; or
(d) for good reason (as defined in Section 5.4) upon not less than
30 days' prior notice from Executive to Employer.
5.2 Definition of Disability. For purposes of Section 5.1, Executive
------------------------
will be deemed to have a "disability" if, for physical or mental reasons,
Executive is unable to perform Executive's duties under this Agreement for 120
consecutive days, or 180 days during any twelve month period, as determined in
accordance with this Section 5.2. The disability of Executive will be
determined by a medical doctor selected by written agreement of Employer and
Executive upon the request of either party by notice to the other. If Employer
and Executive cannot agree on the selection of a medical doctor, each of them
will select a medical doctor and the two medical doctors will select a third
medical doctor who will determine whether Executive has a disability. The
determination of the medical doctor selected under this Section 5.2 will be
binding on both parties. Executive must submit to a reasonable number of
examinations by the medical doctor making the determination of disability under
this Section 5.2, and Executive hereby authorizes the disclosure and release to
Employer of such determination and all supporting medical records. If Executive
is not legally competent, Executive's legal guardian or duly authorized
attorney-in-fact will act in Executive's stead, under this Section 5.2, for the
purpose of submitting Executive to the examinations and providing the
authorization of disclosure required under this Section 5.2.
5.3 Definitions of "for Cause". For purposes of Section 5.1, the phrase
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"for cause" means: (a) Executive's material breach of Articles 6 or 7 of this
Agreement; (b) the willful and continued failure by Executive to substantially
perform his duties hereunder (other than any failure resulting from Executive's
disability as specified in Section 5.2) after demand for substantial performance
is delivered by Employer that specifically identifies the manner in which
Employer believes Executive has not substantially performed his duties; (c) the
appropriation (or attempted appropriation) of a material business opportunity of
Employer, including attempting to secure or securing any personal profit in
connection with any transaction entered into on behalf of Employer;
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(d) the misappropriation (or attempted misappropriation) of any of Employer's
funds or property; or (e) the conviction of, the indictment for (or its
procedural equivalent), or the entering of a guilty plea or plea of no contest
with respect to, a felony, the equivalent thereof, or any other crime with
respect to which imprisonment is a possible punishment. For purposes of this
Section, no act or failure to act on Executive's part shall be considered
"willful" unless done, or omitted to be done, without reasonable belief that his
action or omission was in the best interests of Employer. Any act, or failure to
act, by Executive that is based upon authority given pursuant to a resolution
duly adopted by Employer's Board of Directors or based upon the advice of
counsel for Employer shall be presumed to be done, or omitted to be done, by
Executive in the best interests of Employer. Notwithstanding the foregoing,
Executive may not be terminated for Cause without delivery to Executive of a
Notice of Termination setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under clause (a), (b), (c), (d) or (e) of this Section; provided,
however, that if clause (b) above forms the basis for such termination, (i)
Employer must have delivered to Executive a demand for substantial performance
in accordance with clause (b) above and (ii) the Notice of Termination must be
preceded by written notice to Executive (A) specifically identifying the manner
in which Employer believes Executive has not substantially performed his duties
after Employer's demand for substantial performance and (B) providing an
opportunity for Executive, together with his counsel, to be heard before the
Board of Directors of Employer.
5.4 Definition of "for Good Reason". For purposes of Section 5.1, the
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phrase "for good reason" means any of the following without Executive's consent:
(a) Employer's material breach of this Agreement; (b) the assignment of
Executive without his consent to a position, responsibilities or duties of a
materially lesser status than his position, responsibilities, or duties at the
Effective Date; (c) the requirement by Employer that Executive report to someone
other than the Chief Executive Officer of Halter Marine; or (d) the requirement
by Employer that Executive reside anywhere other than the Minneapolis/St. Xxxx
Minnesota area.
5.5 Termination Pay. Effective upon the termination of this Agreement,
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Employer will be obligated to pay Executive (or, in the event of his death, his
designated beneficiary as defined below) only such compensation as is provided
in this Section 5.5. For purposes of this Section 5.5, Executive's designated
beneficiary will be such individual beneficiary or trust as Executive may
designate by notice to Employer from time to time or, if Executive fails to give
notice to Employer of such a beneficiary, Executive's estate. Notwithstanding
the preceding sentence, Employer will have no duty, in any circumstances, to
attempt to open an estate on behalf of Executive, to determine whether any
beneficiary designated by Executive is alive or to ascertain the address of any
such beneficiary, to determine the existence of any trust, to determine whether
any person or entity purporting to act as Executive's personal representative
(or the trustee of a trust established by Executive) is duly authorized to act
in that capacity, or to locate or attempt to locate any beneficiary, personal
representative, or trustee.
(a) Termination by Executive for Good Reason. If Executive terminates
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this Agreement for good reason, Employer will pay Executive (i) Executive's Base
Compensation for the remainder, if any, of the calendar month in which such
termination is effective and (ii) that portion
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of Executive's Incentive Compensation, if any, for the fiscal year during which
the termination is effective, prorated through the date of termination.
(b) Termination by Employer for Cause. If Employer terminates this
---------------------------------
Agreement for cause, Executive will be entitled to receive his Base Compensation
only through the date such termination is effective but will not be entitled to
any Incentive Compensation for the fiscal year during which such termination
occurs.
(c) Termination upon Disability. If this Agreement is terminated by
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either party as a result of Executive's disability, as determined under Section
5.2, Employer will pay Executive his Base Compensation through the remainder of
the calendar month during which such termination is effective and for the lesser
of (i) six (6) consecutive months thereafter or (ii) the period until disability
insurance benefits commence under the disability insurance coverage furnished by
Employer to Executive and for that part of Executive's Incentive Compensation,
if any, for the fiscal year during which disability occurs, prorated through the
end of the calendar month during which disability occurs.
(d) Termination upon Death. If this Agreement is terminated because
----------------------
of Executive's death, Executive will be entitled to receive his Base
Compensation through the end of the calendar month in which his death occurs and
that part of Executive's Incentive Compensation, if any, for the fiscal year
during which his death occurs prorated through the end of the calendar month
during which his death occurs.
(e) Benefits. Executive's accrual of, or participation in plans
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providing for, the Benefits will cease at the effective date of the termination
of this Agreement, and Executive will be entitled to accrued Benefits pursuant
to such plans only as provided in such plans. Executive will not receive, as
part of his termination pay pursuant to this Article 5, any payment or other
compensation for any vacation, holiday, sick leave, or other leave unused on the
date the notice of termination is given under this Agreement or upon the death
of Executive.
(f) Return of Employer Property. All records, designs, patents,
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business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of Employer,
Halter Marine or their representatives, vendors or customers which pertain to
the business of Employer or Halter Marine shall be and remain the property of
Employer or Halter Marine, as the case may be, and be subject at all times to
their discretion and control. Likewise, all such property and all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of Employer
or Halter Marine that is collected by Executive shall be delivered promptly to
Employer without request by it upon termination of employment.
ARTICLE 6.
NON-DISCLOSURE
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6.1 Disclosure of Information. Executive agrees that during the term of
-------------------------
Executive's employment with Employer and for a period of three (3) years
following the date of the termination of Executive's employment with Employer,
without the prior written consent of Employer, Executive shall not, directly or
indirectly, through any form of ownership, in any individual or representative
or affiliated capacity whatsoever, except as may be required by law or as may be
in furtherance of Employer's business, reveal, divulge, disclose or communicate
to any person, firm, association, corporation or other entity in any manner
whatsoever information of any kind, nature or description concerning: (i) the
names of any prior or present suppliers or customers of Employer or Halter
Marine, (ii) the prices for which Employer or Halter Marine obtains or has
obtained products or services, (iii) the names of the personnel of Employer or
Halter Marine, (iv) the manner of operation of Employer or Halter Marine, (v)
the plans, trade secrets, or other data of any kind, nature or description,
whether tangible or intangible, of Employer or Halter Marine, or (vi) any other
financial, statistical or other information acquired by Employer or Halter
Marine that Employer or Halter Marine designates or treats as confidential or
proprietary. The agreements set forth herein shall not apply to any information
that at the time of disclosure or thereafter is generally available to and known
by the public (other than as a result of a disclosure directly or indirectly by
Executive in violation of this Agreement), the disclosure of which is required
by law, regulation, order, decree or process or is otherwise approved by
Employer or Halter Marine. Without regard to whether any or all of the
foregoing matters would be deemed confidential, material or important, the
parties hereto stipulate that as between them, the same are important, material
and confidential and gravely affect the effective and successful conduct of the
Business and its goodwill.
6.2 Non-Removal. Executive will not remove from Employer's premises
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(except to the extent such removal is for purposes of the performance of
Executive's duties at home or while traveling, or except in furtherance of the
business of Employer or as otherwise specifically authorized by Employer) any
document, record, notebook, plan, model, component, device, or computer software
or code, whether embodied in a disk or in any other form (collectively, the
"Proprietary Items"). Executive recognizes that, as between Employer and
Executive, all of the Proprietary Items, whether or not developed by Executive,
are the exclusive property of Employer. Upon termination of this Agreement by
either party, or upon the request of Employer during the period of employment,
Executive will return to Employer all of the Proprietary Items in Executive's
possession or subject to Executive's control, and Executive shall not retain any
copies, abstracts, sketches, or other physical embodiment of any of the
Proprietary Items.
ARTICLE 7.
NON-COMPETITION AND NON-INTERFERENCE
7.1 Noncompetition. Executive agrees that during the term of Executive's
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employment with Employer and for a period of three (3) years following the date
of the termination of Executive's employment with Employer, Executive shall not
perform any of the following acts, except those acts as are on behalf and for
the benefit of Employer:
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(i) Call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any past, existing or potential customers,
suppliers, businesses, or accounts of the Business in connection with any
business substantially similar to the Business in the Territory;
(ii) Hire, attempt to hire, contact or solicit with respect to
hiring for Executive or on behalf of any other person or entity any present
or future employee of Employer or Halter Marine in the Business;
(iii) Engage in, or give any advice to any person, firm,
partnership, association, venture, corporation or other entity engaged in,
a business substantially similar to the Business in the Territory;
(iv) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the Business
in the Territory;
(v) Do any act that Executive knew or should have known might
injure Employer, Halter Marine or the Business; and
(vi) Without limiting the generality of the foregoing provisions,
conduct a business substantially similar to the Business in the Territory.
The covenants in subsections (i) through (vi) are intended to restrict
Executive from competing in any manner with Employer, Halter Marine or the
Business. The obligations set forth in subsections (i) through (vi) above shall
apply to actions by Executive, through any form of ownership, and whether as
principal, officer, director, agent, employee, employer, consultant, shareholder
or holder of any equity security (beneficially or as trustee of any trust),
lender, partner, joint venturer or in any other individual or representative or
affiliated capacity whatsoever. However, none of the foregoing shall prevent
Executive from being the holder of up to 5.0% in the aggregate of any class of
securities of any corporation engaged in the activities described in subsections
(i) through (vi) above, provided that such securities are listed on a national
securities exchange or reported on the Nasdaq National Market or the Nasdaq
Small Cap Market.
ARTICLE 8.
GENERAL PROVISIONS
8.1 Injunctive Relief and Additional Remedies.
-----------------------------------------
(a) Executive acknowledges that a violation or attempted violation of
any of the covenants and agreements in Sections 6.1 and 7.1 above will cause
such damage to Employer as will be irreparable, the exact amount of which would
be difficult to ascertain and for which there will be no adequate remedy at law,
and accordingly, Executive agrees that Employer shall be entitled as a matter of
right to an injunction issued by any court of competent jurisdiction,
restraining such violation or attempted violation of such covenants and
agreements by Executive, or the affiliates,
-8-
partners or agents of such Executive, as well as to recover from Executive any
and all costs and expenses sustained or incurred by Employer in obtaining such
an injunction, including, without limitation, reasonable attorneys' fees. In the
event that Employer is unsuccessful in obtaining such an injunction, then
Employer shall reimburse Executive for reasonable attorneys' fees and court
costs and expenses incurred by Executive in defending such action. Employer
agrees that a reasonable bond or other security may be required by a court in
connection with such injunction. Executive further agrees that the three-year
period of restriction set forth in Sections 6.1 and 7.1 above shall be tolled
during any period of violation thereof by Executive. Any exercise by Employer of
its rights pursuant to this Section 3 shall be cumulative and in addition to any
other remedies to which Employer may be entitled. Each party represents and
warrants that it has been represented by counsel in the negotiation and
execution of this Agreement, including without limitation the provisions set
forth above in this Section 3(a) concerning the recovery of attorneys' fees.
(b) Executive understands and acknowledges that Employer shall have
the right, in its sole discretion, to reduce the scope of any covenants set
forth in Section 6.1 and 7.1, or any portion thereof, without Executive's
consent, effective immediately upon receipt by Executive of written notice
thereof; and Executive agrees that Executive shall comply forthwith with any
covenant as so modified, which shall be fully enforceable as so revised in
accordance with the terms of this Agreement.
8.2 Validity. To the extent permitted by applicable law, if it should
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ever be held that any provision contained herein does not contain reasonable
limitations as to time, geographical area or scope of activity to be restrained,
then the court so holding shall at the request of Employer reform such
provisions to the extent necessary to cause them to contain reasonable
limitations as to time, geographical area and scope of activity to be restrained
and to give the maximum permissible effect to the intentions of the parties as
set forth herein; and the court shall enforce such provisions as so reformed.
If, notwithstanding the foregoing, any provision hereof is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or enforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision there shall be added
automatically by Employer as a part hereof a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable, and the parties hereby agree to such provision.
If Executive's employment hereunder expires or is terminated, this
Agreement will continue in full force and effect as is necessary or appropriate
to enforce the covenants and agreements of Executive in Sections 6.1 and 7.1.
8.3 Representations and Warranties by Executive. Executive represents
-------------------------------------------
and warrants to Employer that the execution and delivery by Executive of this
Agreement do not, and the performance by Executive of Executive's obligations
hereunder will not, with or without the giving of notice or the passage of time,
or both: (a) violate any judgment, writ, injunction, or order of any
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court, arbitrator, or governmental agency applicable to Executive; or (b)
conflict with, result in the breach of any provisions of or the termination of,
or constitute a default under, any agreement to which Executive is a party or by
which Executive is or may be bound. Executive represents and warrants to
Employer that as of the date of this Agreement Executive has no claims against
Employer or any of its parent corporations, subsidiary corporations or
affiliated entities or any of their respective stockholders, directors,
officers, employees or agents.
8.4 Intellectual Property. Executive recognizes and agrees that, on and
---------------------
after the date hereof, Executive will not have the right to use for Executive's
own account any of the service marks, trademarks, trade names, licenses,
procedures, processes, labels, trade secrets or customer lists conveyed in the
Acquisition.
8.5 Obligations Contingent on Performance. The obligations of Employer
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hereunder, including its obligation to pay the compensation provided for herein,
are contingent upon Executive's performance of Executive's obligations
hereunder.
8.6 Waiver. The rights and remedies of the parties to the Agreement are
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cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.
8.7 Binding Effect; Delegation of Duties Prohibited. This Agreement
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shall inure to the benefit of, and shall be binding upon, the parties hereto and
their respective successors, assigns, heirs, and legal representatives,
including any entity with which Employer may merge or consolidate or to which
all or substantially all of its assets may be transferred. The duties and
covenants of Executive under this Agreement, being personal, may not be assigned
or delegated.
8.8 Notices. Any notice, request, instruction, document or other
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communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Employer: AEPI Acquisition, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
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Telecopy No.: (000) 000-0000
with copies to: Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Executive: Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
with copies to: Holden & Xxxxxx
101 W. Xxxxxx X. Xxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
8.9 Entire Agreement; Amendments. This Agreement contains the entire
----------------------------
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be amended orally but only by an agreement in writing signed by the parties
hereto.
8.10 Governing Law. This Agreement will be governed by the laws of the
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State of Minnesota without regard to conflicts of laws principles.
8.11 Arbitration. Any unresolved dispute or controversy arising under or
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in connection with this Agreement shall be settled exclusively by arbitration
conducted before a panel of three (3) arbitrators in Jackson, Mississippi in
accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall not have the authority to add to, detract from,
or modify any provision hereof or to award punitive damages to any injured
party. The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to
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enforce this Agreement, and interest thereon in the event the arbitrators
determine that Executive was terminated without disability or good cause, as
defined in Article 5, or that Employer has otherwise materially breached this
Agreement. A decision by a majority of the arbitration panel shall be final and
binding. Judgment may be entered on the arbitrators' award in any court having
jurisdiction. The direct expense of any arbitration proceeding shall be borne by
Employer.
8.12 Section Headings, Construction. The headings of Sections and
------------------------------
Articles in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections" or
"Article" or "Articles" refer to the corresponding Section or Sections or
Article or Articles of this Agreement unless otherwise specified. All words
used in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
8.13 Guarantee. Halter Marine hereby unconditionally guarantees the
---------
performance of Employer's obligations under this Agreement in accordance with,
and subject to, the terms hereof.
8.14 Severability. If any provision of this Agreement is held invalid or
------------
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
8.15 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
AEPI ACQUISITION, INC.
By:_______________________________
Title:
EMPLOYEE:
__________________________________
Xxxxxxx X. Xxxxxxx
HALTER MARINE GROUP, INC.
-12-
(solely for purposes of Section 8.13 hereof)
By:_____________________________
Title:
-13-
EXHIBIT E
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into as of the
31st day of October, 1997, by and between AmClyde Engineered Products, Inc., a
Delaware corporation ("Seller"), AEPI Acquisition, Inc., a Delaware corporation
("Buyer"), and Whitney National Bank, a national banking corporation, as escrow
agent (the "Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October __, 1997 (the "Asset Purchase Agreement"), by and among Buyer, Halter
Marine Group, Inc., Seller, and Xxxxxxx X. Xxxx, Xx., Seller is to sell to Buyer
and Buyer is to purchase and accept as of the Closing the Assets (other than the
Excluded Assets) and the Assumed Liabilities (each as defined in the Asset
Purchase Agreement) (the "Acquisition"); and
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition, that the parties execute and deliver this Agreement
whereby a certain portion of the purchase price would be payable in shares of
Halter Stock, as defined in the Asset Purchase Agreement, and placed in escrow
(the "Escrow") for a period of time.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms, and subject to the conditions
hereinafter set forth, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
------------
herein shall have the meaning ascribed to them in the Asset Purchase Agreement.
2. Appointment of the Agent. Buyer and Seller hereby appoint the Agent
------------------------
as Escrow agent in accordance with the terms and conditions set forth herein,
and the Agent hereby accepts such appointment.
3. Deposit of the Escrowed Property.
--------------------------------
(a) On the Closing Date, Buyer shall, in accordance with Section 9.3
of the Asset Purchase Agreement, deposit with and register in the name of the
Agent, or the nominee of the Agent, Thirteen Thousand Eight Hundred Fifty-One
(13,851) shares of Halter Stock (the "Escrowed Property") to be held in
accordance with Section 5 below.
(b) The Agent shall: (i) hold the Escrowed Property in escrow for the
purposes herein and for no other purpose, subject to the terms and conditions
hereof and (ii) provide Buyer and Seller with a periodic accounting of the
number of shares of Halter Stock held in the Escrow.
4. Beneficial Ownership of Halter Stock. The Halter Stock held as
------------------------------------
Escrowed Property shall be held for the benefit of Seller and Seller shall be
entitled to exercise any and all beneficial ownership rights pertaining to
Halter Stock constituting Escrowed Property, including but not limited to, the
following:
(a) All voting rights of the shares of Halter Stock constituting
Escrowed Property registered in the name of the Agent shall be vested in the
Agent, but the Agent shall vote all such shares of Halter Stock constituting
Escrowed Property in accordance with the written instructions of Seller.
Promptly after the Agent has received a solicitation for the vote of the shares
of Halter Stock constituting Escrowed Property, it shall send to Seller copies
of any proxy statement or similar solicitation materials it has received, and a
copy of the form of proxy or a questionnaire requesting voting instructions from
Seller in respect of the shares of Halter Stock constituting Escrowed Property
and indicating a date by which Seller must return such proxy or respond to such
questionnaire.
(b) The Agent shall pay to Seller all cash amounts received by the
Agent as cash dividends on the shares of Halter Stock constituting Escrowed
Property; provided, however, that if the Parent shall at any time pay a dividend
-------- -------
on those shares of Halter Stock constituting Escrowed Property in shares of
Halter Stock or any other security convertible into or exchangeable or
exercisable for shares of Halter Stock, in non-cash assets or shall effect a
stock split, the Agent shall deposit all such shares of Halter Stock and such
other securities or non-cash assets received in respect of such dividend or
stock split into the Escrow account. All such shares of Halter Stock and other
securities so deposited shall constitute Escrowed Property and shall be
available for disposition as provided herein.
(c) Seller shall be deemed to own the shares of Halter Stock
constituting the Escrowed Property and held by the Agent and all dividends, gain
or loss from sale, and other income allocable to such Halter Stock constituting
Escrowed Property and held by the Agent shall be reported as income by Seller.
5. Disposition of Escrowed Property.
--------------------------------
(a) If the Agent shall receive a written notice from Buyer at any time
from the date of this Agreement through 24 months following the date of this
Agreement certifying (i) that Buyer has suffered a Buyer's Loss as provided in
Section 10.1 of the Asset Purchase Agreement, or other losses arising from or
relating to the Asset Purchase Agreement, and as a result, is entitled to
payment hereunder pursuant to the Asset Purchase Agreement; and (ii) the total
cash amount (the "Amount") Buyer is entitled to from the release and delivery of
that number of shares of Halter Stock (rounded upward or downward to the nearest
whole share), as determined by Buyer, valued at $36.10 per share adjusted for
stock splits and stock dividends (the "Closing Price"), which is equivalent to
the Amount (a "Claim") with respect to such Buyer's Loss or other loss, as the
case may be, then the Agent shall promptly (and in any event within ten (10)
days following receipt of such notice from Buyer) deliver a copy of such notice
to Seller. If the Agent does not, within twenty (20) days after
-2-
the delivery of such notice by the Agent to Seller, receive a written objection
from Seller with respect to such Claim, the Agent shall promptly deliver to
Buyer such number of shares of Halter Stock (rounded upward or downward to the
nearest whole share), valued at the Closing Price, as shall be sufficient to
satisfy the Claim. If the Agent shall receive a written objection from Seller
within such twenty (20)-day period, a conflict shall be deemed to have arisen (a
"Conflict") and the Agent shall, within five (5) days of the Agent's receipt of
the written objection from Seller, deliver notice of such Conflict to Buyer and
Seller, and the Agent shall refrain from taking any action until the Agent shall
be directed otherwise in accordance with Section 5(b) below.
(b) If a Conflict shall have arisen as described in Section 5(a)
above, upon receipt by the Agent during the term of this Agreement of (i) joint
written instructions signed by Buyer and Seller directing the release and
delivery of all or a portion of the Escrowed Property or (ii) a final judgment
or order of a court of competent jurisdiction not subject to any further appeals
directing the release and delivery of all or a portion of the Escrowed Property
held hereunder, the Agent shall promptly deliver to the person or persons
specified, out of the Escrow created hereunder and in the manner specified in
the instructions, judgment or order, as the case may be, all or a portion of the
Escrowed Property specified in such instructions, judgment or order, and the
Agent shall thereupon be relieved and discharged from any responsibility or
obligation with respect to such of the Escrowed Property delivered in accordance
with this Agreement.
(c) Unless otherwise notified by a joint instruction signed by Buyer
and Seller, if 12 months after the date of this Agreement the aggregate amount
of all Claims (as such term is defined in Section 5(a) hereof) made by Buyer for
which payment has been made plus those Claims which are at that time payable by
means of any disposition of the Escrowed Property plus those Claims which have
not been resolved in accordance with Section 5(a) or (b) hereof does not exceed
One Hundred Thousand Dollars ($100,000), then the Agent shall release and
deliver to Seller that number of shares of Halter Stock (rounded upward or
downward to the nearest whole share), valued at the Closing Price, which is
equivalent to the sum of Two Hundred Fifty Thousand Dollars ($250,000).
(d) Unless otherwise notified by a joint instruction signed by Buyer
and Seller, in the event the Escrow created hereunder is not sooner terminated
pursuant to the provisions of Section 5(f) below or extended pursuant to the
provisions of this Section 5(d), the escrow period and the Escrow created
hereunder shall terminate 24 months following the date hereof (the "Escrow
Period"). Upon such termination, the Agent shall release and deliver to Seller
all of the Escrowed Property; provided, however, if Buyer has filed a Claim with
-------- -------
the Agent prior to such termination, which Claim has not been resolved in
accordance with Section 5(a) or (b) above by the date of termination, the Agent
shall release and deliver to Seller only that number of shares of Halter Stock
(rounded upward or downward to the nearest whole share), valued at the Closing
Price, which is equivalent to an amount in excess of the aggregate amount of
Buyer's outstanding and unresolved Claim(s). Upon resolving all remaining
Claims in accordance with this Section 5, including any distributions to Buyer
(which may be after the 24 month period provided herein, in which case the
Escrow Period shall be extended to such time in which all Claims are resolved),
Agent shall release
-3-
and deliver to Seller all remaining Escrowed Property and close the Escrow,
whereupon the Escrow Period and the Escrow created hereunder shall be
terminated.
(e) Notwithstanding the provisions of Section 5(d) above, at the
conclusion of the Escrow Period, if any Claim has not been resolved in
accordance with the terms hereof, the Agent shall have the right, in its sole
discretion, to deposit with the registry of any State or Federal court located
in the Parish of Orleans, Louisiana, that number of shares of Halter Stock
(rounded upward or downward to the nearest whole share), valued at the Closing
Price, which is equivalent to the aggregate amount of Buyer's outstanding and
unresolved Claims. In such a case, the Agent shall implead Buyer and Seller in
any such action filed with the Court.
(f) Unless otherwise notified in a joint instruction signed by Buyer
and Seller, in the event the Agent releases and delivers to Buyer all of the
Escrowed Property in accordance with the terms of this Section 5 prior to the
date that is 24 months following the date hereof, the Escrow Period and the
Escrow created hereunder shall immediately terminate and the Agent shall close
the Escrow and give notice thereof to Buyer and Seller.
(g) All distributions of the Escrowed Property to be made by the Agent
under this Agreement shall be effected by the Agent's delivering from the Escrow
to the transfer agent for Halter Marine Group, Inc. (the "Transfer Agent") a
negotiable certificate or certificates, as the case may be, representing
sufficient shares of Halter Stock to satisfy the relevant distribution (the
"Delivered Certificates"), along with instructions to the Transfer Agent to (i)
transfer the shares representing the distribution to each distributee, (ii)
reissue the balance of the Halter Stock represented by the Delivered
Certificates, if any, in the name of the Agent or the Agent's nominee and (iii)
return all of the newly issued certificates to the Agent for distribution. The
Agent shall, upon receipt of the newly issued certificates, promptly deliver to
each distributee the certificates representing shares of Halter Stock to which
the distributee is entitled under this Agreement and place the shares reissued
to the Agent, if any, in the Escrow to be held as Escrowed Property.
6. Exculpation and Indemnification of the Agent.
--------------------------------------------
(a) The Agent is not a party to and is not bound by or charged with
notice of any agreement out of which this Escrow may arise. The Agent acts
hereunder solely as a depository and is not responsible or liable in any manner
whatsoever for the sufficiency, correctness, authenticity or validity of the
Escrowed Property, the form of execution thereof or for the identity or
authority of any person executing this Agreement or depositing the Escrowed
Property. The responsibility of the Agent extends only to the duties
affirmatively stated in this Agreement and to the exercise of ordinary
diligence. The Agent shall not be responsible for any act or omission except
for actual fraud, dishonesty or bad faith. No implied duties or obligations of
the Agent shall be read into this Agreement and the Agent shall have no duty to
enforce any obligation of any person to make any payment or delivery, or to
direct or cause any payment or delivery to be made, or to enforce any obligation
of any persons to perform any other act. The Agent shall in no way be
responsible for, nor shall it have any duty to notify any party hereto or any
other party interested in this Agreement
-4-
of any payment required or maturity occurring under this Agreement or under the
terms of any instrument deposited hereunder. The Agent shall be under no
liability to Buyer or Seller or to anyone else by reason of any failure on the
part of any party hereto or any maker, guarantor, endorser or other signatory of
any document or any other person to perform such person's obligations under any
such document. Except for amendments to this Agreement referred to below and
except for joint instructions given to the Agent by Buyer and Seller relating to
the Escrowed Property, the Agent shall not be obligated to recognize any
agreement between any or all of the persons referred to herein, notwithstanding
that references thereto may be made herein and whether or not it has knowledge
thereof.
(b) The Agent shall not be liable to Buyer and Seller or to anyone
else for any action taken or omitted by it, or any action suffered by it to be
taken or omitted, in good faith and in the exercise of its own best judgment.
The Agent may rely conclusively and shall be protected in acting upon any order,
written notice, request, waiver, consent, receipt, authorization, power of
attorney, demand, certificate, opinion or advice of counsel (including counsel
chosen by the Agent), statement, instrument, report or other paper or document
(not only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and acceptability of any information
therein contained), including any of such of the aforementioned instruments as
are delivered by facsimile transmission, which is believed by the Agent to be
genuine and to be signed or presented by the proper person or persons, including
but not limited to, items requesting or authorizing release or retention of the
Escrowed Property and items amending the terms of this Agreement. The Agent may
rely upon any such instructions and deliver the Escrowed Property as directed
without further investigation. The Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this Agreement
or any of the terms hereof, unless evidenced by a writing delivered to the Agent
signed by the proper party or parties and, if the duties or rights of the Agent
are affected, unless it shall give its prior written consent thereto.
(c) The Agent shall not be responsible for the sufficiency or accuracy
of the form of, or the execution, validity, value or genuineness of, any
document or property received, held or delivered by it hereunder, or of any
signature or endorsement thereon, or for any lack of endorsement thereon, or for
any description therein, nor shall the Agent be responsible or liable to Buyer
or Seller or to anyone else in any respect on account of the identity,
authority, or rights of the persons executing or delivering or purporting to
execute or deliver any document or property or this Agreement. The Agent shall
have no responsibility with respect to the use or application of any of the
Escrowed Property delivered by the Agent pursuant to the provisions hereof.
(d) The Agent shall have the right to assume in the absence of written
notice to the contrary from the proper person or persons that a fact or an event
by reason of which an action would or might be taken by the Agent does not exist
or has not occurred, without incurring liability to Buyer or Seller or to anyone
else for any action taken or omitted, or any action suffered by it to be taken
or omitted, in good faith and in the exercise of its own best judgment, in
reliance upon such assumption.
-5-
(e) The Agent shall be indemnified and held harmless jointly and
severally by Buyer and Seller from and against any and all expenses, including
attorneys' fees and disbursements, or any losses, costs, claims, demands or
damages suffered or incurred by the Agent in connection with any cause of
action, litigation or other proceeding involving any claim, or in connection
with any claim or demand, which in any way, directly or indirectly, arises from
or in conjunction with this Agreement, the services of the Agent hereunder, or
the property held by it hereunder, except for matters resulting from the Agent's
own gross negligence or willful misconduct.
(f) In the event of a Conflict, if the Agent, in good faith, should be
in doubt as to what action it should take hereunder, the Agent may, at its
option, (i) deposit all of the Escrowed Property with a court registry, as
provided in Section 5(e) hereunder, (ii) refuse to comply with any claims or
demands on it, or (iii) refuse to take any other action hereunder. The Agent
may consult with legal counsel of its choice in the event of any dispute or
question as to the construction of any of the provisions hereof or its duties
hereunder, and it shall incur no liability and shall be fully protected in
acting in accordance with the opinion and instructions of such counsel.
7. Compensation of the Agent. The Agent shall be entitled to an account
-------------------------
acceptance fee in the amount of $1,000, due and payable upon execution of this
Agreement, and an account service fee in the amount of $1,500 per year or part
thereof for its services hereunder and to reimbursement for its costs and
expenses in connection with its performance of additional services under this
Agreement (including amounts representing reasonable fees and expenses of the
Agent's officers, employees, legal counsel, accountants and/or agents)
(collectively, the "Fees"). Buyer shall pay the Fees hereunder; provided,
however, that if the Agent incurs any out-of-pocket expenses relating to a
dispute which are subject to reimbursement hereunder, Buyer on the one hand and
Seller on the other hand shall share equally such expense reimbursement.
8. Further Assurances. From time to time on and after the date hereof,
------------------
Buyer and Seller shall deliver or cause to be delivered to the Agent such
further documents and instruments and shall do and cause to be done such further
acts as the Agent shall reasonably request (it being understood that the Agent
shall have no obligation to make any such request) to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.
9. Termination of Agreement and Resignation of the Agent.
-----------------------------------------------------
(a) This Agreement shall terminate on the final disposition of the
Escrowed Property hereunder, provided that the rights of the Agent and the
obligations of Buyer and Seller under Sections 6 and 7 shall survive the
termination hereof.
(b) The Agent may resign at any time and be discharged from its duties
as Escrow agent hereunder by giving Buyer and Seller at least thirty (30) days
written notice thereof. As soon as practicable after its resignation, the Agent
shall turn over to a successor Escrow agent appointed by Buyer and Seller all
Escrowed Property held hereunder upon presentation of the
-6-
document appointing the new Escrow agent and its acceptance thereof. If no new
agent is so appointed within the sixty (60) day period following such notice of
resignation, the Agent may deposit the aforesaid monies and property with the
registry of any State or Federal court located in the Parish of Orleans,
Louisiana. Upon doing so, the Agent shall be relieved and discharged of any
further duty, responsibility or obligation under this Agreement.
10. Notices. Any notice, request, instruction, document or other
--------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer: Halter Marine Group, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
with copies to: Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Seller: AmClyde Engineered Products, Inc.
c/o Xxxxxxx X. Xxxx, Xx.
#0 Xxxxxxxxx Xxxx
Xxxxx Xxxx
Xx. Xxxx, XX 00000
Telecopy No. (000) 000-0000
With copies to: Xxxxxx & Whitney, LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Agent: Whitney National Bank
Attention: Xxxxxxx X. Xxxxxxxxx
000 Xx. Xxxxxxx Xxxxxx, Xxx. 000
Xxx Xxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
-7-
with copies to: Monroe & Lemman
(A Professional Corporation)
000 Xx. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
11. Entire Agreement. This Agreement constitutes the entire agreement
-----------------
and supersedes all prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof, and no
party shall be liable or bound to the other in any manner by any representations
or warranties not set forth herein.
12. Successors and Assigns. This Agreement and the rights and
----------------------
obligations hereunder of the other parties hereto may be assigned by those
parties only to a successor to the relevant party's entire business. This
Agreement and the rights and obligations hereunder of the Agent may be assigned
by the Agent only to a successor to its entire business. This Agreement shall
be binding upon and inure to the benefit of each party's respective successors,
heirs and permitted assigns. No other person shall acquire or have any rights
under or by virtue of this Agreement. This Agreement is intended to be for the
sole benefit of the parties hereto, and (subject to the provisions of this
Section 12) their respective successors, heirs and assigns, and none of the
provisions of this Agreement are intended to be, nor shall they be construed to
be, for the benefit of any third person.
13. Headings. The headings of the sections of this Agreement are inserted
--------
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
14. Modification and Waiver. Any of the terms or conditions of this
-----------------------
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended by a written
instrument executed by all parties hereto. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by all
parties. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
-8-
15. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED, AND
-------------
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF LOUISIANA (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
16. Invalid Provisions. If any provision of this Agreement is held to be
------------------
illegal, invalid, or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement.
17. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
[Balance of page intentionally left blank.]
-9-
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed in counterparts all as of the date first above written.
SELLER:
AmClyde Engineered Products, Inc., a Delaware
corporation
By:___________________________________________
Xxxxxxx X. Xxxxxxx
President
BUYER:
AEPI Acquisition, Inc., a Delaware corporation
By:___________________________________________
Xxxx X. Xxxx
Executive Vice President
ESCROW AGENT:
Whitney National Bank, a national banking
corporation
By:___________________________________________
Xxxxxxx X. Xxxxxxxxx
Trust Officer
-10-
EXHIBIT F-1
MATTERS COVERED BY OPINION OF
SELLER'S COUNSEL-XXXXXX & EFRON, P.A.
-------------------------------------
1. Seller is a corporation duly organized and validly existing under,
and by virtue of, the laws of the State of Delaware and is in good standing
under such laws. Seller has the requisite corporate power and authority to own
and operate the Assets and to carry on its business as presently conducted.
2. Seller has all requisite legal and corporate power and authority to
execute and deliver the Agreement, and any other certificate or document to be
executed, delivered and entered into by Seller in connection with the
acquisition (collectively, the "Seller Signed Documents"), and to carry out and
perform all of its obligations under each of the Seller Signed Documents.
docs
3. All corporate action on the part of Seller and its board of directors
and shareholder necessary for the authorization, execution and delivery by
Seller of each of the Seller Signed Documents, the performance of Seller's
obligations under the Seller Signed Documents, and the consummation of the
transactions contemplated by the Seller Signed Documents has been duly, validly
and lawfully taken.
4. The Seller Signed Documents have been duly and validly executed and
delivered by Seller and constitute valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms, subject to
the effect of applicable bankruptcy, insolvency, reorganization, moratorium or
other similar federal or state laws affecting the rights of creditors generally
and except that we render no opinion with respect to the effect or availability
of rules of law governing specific performance, injunctive relief or other
equitable remedies (regardless of whether any such remedy is considered in a
proceeding at law or in equity).
5. The execution, delivery and performance of and compliance by Seller
with the Seller Signed Documents does not breach or violate: (a) any provision
of Seller's Certificate of Incorporation or Bylaws; (b) any material agreement,
commitment, instrument or contract listed in Schedules 1.1A and 3.8 to the
Agreement, except as disclosed in the Agreement, its Schedules or its Exhibits;
(c) to the best of our knowledge, any other agreement, commitment, instrument or
contract to which Seller is a party or by which Seller is bound; or (d) to the
best of our knowledge, any judgment, decree, injunction or order applicable to
Seller.
6. Except as set forth in the Agreement, the Schedules or the Exhibits
to the Agreement, no consent, approval or authorization of or designation,
declaration or filing with any federal or Delaware governmental authority or to
the best of our knowledge any other person is required in connection with the
valid execution, delivery and performance by Seller of the Agreement and the
Seller Ancillary Agreements or of any other transaction contemplated thereby,
except that we express no opinion as to the requirement of filing of any
notifications with federal agencies pursuant to the Xxxx Xxxxx Xxxxxx Antitrust
Improvements Act.
7. To the best of our knowledge, no material Environmental Claim is
pending or threatened against Seller.
8. To the best of our knowledge, the execution and performance of the
Agreement by Seller will not violate or result in a failure to comply with any
presently existing federal or Delaware statute or regulation which in our
experience is normally applicable to general business corporations which are not
engaged in regulated activities and to transactions of the type set forth in the
Agreement (but without our having made special investigation as to any other
laws), except no opinion is expressed as to any laws the violation of which
would not have a material adverse impact on Seller or to which Seller may be
subject as a result of Buyer's legal or regulatory status, except that we
express no opinion as to the requirement of filing of any notifications with
federal agencies pursuant to the Xxxx Xxxxx Xxxxxx Antitrust Improvements Act
for the transactions set forth in the Agreement.
-2-
EXHIBIT F-2
MATTERS COVERED BY OPINION OF
SELLER'S COUNSEL-XXXXXX & WHITNEY LLP
-------------------------------------
The Agreement constitutes the legal, valid and binding obligation of Seller
and Shareholder, enforceable against Seller and Shareholder in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights of creditors generally, and to
the exercise of judicial discretion in accordance with general principles of
equity, including (without limitation) concepts of materiality, reasonableness,
good faith and fair dealing, and other similar doctrines affecting the
enforceability of agreements generally (regardless of whether considered in a
proceeding in equity or at law).
EXHIBIT G
MATTERS COVERED BY OPINION OF BUYER'S COUNSEL
---------------------------------------------
1. Each of Halter and Subsidiary is a corporation validly existing
and in good standing under the laws of the State of Delaware;
2. Halter has the requisite corporate power and authority to execute
and deliver the Agreement and the Assumption Agreement and to consummate
the transactions contemplated thereby;
3. Subsidiary has the requisite corporate power and authority to
execute and deliver the Agreement, the Assumption Agreement and the Escrow
Agreement and to consummate the transactions contemplated thereby;
4. The execution and delivery of the Agreement and the Assumption
Agreement by Halter and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary action of the Board of
Directors of Halter;
5. The execution and delivery of the Agreement, the Assumption
Agreement and the Escrow Agreement by Subsidiary and the consummation of
the transactions contemplated thereby have been duly authorized by all
necessary action of the Board of Directors of Subsidiary;
6. The Agreement and the Assumption Agreement have been duly
executed and delivered by a duly authorized officer of Halter and each
constitutes the valid, legal and binding obligation of Halter, enforceable
in accordance with its terms (except insofar as the enforceability of the
Agreement and the Assumption Agreement may be limited by bankruptcy,
insolvency, similar laws affecting the rights of creditors generally or the
general principles of equity, as to which we express no opinion);
7. The Agreement, the Assumption Agreement and the Escrow Agreement
have been duly executed and delivered by a duly authorized officer of
Subsidiary and each constitutes the valid, legal and binding obligation of
Subsidiary, enforceable in accordance with its terms (except insofar as the
enforceability of the Agreement, the Assumption Agreement and the Escrow
Agreement may be limited by bankruptcy, insolvency, similar laws affecting
the rights of creditors generally or the general principles of equity, as
to which we express no opinion); and
8. The shares of Halter Stock, when issued and delivered will have
been duly authorized and issued, and will be fully paid and non-assessable.
EXHIBIT "H"
ALLOCATION OF PURCHASE PRICE AND OTHER CONSIDERATION
----------------------------------------------------
Amount of
Allocated
-----------
Class I Assets (cash, demand deposits and
similar accounts in banks, savings and loan
associations and other depository institutions): actual*
Class II Assets (certificates of deposit, U.S.
government securities, readily marketable stock
or securities and foreign currency): -0-
Class III Assets (all tangible and intangible
assets that are not Class I, II or IV assets): $_______**
Class IV Assets (intangible assets in the nature
of goodwill and going concern value): [balance***]
* Will be equal to the actual cash balances transferred at Closing.
** To be determined after Closing based on the fair market value of such
assets in conjunction with a physical inventory. Buyer and Seller agree
that the fair market value of Assets consisting of either inventory or
depreciable personal property shall equal the federal income tax basis of
such Assets as of the Closing Date as reflected on the books and records of
Seller.
*** Balance of the Purchase Price, Contingent Consideration and any other
consideration.
-2-
