EXHIBIT 4.2
AGREEMENT AND PLAN OF MERGER
By and Among
HALTER MARINE GROUP, INC.,
UTILITY ACQUISITION, INC.,
UTILITY STEEL FABRICATION INC.,
and the
SHAREHOLDERS OF
UTILITY STEEL FABRICATION INC.
Dated as of October 31, 1997
TABLE OF CONTENTS
ARTICLE I THE MERGER.......................................................... 1
1.1. The Merger........................................................... 1
1.2. The Closing.......................................................... 1
1.3. Effective Time....................................................... 2
1.4. Appointment of Shareholder Representative............................ 2
1.5. Shareholder Representative; Power of Attorney........................ 3
ARTICLE II THE SURVIVING CORPORATION.......................................... 4
2.1 Articles of Incorporation.......................................... 4
2.2 Bylaws............................................................. 4
2.3 Directors.......................................................... 4
2.4 Officers........................................................... 4
ARTICLE III CONVERSION OF UTILITY STOCK....................................... 4
3.1 Conversion of Utility Stock........................................ 4
3.2. Exchange of Certificates........................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................... 6
4.1. Representations and Warranties of Utility and the Shareholders..... 6
4.1.1. Authorization, etc......................................... 6
4.1.2. Corporate Status........................................... 6
4.1.3. Capitalization, etc........................................ 7
4.1.4. No Conflicts, etc.......................................... 7
4.1.5. Financial Statements....................................... 8
4.1.6. Absence of Undisclosed Liabilities......................... 9
4.1.7. Taxes...................................................... 9
4.1.8. Absence of Changes......................................... 10
4.1.9. Litigation................................................. 12
4.1.10. Compliance with Laws; Governmental Approvals............... 13
4.1.11. Title to Assets............................................ 13
4.1.12. Contracts.................................................. 14
4.1.13. Territorial Restrictions................................... 15
4.1.14. Inventories................................................ 16
4.1.15. Bank Accounts.............................................. 16
4.1.16. Licenses................................................... 16
4.1.17. Intellectual Property...................................... 16
4.1.18. Insurance.................................................. 17
4.1.19. Environmental Matters...................................... 18
(i)
4.1.20. Employees; Labor Matters, etc................................................... 20
4.1.21. Employee Benefit Plans and Related Matters...................................... 20
4.1.22. Brokers; Finders, etc........................................................... 22
4.1.23. Disclosure...................................................................... 22
4.1.24. Purchase for Investment......................................................... 23
4.1.25. Accounts Receivable............................................................. 23
4.2. Representations and Warranties of Halter and Acquisition................................. 23
4.2.1. Authorization, etc.............................................................. 23
4.2.2. Corporate Status................................................................ 24
4.2.3. No Conflicts, etc............................................................... 24
4.2.4. Brokers; Finders, etc........................................................... 24
4.2.5. Validity of Halter Shares....................................................... 25
4.2.6. Disclosure...................................................................... 25
4.2.7. Halter Stock.................................................................... 25
ARTICLE V COVENANTS................................................................................ 25
5.1. Covenants of Utility and the Shareholders................................................ 25
5.1.1. Conduct of Business............................................................. 25
5.1.2. No Solicitation................................................................. 28
5.1.3. Access and Information; Cooperation for SEC Filings by Halter................... 28
5.1.4. Public Announcements............................................................ 29
5.1.5. Vote or Consent on Merger; Other Actions........................................ 29
5.1.6. Further Actions................................................................. 30
5.1.7. Further Assurances.............................................................. 30
5.2. Covenants of Halter and Acquisition...................................................... 30
5.2.1. Further Actions................................................................. 30
5.2.2. Further Assurances.............................................................. 31
5.2.3. Election of President........................................................... 31
5.2.4. Employee Benefits............................................................... 31
5.2.5. Registration of Halter Shares................................................... 32
5.2.6. Principal Office................................................................ 34
5.2.7. Acquisition's Articles and Bylaws............................................... 34
5.2.8. Price Protection................................................................ 34
ARTICLE VI CONDITIONS PRECEDENT.................................................................... 35
6.1 Conditions to Obligations of Each Party.................................................. 35
6.1.1. No Injunction, etc.............................................................. 35
6.1.2. Corporate Proceedings........................................................... 35
6.2 Conditions to Obligations of Halter and Acquisition...................................... 35
6.2.1. Representations; Performance.................................................... 35
6.2.2. Consents........................................................................ 36
6.2.3. No Material Adverse Effect...................................................... 36
(ii)
6.2.4. Transaction Agreements..................................... 36
6.2.5. Opinion of Counsel......................................... 36
6.2.6. Estoppel Letters........................................... 36
6.2.7. Title Insurance............................................ 36
6.3. Conditions to Obligations of Utility and the Shareholders.......... 37
6.3.1. Representations; Performance, etc......................... 37
6.3.2. Opinion of Counsel......................................... 37
6.3.3. Transaction Agreements.................................... 37
6.3.4. Consents................................................... 37
6.3.5. Tax Opinion................................................ 37
ARTICLE VII TERMINATION................................................... 37
7.1. Termination........................................................ 37
7.2. Effect of Termination.............................................. 38
ARTICLE VIII INDEMNIFICATION; MISCELLANEOUS............................... 38
8.1 Indemnification.................................................... 38
8.2 Survival of Representations and Warranties; etc.................... 42
8.3. Expenses........................................................... 43
8.4. Severability....................................................... 43
8.5. Notices............................................................ 43
8.6. Miscellaneous...................................................... 44
8.6.1. Headings................................................... 44
8.6.2. Entire Agreement........................................... 44
8.6.3. Counterparts............................................... 45
8.6.4. Governing Law.............................................. 45
8.6.5. Binding Effect............................................. 45
8.6.6. Assignment................................................. 45
8.6.7. No Third Party Beneficiaries............................... 45
8.6.8. Amendment; Waiver,etc...................................... 45
8.6.9. Confidentiality............................................ 46
8.6.10. Nature of Obligations...................................... 46
(iii)
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A - List of Shareholders
Exhibit B - Escrow Agreement
Exhibit C - Form of Subscription Agreement
Exhibit D - Form of Employment Agreement
Exhibit E - Forms of Non-Competition Agreement
Exhibit F - Form of Shareholder's Release
Schedules
(iv)
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger, dated as of October 31, 1997, by and among
Halter Marine Group, Inc., a Delaware corporation ("Halter"), Utility
Acquisition, Inc., a Louisiana corporation ("Acquisition"), Utility Steel
Fabrication Inc., a Louisiana corporation ("Utility"), and the shareholders of
Utility listed on Exhibit A hereto (collectively, the "Shareholders" and
severally, a "Shareholder").
WHEREAS, each of Halter, Acquisition and Utility desire to effect a
business combination pursuant to which Utility will be merged with and into
Acquisition (the "Merger") and the holders of common stock, no par value, of
Utility ("Utility Common Stock") will receive shares of common stock, par value
$0.01 per share, of Halter ("Halter Common Stock") and cash in exchange for
their shares of Utility Common Stock;
WHEREAS, the Boards of Directors of Halter, Acquisition and Utility each
have approved the Merger provided for herein upon the terms and subject to the
conditions set forth herein;
WHEREAS, the Shareholders, the beneficial owners and holders of record of
all of the issued and outstanding capital stock of Utility, each desires to join
in and be a party to this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements made herein and of the mutual benefits to be derived
hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3), Utility shall be merged with
and into Acquisition and the separate corporate existence of Utility shall
thereupon cease. Acquisition shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation"). The Merger
shall have the effects specified in the Louisiana Business Corporation Law (the
"LBCL").
1.2. The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the office of
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, A Professional Limited Liability Company, ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, at 9:00 a.m., Central time, on the first
business day immediately following the day on which the last to be fulfilled or
waived of the conditions set forth in Article 6 shall be fulfilled or waived in
accordance herewith or (b) at such other time, date or place as Halter and
Utility may agree. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date".
1.3. Effective Time. If the conditions to the Merger set forth in
Article 6 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 7, the parties
hereto shall cause a Certificate of Merger meeting the requirements of Section
112F of the LBCL to be properly executed and filed in accordance with such
section on the Closing Date. The Merger shall become effective at the time of
filing of the Certificate of Merger with the Secretary of State of the State of
Louisiana in accordance with the LBCL, or at such later time which the parties
hereto shall have agreed upon and designated in such filing as the effective
time of the Merger (the "Effective Time").
1.4. Appointment of Shareholder Representative.
(a) In order to efficiently administer the Merger and the
transactions contemplated hereby, including (i) the waiver of any condition to
the obligations of the Shareholders to consummate the Merger and the
transactions contemplated hereby and (ii) the defense and/or settlement of any
claims for which the Shareholders may be required to indemnify Halter and/or
Acquisition pursuant to Article VIII of this Agreement or the Escrow Agreement,
the Shareholders hereby designate ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (or his successor appointed in
accordance with Section 1.5) as their representative (the "Shareholder
Representative").
(b) The Shareholders hereby authorize the Shareholder Representative
(i) to take all action necessary in connection with the waiver of any condition
to the obligations of the Shareholders to consummate the Merger and the
transactions contemplated hereby, or the defense and/or settlement of any claims
for which the Shareholders may be required to indemnify Halter and/or
Acquisition pursuant to the Escrow Agreement, (ii) to give and receive all
notices required to be given under this Agreement and the Escrow Agreement and
(iii) to take any and all additional action as is contemplated to be taken by or
on behalf of the Shareholders by the terms of this Agreement or the Escrow
Agreement.
(c) By his or her execution of this Agreement, each Shareholder
agrees that:
(i) the provisions of this Section 1.4 are independent and
severable, are irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Shareholder may have in
connection with the Merger and the transactions contemplated by this Agreement;
2
(ii) remedies available at law for any breach of the provisions
of this Section 1.4 are inadequate; therefore, Halter, Acquisition and Utility
shall be entitled to temporary and permanent injunctive relief without the
necessity of proving damages if either Halter, Acquisition and/or Utility brings
an action to enforce the provisions of this Section 1.4; and
(iii) the provisions of this Section 1.4 shall be binding upon
the executors, heirs, legal representatives, personal representatives, trustees,
and successors of each Shareholder, and any references in this Agreement to a
Shareholder or the Shareholders shall mean and include the successors to the
Shareholders' rights hereunder, whether pursuant to testamentary disposition,
the laws of descent and distribution or otherwise.
1.5. Shareholder Representative; Power of Attorney.
(a) The Shareholder Representative shall be appointed by and shall
constitute the agent and attorney-in-fact of each Shareholder, for and on behalf
of such Shareholders: to give and receive notices and communications hereunder
and under the Escrow Agreement and any other document contemplated hereby or
thereby; to authorize delivery to Halter and/or Acquisition of funds from the
escrow in satisfaction of claims by Halter and/or Acquisition in respect to
Damages (as hereinafter defined); to object to such deliveries; to agree to,
negotiate, enter into settlements and compromises of, and comply with orders of
courts and awards of arbitrators with respect to such claims which may be
satisfied from the Escrow Amount (as hereinafter defined); and to take all
actions necessary or appropriate in the judgment of the Shareholder
Representative for the accomplishment of the foregoing. The Shareholder
Representative may resign upon 30 days prior written notice to the parties to
this Agreement, and the Escrow Agent. The Shareholder Representative may be
replaced by the Shareholders from time to time upon not less than five days
prior written notice to the parties to this Agreement and the Escrow Agent;
provided that the Shareholder Representative may not be replaced unless
Shareholders holding a majority in interest of the Escrow Amount agree to such
replacement. In the event that the Shareholder Representative dies, becomes
unable to perform his responsibilities hereunder or resigns from such position,
Shareholders holding a majority in interest of the Escrow Amount shall select
another representative to fill such vacancy and such substituted representative
shall be deemed to be the Shareholder Representative for all purposes of this
Agreement. Any successor Shareholder Representative shall have all of the
power, authority, rights and privileges conferred by this Agreement upon the
original Shareholder Representative, and the term "Shareholder Representative"
as used herein shall be deemed to include any successor Shareholder
Representative. No bond shall be required of the Shareholder Representative,
and the Shareholder Representative shall receive no compensation for his
services. During the term of the Escrow Agreement, notices or communications to
or from the Shareholder Representative shall constitute notice to or from each
of the Shareholders, as appropriate.
(b) The Shareholder Representative shall not be liable for his
service in such capacity to the Shareholders for any act done or omitted
hereunder as the Shareholder
3
Representative while acting in good faith and in the exercise of reasonable
judgment, and any act done or omitted pursuant to the advice of counsel shall be
evidence of such good faith.
(c) A decision, act, consent or instruction of the Shareholder
Representative then serving shall constitute the decision, act or consent or
instruction of all the Shareholders, and shall be final, valid, binding and
conclusive upon each of the Shareholders, and the Escrow Agent, Halter and
Acquisition may rely upon any decision, act, consent or instruction of the
Shareholder Representative as being the decision, act, consent or instruction of
each and all of the Shareholders with respect to the Escrow Amount. The Escrow
Agent, Halter, and Acquisition are hereby relieved from any liability to any
person for any acts done by them with respect to the Escrow Amount in accordance
with such decision, act, consent or instruction of the Shareholder
Representative. Although the Shareholder Representative shall not be obligated
to obtain instructions from the Shareholders prior to any decision, act, consent
or instruction, if and to the extent that the Shareholder Representative
receives any written instructions from the Shareholders holding a majority in
interest of the Escrow Amount, the Shareholder Representative shall comply with
such instructions.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles of Incorporation of
Acquisition in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law.
2.2 Bylaws. The Bylaws of Acquisition in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
2.3 Directors. The directors of Acquisition immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time.
2.4 Officers. The officers of Acquisition immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time.
ARTICLE III
CONVERSION OF UTILITY STOCK
3.1 Conversion of Utility Stock. (a) At the Effective Time, each share of
common stock, par value $1.00 per share, of Acquisition outstanding immediately
prior to the Effective Time shall remain outstanding and shall represent one
share of common stock, par value $1.00 per share, of the Surviving Corporation.
4
(b) At the Effective Time, the shares of Utility Common Stock issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holders thereof be converted
into the right to receive an aggregate of 221,250 shares of Halter Common Stock
and cash in the amount of $5,880,000 (the "Merger Consideration"). Of the cash
portion of the Merger Consideration, $350,000 (the "Escrow Amount") shall be
deposited into an escrow account pursuant to an Escrow Agreement among Halter,
each of the shareholders of Utility, and Hibernia National Bank substantially in
the form attached hereto as Exhibit B (the "Escrow Agreement") to secure the
indemnification obligations of the Shareholders set forth in Section 8.1(a) of
this Agreement. The Merger Consideration and the Escrow Amount shall be
allocated among the Shareholders as set forth in Schedule 3.1 hereto. The cash
portion of the Merger Consideration shall be paid by wire transfer or cashiers
checks as the Shareholders may direct.
(c) As a result of the Merger and without any action on the part of
the holder thereof, all shares of Utility Common Stock shall cease to be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate (a "Certificate") representing any shares of Utility
Common Stock shall thereafter cease to have any rights with respect to such
shares, except the right to receive upon the surrender of such Certificate,
without interest, the Halter Common Stock and cash into which the shares
represented by such Certificate have been converted in accordance with Sections
3.1(b) and 3.2(d) of this Agreement.
(d) Each share of Utility Common Stock issued and held in Utility's
treasury at the Effective Time shall, by virtue of the Merger, cease to be
outstanding and shall be canceled and retired without payment of any
consideration therefor.
3.2. Exchange of Certificates. (a) At or after the Effective Time,
each holder of Certificates theretofore representing shares of Utility Common
Stock, upon the surrender thereof to Halter together with a duly executed and
completed Subscription Agreement, in the form attached hereto as Exhibit C
("Subscription Agreement"), shall receive in exchange therefor the portion of
the Merger Consideration into which such shares of Utility Common Stock have
been converted as provided in Section 3.1 hereof, subject to the payment into an
escrow account of the Escrow Amount and after giving effect to any required
withholding tax, and the Certificate so surrendered shall be canceled. No
interest will be paid or accrued on the value of any Halter Common Stock or cash
payable to holders of Certificates. Until so surrendered, each Certificate
shall be deemed for all purposes, other than as provided below with respect to
the payment of dividends or other distributions, if any, in respect of Halter
Common Stock, to represent the number of whole shares of Halter Common Stock and
cash into which the shares of Utility Common Stock theretofore represented
thereby shall have been converted.
(b) Notwithstanding any other provisions of this Agreement, no
dividends on Halter Common Stock shall be paid with respect to any shares of
Utility Common Stock represented by a Certificate until such Certificate is
surrendered for exchange as provided herein. Subject to the effect of applicable
laws, following surrender of any such Certificate, there shall
5
be paid to the holders of the Certificates representing whole shares of Halter
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore payable with respect to such whole
shares of Halter Common Stock and not paid, less the amount of any withholding
taxes which may be required thereon, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Halter Common Stock, less the
amount of any withholding taxes which may be required thereon.
(c) At or after the Effective Time, there shall be no transfers on
the stock transfer books of Utility of the shares of Utility Common Stock which
were outstanding immediately prior to the Effective Time.
(d) No fractional shares of Halter Common Stock will be issued
pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Utility and the Shareholders.
Utility and each Shareholder represents and warrants to Halter and Acquisition
as follows:
4.1.1. Authorization, etc. Utility has the requisite corporate power and
authority to execute and deliver this Agreement and all agreements contemplated
hereby (collectively, the "Transaction Agreements"), and, subject only to the
approval of this Agreement and the transactions contemplated hereby by the
holders of two-thirds (2/3) of the outstanding shares of Utility Common Stock
(the "Requisite Shareholder Approval"), to perform fully its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by Utility of this Agreement and the
other Transaction Agreements and, subject to obtaining the Requisite Shareholder
Approval, the consummation of the transactions contemplated hereby and thereby,
have been duly authorized by all requisite corporate action of Utility. Utility
and the Shareholders have duly executed and delivered this Agreement and on the
Closing Date Utility and the Shareholders will have duly executed and delivered
the Transaction Agreements to which they are parties. Subject to obtaining the
Requisite Shareholder Approval, this Agreement is, and on the Closing Date each
of the Transaction Agreements will be, legal, valid and binding obligations of
Utility and/or the Shareholders, as the case may be, enforceable against each of
them in accordance with their respective terms.
4.1.2. Corporate Status. (a) Each of Utility and J & B Company, Inc., a
Louisiana corporation ("J&B") is a corporation duly organized, validly existing
and in good standing under the laws of the State of Louisiana, with full
corporate power and authority to carry on its
6
respective business and to own or lease and to operate its respective properties
as and in the places where such business is conducted and such properties are
owned, leased or operated.
(b) Each of Utility and J&B is duly qualified or licensed to do
business in the jurisdictions specified in Schedule 4.1.2, which are the only
jurisdictions in which the operation of its respective business or the character
of the properties owned, leased or operated by it makes such qualification or
licensing necessary.
(c) Utility has delivered to Halter complete and correct copies of
its articles of incorporation and bylaws, and the articles of incorporation and
bylaws of J&B, each as amended and in effect on the date hereof. Neither Utility
nor J&B is in violation of any of the provisions of its respective articles of
incorporation or bylaws. The minute books and other corporate records of Utility
and J&B have been made available to Halter prior to the execution of this
Agreement and contain a true and complete record of all action taken at all
meetings and by all written consents in lieu of meetings of the shareholders,
the Board of Directors and committees of the Board of Directors of Utility and
J&B, respectively. The stock transfer ledgers and other similar records of
Utility and J&B have been made available to Halter prior to the execution of
this Agreement and currently reflect all record transfers prior to the execution
of this Agreement in the capital stock of Utility and J&B, respectively.
4.1.3. Capitalization, etc. (a) The authorized capital stock of Utility
consists solely of 10,000 shares of Utility Common Stock, of which 4,622 shares
are issued and outstanding and 5,378 shares are held in its treasury. All
issued and outstanding shares of Utility Common Stock are duly authorized,
validly issued, fully paid, non-assessable and free of preemptive rights.
(b) Except for this Agreement, no subscriptions, options,
warrants, conversion or other rights, agreements, commitments, arrangements or
understandings of any kind obligating Utility, contingently or otherwise, to
issue or sell, or cause to be issued or sold, any shares of Utility Common
Stock, or any securities convertible into or exchangeable for any such shares,
are outstanding, and no authorization therefor has been given. There are no
outstanding contractual or other rights or obligations to or of Utility to
repurchase, redeem or otherwise acquire any outstanding shares of Utility Common
Stock.
(c) The authorized capital stock of J&B consists solely of 10,000
shares of common stock, no par value, of which 10,000 shares are issued and
outstanding and no shares are held in its treasury. All issued and outstanding
shares of J&B's capital stock are duly authorized, validly issued, fully paid,
non-assessable, free of preemptive rights and owned by Utility, free and clear
of all liens, pledges, assessments, charges, security interests, claims or other
encumbrances of any kind (each, a "Lien"). Except for interests in J&B, neither
Utility nor J&B owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, business, trust
or entity (other than investments in short-term investment securities).
7
4.1.4. No Conflicts, etc. The execution, delivery and performance by
Utility and the Shareholders of this Agreement and of the other Transaction
Agreements to which they are parties, and the consummation of the transactions
contemplated hereby and thereby, do not and will not conflict with or result in
a violation of or a default under (with or without the giving of notice or the
lapse of time or both), create in any other person a right or claim of
termination, amendment, modification, acceleration or cancellation of, or result
in the creation of any Lien (or any obligation to create any Lien) upon any of
the properties or assets of Utility or J&B under, (i) to the knowledge of
Utility or any Shareholder, any law, statute, ordinance, governmental rule or
regulation (each, a "Law") applicable to Utility, J&B or any of their respective
properties or assets, or to any Shareholder, (ii) the articles of incorporation
or bylaws of Utility or J&B or (iii) except as set forth in Schedule 4.1.4., any
contract (whether written or oral), agreement, arrangement or other instrument
(each, a "Contract") to which Utility, J&B or any Shareholder is a party or by
which Utility, J&B, any Shareholder or any of the properties or assets of
Utility or J&B may be bound or affected, except, in the case of clause (iii),
for violations or defaults that, individually and in the aggregate, would not
have a material adverse effect on the business, results of operations, condition
(financial or otherwise) or prospects of Utility and J&B (a "Material Adverse
Effect") and would not materially impair the ability of Utility or any
Shareholder to perform its obligations hereunder or under the other Transaction
Agreements to which they are parties. Except as specified in Schedule 4.1.4, to
the knowledge of Utility or any Shareholder, no governmental approval or other
approval or other consent of any party is required to be obtained or made by
Utility or any Shareholder in connection with the execution and delivery of this
Agreement or the other Transaction Agreements or the consummation of the
transactions contemplated hereby or thereby.
4.1.5. Financial Statements. (a) Utility has delivered to Halter
complete and correct copies of (a) the consolidated balance sheets as of
December 31, 1996, December 31, 1995 and December 31, 1994 of Utility and J&B,
the related consolidated statements of income, retained earnings and cash flows
for the respective years then ended, the related notes and schedules thereto,
and the report of its independent public accountants with respect thereto
(collectively, the "Reviewed Financial Statements"), and (b) the unaudited
consolidated balance sheet (the "Latest Balance Sheet") as of June 30, 1997 (the
"Balance Sheet Date") of Utility and J&B, the related unaudited consolidated
statements of income, retained earnings and cash flows for the respective
periods then ended and the related notes and schedules, if any, thereto
(collectively, the "Unaudited Financial Statements").
(b) The Reviewed Financial Statements are complete and correct in
all respects, have been derived from the accounting books and records of Utility
and J&B and have been prepared in accordance with generally accepted accounting
principles ("GAAP") throughout the periods indicated. The Unaudited Financial
Statements have been prepared in all material respects on a basis consistent
with the Reviewed Financial Statements.
(c) The balance sheets included in the Reviewed Financial
Statements and the Unaudited Financial Statements (collectively, the "Financial
Statements") present fairly the
8
consolidated financial position of Utility and J&B as of the respective dates
thereof, and the related statements of income, retained earnings and cash flows
included in such Financial Statements present fairly the consolidated result of
operations, retained earnings and cash flows of Utility and J&B for the
respective periods indicated.
4.1.6. Absence of Undisclosed Liabilities. Neither Utility nor J&B has
any liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
except (a) as set forth in Schedule 4.1.6, (b) as and to the extent disclosed
and adequately reserved against in the Latest Balance Sheet (excluding the notes
thereto) and (c) for liabilities and obligations that (i) were incurred after
the Balance Sheet Date, in the ordinary course of business consistent with prior
practice and (ii) individually and in the aggregate are not material to Utility
or J&B and have not had or resulted in, and will not have or could reasonably be
expected to result in, a Material Adverse Effect.
4.1.7. Taxes. (a) All federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, stamp, occupation, customer
duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative, add-on minimum taxes, or other
tax of any kind whatsoever, including any interest, penalty, or addition thereto
(each, a "Tax" and collectively, "Taxes") that are or may be required to be
paid, collected or withheld by or with respect to Utility or J&B or any of their
respective assets or properties on or before the Closing Date or that are
chargeable as a Lien on any assets or properties of Utility or J&B have been
timely paid or collected or withheld and remitted to the appropriate taxing or
other governmental authorities, except (i) as set forth on Schedule 4.1.7, (ii)
for any Taxes which are being contested in good faith by appropriate proceedings
and for which adequate reserves with respect thereto have been established and
are being maintained in accordance with GAAP and (iii) for any Taxes that are
not yet due and payable and are adequately reserved in the Latest Balance Sheet
or have arisen in the ordinary course of business since the Balance Sheet Date
and before the Closing Date.
(b) Except as set forth on Schedule 4.1.7 and without limiting
the representation made in Section 4.1.7(a), all federal, state, local and
foreign tax returns that are or may be required to be filed by or with respect
to Utility or J&B, or any of their respective assets or properties, on or before
the Closing Date have been timely filed with the appropriate taxing or other
governmental authorities and have reflected only such positions on such tax
returns as were believed in good faith by the person preparing each such tax
return and the person on whose behalf each such tax return was filed to be
supported under then prevailing Law. All Taxes shown to be due on each such tax
return have been paid.
(c) Except as set forth on Schedule 4.1.7, neither Utility nor
J&B (i) has received any written notice of deficiency or assessment from any
taxing or other governmental authority with respect to Taxes, (ii) is currently
under, or has received notice of commencement
9
of, any audit by any taxing or other governmental authority concerning any Taxes
or (iii) has executed any waiver of the statute of limitations with respect to
any taxable period.
(d) Except as set forth on Schedule 4.1.7, (i) no written ruling (as
such term is used in the Code has been received from, and no closing or other
similar agreement has been executed with, any taxing or other governmental
authority that will be binding upon Utility, J&B or any of their respective
assets or properties after the Closing and (ii) no power of attorney has been
given by or with respect to Utility or J&B to any person with respect to Taxes
that will be binding upon Utility or J&B.
4.1.8. Absence of Changes. Except as set forth in Schedule 4.1.8, since
the Balance Sheet Date, each of Utility and J&B has conducted its business only
in the ordinary course consistent with prior practice and has not:
(a) suffered any Material Adverse Effect;
(b) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock or otherwise purchased or redeemed,
directly or indirectly, any shares of its capital stock;
(c) issued or sold any shares of its capital stock, or any securities
convertible into or exchangeable for any such shares, or issued, sold, granted
or entered into any subscriptions, options, warrants, conversion or other
rights, agreements, commitments, arrangements or understandings of any kind,
contingent or otherwise, to purchase or otherwise acquire any such shares or any
securities convertible into or exchangeable for any such shares;
(d) incurred any indebtedness for borrowed money, issued or sold any
debt securities or prepaid any debt (including, without limitation, any
borrowings from or prepayments to any Shareholder) except for borrowings and
prepayments in the ordinary course of business;
(e) mortgaged, pledged or otherwise subjected to any Lien, any of its
properties or assets, tangible or intangible, except for (i) mortgages and
encumbrances which secure indebtedness which is properly reflected in the Latest
Balance Sheet; (ii) Liens filed of record; (iii) Liens for taxes accrued but not
yet payable; (iv) Liens arising as a matter of law in the ordinary course of
business with respect to obligations incurred after the Balance Sheet Date;
provided that the obligations secured by such Liens are not delinquent or are
being contested in good faith; (v) such imperfections of title and encumbrances,
if any, as do not materially detract from the value of or materially interfere
with the present use of any of such properties or assets or the pending sale of
any of such owned properties or assets; and (vi) capital leases, if any, with
third parties for fair and adequate consideration (collectively, "Permitted
Liens");
(f) forgiven, canceled, compromised, waived or released any debts,
claims or rights, except for debts of, or claims and rights against, persons
other than any Shareholder that
10
have been forgiven, canceled, compromised, waived or released in the ordinary
course of business;
(g) amended, modified or terminated any existing Contract or entered
into (x) any agreement, commitment or other Transaction, other than agreements
entered into in the ordinary course of business and involving an expenditure of
less than $10,000 in each individual case and $50,000 in the aggregate, or (y)
any agreement, commitment or other Transaction that, pursuant to its terms, is
not cancelable without penalty on notice of 30 days or less from the end of the
first month following the Closing Date;
(h) paid or committed to pay any bonus, other incentive compensation,
change in control or similar compensation to any officer, director, employee,
sales representative, agent or consultant, Shareholder or affiliate, or granted
or committed to grant to any officer, director, employee, sales representative,
agent, consultant, Shareholder or affiliate any other increase in, or
additional, compensation in any form;
(i) entered into, instituted, adopted or amended or committed to enter
into, institute, adopt or amend any employment, consulting, retention, change-
in-control, collective bargaining, bonus or other incentive compensation,
profit-sharing, health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other employment,
compensation or benefit plan, policy, agreement, trust, fund or arrangement in
respect of or for the benefit of any officer, director, employee, sales
representative, agent, consultant, Shareholder or affiliate;
(j) encountered any labor union organizing activity or had any actual
or threatened employee strikes, work stoppages, slowdowns or lockouts, or had
any material adverse change in its relations with its employees, agents,
customers or suppliers;
(k) amended either of its articles of incorporation or bylaws;
(l) changed in any respect its accounting practices, policies or
principles;
(m) incurred, assumed, guaranteed or otherwise become directly or
indirectly liable with respect to any liability or obligation in excess of
$10,000 in each case or $50,000 in the aggregate at any one time outstanding
(whether absolute, accrued, contingent or otherwise and whether direct or
indirect, or as guarantor or otherwise with respect to any liability or
obligation of any other person) other than agreements for purchases of goods or
services in the ordinary course of business;
(n) sold any assets, other than inventory in the ordinary course of
business;
11
(o) made any material changes in policies or practices relating to
selling practices, returns, discounts or other terms of sale or accounting
therefor or in policies of employment;
(p) received any notice of termination of any Contract which, in any
case or in the aggregate, would have or result in a Material Adverse Effect;
(q) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any United States or foreign
patents, copyrights, trademarks, service marks, trade names, trade dress, logos,
business and product names, slogans, inventions, trade secrets, industrial
models, formulas, processes, designs, confidential and technical information,
manufacturing, engineering and technical drawings, product specifications, know-
how, and intellectual property rights to or similar to and registrations and
applications for registration relating to any of the foregoing ("Intellectual
Property"), or modified any existing rights with respect thereto;
(r) suffered any damage, destruction or loss (whether or not covered
by insurance), or any employment-related problem, that, individually or in the
aggregate, would have or result in a Material Adverse Effect;
(s) failed to replenish its inventories and supplies in a normal and
customary manner consistent with its prior practice and prudent business
practices prevailing in the industry, or made any purchase commitment in excess
of the normal, ordinary and usual requirements of its business or at any price
or upon terms and conditions more onerous than those usual and customary in the
industry, or made any change in its selling, pricing, advertising or personnel
practices inconsistent with its prior practice and prudent business practices
prevailing in the industry;
(t) made any capital expenditures or capital additions or improvements
in excess of an aggregate of $10,000;
(u) instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body other than in the ordinary
course of business consistent with past practices, but not in any case involving
amounts in excess of $10,000;
(v) entered into any transaction, Contract or commitment other than in
the ordinary course of business, or paid or agreed to pay any brokerage or
finder's fees, taxes or other expenses in connection with, or incurred any
severance pay obligations by reason of, this Agreement, the other Transaction
Agreements or the transactions contemplated hereby or thereby; or
(w) taken any action or omitted to take any action that could
reasonably be expected to result in the occurrence of any of the foregoing.
12
4.1.9. Litigation. Except as set forth in Schedule 4.1.9, there is no
action, claim, demand, suit, proceeding, arbitration, grievance, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or, to the knowledge of
Utility or any Shareholder, threatened against or relating to Utility or J&B or
against or relating to the transactions contemplated by this Agreement or the
other Transaction Agreements, and neither Utility nor any Shareholder knows or
has reason to be aware of any basis for the same.
4.1.10. Compliance with Laws; Governmental Approvals. (a) To the knowledge of
Utility or any Shareholder, except as disclosed in Schedule 4.1.10(a), neither
Utility nor J&B is, and since January 1, 1994, neither Utility nor J&B has been,
in violation of or default under any Law applicable to it or any of its
properties or business, except for any such violations or defaults that,
individually and in the aggregate, have not had and are not reasonably expected
to have a Material Adverse Effect. Neither Utility nor J&B nor any Shareholder
has received any notice alleging any such violation or default.
(b) Except as disclosed in Schedule 4.1.10(b), to the knowledge of
Utility or any Shareholder, all material governmental approvals necessary for
the conduct of the business and operations of Utility and J&B have been duly
obtained and are in full force and effect. As of the date hereof, there are no
proceedings pending or, to the knowledge of Utility or any Shareholder,
threatened that could result in the revocation, cancellation or suspension, or
any materially adverse modification, of any such governmental approval, and the
execution and delivery of this Agreement and the other Transaction Agreements,
and the consummation of the transactions contemplated hereby and thereby will
not result in any such revocation, cancellation, suspension or modification.
4.1.11. Title to Assets. (a) On the Balance Sheet Date, Utility and J&B
had and, except with respect to assets disposed of for adequate consideration in
the ordinary course of business since such date, as of the date of this
Agreement, have good and merchantable title to all real property and all other
material properties and assets reflected on the Latest Balance Sheet, and have
good and merchantable title to all real property and all other material
properties and assets acquired since such date, in each case free and clear of
all Liens except for Permitted Liens. Utility and J&B own, or have valid
leasehold interests in or license to, all material properties and assets used in
the conduct of the business of Utility and J&B as now conducted. Utility and
J&B have adequate rights of ingress and egress with respect to their respective
real property and all buildings, structures, facilities, fixtures and other
improvements thereon. Utility has delivered or made available to Halter copies
of the deeds and other instruments (as recorded) by which Utility or J&B
acquired such real property, and copies of all title insurance policies,
opinions, abstracts, and surveys in the possession of Utility, J&B or any
Shareholder and relating to such real property.
(b) With respect to each lease of any real property or a material
amount of personal property to which Utility or J&B is a party, (i) to the
knowledge of Utility or any
13
Shareholder, such lease is a legal, valid and binding agreement, is in full
force and effect and is enforceable in accordance with its terms; (ii) all rents
and other monetary amounts that have become due and payable thereunder have been
paid; (iii) to the knowledge of Utility or any Shareholder, there exists no
default, or event, occurrence, condition or act, which with the giving of
notice, the lapse of time or the happening of any further event, occurrence,
condition or act would become a default under such lease; and (iv) the execution
and delivery of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby will not
constitute a breach under, or cause a termination of, such lease.
(c) Neither Utility nor J&B has any legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of any substantial
part of its assets; or to sell or dispose of any of its assets except in the
ordinary course of business consistent with past practices.
(d) To the knowledge of Utility or any Shareholder, none of Utility's
or J&B's real property, buildings, structures, facilities, fixtures or other
improvements, or the use thereof, contravenes or violates any building, zoning,
administrative, occupational safety and health or other applicable Law in any
material respect.
(e) The improvements on Utility's and J&B's real property are in good
operating condition and in a state of good maintenance and repair, ordinary wear
and tear excepted, are adequate and suitable for the purposes for which they are
presently being used and there are no condemnation or appropriation proceedings
pending or, to the knowledge of Utility or any Shareholder, threatened against
any of such real property or the improvements thereon. There is no writ,
injunction, decree, order or judgment outstanding, nor any action, claim, suit
or proceeding, pending or, to the knowledge of Utility or any Shareholder,
threatened, relating to the ownership, lease, use, occupancy or operation of any
such real property or the improvements thereon.
4.1.12. Contracts. (a) Schedule 4.1.12(a) contains a complete and
correct list of all Contracts of the types described below (true and complete
copies or, if none, reasonably complete and accurate written descriptions of
which, together with all amendments and supplements thereto and all waivers of
any terms thereof, have been made available to Halter prior to the date of this
Agreement), to which Utility or J&B is a party or by which any of its respective
assets or properties is bound:
(i) leases, licenses, and other material Contracts concerning or
relating to real property;
(ii) written or oral employment Contracts for officers,
directors, management or key personnel, consulting, agency, collective
bargaining or other similar Contracts and agreements under which current or
future obligations exist relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives, distributors,
14
dealers, agents, independent contractors or consultants, in each case that are
not cancelable on notice of 30 days or less and do not require payments in the
event of termination;
(iii) loan agreements, indentures, letters of credit, mortgages,
security agreements, pledge agreements, deeds of trust, bonds, notes,
guarantees, and other agreements and instruments effecting, evidencing or
securing the borrowing of money or obtaining of or extension of credit (other
than ordinary trade credit);
(iv) brokerage or finder's agreements;
(v) joint venture, partnership and similar Contracts involving
a sharing of profits or expenses;
(vi) asset purchase agreements and other acquisition or
divestiture agreements (other than agreements for sales of inventory in the
ordinary course of business) and any agreements relating to the sale, lease or
disposal of any capital assets;
(vii) orders and other Contracts for the purchase or sale of
materials, supplies, products or services under which current or future
obligations exist;
(viii) other Contracts with respect to which the aggregate amount
that could reasonably be expected to be paid or received thereunder in the
future exceeds $10,000 in the aggregate;
(ix) master lease agreements providing for the leasing of
personal property;
(x) Contracts between or among Utility or J&B, on the one
hand, and any officer, director or affiliate of Utility or J&B, or any
Shareholder, on the other hand; and
(xi) any other Contracts, agreements or commitments that are
material to Utility, J&B or their respective businesses.
(b) All Contracts are in full force and effect and enforceable against
Utility, J&B and each Shareholder who is a party thereto, and, to the knowledge
of Utility and each Shareholder, against each other party thereto. There does
not exist under any Contract any event of default or event or condition that,
after notice or lapse of time or both, would constitute a violation, breach or
event of default thereunder on the part of Utility, J&B, each Shareholder who is
a party thereto or, to the knowledge of Utility and each Shareholder, any other
party thereto except as set forth in Schedule 4.1.12(b) and except for such
events or conditions that, individually and in the aggregate, (i) have not had
or resulted in, and will not have or result in, a Material Adverse Effect and
(ii) have not and will not materially impair the ability of Utility to perform
its obligations hereunder or under the other Transaction Agreements to which it
is a party. Except as set forth in Schedule 4.1.12(b), no consent of any third
party is required under
15
any Contract as a result of or in connection with, and the enforceability of any
Contract will not be affected in any manner by, the execution, delivery and
performance of this Agreement or any of the other Transaction Agreements or the
consummation of the transactions contemplated hereby or thereby.
4.1.13. Territorial Restrictions. Except as otherwise described on
Schedule 4.1.13, neither Utility nor J&B is restricted by any Contract,
agreement or understanding with any other person from carrying on its business
anywhere in the world.
4.1.14. Inventories. Except for excess and obsolete inventory for which
reserves have been established on the Latest Balance Sheet: (a) all of the
inventories of Utility and J&B of raw materials, supplies, work in process,
finished products, spare parts, and replacement and component parts are of good,
usable and merchantable quality in all material respects and, except as set
forth on Schedule 4.1.14, do not include excess, obsolete or discontinued items;
(b) all such inventories are of such quality as to meet the quality control
standards of Utility and J&B, as applicable, and any applicable governmental
quality control standards; (c) all such inventories that are finished goods are
saleable as current inventories at the current prices thereof in the ordinary
course of business and (d) all such inventories are recorded on the books of
Utility or J&B, as applicable, at the lower of cost or market value determined
in accordance with GAAP.
4.1.15. Bank Accounts. Schedule 4.1.15 sets forth a complete and correct
list containing the names of each bank or other financial institution in which
Utility or J&B has an account or safe deposit or lock box, the account or box
number, as the case may be, and the name of every person authorized to draw
thereon or having access thereto.
4.1.16. Licenses. To the knowledge of Utility or any Shareholder, each
of Utility and J&B has all necessary licenses, permits, approvals, registrations
and similar consents and authorizations (collectively, the "Licenses") required
to lawfully conduct its business as presently conducted, including but not
limited to all material Licenses required for each of Utility and J&B to operate
as it currently operates and in accordance with all applicable Laws or orders or
permits of any governmental authority, and (a) each such License is valid,
binding and in full force and effect, (b) no such License is subject to
revocation or forfeiture by virtue of any existing circumstance, (c) there is no
pending or, to the knowledge of Utility or any Shareholder, threatened
proceeding to modify in any material respect or revoke any License, (d) no such
License is subject to any outstanding order, decree, judgment, stipulation, or
investigation known to Utility or any Shareholder that would materially affect
such License, and (e) Utility and J&B are not, and neither Utility nor J&B nor
any Shareholder has received any notice that either Utility or J&B is, in
default (or with the giving of notice or lapse of time or both, would be in
default) under any such License.
4.1.17. Intellectual Property. (a) Title. Schedule 4.1.17(a)(i)
contains a complete and correct list of all Intellectual Property that is owned
by Utility or J&B other than Intellectual Property that is both not registered
or subject to application for registration and not material to
16
the business of Utility. All Intellectual Property related to, used in, held for
use in connection with, or necessary for the conduct of, or otherwise material
to, the businesses of Utility and J&B (the "Intellectual Property Assets") are
owned by Utility or J&B, except as disclosed on Schedule 4.1.17(a)(ii).
(b) No Infringement. To the knowledge of Utility and each Shareholder,
the conduct of its respective business by Utility and J&B does not infringe or
otherwise conflict with any rights of any person in respect of any Intellectual
Property. To the knowledge of Utility and each Shareholder, none of the
Intellectual Property Assets is being infringed.
(c) Licensing Arrangements. Schedule 4.1.17(c)(i) sets forth all
Contracts, agreements or arrangements pursuant to which Utility or J&B has
licensed any Intellectual Property Assets to, or the use of such Intellectual
Property Assets is otherwise permitted (through non-assertion, settlement or
similar agreements or otherwise) by, any other person. Schedule 4.1.17(c)(ii)
sets forth all Contracts, agreements or arrangements pursuant to which Utility
or J&B has had Intellectual Property primarily related to, used in, held for use
primarily in connection with, or necessary for the conduct of or otherwise
material to its business licensed to it, or has otherwise been permitted to use
such Intellectual Property (through non-assertion, settlement or similar
agreements or otherwise) (other than off-the-shelf commercially available
software). All of the Contracts, agreements or arrangements that are or should
be set forth on Schedules 4.1.17(c)(i) and (ii) (the "Intellectual Property
Licenses") (x) are in full force and effect in accordance with their terms and
no default exists thereunder by Utility or J&B or, to the knowledge of Utility
or any Shareholder, by any other party thereto, (y) are free and clear of all
Liens, and (z) do not contain any change in control or other terms or conditions
that will become applicable or inapplicable as a result of the consummation of
the transactions contemplated by this Agreement and the other Transaction
Agreements. Utility has made available to Halter true and complete copies of
all Intellectual Property Licenses (including amendments, supplements, renewals,
waivers and other modifications) set forth on Schedule 4.1.17(c)(i) and (ii).
All royalties, license fees, charges and other amounts payable by, on behalf of,
to, or for the account of Utility or J&B in respect of any Intellectual Property
Assets are set forth on Schedules 4.1.17(c)(i) and (ii) and are reflected in the
Financial Statements.
(d) No Intellectual Property Litigation. Except as set forth in
Schedule 4.1.17(d), no claim or demand of any person has been made nor is there
any proceeding that is pending, or to the knowledge of Utility or any
Shareholder, threatened, which (i) challenges the rights of Utility or J&B in
respect of any Intellectual Property Assets, (ii) asserts that Utility or J&B is
infringing or otherwise in conflict with, or is, except as set forth in Schedule
4.1.17(c)(ii), required to pay any royalty, license fee, charge or other amount
with regard to, any Intellectual Property, or (iii) claims that any default
exists under any Contract, agreement or arrangement listed on Schedule
4.1.17(c)(i) or (ii). Except as set forth in Schedule 4.1.17(d), none of the
Intellectual Property Assets is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, arbitrator, or
administrative agency, or has been the subject of any litigation within the last
five years, whether or not resolved in favor of Utility or J&B.
17
(e) Due Registration, etc. Each of Utility and J&B has taken, or has
caused to be taken, such necessary or desirable actions to ensure that the
patents and trademarks owned by it that are material to its business have been
duly registered under any applicable Laws or regulations in the appropriate
filing offices, domestic and foreign, and such registrations are in full force
and effect.
4.1.18. Insurance. Schedule 4.1.18 contains a complete and correct list
of all insurance policies maintained by Utility or J&B. Utility has made
available to Halter complete and correct copies of all such policies, together
with all riders and amendments thereto. Such policies are in full force and
effect, all premiums due thereon have been paid and neither Utility nor J&B has
received notice of a material premium increase or cancellation with respect to
such policies or of any default thereunder. Each of Utility and J&B has
complied in all material respects with the terms and provisions of such
policies. Within the past two years, neither Utility nor J&B has been refused
any basic insurance coverage applied for, and Utility has no reason to believe
that its existing insurance coverage and J&B's existing insurance coverage
cannot be renewed as and when the same shall expire, upon terms and conditions
standard in the market at the time renewal is sought.
4.1.19. Environmental Matters.
(a)(i) To the knowledge of Utility or any Shareholder, each of
Utility and J&B has obtained all Licenses that are required to be obtained by it
in connection with the operation of its business and ownership of its properties
(collectively, the "Subject Properties") under any applicable Environmental Law
Requirements (as hereinafter defined), except where failure to obtain such
Licenses would not have a Material Adverse Effect;
(ii) to the knowledge of Utility or any Shareholder, each of
Utility and J&B is in compliance in all respects with all terms and conditions
of such Licenses and with all applicable Environmental Law Requirements, except
where the failure to so comply would not have a Material Adverse Effect;
(iii) to the knowledge of Utility or any Shareholder, there are
no past or present events, conditions, circumstances, activities or plans, in
each case by or relating in any manner to Utility or J&B or their use of the
Subject Properties, that did or would violate or prevent compliance or continued
compliance with any Environmental Law Requirements or give rise to any
Environmental Liability (as hereinafter defined), except for such matters as
would not have a Material Adverse Effect;
(iv) there is no civil, criminal or administrative action,
suit, demand, claim, order, judgment, hearing, notice or demand letter, notice
of violation, investigation or proceeding pending or, to the knowledge of
Utility or any Shareholder, threatened by any person against Utility, J&B or any
prior owner of any of the Subject Properties, and relating in any way to any
18
Environmental Law Requirement or seeking to impose any Environmental Liability,
except for such matters as would not have a Material Adverse Effect;
(v) to the knowledge of Utility and each Shareholder, neither
Utility nor J&B is subject to or responsible for any Environmental Liability
which is not set forth and adequately reserved against on the Latest Balance
Sheet;
(vi) neither Utility nor J&B owns, operates or leases a
treatment, storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, as amended, or under any other comparable state
or local Law; and, without limiting the foregoing, (x) no polychlorinated
biphenyl is or has been present, (y) there are no underground storage tanks or
surface impoundments for hazardous materials, active or abandoned, and (z) no
hazardous material has been released in a quantity reportable under, or in
violation of, any Environmental Law Requirement or otherwise released, in the
cases of clauses (x), (y) and (z), at, on or under any site or facility now or
previously owned, operated or leased by Utility or J&B during the period of such
ownership, operation or lease;
(vii) neither Utility nor J&B has transported or arranged for
the transportation of any hazardous material to any location that is (x) listed
on the National Priorities List (the "NPL") under the Comprehensive
Environmental Response, Compensation and Liability Act of 1986, (y) listed for
possible inclusion on the NPL by the United States Environmental Protection
Agency (the "EPA") in CERCLIS (as hereinafter defined) or on any similar state
or local list or (z) the subject of enforcement actions by federal, state or
local governmental or regulatory authorities that may lead to any Environmental
Liability of Utility or J&B;
(viii) no hazardous material generated by Utility or J&B has been
recycled, treated, stored, disposed of or released by Utility or J&B at any
location;
(ix) no oral or written notification of a release of a
hazardous material has been filed by or on behalf of Utility or J&B and no site
or facility now or previously owned, operated or leased by Utility is listed or
proposed for listing on the NPL, CERCLIS or any similar state or local list of
sites requiring investigation or clean-up;
(x) to the knowledge of Utility or any Shareholder, no Liens
have arisen under or pursuant to any Environmental Law Requirement on any site
or facility owned, operated or leased by Utility or J&B, and no federal, state
or local governmental or regulatory authority action has been taken or, to the
knowledge of Utility or any Shareholder, is in process that could subject any
such site or facility to such Liens, and neither Utility nor J&B would be
required to place any notice or restriction relating to the presence of
hazardous materials at any site or facility owned by it in any deed to the real
property on which such site or facility is located; and
(xi) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or that are in the
possession of, Utility or J&B in relation
19
to any site or facility now or previously owned, operated or leased by Utility
or J&B which have not been delivered to Halter prior to the execution of this
Agreement.
(b) "Environmental Law Requirement" shall mean any Law, ordinance,
rule, regulation, notice, plan or demand letter relating to pollution or
protection of human health, safety or the environment, including those relating
to emissions, discharges, releases, or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
into the environment (including without limitation, ambient air, surface water,
groundwater, soil, wetlands, subsurface strata or land) or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
(c) "Environmental Liability" shall mean (i) any liability or
obligation arising under any Environmental Law Requirement that has resulted in
or is reasonably likely to result in a Material Adverse Effect, or (ii) any
liability or obligation under any other current theory of law or equity
(including without limitation, any liability for personal injury, property
damage or remediation) that results from, or is based upon or related to, the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handing, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, or industrial,
toxic or hazardous substance or waste, which liability or obligation has
resulted in or is reasonably likely to result in a Material Adverse Effect.
(d) "CERCLIS" shall mean the list of sites identified as containing
hazardous substances and proposed for evaluation by the EPA for possible
inclusion on the NPL.
4.1.20. Employees; Labor Matters, etc. Except as set forth in Schedule
4.1.20, neither Utility nor J&B is a party to or bound by any collective
bargaining agreement and there are no labor unions or other organizations
representing, purporting to represent or attempting to represent any employees
of Utility or J&B. Since January 1, 1994, there has not occurred or been
threatened any material strike, slowdown, picketing, work stoppage, concerted
refusal to work overtime or other similar labor activity with respect to any
employees of Utility or J&B, and since such date, each of Utility and J&B has
complied in all material respects with all applicable Laws relating to the
employment of labor, including without limitation those relating to wages,
hours, occupational safety and health and collective bargaining. There are no
material labor disputes currently subject to any grievance procedure,
arbitration or litigation and there is no representation petition pending or
threatened with respect to any employee of Utility or J&B. Neither Utility nor
J&B has received any written notice of, or is otherwise aware of, any federal,
foreign, state or local administrative proceeding (excluding workers
compensation proceedings or except as set forth in Schedule 4.1.20) pending or,
to the knowledge of Utility or any Shareholder, threatened with respect to any
employee of Utility or J&B. There is no unfair labor practice, sex, age, race
or other discrimination or labor arbitration proceeding pending or, to the
knowledge of Utility or any Shareholder, threatened against Utility or J&B.
20
4.1.21. Employee Benefit Plans and Related Matters. (a) Employee
Benefit Plans. (i) Schedule 4.1.21(a) sets forth a true and complete list of
each plan, fund or program that provides for its participants or their
beneficiaries, through the purchase of insurance or otherwise, medical,
surgical, or hospital care or benefits, or benefits in the event of sickness,
accident, disability, death or unemployment, or vacation benefits,
apprenticeship or other training programs, or day care centers, scholarship
funds, prepaid legal services, or supplemental income benefits for transferred
employees, or retirement income, or results in a deferral of income by employees
for periods extending to the termination of covered employment or beyond,
regardless of the method of calculating the contributions made to any such plan,
fund or program, or the method of calculating the benefits under any such plan,
fund or program or the method of distributing benefits from any such plan, fund
or program, and each bonus, incentive or deferred compensation, severance,
termination, retention, change in control, stock option or other equity-based,
performance or other employee or retiree benefit or compensation plan, program,
arrangement, agreement or policy, in any such case, whether written or unwritten
(in each case that applies to more than one person), that (x) provides or may
provide benefits or compensation in respect of any employee or former employee
employed or formerly employed by Utility or J&B or the beneficiary or dependent
of any such employee or former employee (such employees, former employees,
beneficiaries and dependents collectively, the "Employees") or under which any
Employee is or may become eligible to participate or derive a benefit and (y) is
or has been entered into, maintained or established by Utility or J&B, or to
which Utility or J&B contributes or is or has been obligated or required to
contribute or otherwise with respect to which Utility or J&B may have any
liability (collectively, the "Plans").
(ii) With respect to each such Plan, Utility has made available
to Halter complete and correct copies of: all written Plans; descriptions of all
unwritten Plans; all trust agreements, insurance contracts or other funding
arrangements; the two most recent actuarial reports prepared for any Plan that
is a defined benefit plan and for which actuarial reports are prepared; the two
most recent annual and similar reports filed with any governmental authority,
including all schedules thereto and all reports attached thereto; the most
recent Internal Revenue Service ("IRS") determination letter issued in respect
of any Plan; current summary plan descriptions and other explanatory literature
or announcements provided to Employees; all material communications received
from or sent to the IRS, the Pension Benefit Guaranty Corporation or the
Department of Labor in respect of any Plan (including a written description of
any oral communication in which Utility or J&B was identified by name) during
the preceding two years; statements or other communications regarding withdrawal
or other multi-employer plan liabilities in respect of any Plan which is a
multi-employer Plan, if any; and all amendments and modifications to any such
document. Except as disclosed in Schedule 4.1.21(a), neither Utility nor J&B has
communicated to any Employee any intention or commitment to modify any Plan or
to establish or implement any other employee or retiree benefit or compensation
arrangement.
(b) Qualification. Each Plan intended to be qualified under Section
401(a) of the Code, and the trust (if any) forming a part thereof, has received
a favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is
21
exempt from taxation under Section 501(a) of the Code, and, to the knowledge of
Utility and each Shareholder, nothing has occurred since the date of such
determination letter that could adversely affect such qualification or tax-
exempt status.
(c) Compliance; Liability.
(i) No Plan covered by Title IV of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or Section 412 of the Code is
now, or ever was, to the knowledge of Utility or any Shareholder, maintained by
Utility, J&B or any predecessor of either of them. Neither any Plan nor Utility
nor J&B has incurred any liability or penalty under Section 4975 of the Code or
Sections 409, 502(i) or 502(l) of ERISA.
(ii) Each of the Plans has been operated and administered in all
respects in substantial compliance with all applicable Laws, including without
limitation all applicable provisions of ERISA and the Code. There are no
pending or, to the knowledge of Utility or any Shareholder, threatened or
anticipated claims against or involving any of the Plans and no suit, action or
other litigation (excluding claims for benefits incurred in the ordinary course
of Plan activities) has been brought against or with respect to any such Plan.
(iii) All contributions required to be made as of the date of
this Agreement to the Plans have been made or provided for. Neither Utility, J&B
nor any entity under "common control" with Utility or J&B within the meaning of
Section 4001 of ERISA has contributed to, or been required to contribute to, any
"multi-employer plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA).
(iv) No Employee is or may become entitled to post-employment
benefits of any kind by reason of employment by Utility or J&B, including,
without limitation, death or medical benefits (whether or nor insured), other
than (a) coverage provided pursuant to the terms of any Plan specifically
identified as providing such coverage in Schedule 4.1.21(a) or mandated by
Section 4980B of the Code, (b) retirement benefits payable under any Plan
qualified under Section 401(a) of the Code or (c) deferred compensation fully
and adequately accrued as a liability on the Latest Balance Sheet or incurred
with respect to services rendered after the Balance Sheet Date in the ordinary
course of business consistent with prior practice, pursuant to the terms of a
Plan. The consummation of the transactions contemplated by this Agreement will
not result in an increase in the amount of compensation or benefits or the
acceleration of the vesting or timing of payment of any compensation or benefits
payable to or in respect of any Employee.
4.1.22. Brokers; Finders, etc. Neither Utility nor J&B nor any
Shareholder has engaged any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement who would be
entitled to a brokerage or finder's commission, fee or similar compensation in
connection therewith or upon the consummation thereof. All negotiations relating
to this Agreement and the transactions contemplated hereby have been carried on
without the participation of any person acting on behalf of Utility, J&B or any
Shareholder in such manner
22
as to give rise to any valid claim against Halter or any of its subsidiaries or
affiliates for any brokerage or finder's commission, fee or similar
compensation, or for any bonus payable to any officer, director, employee, agent
or sales representative of or consultant to Utility, J&B or any Shareholder upon
consummation of the transactions contemplated hereby.
4.1.23. Disclosure. To the knowledge of Utility and each Shareholder, no
representation or warranty by Utility and the Shareholders contained in this
Agreement nor any statement or certificate furnished or to be furnished by or on
behalf of Utility or any Shareholder to Halter or its representatives 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
required to make the statements contained herein or therein not misleading. To
the knowledge of Utility and each Shareholder, there is no fact (other than
matters of a general economic nature which do not affect the Utility or J&B
businesses uniquely) that has not been disclosed by Utility or the Shareholders
to Halter and/or its representatives that might reasonably be expected to have
or result in a Material Adverse Effect.
4.1.24. Purchase for Investment. Each Shareholder will acquire the
Halter Shares (as defined in Section 4.2.5) under the Subscription Agreement
solely for investment, with no present intention to resell such Halter Shares in
violation of the Securities Act of 1933 (the "Securities Act"). Each
Shareholder hereby acknowledges that the Halter Shares have not been registered
pursuant to the Securities Act or other applicable Law and may not be
transferred in the absence of such registration or an exemption therefrom.
4.1.25. Accounts Receivable. All accounts receivable of Utility and J&B
that are reflected on the Latest Balance Sheet or on the accounting records of
Utility and J&B as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the ordinary course of business. Unless paid
prior to the Closing Date, the Accounts Receivable are or will be as of the
Closing Date current and collectible net of the respective reserves shown on the
Latest Balance Sheet or on the accounting records of Utility and J&B as of the
Closing Date (which reserves are adequate and calculated consistent with past
practices and, in the case of the reserve as of the Closing Date, will not
represent a greater percentage of the Accounts Receivable as of the Closing Date
than the reserve reflected in the Latest Balance Sheet represented of the
Accounts Receivable reflected therein and will not represent a material adverse
change in the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, each of the Accounts Receivable either has been or
will be collected in full, without any set-off, within ninety days after the day
on which it first becomes due and payable. To the knowledge of Utility or any
Shareholder, there is no contest, claim, or right of set-off, other than returns
in the ordinary course of business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Schedule 4.1.25 contains a complete and accurate list of all
Accounts Receivable as of the date of the Latest Balance Sheet, which list sets
forth the aging of such Accounts Receivable.
23
4.2. Representations and Warranties of Halter and Acquisition. Halter
and Acquisition represent and warrant to Utility and each Shareholder as
follows:
4.2.1. Authorization, etc. Each of Halter and Acquisition has the
requisite corporate power and authority to execute and deliver this Agreement
and the other Transaction Agreements to which it is a party, to perform fully
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Halter and
Acquisition of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action of Halter and Acquisition. Each of
Halter and Acquisition has duly executed and delivered this Agreement and on the
Closing Date will have duly executed and delivered the other Transaction
Agreements to which it is a party. This Agreement is, and on the Closing Date
each of the other Transaction Agreements to which Halter or Acquisition is a
party will be, legal, valid and binding obligations of Halter and/or
Acquisition, as the case may be, enforceable against each such party in
accordance with their respective terms.
4.2.2. Corporate Status. Each of Halter and Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
carry on its respective business and to own or lease and to operate its
respective properties as and in the places where such business is conducted and
such properties are owned, leased or operated.
4.2.3. No Conflicts, etc. The execution, delivery and performance by
Halter and Acquisition of this Agreement and of the other Transaction Agreements
to which they are parties, and the consummation of the transactions contemplated
hereby and thereby, do not and will not conflict with or result in a violation
of or a default under (with or without the giving of notice or the lapse of time
or both), create in any other person a right or claim of termination, amendment,
modification, acceleration or cancellation of, or result in the creation of any
Lien (or any obligation to create any Lien) upon any of the properties or assets
of Halter or Acquisition under (i) any Law applicable to Halter or Acquisition
or any of the properties or assets of Halter or Acquisition, (ii) the
certificate or articles of incorporation or bylaws of Halter or Acquisition or
(iii) except as set forth in Schedule 4.2.3, any Contract to which Halter or
Acquisition is a party or by which Halter or Acquisition or any of their
properties or assets may be bound or affected, except, in the case of clause
(iii), for violations or defaults that, individually and in the aggregate, would
not have a material adverse effect on the business, results of operations,
condition (financial or otherwise) or prospects of Halter and Acquisition, taken
as a whole (a "Halter Material Adverse Effect"), and would not materially impair
the ability of Halter or Acquisition to perform its respective obligations
hereunder or under the other Transaction Agreements to which they are parties.
Except as specified in Schedule 4.2.3, no governmental approval or other consent
of any party is required to be obtained or made by Halter or Acquisition in
connection with the execution and delivery of this Agreement or the other
Transaction Agreements or the consummation of the transactions contemplated
hereby or thereby.
24
4.2.4. Brokers; Finders, etc. Halter has not engaged any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement who would be entitled to a brokerage or finder's commission, fee
or similar compensation in connection therewith or upon the consummation
thereof. All negotiations relating to this Agreement and the transactions
contemplated hereby have been carried on without the participation of any person
acting on behalf of Halter in such manner as to give rise to any valid claim
against Utility, J&B or any Shareholder for any brokerage or finder's
commission, fee or similar compensation.
4.2.5. Validity of Halter Shares. The shares of Halter Common Stock to
be issued in connection with the Merger (the "Halter Shares"), when issued and
delivered in accordance with the terms of this Agreement, will have been duly
authorized and validly issued and will be fully paid and non-assessable.
4.2.6. Disclosure. To the knowledge of Halter and Acquisition, no
representation or warranty by Halter and Acquisition contained in this Agreement
nor any statement or certificate furnished or to be furnished by or on behalf of
Halter or Acquisition to Utility or its representatives 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 required to make the
statements contained herein or therein not misleading. To the knowledge of
Halter and Acquisition, there is no fact (other than matters of a general
economic or political nature which do not affect Halter's business uniquely)
known to Halter or Acquisition that has not been disclosed by Halter or
Acquisition to Utility and/or its representatives that might reasonably be
expected to have or result in a Halter Material Adverse Effect.
4.2.7. Halter Stock. As of June 30, 1997, 18,450,000 shares of Halter
common stock were issued and outstanding.
ARTICLE V
COVENANTS
5.1. Covenants of Utility and the Shareholders.
5.1.1. Conduct of Business. On and after the date hereof and until the
Effective Time, except as expressly permitted or required by this Agreement or
as otherwise expressly consented to by Halter in writing, Utility will and will
cause J&B to, and the Shareholders will cause Utility and J&B to:
(a) carry on its business in, and only in, the ordinary course, in
substantially the same manner as heretofore conducted, and use all commercially
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep available
the services of its present officers and significant employees, and preserve its
relationship with customers, suppliers and others having business dealings with
it, to the end
25
that its goodwill and going business shall be in all material respects
unimpaired following the Closing;
(b) not prepay any accounts payable, delay payment of any trade
payables or other obligations, or make any other cash payments other than in the
ordinary course of business;
(c) maintain all of its tangible assets in good repair, working
order and operating condition subject only to ordinary wear and tear;
(d) use all reasonable efforts to keep in full force and effect
insurance comparable in amount and scope of coverage to insurance now carried by
it;
(e) maintain its books of account and records in the usual,
regular and ordinary manner consistent with past policies and practices and not
change such policies and practices;
(f) comply in all material respects with all Laws applicable to
Utility, J&B and their respective businesses;
(g) use all reasonable efforts to maintain its good standing in
its jurisdiction of incorporation and in the jurisdictions in which it is
qualified to do business as a foreign corporation and to maintain all
governmental approvals and consents necessary for, or otherwise material to,
Utility, J&B and their respective businesses;
(h) not merge or consolidate with, or agree to merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire, any business, business organization or division thereof, of any other
person;
(i) promptly advise Halter in writing of any event, occurrence,
fact, condition, change, development or effect that, individually or in the
aggregate, could, to the knowledge of Utility or any Shareholder, reasonably be
expected to have or result in a Material Adverse Effect or to cause a breach of
this Section 5.1.1;
(j) perform in all material respects all of its obligations under
all Contracts relating to or affecting Utility, J&B and their respective
businesses;
(k) not declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock or otherwise purchase or redeem,
directly or indirectly, any shares of its capital stock;
(l) not issue or sell any shares of any class of its capital
stock, or any securities convertible into or exchangeable for any such shares,
or issue, sell, grant or enter into any subscriptions, options, warrants,
conversion or other rights, agreements, commitments,
26
arrangements or understandings of any kind, contingently or otherwise, to
purchase or otherwise acquire any such shares or any securities convertible into
or exchangeable for any such shares;
(m) not incur any indebtedness for borrowed money, issue or sell
any debt securities or prepay any debt (including, without limitation, any
borrowings from or prepayments to any Shareholder or other affiliate) except for
borrowings and prepayments (other than to or from any Shareholder or other
affiliate) in the ordinary course of business;
(n) not mortgage, pledge or otherwise subject to any Lien, any of
its real property or other properties or assets, tangible or intangible, except
in the ordinary course of business;
(o) not forgive, cancel, compromise, waive or release any debts,
claims or rights, except for debts of, or claims and rights against, persons
other than any Shareholder or other affiliate that are forgiven, canceled,
compromised, waived or released in the ordinary course of business;
(p) not amend, modify or terminate any existing Contract or enter
into (x) any agreement, commitment or other Transaction, other than agreements
entered into in the ordinary course of business and involving an expenditure of
less than $10,000 in each individual case and $50,000 in the aggregate, or (y)
any agreement, commitment or other Transaction that, pursuant to its terms, is
not cancelable without penalty on notice of 30 days or less from the end of the
first month following the Closing Date;
(q) not pay or commit to pay any bonus, other incentive
compensation, change in control or similar compensation to any officer,
director, employee, sales representative, agent consultant, Shareholder or
affiliate or grant or commit to grant to any officer, director, employee, sales
representative, agent, consultant, Shareholder or affiliate any other increase
in, or additional, compensation in any form;
(r) not enter into, institute, adopt or amend or commit to enter
into, institute, adopt or amend any employment, consulting, retention,
change-in-control, collective bargaining, bonus or other incentive compensation,
profit-sharing, health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other employment,
compensation or benefit plan, policy, agreement, trust, fund or arrangement in
respect of or for the benefit of any officer, director, employee, sales
representative, agent, consultant, Shareholder or affiliate;
(s) not amend either its articles of incorporation or bylaws;
(t) not incur, assume, guarantee or otherwise become directly or
indirectly liable with respect to any liability or obligation in excess of
$10,000 in each case or $50,000 in the aggregate at any one time outstanding
(whether absolute, accrued, contingent or otherwise and
27
whether direct or indirect, or as guarantor or otherwise with respect to any
liability or obligation of any other person) other than agreements for purchases
of goods or services in the ordinary course of business;
(u) not sell any assets, other than inventory in the ordinary
course of business;
(v) not make any material changes in policies or practices
relating to selling practices, returns, discounts or other terms of sale or
accounting therefor or in policies of employment;
(w) not transfer or grant any rights under, or enter into any
settlement regarding the breach or infringement of any Intellectual Property, or
modify any existing rights with respect thereto;
(x) replenish its inventories and supplies in a normal and
customary manner consistent with its prior practice and prudent business
practices prevailing in the industry, and not make any purchase commitment in
excess of the normal, ordinary and usual requirements of its business or at any
price or upon terms and conditions more onerous than those usual and customary
in the industry, and not make any change in its selling, pricing, advertising or
personnel practices inconsistent with its prior practice and prudent business
practices prevailing in the industry;
(y) not make any capital expenditures or capital additions or
improvements in excess of an aggregate of $10,000;
(z) not institute, settle or agree to settle any litigation,
action or proceeding before any court or governmental body;
(aa) not liquidate, dissolve or wind-up its affairs; or
(bb) not enter into any transaction, Contract or commitment other
than in the ordinary course of business, or pay or agree to pay any brokerage or
finder's fee, Taxes or other expenses in connection with, or incur any severance
pay obligations by reason of, this Agreement, the other Transaction Agreements
or the transactions contemplated hereby or thereby.
5.1.2. No Solicitation. From the date hereof until the earlier of the
Effective Time or the termination of this Agreement in accordance with the terms
hereof, none of Utility, J&B or any Shareholder or any officers, directors,
agents or affiliates of Utility or J&B shall, directly or indirectly: (i)
solicit or encourage any inquiries or proposals for, or enter into, participate
in or respond to any discussions with respect to, any acquisition or purchase of
all or substantially all of the assets of, or of a substantial equity interest
in, or any business combination with, Utility or J&B, other than as contemplated
by this Agreement, or (ii) furnish or cause to be furnished any non-public
information concerning Utility, J&B or their respective businesses to any person
(other
28
than Halter and its agents and representatives), except pursuant to applicable
Law and after prior written notice to Halter.
5.1.3. Access and Information; Cooperation for SEC Filings by Halter.
(a) From the date hereof until the earlier of the Effective Time or the
termination of this Agreement in accordance with the terms hereof, Utility, J&B,
the Shareholders and persons acting on behalf of any of them will (and their
respective accountants, counsel, consultants, employees and agents will) give
Halter and its accountants, counsel, consultants, employees and agents, full
access during normal business hours to, and furnish them with all documents,
records, work papers and information with respect to, all of the assets,
properties, books, Contracts, commitments, reports and records of Utility and
J&B, as Halter shall from time to time reasonably request. In addition,
Utility, J&B, the Shareholders and persons acting on behalf of any of them will
permit Halter and its accountants, counsel, consultants, employees and agents,
reasonable access to such personnel of Utility and J&B and persons acting on
their behalf during normal business hours as may be necessary or useful to
Halter in its review of the properties, assets and business affairs of Utility
and J&B and the above-mentioned documents, records and information. Utility and
the Shareholders will keep Halter reasonably informed as to the affairs of
Utility, J&B and their respective businesses.
(b) Utility and the Shareholders will use reasonable good faith
efforts to cause the accountants of Utility and J&B to cooperate with Halter,
and deliver to Halter such written consents as it shall reasonably request, in
connection with any required filings with the Commission under the Securities
Act and the Securities Exchange Act of 1934, as amended.
5.1.4. Public Announcements. Except as required by applicable Law,
neither Utility, J&B nor any Shareholder shall, nor shall any person acting on
behalf of any of them, make any public announcement in respect of this Agreement
or the transactions contemplated hereby without the prior written consent of
Halter.
5.1.5. Vote or Consent on Merger; Other Actions. (a) Utility and each
Shareholder agree to take all action necessary in accordance with applicable Law
and Utility's articles of incorporation and bylaws to convene or cause to be
convened a meeting of the shareholders of Utility to consider and vote upon, or
to otherwise take action by shareholder consent to approve, this Agreement and
the Merger and the other Transactions contemplated hereby, as promptly as
practicable. Utility, through its Board of Directors, agrees to recommend to
the shareholders of Utility approval of this Agreement and the Merger and the
other Transactions contemplated hereby.
(b) Each Shareholder agrees to vote, or cause to be voted, all of
his shares of Utility Common Stock in favor of, or to otherwise take action by
shareholder consent to approve, any proposal submitted by the Board of Directors
of Utility for shareholder approval of this Agreement and the Merger and the
other Transactions contemplated hereby.
29
(c) Each Shareholder agrees that he will not, prior to the
Effective Time or the earlier termination of this Agreement pursuant to Section
7 of this Agreement, without the prior written consent of Halter, (i) sell,
transfer, pledge, assign or otherwise dispose of, or enter into any Contract,
option or other arrangement or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of any of his shares of Utility Common
Stock, (ii) grant any proxy with respect to any of his shares of Utility Common
Stock or enter into any voting trust or similar agreement or arrangement in
respect of the voting of any of his shares of Utility Common Stock or (iii) vote
any of the shares of Utility Common Stock to amend the articles of incorporation
or bylaws of Utility, to authorize any merger or consolidation of Utility, or
sale of all or substantially all of the assets of Utility, or the dissolution,
liquidation or winding-up of the affairs of Utility, or authorize the issuance
of any shares of capital stock of Utility, or approve any new employee benefit,
pension, stock option or other similar plan or arrangement of Utility or any
amendment to any existing plan or arrangement to increase the size of any such
plan or arrangement or materially increase the benefits payable thereunder.
5.1.6. Further Actions. (a) Utility and the Shareholders agree to use
and to cause all persons acting on its and their behalf to use all reasonable
good faith efforts to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated hereby by the Closing
Date.
(b) Utility, as promptly as practicable, will file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by it pursuant to applicable Law in connection
with this Agreement and the other Transaction Agreements and the consummation of
the transactions contemplated hereby and thereby.
(c) Utility, as promptly as practicable, will use all reasonable
efforts to obtain, or cause to be obtained, all consents (including, without
limitation, all governmental approvals and any consent required under any
Contract) necessary to be obtained by it in order to consummate the transactions
contemplated by this Agreement.
(d) Utility and the Shareholders will, and will cause all persons
acting on its or their behalf to, coordinate and cooperate with Halter in
exchanging such information and supplying such assistance as may be reasonably
requested by Halter in connection with the filings and other actions
contemplated by Section 5.2.1.
(e) At all times prior to the Effective Time, Utility and the
Shareholders shall promptly notify Halter in writing of any fact, condition,
event or occurrence (including any fact that would cause the representations and
warranties of Utility and the Shareholders set forth in this Agreement to be
incorrect in any material respect) that will or could reasonably be expected to
result in the failure of any of the conditions contained in Sections 6.1 and 6.2
to be satisfied, promptly upon becoming aware of the same.
30
5.1.7. Further Assurances. Following the Closing, Utility and the
Shareholders shall, and shall cause all persons acting on its or their behalf
to, from time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall be
necessary, or otherwise reasonably requested by Halter, to confirm and assure
the rights and obligations provided for in this Agreement and in the other
Transaction Agreements and render effective the consummation of the transactions
contemplated hereby and thereby.
5.2. Covenants of Halter and Acquisition.
5.2.1. Further Actions. (a) Each of Halter and Acquisition agrees to
use, and to cause all persons acting on its behalf to use, all reasonable good
faith efforts to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated hereby by the Closing
Date.
(b) Each of Halter and Acquisition, as promptly as practicable,
will file or supply, or cause to be filed or supplied, all applications,
notifications and information required to be filed or supplied by it pursuant to
applicable Law in connection with this Agreement and the other Transaction
Agreements, and the consummation of the transactions contemplated hereby and
thereby.
(c) Each of Halter and Acquisition, as promptly as practicable,
will use all reasonable efforts to obtain or cause to be obtained, all consents
(including, without limitation, all governmental approvals) necessary to be
obtained by it in order to consummate the transactions contemplated by this
Agreement.
(d) Each of Halter and Acquisition will, and will cause all
persons acting on its behalf to, coordinate and cooperate with Utility in
exchanging such information and supplying such assistance as may be reasonably
requested by Utility in connection with the filings and other actions
contemplated by Section 5.1.6.
(e) At all times prior to the Effective Time, Halter shall
promptly notify Utility in writing of any fact, condition, event or occurrence
(including any fact that would cause any of the representations and warranties
of Halter set forth in this Agreement to be incorrect in any material respect)
that will or may result in the failure of any of the conditions contained in
Sections 6.1. and 6.3 to be satisfied, promptly upon becoming aware of the same.
5.2.2. Further Assurances. Following the Closing, each of Halter and
Acquisition shall, and shall cause its affiliates and persons acting on behalf
of any of them to, from time to time, execute and deliver such additional
instruments, documents, conveyances or assurances and take such other actions as
shall be necessary, or otherwise reasonably requested by Utility, to confirm and
assure the rights and obligations provided for in this Agreement and in the
other Transaction Agreements and render effective the consummation of the
transactions contemplated hereby and thereby.
31
5.2.3. Election of President. Immediately following the Effective Time,
the Board of Directors of Acquisition shall cause ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to be elected
President and Chief Operating Officer of Acquisition and J&B.
5.2.4. Employee Benefits. (a) From and after the Effective Time,
subject to applicable law, Acquisition will honor in accordance with their
terms, all Plans; provided, however, that nothing herein shall preclude any
change effected on a prospective basis in any Plan that is permitted pursuant to
the following sentence of this Section 5.2.4. For a period of not less than
six months following the Effective Time, subject to applicable law, Acquisition
will provide benefits to Utility and J&B employees who become employees of
Acquisition and its subsidiaries which will, in the aggregate, be no less
favorable than those provided by Utility and J&B to their employees immediately
prior to the Effective Time. Any change effected on a prospective basis in any
Plan shall provide employees of Acquisition with benefits that, in the
aggregate, are no less favorable than those provided to Halter or any of its
other subsidiaries. Any new health insurance plan shall provide coverage for
pre-existing conditions. Acquisition shall give the former employees of Utility
full credit for the period of time each was employed by Utility prior to the
Effective Time and for the period of time each is employed by Acquisition after
the Effective Time.
(b) For three full fiscal years after the Effective Time,
Acquisition agrees to maintain a bonus plan for employees of Acquisition and
J&B, pursuant to which a pool of up to $100,000 in bonuses per year shall be
distributed by the Board of Directors of Acquisition to such employees;
provided, however, that no such bonuses shall be required to be paid with
respect to any fiscal year in which the pre-tax profits of Acquisition and J&B
do not exceed $1,000,000.
5.2.5. Registration of Halter Shares.
(a) Halter shall use its Best Lawful Efforts (as hereinafter
defined) to effect the registration of the Halter Shares 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 each Shareholder receiving
Registrable Securities pursuant to the Merger (collectively, the "Holders") of
such Registrable Securities (the "Registration Statement"); provided, if the
Registration Statement is declared effective prior to December 10, 1997 (the
"Effectiveness Target Date"), Holders shall not sell any Registrable Securities
pursuant to the Registration Statement prior to the Effectiveness Target Date.
In addition, Halter shall prepare and file all such amendments and supplements
to such Registration Statement and the prospectus used in connection therewith
as may be necessary to keep the Registration Statement effective and in
compliance with applicable law for a period of not less than 180 days 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, Halter shall not be obligated to effect any such registration
pursuant to this Section 5.2. if Halter's counsel delivers an opinion to Holders
and
32
Halter'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 Halter's
performance or compliance with this Section 5.2.5 shall be paid by Halter;
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 Halter shall have consented, Halter 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. As used
herein, the phrase "Best Lawful Efforts" shall mean the efforts that a prudent
business person desirous of achieving a result would use under similar
circumstances to ensure that such result is achieved as expeditiously as
possible.
(b) Notwithstanding anything to the contrary in Section 5.2.5(a),
Halter may, by delivering written notice to Holders, prohibit offers and sales
of Registrable Securities pursuant to the Registration Statement at any time if
(A)(i) Halter is in the possession of material non-public information relating
to Halter, (ii) Halter 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) Halter determines in
good faith that public disclosure of such material non-public information would
not be in the best interests of Halter and its stockholders or (B)(i) Halter has
made a public announcement relating to an acquisition or business combination
transaction including Halter and/or one or more of its subsidiaries that is
material to Halter and its subsidiaries taken as a whole and (ii) Halter
determines in good faith that (x) offers and sales of Registrable Securities
pursuant to the Registration Statement prior to the consummation of such
transaction (or such earlier date as Halter shall determine) is not in the best
interests of Halter 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
Registration Statement; provided, however, that upon (i) the public disclosure
-------- -------
by Halter 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
described in clause (B) of this paragraph, the suspension of the use of the
Registration Statement pursuant to this Section 5.2.5(b) shall cease and the
Halter shall promptly notify Holders that dispositions of Registrable Securities
may be resumed.
(c) Halter may require Holders to furnish to Halter such
information regarding the distribution of Registrable Securities as is required
by law to be disclosed in the Registration Statement, and Halter may exclude
from the 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 Halter as promptly as practicable of any inaccuracy
or change in information previously furnished by such Holder to Halter or of the
occurrence of any event as a result of which the prospectus included in the
Registration Statement contains or would contain
33
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 statements
therein, in light of the circumstances then existing, not misleading and
promptly furnish to Halter 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.
(d) Halter 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 arise out of or are based
upon 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
Halter will not be liable in any such case 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
specifically provided in writing by a Holder for inclusion in such Registration
Statement and so included in conformity with such information provided.
(e) Each Holder will indemnify and hold harmless Halter, each of
its directors, each of its officers who have signed the Registration Statement,
and each person, if any, who controls within the meaning of the Securities Act,
the Company from and against any and all loss, damage, liability, cost and
expense to which any such person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
arise out of or are based upon 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; in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was specifically provided in
writing for inclusion in such Registration Statement and so included in
conformity with such information provided.
5.2.6. Principal Office. Acquisition and Halter agree that they will
maintain the office operating Utility's assets located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ for a period of twelve (12) months after the Closing
Date and represent and warrant to the Shareholders that they have no current
plans or intentions to move such office after such twelve month period.
34
5.2.7. Acquisition's Articles and Bylaws. From and after the Closing
Date, Acquisition shall not amend, alter or repeal those provisions of the
articles of incorporation, bylaws or other governing documents of Acquisition
relating to liability or indemnification of directors and officers, except as
required by law, if the effect of such amendment, alteration or repeal would be
to increase the potential liability of a former director or officer of Utility
to Utility or to its stockholders for monetary damages for breach of fiduciary
duty, or to lessen or otherwise adversely affect the indemnification rights of
former directors and officers of Utility as provided in such articles of
incorporation, bylaws or other governing documents as in effect on the date of
this Agreement.
5.2.8. Price Protection. (a) If:
(i) the average of the closing prices (such average being the
"Average Market Price") of Halter Common Stock on the
American Stock Exchange (the "AMEX") for the five trading
days ending on the Protection Date (as hereinafter defined)
is less than the Acquisition Price (as hereinafter defined),
and
---
(ii) a Shareholder (a "Selling Shareholder") sells (in an open
market brokers' transaction) shares of Halter Common Stock
received pursuant to this Agreement, within six (6) months
after the Protection Date (the "Protection Period"), for a
price per share (a "Disposition Price") less than the
Acquisition Price, and
---
(iii) the Shareholder Representative, on behalf of such Selling
Shareholder, delivers to Halter within fifteen (15) days
after the end of the Protection Period a notice (the "Price
Protection Notice") that such Selling Shareholder is
entitled to payment pursuant to this Section, which Price
Protection Notice shall contain a brokers' confirmation of
sale or other documentation satisfactory to Halter
evidencing such Selling Shareholder's sale of Halter Shares
(including the date and sales price thereof),
then Halter shall pay to such Selling Shareholder, within fifteen (15) business
days after receiving the Price Protection Notice, an amount in cash (the
"Protection Amount") equal to the amount by which: (A) the Acquisition Price
exceeds (B) the greater of the Average Market Price or the Disposition Price,
multiplied by (C) the number of shares of Halter Common Stock disposed of at the
Disposition Price by such Selling Shareholder during the Protection Period.
(b) A Selling Shareholder shall have the option, exercisable by
giving Halter notice with the Price Protection Notice, to receive the Protection
Amount in: (i) cash; (ii) additional Halter Common Stock; or (iii) any
combination of the foregoing. If a Selling Shareholder elects to receive
additional Halter Common Stock, the number of shares of Halter Common Stock such
Selling Shareholder will receive shall equal the quotient obtained by dividing
that portion of the Protection Amount that such Selling Shareholder elects to
receive in Halter Common Stock by the
35
average closing price of Halter Common Stock on the AMEX for the five trading
days ending on the date Halter receives the Price Protection Notice. All shares
of Halter Common Stock issued to the Selling Shareholders pursuant to the
foregoing shall be "restricted securities" as defined in Rule 144 under the
Securities Act and will bear a legend substantially in the form described in the
Subscription Agreement. Notwithstanding anything in this Section 5.2.9 to the
contrary, cash shall be paid in lieu of fractional shares.
(c) As used herein, the term "Protection Date" shall mean the
earlier of (i) the date on which all Registrable Securities may be sold pursuant
to the Registration Statement or (ii) the date on which all Merger Consideration
consisting of Halter Common Stock may lawfully be sold in the public market
without registration.
(d) As used herein, the term "Acquisition Price" shall mean
$27.21.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Obligations of Each Party. The respective
obligations of the parties to consummate the transactions contemplated hereby
shall be subject to the fulfillment on or prior to the Closing Date of the
following conditions:
6.1.1. No Injunction, etc. Consummation of the transactions contemplated
hereby shall not have been restrained, enjoined or otherwise prohibited by any
applicable Law, including any order, injunction, decree or judgment of any court
or governmental authority. No court or governmental authority shall have
determined any applicable Law to make illegal the consummation of the
transactions contemplated hereby or by the other Transaction Agreements, and no
proceedings with respect to the application of any such Law to such effect shall
be pending or threatened.
6.1.2. Corporate Proceedings. All corporate and other proceedings of
Utility, on the one hand, and Halter and Acquisition, on the other hand, in
connection with this Agreement and the other Transaction Agreements and the
transactions contemplated hereby and thereby, and all documents and instruments
incident thereto, shall be reasonably satisfactory in substance and form to
Halter and its counsel, on the one hand, and Utility and its counsel, on the
other hand, and Halter and its counsel, on the one hand, and Utility and its
counsel, on the other hand, shall have received all such documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested.
6.2 Conditions to Obligations of Halter and Acquisition. The
obligations of Halter and Acquisition to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver in writing by
Halter) on or prior to the Closing Date of the following additional conditions:
36
6.2.1. Representations; Performance. The representations and warranties
of Utility and the Shareholders contained in this Agreement (i) shall be true
and correct in all material respects at and as of the date hereof, and (ii)
shall be repeated and shall be true and correct in all material respects on and
as of the Closing Date with the same effect as though made on and as of the
Closing Date. Utility and the Shareholders shall have duly performed and
complied in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with by each of them prior to or on
the Closing Date. Utility and the Shareholders shall have delivered to Halter a
certificate, dated the Closing Date and signed by Utility's duly authorized
officer and by each Shareholder, to the foregoing effect.
6.2.2. Consents. Utility shall have obtained and shall have delivered to
Halter copies of (i) all governmental approvals required to be obtained by
Utility in connection with the execution and delivery of this Agreement and the
other Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby and (ii) all consents (including, without
limitation, all consents required under any Contract) necessary to be obtained
by Utility, J&B or the Shareholders in order to consummate the Merger pursuant
to this Agreement.
6.2.3. No Material Adverse Effect. No event, occurrence, fact, condition,
change, development or effect shall have occurred, exist or come to exist since
the Balance Sheet Date that, individually or in the aggregate, has constituted
or resulted in, or could reasonably be expected to constitute or result in, a
Material Adverse Effect.
6.2.4. Transaction Agreements. The Shareholders shall have entered into
the following agreements with Halter and/or Acquisition:
(a) the Employment Agreement, in the form attached hereto as
Exhibit D, shall be entered into by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
(b) the Non-Competition Agreement, in the form attached hereto as
Exhibit E shall be entered into by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
(c) the Escrow Agreement;
(d) the Subscription Agreements; and
(e) the Shareholder's Releases, in the form attached hereto as
Exhibit F.
6.2.5. Opinion of Counsel. Halter and Acquisition shall have received an
opinion, addressed to each of them and dated the Closing Date, from Sessions &
▇▇▇▇▇▇▇, L.L.P., counsel to Utility and the Shareholders, in form and content
acceptable to Halter.
6.2.6. Estoppel Letters. Utility shall have delivered to Halter estoppel
letters, reasonably satisfactory to Halter, from the lessors of the leases
listed in Schedule 6.2.6 to the effect that Utility or J&B, as applicable, has
paid all rent and other amounts due under such lease, is not otherwise in
default in any material respect thereunder and, if required under such Lease,
consenting to the assumption of such lease by Acquisition as the Surviving
Corporation in the Merger.
37
6.2.7. Title Insurance. Utility shall cause to be delivered to Halter,
at Utility's expense, policies of title insurance from a title company
acceptable to Halter that each of Utility and J&B has good and indefeasible
title to each parcel of real estate or tract of land owned by Utility or J&B,
free and clear of all Liens other than Permitted Liens.
6.3. Conditions to Obligations of Utility and the Shareholders. The
obligations of Utility and the Shareholders to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver in writing by
Utility or the Shareholders, as the case may be), on or prior to the Closing
Date, of the following additional conditions:
6.3.1. Representations; Performance, etc. The representations and
warranties of Halter and Acquisition contained in this Agreement (i) shall be
true and correct in all material respects at and as of the date hereof and (ii)
shall be repeated and shall be true and correct in all material respects on and
as of the Closing Date with the same effect as though made at and as of the
Closing Date. Each of Halter and Acquisition shall have duly performed and
complied in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date. Each of Halter and Acquisition shall have delivered to Utility a
certificate, dated the Closing Date and signed by its duly authorized officer,
to the foregoing effect.
6.3.2. Opinion of Counsel. Utility shall have received an opinion,
addressed to it and dated the Closing Date, from ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, A
Professional Limited Liability Company, counsel to Halter, in form and content
acceptable to Utility.
6.3.3. Transaction Agreements. Halter and/or Acquisition shall have
executed and delivered each of the Transaction Agreements to which it will be a
party.
6.3.4. Consents. Halter or Acquisition shall have obtained and shall
have delivered to Utility copies of (i) all governmental approvals required to
be obtained by Halter or Acquisition in connection with the execution and
delivery of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby and (ii) all
consents necessary to be obtained by either of them in order to consummate the
Merger pursuant to this Agreement.
6.3.5. Tax Opinion. The Shareholders shall have received an opinion from
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, A Professional Limited Liability Company to the effect that
the Merger qualifies as a reorganization under Section 368(a)(2)(D) of the Code.
ARTICLE VII
TERMINATION
7.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time:
38
(a) by the written agreement of Halter and Utility;
(b) by either Utility or Halter, by written notice to the other
party hereto by 5:00 p.m., Central time, on January 5, 1998 if the Closing shall
not have occurred by December 31, 1997 (unless the failure of the Closing to
occur shall be due to any breach of this Agreement by the party seeking to
terminate), unless such date shall be extended by the mutual written consent of
Utility and Halter;
(c) by Utility, if there has been a breach on the part of Halter
or Acquisition in the representations, warranties or covenants of Halter and
Acquisition set forth herein, or a failure on the part of Halter or Acquisition
to perform their respective obligations hereunder; provided that Utility shall
have performed and complied with, in all material respects, all agreements and
covenants required by this Agreement to have been performed and complied with by
Utility prior to such time, or any other events or circumstances shall have
occurred such that, in any such case, any of the conditions to the Closing set
forth in Sections 6.1 or 6.3 could not be satisfied on or prior to the
termination date contemplated by Section 7.1(b) hereof; or
(d) by Halter, if there has been a breach on the part of Utility
or the Shareholders in the representations, warranties or covenants of Utility
or the Shareholders set forth herein or any failure on the part of Utility or
the Shareholders to perform their respective obligations hereunder; provided
that Halter shall have performed and complied with, in all material respects,
all agreements and covenants required by this Agreement to have been performed
or complied with by Halter prior to such time, or any other events or
circumstances shall have occurred such that, in any case, any of the conditions
to the Closing set forth in Sections 6.1 or 6.2 could not be satisfied on or
prior to the termination date contemplated by Section 7.1(b) hereof.
7.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 7.1, this Agreement shall become
void and have no effect and all obligations of the parties hereto shall
terminate, except the obligations of the parties pursuant to Section 8.3 and
except for the provisions of Section 8.6.
ARTICLE VIII
INDEMNIFICATION; MISCELLANEOUS
8.1 Indemnification. (a) By the Shareholders. Each Shareholder
covenants and agrees to indemnify, defend and hold harmless Halter, its
officers, directors, employees, agents, advisers, representatives and affiliates
(collectively, the "Buyer Indemnitees") for, and will pay to or reimburse the
Buyer Indemnitees for the amount of, any and all damage, loss, liability, claim
or expense (including reasonable attorney's fees and expenses of investigating,
defending or prosecuting any claim) (collectively, "Damages"), resulting from or
arising out of directly or indirectly:
39
(i) any inaccuracy of any representation or warranty made by
Utility or any Shareholder herein or under any other Transaction Agreement or in
connection herewith or therewith;
(ii) any failure of Utility or any Shareholder to perform any
covenant or agreement hereunder or under any other Transaction Agreement or to
fulfill any other obligation in respect hereof or thereof; and
(iii) any third party claim resulting from or arising out of any
services or work performed, including any product of others incorporated into
any services or work performed, by Utility or J&B prior to the Effective Time.
(b) By Halter. Halter covenants and agrees to defend, indemnify and
hold harmless each Shareholder and his respective agents, advisers,
representatives and affiliates (collectively, the "Seller Indemnitees") from and
against any and all Damages, whether or not involving a third party claim,
resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
Halter herein or under any other Transaction Agreement or in connection herewith
or therewith; and
(ii) any failure of Halter or Acquisition to perform any
covenant or agreement hereunder or under any other Transaction Agreement or to
fulfill any other obligation in respect hereof or thereof.
(c) By Acquisition. From and after the Closing Date, Acquisition
agrees to indemnify, defend and hold harmless the former directors and officers
of Utility and J&B (the "Former Directors") to the fullest extent permitted by
the LBCL from and against any and all Damages based upon or arising out of
actions or omissions or alleged actions or omissions of such Former Directors in
their capacity as officers or directors of Utility and J&B occurring (or alleged
to have occurred) at or prior to the Closing Date.
(d) No Indemnification for Certain Acts. Notwithstanding the
provisions of Sections 8.1(a), 8.1(b) and 8.1(c) hereof, a party otherwise
required to provide indemnification under this Section 8.1 shall not be liable
for indemnification pursuant hereto to the extent that any Damage is found by a
court or arbitration panel of competent jurisdiction, after full hearing on the
merits, to have resulted from the fraudulent, grossly negligent, bad faith or
criminal act or omission of a party otherwise entitled to indemnification
hereunder or of such party's officers, directors, employees, agents, advisers,
representatives or affiliates.
(e) Adjustments to Indemnification Payments. Without limiting the
obligations of the Indemnifying Party (as hereinafter defined) under this
Agreement, (including the timely indemnification of the Indemnified Party), any
amount payable by any Shareholder to any Buyer Indemnitee, on the one hand, or
by Halter to any Shareholder, on the other hand, pursuant to this
40
Section 8.1 in respect of any Claim for indemnification hereunder shall be net
of any insurance proceeds realized by and paid to the Indemnified Party in
respect of such claim by any Buyer Indemnitee or by any Seller Indemnitee or by
any consolidated, combined or unitary group of which such Buyer Indemnitee or
Seller Indemnitee is a member. The Indemnified Party shall use its reasonable
efforts to make insurance claims relating to any claim for which it is seeking
indemnification pursuant to this Section 8.1; provided that the Indemnified
Party shall not be obligated to make such an insurance claim if the Indemnified
Party in its reasonable judgment believes that the cost of pursuing such an
insurance claim together with any corresponding increase in insurance premiums
or other chargebacks to the Indemnified Party, would exceed the value of the
claim for which the Indemnified Party is seeking indemnification. In the event
the Indemnified Party receives such insurance proceeds after being indemnified
by the Indemnifying Party with respect to any Damage, the Indemnified Party
shall pay to the Indemnifying Party the net amount of such insurance proceeds
(less attorney's fees and other expenses incurred in connection with such
recovery) paid to the Indemnified Party.
(f) Indemnification Procedures -- Third Party Claims. In the case of
any claim, suit, demand, proceeding or action (a "Proceeding") asserted by a
third party against a party entitled to indemnification under this Agreement
(the "Indemnified Party"), notice shall be given by the Indemnified Party to the
party required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any Proceeding as to which
indemnity may be sought, and the Indemnified Party shall permit the Indemnifying
Party (at the expense of such Indemnifying Party) to assume the defense of any
Proceeding or any litigation resulting therefrom; provided that (i) the counsel
for the Indemnifying Party who shall conduct the defense of such Proceeding or
litigation shall be reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may participate in such defense at such Indemnified Party's
expense and (iii) the omission by any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such omission results
in a failure of actual notice to the Indemnifying Party and such Indemnifying
Party is materially damaged as a result of such failure to give notice. Except
with the prior written consent of the Indemnified Party, no Indemnifying Party,
in the defense of any such Proceeding or litigation, shall consent to entry of
any judgment or enter into any settlement that provides for injunctive or other
nonmonetary relief affecting the Indemnified Party or that does not include as
an unconditional term thereof the giving by each claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such
Proceeding or litigation. In the event that the Indemnified Party shall in good
faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such Proceeding by
the Indemnifying Party might be expected to affect adversely the Indemnified
Party or that the Indemnified Party may have available to it one or more
defenses or counterclaims that are inconsistent with one or more of those that
may be available to the Indemnifying Party in respect of such Proceeding or any
litigation relating thereto, the Indemnified Party shall have the right at all
times to take over and assume control over the defense, settlement, negotiations
or litigation relating to any such Proceeding at the sole cost of the
Indemnifying Party; provided that if the Indemnified Party does so take over and
assume control, the Indemnified Party shall
41
not settle such Proceeding or litigation without the prior written consent of
the Indemnifying Party. In the event that the Indemnifying Party does not accept
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defend against any such Proceeding or demand and shall be
entitled to settle or agree to pay in full such Proceeding or demand. In any
event, the Indemnifying Party and the Indemnified Party shall cooperate in the
defense of any Proceeding or litigation subject to this Section 8.1 and the
records of each shall be available to the other with respect to such defense.
(g) Indemnification Procedure -- Other Claims. A claim for
indemnification for any matter not involving a third party claim may be asserted
by written notice (an "Indemnification Notice") to the party from whom
indemnification is sought, specifying in reasonable detail the nature of the
event which the Indemnified Party asserts entitles it to indemnification
hereunder and the amount of (if determinable) and the basis for the
indemnification claim. The Indemnifying Party shall, within fifteen business
days after the receipt of an Indemnification Notice, either: (i) acknowledge the
debt, liability or obligation for which indemnity is sought and pay the
Indemnified Party an amount sufficient to discharge such debt, liability or
obligation, or (ii) notify the Indemnified Party in writing that it contests the
Indemnifying Party's entitlement to indemnification or disagrees as to the
amount due specifying the basis for such contest or disagreement. Failure of an
Indemnifying Party to respond within fifteen business days following receipt of
an Indemnification Notice hereunder shall be deemed acknowledgment of the right
of the Indemnified Party to indemnification hereunder and give rise to the
immediate right in the Indemnified Party to payment in full from the
Indemnifying Party of the amount claimed in such Indemnification Notice.
(h) Limitations on Indemnification. Notwithstanding anything in this
Agreement to the contrary:
(i) neither Shareholders nor Utility shall have liability for
indemnification pursuant to this Article VIII until the aggregate amount of all
Damages for which indemnification would (but for the limitation of this
sentence) be required to be paid by any Shareholder or Utility pursuant to this
Article VIII exceeds $50,000 (the "Loss Threshold"); provided however that if
the aggregate amount of such Damages exceeds the Loss Threshold the Shareholders
and Utility shall indemnify Halter and/or Acquisition in respect of all such
Damages (including the initial $50,000);
(ii) neither Halter nor Acquisition shall have liability for
indemnification pursuant to this Article VIII until the aggregate amount of all
Damages for which indemnification would (but for the limitation of this
sentence) be required to be paid by Halter or Acquisition pursuant to this
Article VIII exceeds the Loss Threshold; provided however that if the aggregate
amount of such Damages exceeds the Loss Threshold Halter and Acquisition shall
indemnify the Shareholders in respect of all such Damages (including the initial
$50,000);
42
(iii) the maximum liability in the aggregate for all
Shareholders pursuant to this Article VIII shall not exceed $2,000,000 (the
"Aggregate Limitation"); and
(iv) the maximum liability for Halter and Acquisition pursuant
to this Article VIII shall not exceed $2,000,000 in the aggregate (the "Halter
Limitation").
Damages arising from any breach of the representations and warranties of Section
4.1.1 (the "Section 4.1.1 Damages") shall not be subject to the Loss Threshold,
but the amount of the Section 4.1.1 Damages shall be counted toward meeting the
Loss Threshold with respect to other indemnification claims. A Shareholder
shall have no further obligations under this Article VIII at the time when all
Shareholders have paid indemnification under this Article VIII (including,
without limitation, payments in respect of defending against third party claims)
equal in the aggregate to the Aggregate Limitation. Upon reaching the Aggregate
Limitation, any one or more Shareholders who are then defending against a third
party claim shall turn the defense thereof over to the Indemnified Parties,
which shall thereafter undertake such defense at their sole expense. Neither
Halter nor Acquisition shall have any further obligations under this Article
VIII at the time when Halter and Acquisition, in the aggregate, have paid
indemnification under this Article VIII (including, without limitation, payments
in respect of defending against third party claims) equal to the Halter
Limitation. Upon reaching the Halter Limitation, Halter and/or Acquisition (as
the case may be) shall turn the defense thereof over to the Indemnified Parties,
which shall thereafter undertake such defense at their sole expense. If an
Indemnifying Party pays indemnification (including without limitation, the cost
of defending a third party claim) that was not required to be paid due to any
limitation set forth in this Section 8.1(h), then the Indemnified Party shall,
promptly after demand by the Indemnifying Party, reimburse the latter for such
payments without interest.
(i) Time Limit. An Indemnified Party shall not be entitled to make
any claim for indemnification against an Indemnifying Party under this Article
VIII unless notice of such claim (as required in this Article VIII) is given
prior to (i) with respect to claims made pursuant to Section 8.1(a)(iii), the
date that is four years after the Closing Date, (ii) with respect to claims made
pursuant to this Article VIII (other than Section 8.1(a)(iii)), the date that is
two years after the Closing Date, or, (ii) with respect to the warranties and
representations in Sections 4.1.7, 4.1.19, and 4.1.21, the date that is the
later of two years after the Closing Date or the expiration of the applicable
statute of limitations period.
(j) Effective Date; Exclusive Remedy. The obligations of the parties
under Article VIII shall only become effective from and after the Closing. Upon
becoming effective the right to indemnification set forth in this Article VIII
shall be the sole and exclusive remedy of the parties for breach of any
representation, warranty, covenant or agreement set forth in or made pursuant to
this Agreement, and each party covenants and agrees not to seek or assert any
other remedy following the Closing, except that any party may seek such
injunctive relief and equitable remedies as may be available. Halter and
Acquisition acknowledge that, except as expressly set forth in this Agreement,
there are no other representations or warranties of the Shareholders or
43
Utility in connection with the transactions contemplated hereby, all such other
representations and warranties being expressly disclaimed.
8.2. Survival of Representations and Warranties; etc. All representations
and warranties of the parties contained in this Agreement shall survive the
Merger. All covenants and agreements contained in this Agreement shall be deemed
to the extent expressly provided herein to be conditions to the Merger and shall
not survive the Merger; provided that the contractual rights to indemnification
provided for in Section 8.1 of this Agreement shall survive the Merger and be
continuing; and provided, further, that the agreements contained in Article 3
and in this Article 8, and the agreements contained in the other Transaction
Agreements, shall survive the Merger and be continuing.
8.3. Expenses. Utility and the Shareholders, on the one hand, and
Halter and Acquisition, on the other hand, shall bear their respective expenses,
costs and fees (including attorneys' and auditors' fees) in connection with the
transactions contemplated hereby, including the preparation, execution and
delivery of this Agreement and compliance herewith, whether or not the
transactions contemplated hereby shall be consummated.
8.4. Severability. If any provision of this Agreement, including any
phrase, sentence, clause, section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
8.5. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy or telegram:
(i) if to Utility or the Shareholders, at:
Utility Steel Fabrication Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
44
with copies to:
Sessions & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Title
(ii) if to Halter or Acquisition, at:
Halter Marine Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, III
45
with copies to:
Halter Marine Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ O'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
A Professional Limited Liability Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications shall
be deemed to have been received (w) if by personal delivery, on the day after
such delivery, (x) if by certified or registered mail, on the fifth business day
after the mailing thereof, (y) if by next-day or overnight mail or delivery, on
the day delivered, (z) if by telecopy or telegram, on the next day following the
day on which such telecopy or telegram was sent, provided that a copy is also
sent by certified or registered mail.
8.6. Miscellaneous.
8.6.1. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
8.6.2. Entire Agreement. This Agreement (including the Schedules
hereto), the other Transaction Agreements (when executed and delivered) and the
representations, warranties, agreements and covenants contained herein and
therein constitute the entire agreement and supersede all prior agreements,
understandings, representations, warranties, covenants and discussions, both
written and oral, between the parties with respect to the subject matter hereof,
including without limitation that certain letter of intent dated September 15,
1997, between the parties hereto.
8.6.3. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
46
8.6.4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Louisiana (regardless of the laws
that might otherwise govern under applicable principles of conflicts of law).
8.6.5. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
8.6.6. Assignment. This Agreement shall not be assignable or otherwise
transferable by any party hereto without the prior written consent of the other
parties hereto; provided that Halter may assign this Agreement to any subsidiary
of Halter.
8.6.7. No Third Party Beneficiaries. Except as provided in Section 8.1
with respect to indemnification hereunder, nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, successors and permitted assigns.
8.6.8. Amendment; Waiver, etc. (a) No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies of any
party based upon, arising out of or otherwise in respect of any inaccuracy or
breach of any representation, warranty, covenant or agreement or failure to
fulfill any condition shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement as to which there is no
inaccuracy or breach. The representations and warranties of Utility and the
Shareholders shall not be affected or deemed waived by reason of any
investigation made by or on behalf of Halter (including but not limited to by
any of its advisors, consultants or representatives) or by reason of the fact
that Halter or any of such advisors, consultants or representatives knew or
should have known that any such representation or warranty is or might be
inaccurate.
8.6.9. Confidentiality. Except as otherwise provided in this Agreement,
each party to this Agreement will, and will cause its affiliates (and their
respective accountants, counsel, consultants, employees and agents to whom they
disclose such information) to, keep confidential and not disclose all
information obtained by and in the possession of such party and its affiliates
or to which such party and its affiliates are given access that in any way
relates to the business or operations of the other party hereto. The provisions
of this Section 8.6.9 shall not apply to the
47
disclosure by any party hereto or their respective affiliates of any
information, documents or materials (i) which are, or become, publicly
available, other than by reason of a breach of this Section 8.6.9 by the
disclosing party or any affiliate of the disclosing party, (ii) received from a
third party not bound by any confidentiality agreement with the other party
hereto, (iii) required by applicable Law to be disclosed by such party, or (iv)
necessary to establish such party's rights under either this Agreement or any
other Transaction Agreement; provided that, in the case of clauses (iii) and
(iv), the person intending to make disclosure of confidential information will
promptly notify the party to whom it is obligated to keep such information
confidential and, to the extent practicable, provide such party a reasonable
opportunity to prevent public disclosure of such information. If the
transactions contemplated by this Agreement are not consummated, such
information will be immediately returned to the applicable party (to the extent
such information consists of originals or copies of records, documents, reports
or other written materials).
8.6.10. Nature of Obligations. Except with respect to the provisions of
Section 8.1(c) all obligations of Halter in this Agreement are guaranteed
jointly and severally by Acquisition, and vice-versa. Where both Halter and
Acquisition are bound with respect to the same obligation, the obligation shall
be joint and several.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
HALTER MARINE GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
UTILITY ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice-President/Secretary
48
UTILITY STEEL FABRICATION INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, AS TRUSTEE FOR THE
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
49
CERTIFICATE OF THE SECRETARY
OF
UTILITY STEEL FABRICATION INC.
I hereby certify that I am the duly elected Secretary of Utility Steel
Fabrication Inc., a Louisiana corporation, and that the foregoing Agreement was,
in the manner required by law, duly approved by unanimous written consent of the
shareholders of Utility Steel Fabrication Inc. pursuant to Louisiana Revised
Statutes (S) 12:76.
This Certificate is dated November 3, 1997.
________________________________________
____________________, Secretary
50
CERTIFICATE OF THE SECRETARY
OF
UTILITY ACQUISITION, INC.
I hereby certify that I am the duly elected Secretary of Utility
Acquisition, Inc., a Louisiana corporation, and that the foregoing Agreement
was, in the manner required by law, duly approved by written consent of the sole
shareholder of Utility Acquisition, Inc. pursuant to Louisiana Revised Statutes
(S) 12:76.
This Certificate is dated November 3, 1997.
_____________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice-President/Secretary
51
CERTIFICATE OF THE SECRETARY
OF
HALTER MARINE GROUP, INC.
I hereby certify that I am the duly elected Secretary of Halter Marine
Group, Inc., a Delaware corporation, and that the foregoing Agreement was not
required to be submitted to the shareholders of Halter Marine Group, Inc.
pursuant to Louisiana Revised Statutes (S) 12:112 or Delaware G.C.L. (S) 252.
This Certificate is dated November 3, 1997.
________________________________________
▇▇▇▇▇▇▇ O'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary
52
EXECUTION BY CORPORATIONS
Considering the approval of this Agreement by the shareholders of Utility
Steel Fabrication Inc. and Utility Acquisition, Inc., as certified above, this
Agreement is executed by such corporations and by Halter Marine Group, Inc.
acting through their respective presidents or vice presidents, this 3rd day of
November, 1997.
UTILITY STEEL FABRICATION INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
UTILITY ACQUISITION, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice-President/Secretary
HALTER MARINE GROUP, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
53
ACKNOWLEDGMENT AS TO
UTILITY STEEL FABRICATION INC.
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned authority, personally came and appeared ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ who, being duly sworn, declared and acknowledged before me, Notary, in
the presence of the undersigned competent witnesses, that he is the President of
Utility Steel Fabrication Inc. and that in such capacity he was duly authorized
to and did execute the foregoing Agreement on behalf of such corporation, for
the purposes therein expressed and as his and such corporation's free and
voluntary act and deed.
___________________________________
Appearer
WITNESSES:
___________________________________
___________________________________
SWORN TO AND SUBSCRIBED BEFORE ME
this 3rd day of November, 1997.
___________________________________
NOTARY PUBLIC
54
ACKNOWLEDGMENT AS TO
UTILITY ACQUISITION, INC.
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned authority, personally came and appeared ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ who, being duly sworn, declared and acknowledged before me, Notary,
in the presence of the undersigned competent witnesses, that she is the Vice-
President/Secretary of Utility Acquisition, Inc. and that in such capacity she
was duly authorized to and did execute the foregoing Agreement on behalf of such
Corporation, for the purposes therein expressed and as her and such
Corporation's free and voluntary act and deed.
___________________________________
Appearer
WITNESSES:
___________________________________
___________________________________
SWORN TO AND SUBSCRIBED BEFORE ME
this 3rd day of November, 1997.
___________________________________
NOTARY PUBLIC
55
ACKNOWLEDGMENT AS TO
HALTER MARINE GROUP, INC.
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned authority, personally came and appeared ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ who, being duly sworn, declared and acknowledged before me, Notary,
in the presence of the undersigned competent witnesses, that she is the Senior
Vice President of Halter Marine Group, Inc. and that in such capacity she was
duly authorized to and did execute the foregoing Agreement on behalf of such
corporation, for the purposes therein expressed and as his and such
corporation's free and voluntary act and deed.
___________________________________
Appearer
WITNESSES:
___________________________________
___________________________________
SWORN TO AND SUBSCRIBED BEFORE ME
this 3rd day of November, 1997.
___________________________________
NOTARY PUBLIC
56
Exhibit A
List of Shareholders of Utility Steel Fabrication Inc.
------------------------------------------------------
Shareholder Shares
----------- ------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 3,155
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 489
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ 489
▇▇▇▇ ▇▇▇▇▇▇▇, as Trustee of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust 489
Exhibit B
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement"), dated as of November 3, 1997 (the
"Closing Date"), by and among Utility Acquisition, Inc., a Louisiana corporation
("Buyer"), each of the shareholders ("Shareholders") of Utility Steel
Fabrication Inc., a Louisiana corporation (the "Company") and Hibernia National
Bank, a national banking association, as escrow agent ("Escrow Agent").
Capitalized terms used in this Agreement without definition have the respective
meanings given to them in that certain Agreement and Plan of Merger (the "Merger
Agreement") dated October 31, 1997, by and among Halter Marine Group, Inc., a
Delaware corporation, Buyer, the Company and the Shareholders.
RECITALS
--------
WHEREAS, Buyer and each of the Shareholders are parties to the Merger
--------
Agreement;
WHEREAS, Buyer and each of the Shareholders have agreed to execute this
Agreement pursuant to Section 3.1(b) of the Merger Agreement; and
WHEREAS, the Shareholders have designated ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to act as their
representative ("Shareholders' Representative") in connection with this Escrow
Agreement.
AGREEMENT
---------
NOW THEREFORE, in consideration of the premises and for other good and
-------------
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Establishment of Escrow.
a. Deposit. Buyer is depositing with Escrow Agent an
amount equal to Three Hundred Fifty Thousand Dollars
($350,000) in immediately available funds (as increased by
any earnings thereon and as reduced by any amounts withdrawn
under Section 5(j), the "Escrow Fund").
b. Escrow Agent. Escrow Agent hereby agrees to act as
escrow agent and to hold, safeguard and disburse the Escrow
Fund pursuant to the terms and conditions of this Agreement.
2. INVESTMENT OF FUNDS. Except as Buyer and Shareholders' Representative
may from time to time jointly instruct Escrow Agent in writing, the Escrow Fund
shall be invested from time to time, in United States Treasury Bills having a
remaining maturity of 90 days or less or repurchase obligations secured by such
United States Treasury Bills, or deposited and maintained in a money market
deposit account with Escrow Agent, until disbursement of the entire Escrow Fund.
Escrow Agent is authorized to liquidate, in accordance with its customary
procedures, any portion of the Escrow Fund consisting of investments to provide
for payments required to be made under this Agreement. All interest, dividends,
and profits (less any expense incurred as a result of such investments) shall
inure to the benefit of the Shareholders and shall be added to and shall
increase the Escrow Fund.
3. CLAIMS.
a. Notice of Claim. From time to time on or before the date that is
two years following the Closing Date, Buyer may give notice (a "Claim
Notice") to Shareholders' Representative and Escrow Agent specifying in
reasonable detail the nature and dollar amount of any claim (a "Claim") it
may have pursuant to Section 8.1 of the Merger Agreement. Buyer may deliver
more than one Claim Notice with respect to any underlying set of facts. If
Shareholders' Representative gives notice to Buyer and Escrow Agent
disputing any Claim (a "Counter Notice") within 30 days following receipt
by Escrow Agent of the Claim Notice regarding such Claim, such Claim shall
be resolved as provided in Section 3(b) of this Agreement. If no Counter
Notice is received by Escrow Agent within such 30-day period, then the
dollar amount of damages claimed by Buyer as set forth in its Notice shall
be deemed established for purposes of this Escrow Agreement and the Merger
Agreement and, at the end of such 30-day period, Escrow Agent shall pay to
Buyer the dollar amount demanded in the Claim Notice from (and only to the
extent of) the Escrow Fund. Escrow Agent shall not inquire into or consider
whether a Claim complies with the requirements of the Merger Agreement.
b. Counter Notice. If a Counter Notice is given with respect to a
Claim, Escrow Agent shall make payment with respect thereto only in
accordance with (i) joint written instructions of Buyer and Shareholders'
Representative or (ii) a final non-appealable order of a court of competent
jurisdiction. Any court order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to Escrow Agent to the effect
that the order is final and non-appealable. Escrow Agent shall act on such
court order and legal opinion without further question.
4. TERMINATION OF ESCROW. On the day that is two years following the
Closing Date, Escrow Agent shall pay and distribute the then amount of Escrow
Fund to Shareholders allocated as set forth in Schedule A hereto, unless (i) any
Claims are then pending, in which case an amount equal to the aggregate dollar
amount of such Claims (as shown in the Claim Notices for such Claims) shall be
retained by Escrow Agent in the
Escrow Fund (and the balance paid to Shareholders in such proportions) or (ii)
Buyer has given notice to Shareholders' Representative and Escrow Agent
specifying in reasonable detail the nature of any other Claim it may have
pursuant to Section 8.1 of the Merger Agreement with respect to which it is
unable to specify the amount of Damages, in which case the entire Escrow Fund
shall be retained by Escrow Agent, in either case until it receives joint
written instructions of Buyer and Shareholders' Representative or a final non-
appealable order of a court of competent jurisdiction as contemplated by Section
3(a). Notwithstanding the foregoing, this Agreement shall terminate upon final
disposition by Escrow Agent of the Escrow Fund in accordance with joint written
instructions received by Escrow Agent from Buyer and Shareholders'
Representative terminating this Agreement and directing disposition of the
Escrow Fund.
5. DUTIES OF ESCROW AGENT.
a. Degree of Care. Escrow Agent shall not be under any duty to give
the Escrow Fund held by it hereunder any greater degree of care than it
gives its own similar property and shall not be required to invest any
funds held hereunder except as directed in this Agreement. Uninvested funds
held hereunder shall not earn or accrue interest.
b. Liability of Escrow Agent. Escrow Agent shall not be liable,
except for its own gross negligence or willful misconduct and, except with
respect to claims based upon such gross negligence or willful misconduct
that are successfully asserted against Escrow Agent, Buyer and Shareholders
shall jointly and severally indemnify and hold harmless Escrow Agent (and
any successor Escrow Agent) from and against any and all losses,
liabilities, claims, actions, damages and expenses, including reasonable
attorneys' fees and disbursements, arising out of and in connection with
this Agreement. Without limiting the foregoing, Escrow Agent shall in no
event be liable in connection with its investment or reinvestment of any
cash held by it hereunder in good faith, in accordance with the terms
hereof, including, without limitation, any liability for any delays (not
resulting from its gross negligence or willful misconduct) in the
investment or reinvestment of the Escrow Fund, or any loss of interest
incident to any such delays.
c. Reliance on Orders and Notices. Escrow Agent shall be entitled to
rely upon any order, judgment, certification, demand, notice, instrument or
other writing delivered to it hereunder without being required to determine
the authenticity or the correctness of any fact stated therein or the
propriety or validity of the service thereof. Escrow Agent may act in
reliance upon any instrument or signature believed by it to be genuine and
may assume that the person purporting to give receipt or advice or make any
statement or execute any document in connection with the provisions hereof
has been duly authorized to do so. Escrow Agent may conclusively presume
that the undersigned representative of any party hereto which is an entity
other than a natural person has full power and authority to instruct Escrow
Agent on behalf of that party unless written notice to the contrary is
delivered to Escrow Agent.
d. Reliance on Advice of Counsel. Escrow Agent may act pursuant to
the advice of counsel with respect to any matter relating to this Agreement
and shall not be liable for any action taken or omitted by it in good faith
in accordance with such advice.
e. No Direct Interest. Escrow Agent does not have any interest in
the Escrow Fund deposited hereunder but is serving as escrow holder only
and having only possession thereof. Any payments of income from this Escrow
Fund shall be subject to applicable withholding regulations then in force
with respect to United States federal and state taxes. The parties hereto
will provide Escrow Agent with appropriate Internal Revenue Service Forms
W-9 for tax identification number certification, or non-resident alien
certifications. Sections 5(e) and 5(b) shall survive any termination of
this Agreement or the resignation of Escrow Agent.
f. No Representations. Escrow Agent makes no representation as to
the validity, value, genuineness or the collectability of any security or
other document or instrument held by or delivered to it.
g. No Investment Advice. Escrow Agent shall not be called upon to
advise any party as to the wisdom in selling or retaining or taking or
refraining from any action with respect to any securities or other property
deposit ed hereunder.
h. Resignation. Escrow Agent (and any successor Escrow Agent) may,
at any time, resign (i) by giving written notice to Buyer and Shareholders'
Representative (a "Resignation Notice") or (ii) by delivering the Escrow
Fund to any successor Escrow Agent jointly designated, in writing, by the
Buyer and Shareholders' Representative, or to any court of competent
jurisdiction, whereupon Escrow Agent shall be discharged of and from any
and all further obligations arising in connection with this Agreement. The
resignation of Escrow Agent will take effect on the earlier of (i) the
appointment of a successor (including a court of competent jurisdiction) or
(ii) the day which is 30 days after delivery of the Resignation Notice. If
at that time Escrow Agent has not received a designation of a successor
Escrow Agent, Escrow Agent's sole responsibility after that time shall be
to retain and safeguard the Escrow Fund until receipt of a designation of
successor Escrow Agent or a joint written disposition instruction by the
Buyer and Shareholders' Representative or a final non-appealable order of a
court of competent jurisdiction.
i. Dispute of the Parties. In the event of any disagreement between
the other parties hereto resulting in adverse claims or demands being made
in connection
with the Escrow Fund or in the event that Escrow Agent is in doubt as to
what action it should take hereunder, Escrow Agent may, at its sole
discretion, file a concursus proceeding to resolve said disagreement or
doubt, and (regardless of whether Escrow Agent files a concursus
proceeding) shall be entitled to retain the Escrow Fund until Escrow Agent
shall have received (i) a final non-appealable order of a court of
competent jurisdiction directing delivery of the Escrow Fund or (ii) a
written agreement executed by the other parties hereto directing delivery
of the Escrow Fund, in which event Escrow Agent shall disburse the Escrow
Fund in accordance with such order or agreement. Any court order shall be
accompanied by a legal opinion by counsel for the presenting party
satisfactory to Escrow Agent to the effect that the order is final and non-
appealable. Escrow Agent shall act on such court order and legal opinion
without further question. Escrow Agent shall be indemnified by Buyer and
Shareholders for all cost, including reasonable attorney's fees, in
connection with any concursus proceeding and shall be fully protected in
suspending all or part of its activities under this Escrow Agreement until
a final judgment in any such concursus proceeding is received.
j. Escrow Agent's Compensation. Shareholders shall pay Escrow Agent
annual compensation (as payment in full) for the services to be rendered by
Escrow Agent hereunder in the amount of $2,500 at the time of execution of
this Agreement and $2,500 on each anniversary of the Closing Date
thereafter until this Agreement terminates. Shareholders further agree to
reimburse Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its
counsel). Any fees or expenses of Escrow Agent or its counsel that are not
paid as provided for herein may be taken from any property held by Escrow
Agent hereunder.
k. Use of Escrow Agent's Name. No printed or other matter in any
language (including, without limitation, prospectuses, notices, reports and
promotional material) that mentions Escrow Agent's name or the rights,
powers, or duties of Escrow Agent shall be issued by the other parties
hereto or on such parties' behalf unless Escrow Agent shall first have
given its specific written consent thereto.
l. Use of Securities Depositary. The other parties hereto authorize
Escrow Agent, for any securities held hereunder, to use the services of any
United States central securities depositary it reasonably deems
appropriate, including, without limitation, the Depositary Trust Company
and the Federal Reserve Book Entry System.
m. Institution of Legal Process by Escrow Agent. Escrow Agent shall
not be required to institute or defend any action or legal process
involving any matter referred to herein which in any manner affects it or
its duties or liabilities hereunder
unless or until requested to do so by Buyer or Shareholders' Representative
and then only upon receiving full indemnity in an amount of such character
as it shall require, against any and all claims, liabilities, judgment,
attorney's fees and other expenses of every kind in relation thereto,
except in the case of its own willful misconduct or gross negligence.
n. Payment or Transfer of Monies. Nothing contained herein shall be
deemed to obligate Escrow Agent to pay or transfer any monies hereunder
unless and until such funds are received and collected by Escrow Agent.
6. LIMITED RESPONSIBILITY. This Agreement expressly sets forth all the
duties of Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this Agreement against Escrow
Agent. Escrow Agent shall not be bound by the provisions of any agreement among
the Buyer and Shareholders except this Agreement.
7. OWNERSHIP FOR TAX PURPOSES. Shareholders agree that, for purposes of
federal and other taxes based on income, Shareholders shall be treated as the
owners of the Escrow Fund, and that Shareholders will report all income, if any,
that is earned on, or derived from, the Escrow Fund as its income, pro rata
according to their allocable interests in the Escrow Fund, in the taxable year
or years in which such income is properly includible and pay any taxes
attributable thereto.
8. MISCELLANEOUS.
a. Notice. Any notice or other communication provided for hereunder
will be in writing and may be (i) sent by registered or certified mail postage
prepaid, return receipt requested, (ii) served by personal delivery, (iii) made
by facsimile transmission, or (iv) sent by overnight courier service to the
receiving parties as follows:
IF TO SHAREHOLDERS'
REPRESENTATIVE: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Utility Steel Fabrication Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, III
If to Escrow Agent: Hibernia National Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Any such notice or communication shall be deemed to be given, if sent by
registered or certified mail, on the date sent, if delivered in person, on
the date delivered, if made by facsimile transmission, on the date
transmitted, or, if sent by overnight courier service, on the date sent as
evidenced by the ▇▇▇▇ of lading. Any party sending a notice or other
communication by facsimile transmission shall also send a hard copy of such
notice or other communication by one of the other means of providing notice
set forth in this Section. Any notice or other communication shall be given
to such other representative or at such other address as a party to this
Agreement may furnish to the other party pursuant to this Section.
b. Jurisdiction; Service of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of,
this Agreement may be brought against any of the parties in the courts of
the State of Louisiana, Parish of Orleans, or, if it has or can acquire
jurisdiction, in the United States District Court for the Eastern District
of Louisiana, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any
action or proceeding referred to in the preceding sentence may be served on
any party anywhere in the world.
c. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original and all of
which, when taken together, will be deemed to constitute one and the same.
d. Section Headings. The headings of sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation.
e. Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in 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 or the documents referred
to in 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 or the documents referred to in this Agreement.
f. Exclusive Agreement and Modification. This Agreement supersedes
all prior agreements among the parties with respect to its subject matter
and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be
modified, cancelled, abrogated or rescinded except by a written agreement
executed by the Buyer, the Shareholders' Representative and the Escrow
Agent. Escrow Agent shall not be bound or in any way affected by any notice
of any modification, cancellation, abrogation or rescission of this
Agreement, or any facts or circumstances affecting or alleged to affect the
rights or liabilities of any other person, unless it has received written
notice satisfactory to it, signed by Buyer and the Shareholders'
Representative.
g. Governing Law. This Agreement shall be governed by the laws of
the State of Louisiana without regard to conflicts of law principles.
h. Binding Effect. The rights created by this Agreement shall inure
to the benefit of, and the obligations related thereby shall be binding
upon, the heirs, successors and assigns of the parties hereto.
i. Representations and Warranties. Each of Buyer and each of the
Shareholders represents and warrants to Escrow Agent, and Escrow Agent
represents and warrants to each of Buyer and each of the Shareholders that
(i) party is duly authorized to enter into this Agreement and the
transactions contemplated hereunder; (ii) this Agreement is a valid and
binding obligation of such party and, to such party's knowledge, does not
conflict with, violate or cause a default under any provisions of federal
or state law or any order, decree, license, permit or the like or any other
agreement or instrument to which such party is a party or by which such
party is bound; and (iii) the officer or officers signing this Agreement on
behalf of such party is duly authorized to do so.
IN WITNESS WHEREOF, each of the undersigned have executed and delivered
this Agreement as of this 3rd day of November, 1997.
BUYER:
UTILITY ACQUISITION, INC.
By:_________________________________
Title:______________________________
SHAREHOLDERS:
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
____________________________________
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇ ▇▇▇▇▇▇▇, AS TRUSTEE OF THE
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
ESCROW AGENT:
HIBERNIA NATIONAL BANK
By: _______________________________
Title: Vice President and Trust Officer
Schedule A
ALLOCATION OF ESCROW FUND
==================================================
Percentage of
Shareholder Escrow Fund
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and 68.26%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 10.58%
--------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ 10.58%
--------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, as Trustee for the 10.58%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
--------------------------------------------------
--------------------------------------------------
Total Escrow Fund 100%
=====
==================================================
EXHIBIT C
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT, dated as of November 3, 1997, between Halter Marine
Group, Inc., a Delaware corporation (the "Company") and each of the parties
whose signatures appear on the execution pages hereof (each of such parties, a
"Purchaser" and, collectively, the "Purchasers").
WITNESSETH:
----------
WHEREAS, the Company, Utility Acquisition, Inc., a Louisiana corporation
which is a wholly-owned third-tier subsidiary of the Company ("Acquisition
Sub"), Utility Steel Fabrication Inc., a Louisiana corporation ("Utility
Steel"), and the Shareholders of Utility Steel have entered into an Agreement
and Plan of Merger, dated as of October 31, 1997 (the "Merger Agreement"; terms
defined in the Merger Agreement and otherwise not defined herein are used herein
as therein defined), pursuant to which the Company has agreed to acquire Utility
Steel, and Utility Steel has agreed to be merged with and into Acquisition Sub
(the "Merger"); and
WHEREAS, pursuant to Section 3.2(a) of the Merger Agreement, the Company
has agreed, in partial payment of the consideration to be paid in the Merger, to
issue and deliver to the Purchasers an aggregate of 221,250 shares (each a
"Halter Share" and collectively, the "Halter Shares") of the Company's Common
Stock, par value $.01 per share ("Common Stock);
NOW THEREFORE, to implement the foregoing and in consideration of the
mutual agreements contained herein, the parties hereto hereby agree as follows:
1. PURCHASE OF COMMON STOCK. Subject to all of the terms and conditions
of this Agreement, the Purchasers hereby subscribe for and purchase, and the
Company hereby issues and sells to the Purchasers, the Halter Shares in the
amounts set forth on the execution pages hereof. Concurrent with the execution
of this Agreement, Halter has delivered to the Purchasers one or more stock
certificates representing the number of Halter Shares set forth beneath the
names of such Purchasers on the signature pages hereof, registered in the name
of such Purchasers and bearing the legend set forth in Section 2(b).
2. PURCHASERS' REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Purchaser
represents and warrants to the Company as follows:
(a) Investment Intention. Such Purchaser is acquiring the Halter
Shares solely for his or her own account for investment and not with a view
to or for sale in connection with any distribution thereof in any
transaction or series of transactions that would be in violation of the
securities laws of the United States or any state thereof. Each Purchaser
agrees that he or she will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the Halter Shares
(or solicit any offers to buy, purchase or otherwise acquire or take a
pledge of any Halter Shares), except in compliance with the Securities Act
of 1933, as amended (the "Securities Act"), and the rules and regulations
of the Securities and Exchange Commission (the "Commission") thereunder,
and in compliance with applicable state securities or "blue sky" laws. Each
Purchaser further understands, acknowledges and agrees that none of the
Halter Shares may be transferred, sold, pledged, hypothecate or otherwise
disposed of unless (i) (A) such disposition is pursuant to an effective
registration statement under the Securities Act, (B) such disposition
(including but not limited to any transfer, sale, pledge, hypothecation or
other disposition of the Halter Shares by each Purchaser to any of his or
her affiliates, or by any such affiliate to another such affiliate) is
exempt from the provisions of Section 5 of the Securities Act and each
Purchaser shall have delivered to the Company an opinion of counsel, which
opinion of counsel shall be reasonably satisfactory to the Company, to the
effect that such disposition is exempt from the provisions of Section 5 of
the Securities Act or (C) a no-action letter from the Commission,
reasonably satisfactory to the Company, shall have been obtained with
respect to such disposition and (ii) such disposition is pursuant to
registration under any applicable state securities laws or an exemption
therefrom.
(b) Legend. Each Purchaser acknowledges that the certificate or
certificates representing the Halter Shares shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT
BE TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (i) (A) SUCH DISPOSITION
IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (B) SUCH
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5
OF SUCH ACT AND THE HOLDER HEREOF SHALL HAVE DELIVERED
TO THE COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND
COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE
COMPANY, TO THAT EFFECT, OR (C) A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, SHALL HAVE
BEEN OBTAINED WITH RESPECT TO SUCH DISPOSITION AND (ii)
SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION THEREFROM."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE PROVISIONS OF A SUBSCRIPTION AGREEMENT, DATED AS
OF NOVEMBER 3, 1997, AND NEITHER THIS CERTIFICATE NOR
THE SHARES REPRESENTED BY IT ARE ASSIGNABLE OR
OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH SUBSCRIPTION AGREEMENT, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE ENTITLED TO
THE BENEFITS OF AND ARE BOUND BY THE OBLIGATIONS SET
FORTH IN SECTION 5.2.5 OF THE AGREEMENT AND PLAN OF
MERGER, DATED AS OF OCTOBER 31, 1997, BETWEEN THE
COMPANY, UTILITY ACQUISITION, INC., UTILITY STEEL
FABRICATION INC. AND THE SHAREHOLDERS NAMED THEREIN,
WHICH PROVIDES FOR CERTAIN REGISTRATION RIGHTS WITH
RESPECT TO THE SHARES REPRESENTED BY THIS CERTIFICATE."
(c) Securities Law Matters. Each Purchaser acknowledges receipt of
advice from the Company that (i) the Halter Shares have not been registered
under the Securities Act or any state securities of "blue sky" laws, (ii)
the Halter Shares must be held indefinitely and such Purchaser must
continue to bear the economic risk of the investment in the Halter Shares
unless the Halter Shares are subsequently registered under the Securities
Act and such state laws or an exemption from registration is available,
(iii) when and if the Halter Shares may be disposed of without registration
in reliance upon Rule 144 promulgated under the Securities Act ("Rule
144"), such disposition can be made only in accordance with the terms and
conditions of such Rule and (iv) a notation shall be made in the
appropriate records of the company indicating that the Halter Shares are
subject to restrictions on transfer set forth in this Agreement and
appropriate stop-transfer restrictions will be issued to the Company's
stock transfer agent with respect to the Halter Shares. Prior to any
transfer or attempted transfer of Halter Shares other than the sale of such
shares pursuant to registration under the Securities Act, the Purchasers
agree to give notice to the Company of their intention to effect such
transfer. The notice shall describe the manner and circumstances of the
proposed transfer in detail and shall contain an undertaking to furnish
such other information as may be required to enable Halter's counsel to
render the opinions referred to below, and shall give the identity and
address of the Shareholder's counsel. The Company shall promptly submit a
copy of the notice to its counsel, and the following provisions shall
apply:
(i) If, in the opinion of the Company's counsel or counsel to the
Purchasers which is reasonably satisfactory to the Company, the proposed
transfer may be effected without registration of the Halter Shares under
the Securities Act, the Company shall, as
promptly as practicable, so notify the Shareholders who will then be
entitled to transfer the Halter Shares in accordance with the terms of the
notice delivered by the Purchasers to the Company.
(ii) If, in the opinion of the Company's counsel or counsel to
the Purchasers which is reasonably satisfactory to the Company, the
proposed transfer of the Halter Shares may not be effected without
registration under the Securities Act, the Company shall, as promptly as
practicable, so notify the Purchasers, and the Purchasers shall not be
allowed to effect the proposed transfer except pursuant to an offering
registered under the Securities Act.
(iii) The foregoing restrictions on transfer of Halter Shares
shall terminate as to any Purchaser as soon as the provisions of Rule
144(k) under the Securities Act (or any successor rule) become available to
such Purchaser and the Company shall at such time, upon request of any
Purchaser, cause Halter's transfer agent to reissue certificates to such
Purchaser not containing any legend relating to resales of unregistered
securities.
(d) Compliance with Rule 144. If any of its Halter Shares are to be
disposed of in accordance with Rule 144, such Purchaser shall transmit to
the Company an executed copy of Form 144 (if required by Rule 144) no later
than the time such form is required to be transmitted to the Commission for
filing and such other documentation as the Company may reasonably require
to assure compliance with Rule 144 in connection with such disposition.
(e) Ability to Bear Risk. The financial situation of such Purchaser
is such that it can afford to bear the economic risk of holding the Halter
Shares for an indefinite period, and such Purchaser can afford to suffer
the complete loss of his or her investment in the Halter Shares.
(f) Access to Information. (i) Such Purchaser has participated in the
preparation and negotiation of the Merger Agreement and has carefully
reviewed the public filings made by the Company and its subsidiaries and
the materials furnished to it in connection with the transaction
contemplated thereby and hereby, (ii) such Purchaser has been granted the
opportunity to ask questions of, and receive answers from, representatives
of the Company concerning the terms and conditions of the purchase of the
Halter Shares and (iii) the knowledge and experience of such Purchaser in
financial and business matters in such that he or she is capable of
evaluating the merits and risks of his or her investment in the Halter
Shares.
(g) Registration Covenant. Such Purchaser acknowledges and agrees
that he or she shall be entitled to the rights and subject to the
obligations set forth under Section 5.2.5 of the Merger Agreement with
respect to the registration covenant provided for therein.
3. Representations and Warranties of the Company. The Company
represents and warrants to each Purchaser that (a) the Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Louisiana, (b) this Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid
and legally binding obligation of the Company enforceable against the
Company in accordance with its terms, and (c) the Halter Shares have been
duly authorized and validly issued and are fully paid and non-assessable.
The Company acknowledges and agrees that each Purchaser is entitled to the
rights and subject to the obligations set forth under Section 5.2.5 of the
Merger Agreement with respect to the registration covenant provided for
therein.
4. Miscellaneous.
(a) Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
(b) Entire Agreement. This Agreement, the Merger Agreement and the
other Transaction Agreements (when executed and delivered) constitute the
entire agreement and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to the subject
matter hereof.
(c) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
shall together constitute one and the same instrument.
(d) Severability. If any provision of this Agreement, including any
phrase, sentence, clause, section or subsection is inoperative or
unenforceable for any reason, such circumstances shall not have the effect
of rendering the provision in question inoperative or unenforceable in any
other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any
extent whatsoever.
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Louisiana (regardless of the
laws that might otherwise govern under applicable principles of conflicts
of law).
(f) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors
and permitted assigns.
(g) No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto
and their respective heirs, successors and permitted assigns.
(h) Amendment; Waivers, etc. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought.
Any such waiver shall constitute a waiver only with respect to the specific
matter described in such writing and shall in no way impair the rights of
the party granting such waiver in any other respect or at any other time.
Neither the waiver by any of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure by any of
the parties, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature,
or as a waiver of any of such provisions, rights or privileges hereunder.
The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at
law or in equity.
(i) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or a Purchaser without the prior written consent
of the other party.
IN WITNESS WHEREOF, the Company, by its authorized representative, and
the Purchasers have duly executed this Agreement as of the date first above
written.
HALTER MARINE GROUP, INC.
By:_______________________________
Name:__________________________
Title:_________________________
_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇
▇▇▇▇▇▇
151,026 Halter Shares
_______________________________
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
23,408 Halter Shares
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
23,408 Halter Shares
_______________________________
▇▇▇▇ ▇▇▇▇▇▇▇, AS TRUSTEE OF
THE ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
23,408 Halter Shares
EXHIBIT D
FORM OF EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on November 3,
1997, (the "Effective Date") by and among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Employee") and
Utility Acquisition, Inc., a Louisiana corporation ("Acquisition"). Capitalized
terms not otherwise defined herein shall have the meanings assigned to them in
that certain Agreement and Plan of Merger, dated as of October 31, 1997 (the
"Merger Agreement"), by and among Acquisition, Employee, Utility Steel
Fabrication Inc., a Louisiana corporation (the "Company"), and Halter Marine
Group, Inc., a Delaware corporation ("Halter"). This Employment Agreement is
being executed and delivered in accordance with Section 6.2.4 of the Merger
Agreement.
RECITALS
WHEREAS, Acquisition, Employee, Company and Halter have entered into the
Merger Agreement whereby (i) all of the issued and outstanding common stock, no
par value of the Company will be converted into the right to receive the number
of shares of Halter Common Stock and the cash consideration as set forth in the
Merger Agreement and (ii) the Company will be merged with and into Acquisition
(the "Merger");
WHEREAS, the Company owns, designs, manufactures, sells and distributes
cranes, topping equipment and other equipment used by the marine, offshore and
oil field drilling industries (the "Business") within the parishes of Orleans,
St. Tammany, St. ▇▇▇▇▇▇▇, St. ▇▇▇▇▇▇▇, Assumption, Pointe Coupee, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, East Baton Rouge, West Baton Rouge, St. ▇▇▇▇▇▇, Lafourche,
Terrebonne, Vermillion, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Calcasieu and Iberville in the state of
Louisiana (the "Territory"); and
WHEREAS, Acquisition and Employee have agreed to enter into an agreement
whereby Employee will be employed by Acquisition as more fully set forth herein
for the time period set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the premises and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Term. Subject to the provisions for termination as provided herein,
the term of this Agreement shall be three (3) years commencing on the Effective
Date (the "Term").
2. Employment. During the Term, Employee shall serve as the President
and chief operating officer of the operations of Acquisition as the successor in
the Merger to the Company (and its wholly owned subsidiary, J&B Company, Inc.
("J&B")). Acquisition hereby employs Employee to devote his personal services
to the affairs of Acquisition and J&B (collectively, the "Acquired Companies"),
and the Employee hereby accepts such employment pursuant to the terms and
conditions herein set forth. During the Term, Employee shall well and
faithfully render and perform such other services as may be assigned to him by
or under the authority of Acquisition's Board of Directors. Employee will
devote such time and efforts to the business and affairs of the Acquired
Companies as shall be necessary to perform such services and any other services
assigned to him by the Board of Directors and shall be at all times, when so
engaged, subject to the direction and control of the Board of Directors.
Employee shall render such services to the best of his ability and shall use his
best efforts to promote the interest of the Acquired Companies.
3. Compensation.
a. Base Salary. As compensation for the services rendered by the
Employee, Acquisition shall pay the Employee during the Term a base salary
(the "Base Salary") at the rate of Two Hundred Fifty Thousand and no/100
($250,000) per year less such amounts as are required to be withheld by
applicable law and regulations. Base Salary shall be paid twice each
calendar month, or at more frequent intervals as determined by Acquisition
in its sole discretion.
b. Profit Bonus.
(i) As additional compensation, Employee shall earn an annual
bonus (the "Profit Bonus") for any Bonus Fiscal Year equal to the
aggregate of (1) six point two five (6.25%) percent times the Combined
Pre-Tax Profits of the Acquired Companies greater than $1,000,000 and
less than or equal to $3,000,000 and (2) three (3%) percent times the
Combined Pre-Tax Profits of the Acquired Companies in excess of
$3,000,000.
(ii) The Profit Bonus shall be payable on or before the day
that is sixty days following the end of each Bonus Fiscal Year. In any
Bonus Fiscal Year in which Employee does not provide services for the
entire Bonus Fiscal Year, Employee's Bonus shall be calculated on a
pro rata basis determined by calculating the Bonus for the entire
Bonus Fiscal Year and multiplying by a ratio the numerator of which is
the number of full calendar months Employee provided services during
the Bonus Fiscal Year pursuant to this Agreement and the denominator
of which is twelve.
(iii) As used herein, the phrase "Combined Pre-Tax Profits of
the Acquired Companies" shall mean for any Bonus Fiscal Year the net
income of Acquisition and J&B determined on a consolidated basis in
accordance with generally accepted
accounting principles. Employee acknowledges that Acquisition may
merge itself and/or J&B into one or more direct or indirect
subsidiaries of Halter. If Acquisition's and/or J&B's operations are
merged, combined or commingled with the operations of any other direct
or indirect subsidiary of Halter, the phrase "Combined Pre-Tax Profits
of the Acquired Companies" shall mean for any Bonus Fiscal Year the
net income arising from the utilization of or attributable to the
assets of Acquisition and/or J&B as shown on the accounting records of
Acquisition, J&B or any direct or indirect subsidiary of Halter as
determined by Halter in good faith.
(iv) As used herein, the phrase "Bonus Fiscal Year" shall mean
any full fiscal year or any shortened period ending on the last day of
Acquisition's fiscal year end. Employee acknowledges that Acquisition
intends to change the fiscal year end of the Acquired Companies. If
any Bonus Fiscal Year is a period of less than twelve months as a
result of the change of such fiscal year end, then the ranges for the
Combined Pre-Tax Profits of the Acquired Companies set forth in
Sections 3(b)(i)(1) and 3(b)(ii)(2) in calculating the Profit Bonus
shall be reduced by a ratio the numerator of which is the number of
months in any such shortened Bonus Fiscal Year and the denominator of
which is number twelve.
4. Benefits. Employee shall be allowed to participate in any benefits
package offered to all employees of Acquisition pursuant to its terms.
5. Termination.
a. Termination upon Death. If the Employee dies during the Term,
this Employment Agreement shall terminate, except that the Employee's legal
representatives shall be entitled to receive any earned but unpaid
compensation.
b. Termination upon Disability. If, during the Term, the Employee
becomes physically or mentally disabled, whether totally or partially, so
that the Employee is unable substantially to perform his services hereunder
for (i) a period of three (3) consecutive months, or (ii) shorter periods
aggregating three (3) months during any six (6) month period, Acquisition
may at any time after the last day of the three (3) consecutive months of
disability or the day on which the shorter periods of disability equal an
aggregate of three (3) months, by written notice to the Employee, terminate
the Term of the Employee's employment hereunder. Nothing in this Section
5(b) shall be deemed to extend the Term.
c. Termination for Cause. If the Employee (i) materially neglects
his duties hereunder after fifteen (15) days written notice and opportunity
to cure, (ii) is convicted of any crime or offense (other than a minor
traffic violation or a similar offense), (iii) fails or refuses to comply
materially with the reasonable oral or written policies or directives of
Acquisition (or its authorized representatives), after fifteen (15) days
written notice and opportunity to cure, (iv) is guilty of misconduct in
connection with the performance of his
duties hereunder or (v) materially breaches affirmative or negative
covenants or undertakings hereunder after fifteen (15) days written notice
and opportunity to cure, Acquisition may at any time by written notice (the
date such notice is given pursuant to this Agreement being the "Notice
Date") to the Employee, terminate the Term of the Employee's employment
hereunder and the Employee shall have no right to receive any compensation
or benefit hereunder on and after the Notice Date.
d. Effect of Termination. Upon termination of Employee's employment
for any reason all obligations of Acquisition for Base Salary, Profit
Bonus, and benefits (if any) shall thereupon cease, except for the pro-
rated Base Salary and Profit Bonus payable to the date of termination.
6. Inventions and Intellectual Property.
a. Inventions. All ideas, inventions, and other developments or
improvements conceived or reduced to practice by Employee, alone or with
others, during the term of this Agreement, whether or not during working
hours, that are within the scope of the Business or that relate to or
result from any of the Employer's work or projects or the services provided
by Employee to Acquisition pursuant to this Agreement, shall be the
exclusive property of Acquisition. Employee agrees to assist Acquisition,
at its expense, to obtain patents on any such patentable ideas, inventions,
and other developments, and agrees to execute all documents necessary to
obtain such patents in the name of Acquisition.
b. Intellectual Property. All right, title, and interest of every
kind and nature, whether now known or unknown, in and to any intellectual
property, including without limitation, any inventions, patents,
trademarks, service marks, copyrights, films, scripts, ideas, creations,
and properties invented, created, written, developed, furnished, produced,
or disclosed by Employee (collectively, the "Intellectual Property"), in
the course of rendering services to Acquisition under and pursuant to this
Agreement, shall be and remain the sole and exclusive property of
Acquisition for any and all purposes and uses, and Employee shall have no
right, title, or interest of any kind or nature in or to such property, or
in or to any results and/or proceeds from such property. To the extent that
such Intellectual Property does not fit within the definition of work for
hire under the Copyright Act of 1976 or any such successor law, all rights
to the Intellectual Property, including without limitation all copyright
and trademark rights, are by this Agreement assigned to Acquisition. All
Intellectual Property may, in Acquisition's sole discretion, be registered
in the U.S. Copyright Office or in the U.S. Patent and Trademark Office, as
appropriate, in the name of Acquisition. Employee shall assist Acquisition
in obtaining, defending and enforcing its rights in or registrations of the
Intellectual Property by providing evidence, testimony, and documents
concerning Employee's or Acquisition's use of the Intellectual Property.
7. Non-Competition/Confidentiality.
a. Non-Competition. The Employee acknowledges and agrees that
Acquisition is engaged in the Business throughout the Territory. The
Employee agrees that it will refrain from carrying on or engaging in a
business similar to that of, or which competes with, the Business within
the Territory for a period commencing with the day (such day being the
("Termination Day") that is the earlier of the expiration of this Agreement
or the termination of this Agreement pursuant to Section 5 and ending on
the day that is the second (2nd) anniversary of the Termination Day (the
"Non-Compete Period"). In furtherance of the foregoing, the Employee agrees
that, during the Non-Compete Period, it will not, directly or indirectly,
either; (i) have an ownership interest in (whether as proprietor, partner,
equity holder or otherwise), (ii) be an employee, officer, director or
general or managing partner of, or hold a similar position in, (iii) act as
agent, broker or distributor for or adviser or consultant to, or (iv) in
any way promote, market or otherwise assist any person, firm, corporation,
or business entity which is engaged or which they reasonably know is
undertaking to become engaged, in the Business in the Territory. The
ownership as a passive investment of stock of a Publicly-Held Company
engaged in the Business within the Territory shall not be a violation of
this Section 7(a). As used herein the term "Publicly-Held Company" shall
mean any corporation, limited liability company, partnership, or other
similar entity which has any class of stock, certificate of interest,
certificate of participation, investment contract, or any other security
representing an equity or ownership interest (regardless of the class or
rights of any such equity or ownership interest) (i) registered with the
Securities Exchange Commission pursuant to Section 12 of the Securities
Exchange Act of 1934 (the "Act") or exempt from registration pursuant to
Section 12(g)(2)(B) or 12(g)(2)(G) of the Act, (ii) listed on any national
securities exchange or regional securities exchange, or (iii) otherwise
required to be registered pursuant to Section 12(g) of the Act.
b. No Solicitation. Employee hereby agrees that, during the Non-
Compete Period, it will not (i) directly or indirectly recruit, solicit or
otherwise induce or influence any employee or agent of Acquisition or
Halter to discontinue such employment, agency or other relationship with
Acquisition or Halter or (ii) employ or seek to employ or cause any person
or entity engaged in the Business (a "Competitor") to employ or seek to
employ, any person who is at such time employed by the Company or was
employed by the Company at any time within six (6) months prior to the date
the Employee or the Competitor employs or seeks to employ such person.
c. Confidentiality.
(i) Acknowledgment. Employee acknowledges that Employee has
occupied or will occupy a position of trust and confidence with
Acquisition and/or Halter and has or may become familiar with the
following, any and all of which constitute confidential information of
Acquisition, Halter, or any affiliates thereof, (collectively, the
"Confidential Information"): (A) any and all trade secrets concerning
the business and affairs of Acquisition or Halter, data, know-how,
inventions and ideas, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code),
computer software and database technologies, systems, structures and
architectures (and related processes, formulae, compositions,
improvements, devices, know-how,
inventions, discoveries, concepts, ideas, designs, methods and
information) of Acquisition or Halter and any other information,
however documented, of Acquisition or Halter that is a trade secret;
(B) any and all information concerning the business and affairs of
Acquisition or Halter (which includes historical financial statements,
financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key
personnel, personnel training and techniques and materials) however
documented; and (C) any and all notes, analysis, compilations,
studies, summaries, and other material prepared by or for Employee
containing or based, in whole or in part, on any information included
in the foregoing.
(ii) Confidential Information. Employee acknowledges and agrees
that all Confidential Information known or obtained by Employee,
whether before or after the date hereof, is the property of
Acquisition and/or Halter. Therefore, Employee agrees that Employee
will not, at any time, disclose to any unauthorized persons,
corporations, partnerships, limited liability companies or other
entities or use for his own account or for the benefit of any third
party any Confidential Information, whether Employee has such
information in Employee's memory or embodied in writing or other
physical form, without Acquisition's or Halter's written consent,
unless and to the extent that the Confidential Information is or
becomes generally known to and available for use by the public other
than as a result of Employee's fault or the fault of any other person
or entity bound by a duty of confidentiality to Acquisition, Halter or
any affiliate thereof. Employee agrees to deliver to Acquisition or
Halter , at Acquisition's or Halter's request, all documents,
memoranda, notes, plans, records, reports, and other documentation,
models, components, devices, or computer software, whether embodied in
a disk or in other form (and all copies of all of the foregoing),
relating to the businesses, operations, or affairs of Acquisition or
Halter and any other Confidential Information that Employee may then
possess or have under Employee's control.
8. Miscellaneous.
a. Notice. Any notice or other communication provided for hereunder
will be in writing and may be (i) sent by registered or certified mail
postage prepaid, return receipt requested, (ii) served by personal
delivery, (iii) made by facsimile transmission, or (iv) sent by overnight
courier service to the receiving parties as follows:
If to Acquisition: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, III
With a copy to: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Employee: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Utility Steel Fabrication Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Sessions & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. Title
Any such notice or communication shall be deemed to be given, (i) if sent
by registered or certified mail, on the date sent; (ii) if delivered in
person, on the date delivered; (iii) if made by facsimile transmission, on
the date transmitted; or, (iv) if sent by overnight courier service, on the
date sent as evidenced by the ▇▇▇▇ of lading. Any party sending a notice or
other communication by facsimile transmission shall also send a hard copy
of such notice or other communication by one of the other means of
providing notice set forth in this Section 8(a). Any notice or other
communication shall be given to such other representative or at such other
address as a party to this Agreement may furnish to the other party
pursuant to this Section 8(a).
b. No Waiver. The failure of any party to this Agreement to insist
upon the performance of any of the terms and conditions of this Agreement,
or the waiver or any breach of any of the terms and conditions of this
Agreement, shall not be construed as thereafter waiving any such terms and
conditions, but the same shall continue and remain in full force and effect
as if no such forbearance or waiver had occurred.
c. Binding Effect. This Agreement shall be binding on and inure to
the benefit of the respective heirs, successors and assigns of the parties.
d. Governing Law. This Agreement shall be governed by, construed,
and enforced in accordance with the laws of the State of Louisiana.
e. Entire Agreement. This Agreement along with additional documents
referred to herein shall constitute the entire agreement among the parties
and any prior understanding or representation of any kind preceding the
date of this Agreement shall not be binding upon any party.
f. Interpretation. Notwithstanding any provision in this Agreement
to the contrary, the parties agree that this Agreement shall be interpreted
without giving effect to any principle of construction that would otherwise
require this Agreement to be construed against a party that drafted it
solely because such party drafted this Agreement.
g. Modification. Any modification of this Agreement or additional
obligation assumed by any party in connection with this Agreement shall be
binding only if placed in writing and signed by the parties.
h. Paragraph Headings. The titles to the paragraphs of this
Agreement are solely for the convenience of the parties and shall not be
used to explain, modify or simplify, or aid in the interpretation of the
provisions of this Agreement.
i. Severability. If a court of competent jurisdiction finds any
provision of the Agreement to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
j. Counterparts. This Agreement may be executed in multiple
counterparts, each of which is considered an original and shall be binding
upon the party executing the same, but all of such counterparts shall
constitute the same agreement.
k. Assignment of Rights. The rights and obligations of the Employee
under this Agreement are personal rights and obligations of the Employee
and may not be assigned or transferred to any other person, firm,
corporation, or other entity without the prior, express, and written
consent of Acquisition. Acquisition may assign or transfer its rights under
this Agreement (a) to Halter or any entity of which Halter, directly or
indirectly, owns more than fifty (50%) percent of the voting interest or
(b) to any third party in Acquisition's sole discretion provided that (i)
Acquisition shall remain solidarily liable with such assignee or transferee
for the payment of the Base Salary and Profit Bonus and (ii) any such
assignee or transferee expressly assumes the obligations of Acquisition
provided under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
EMPLOYEE UTILITY ACQUISITION, INC.
____________________________ ___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice-President/Secretary
EXHIBIT E
FORMS OF NON-COMPETITION AGREEMENTS
THIS NON-COMPETITION AGREEMENT (the "Agreement"), entered into this 3rd day
of November, 1997 (the "Effective Date"), is by and between Utility Acquisition,
Inc., a Louisiana corporation ("Acquisition"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Shareholder"). Capitalized terms not otherwise defined herein shall have the
meanings assigned to them in that certain Agreement and Plan of Merger (the
"Agreement"), dated as of October 31, 1997, by and among Halter Marine Group,
Inc., a Delaware corporation ("Halter"), Acquisition, Utility Steel Fabrication
Inc., a Louisiana corporation (the "Company") and the Shareholders of the
Company.
RECITALS
WHEREAS, Halter, Acquisition, the Company and the Shareholders of the
Company have entered into the Merger Agreement, pursuant to which the Company
will be merged with and into Acquisition;
WHEREAS, Shareholder is the principal shareholder of the Company and as
such, pursuant to the Merger Agreement, is selling to Acquisition all of his
interest in, including the goodwill of, the Company, for the consideration set
forth in the Merger Agreement;
WHEREAS, the Company owns, designs, manufactures, fabricates, sells and
distributes cranes, topping equipment and other equipment used by the marine and
offshore and oilfield drilling industries (the "Business") within the parishes
of Orleans, St. Tammany, St. ▇▇▇▇▇▇▇, St. ▇▇▇▇▇▇▇, Assumption, Pointe Coupee,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, East Baton Rouge, West Baton Rouge, St. ▇▇▇▇▇▇, Lafourche,
Terrebonne, Vermillion, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Calcasieu and Iberville in the State of
Louisiana (the "Territory"); and
WHEREAS, Section 6.2.4 of the Merger Agreement requires that a
noncompetition agreement be executed and delivered by the Shareholder as a
condition to the consummation of the transactions contemplated by the Merger
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Consideration. In conjunction with the Merger as set forth in the
Merger Agreement, Acquisition has executed the Merger Agreement and will pay to
the Shareholder the consideration set forth therein. The Shareholder
acknowledges and agrees that the execution of the Merger
Agreement and the payment of the consideration set forth therein constitutes
good and valuable consideration for the covenants and agreements of the
Shareholder in this Agreement.
2. Noncompetition and Nonsolicitation.
a. Noncompetition. The Shareholder acknowledges and agrees that the
Company is engaged in the Business throughout the Territory. The
Shareholder agrees that he will refrain from carrying on or engaging in a
business similar to that of, or which competes with, the Business within
the Territory for a period commencing with the Closing and ending on the
day that is the second (2nd) anniversary of the Closing (the "Non-Compete
Period"). In furtherance of the foregoing, the Shareholder agrees that,
during the Non-Compete Period, it will not, directly or indirectly, either:
(i) have an ownership interest in (whether as proprietor, partner, equity
holder or otherwise), (ii) be an employee, officer, director or general or
managing partner of, or hold a similar position in, (iii) act as agent,
broker or distributor for or adviser or consultant to, or (iv) in any way
promote, market or otherwise assist any person, firm, corporation, or
business entity which is engaged, or which they reasonably know is
undertaking to become engaged, in the Business within the Territory. The
ownership as a passive investment by the Shareholder of less than three
percent (3%) of the outstanding shares of the capital stock of a Publicly-
Held Company engaged in the Business within the Territory shall not be a
violation of this Section 3. As used herein the term "Publicly-Held
Company" shall mean any corporation, limited liability company,
partnership, or other similar entity which has any class of stock,
certificate of interest, certificate of participation, investment contract,
or any other security representing an equity or ownership interest
(regardless of the class or rights of any such equity or ownership
interest) (i) registered with the Securities Exchange Commission pursuant
to Section 12 of the Securities Exchange Act of 1934 (the "Act") or exempt
from registration pursuant to Sections 12(g)(2)(B) or 12(g)(2)(G) of the
Act, (ii) listed on any national securities exchange or regional securities
exchange, or (iii) otherwise required to be registered pursuant to Section
12(g) of the Act.
b. No Solicitation. The Shareholder hereby agrees that, during the
Non-Compete Period, he will not, other than in the good faith performance
of his duties as an officer of the Company, (i) directly or indirectly
recruit, solicit or otherwise induce or influence any employee or agent of
the Company, to discontinue such employment, agency or other relationship
with the Company or (ii) employ or seek to employ or cause any person or
entity engaged in the Business (a "Competitor") to employ or seek to
employ, any person who is at such time employed by the Company or was
employed by the Company at any time within six (6) months prior to the date
the Shareholder or the Competitor employs or seeks to employ such person.
3. Confidentiality.
a. Acknowledgment. The Shareholder acknowledges that:
(i) the Shareholder has occupied a position of trust and
confidence with the Company prior to the date hereof and has become
familiar with the following, any and all of which constitute
confidential information of the Company and Acquisition (collectively,
the "Confidential Information"): (A) any and all trade secrets
concerning the business and affairs of the Company, data, know-how,
compositions, inventions and ideas, past, current and planned research
and development, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code),
computer software and database technologies, systems, structures and
architectures (and related processes, formulae, compositions,
improvements, devices, know-how, inventions, discoveries, concepts,
ideas, designs, methods and information, of the Company and any other
information, however documented, of the Company that is a trade
secret; (B) any and all information concerning the business and
affairs of the Company (which includes historical financial
statements, financial projections and budgets, historical and
projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and
materials) however documented; and (C) any and all notes, analysis,
compilations, studies, summaries, and other material prepared by or
for the Company containing or based, in whole or in part, on any
information included in the foregoing;
(ii) the provisions of this Agreement are reasonable and
necessary to protect and preserve the Company's business; and
(iii) the Company and Acquisition would be irreparably damaged
if the Shareholder were to breach this Agreement.
b. Confidential Information. The Shareholder acknowledges and
agrees that all Confidential Information known or obtained by the
Shareholder, whether before or after the date hereof, is the property of
the Company. Therefore, the Shareholder agrees that the Shareholder will
not, at any time, disclose to any unauthorized persons, corporations,
partnerships, limited liability companies or other entities or use for the
Shareholder's own account or for the benefit of any third party any
Confidential Information, whether the Shareholder has such information in
the Seller's memory or embodied in writing or other physical form, without
Acquisition's written consent, unless and to the extent that the
Confidential Information is or becomes generally known to and available for
use by the public other than as a result of the Shareholder's fault or the
fault of any other person or entity bound by a duty of confidentiality to
the Company or any affiliate thereof. Upon Acquisition's request, the
Shareholder agrees to deliver to Acquisition , all documents, memoranda,
notes, plans, records, reports, and other documentation, models,
components, devices, or computer software, whether embodied in a disk or in
other form (and all copies of all of the foregoing), relating to the
businesses, operations, or affairs of the Company and
any other Confidential Information that the Shareholder may then possess or
have under the Shareholder's control.
4. Notice to Others. The Shareholder hereby agrees that Acquisition or
any of its affiliates may disclose the non-competition provisions of this
Agreement to any person or entity.
5. Remedies. The Shareholder acknowledges that any violation of this
Agreement may cause irreparable harm to the Company and that damages are not an
adequate remedy. The Shareholder, therefore, agrees that the Company shall be
entitled to injunctive relief, including temporary, preliminary and permanent
injunctions, by an appropriate court in the appropriate jurisdiction, enjoining,
prohibiting and restraining the Shareholder from the continuance of any such
violation, in addition to any monetary damages which might occur by reason of
the violation of this Agreement. The remedies provided in this Agreement are
cumulative and shall not exclude any other remedies to which any party to this
Agreement may be entitled under this Agreement or other applicable law, and the
exercise of a remedy shall not be deemed an election excluding any other remedy
(any such claim by the other party to this Agreement being hereby waived).
6. Miscellaneous.
a. Notice. Any notice or other communication provided for hereunder
will be in writing and may be (i) sent by registered or certified mail
postage prepaid, return receipt requested, (ii) served by personal
delivery, (iii) made by facsimile transmission, or (iv) sent by overnight
courier service to the receiving parties as follows:
If to the Company: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, III
With a copy to: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Shareholder: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Utility Steel Fabrication Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Sessions & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. Title
Any such notice or communication shall be deemed to be given, if sent by
registered or certified mail, on the date sent; if delivered in person, on
the date delivered; if made by facsimile transmission, on the date
transmitted; or, if sent by overnight courier service, on the date sent as
evidenced by the ▇▇▇▇ of lading. Any party sending a notice or other
communication by facsimile transmission shall also send a hard copy of such
notice or other communication by one of the other means of providing notice
set forth in this Section 6(a). Any notice or other communication shall be
given to such other representative or at such other address as a party to
this Agreement may furnish to the other party pursuant to this Section
6(a).
b. No Waiver. The failure of any party to this Agreement to insist
upon the performance of any of the terms and conditions of this Agreement,
or the waiver or any breach of any of the terms and conditions of this
Agreement, shall not be construed as thereafter waiving any such terms and
conditions, but the same shall continue and remain in full force and effect
as if no such forbearance or waiver had occurred.
c. Binding Effect. This Agreement shall bind and inure to the
benefit of the respective heirs, successors and assigns of the parties.
d. Governing Law. This Agreement shall be governed by, construed,
and enforced in accordance with the laws of the State of Louisiana.
e. Entire Agreement. This Agreement and the documents referred to
herein shall constitute the entire agreement among the parties and any
prior understanding or representation of any kind preceding the date of
this Agreement shall not be binding upon any party.
f. Interpretation. Notwithstanding any provision in this Agreement
to the contrary, the parties agree that this Agreement shall be interpreted
without giving effect to any principle of construction that would otherwise
require this Agreement to be construed against a party that drafted it
solely because such party drafted this Agreement.
g. Modification. Any modification of this Agreement or additional
obligation assumed by any party in connection with this Agreement shall be
binding only if placed in writing and signed by the parties.
h. Paragraph Headings. The titles to the paragraphs of this
Agreement are solely for the convenience of the parties and shall not be
used to explain, modify or simplify, or aid in the interpretation of the
provisions of this Agreement.
i. Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
j. Scope. It is the express intent of the parties hereto that the
provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies of the State of Louisiana. It is
understood and agreed by the parties hereto that should any portion,
provision or clause of this Agreement be deemed too broad to permit
enforcement to its full extent, then it shall be enforced to the maximum
extent permitted by law, and each of the Company and the Shareholder hereby
consents and agrees that such scope may be judicially modified accordingly
in any proceeding brought to enforce such restriction.
k. Counterparts. This Agreement may be executed in multiple
counterparts, each of which is considered an original and shall be binding
upon the party executing the same, but all of such counterparts shall
constitute the same agreement.
90
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
UTILITY ACQUISITION, INC.
__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice-President/Secretary
__________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
91
EXHIBIT F
Form of Shareholder's Release
THIS SHAREHOLDERS' RELEASE (the "Release"), is entered into this 3rd of
November, 1997, by and between Utility Acquisition, Inc., a Louisiana
corporation ("Buyer"), and the undersigned shareholders (the "Shareholders") of
Utility Steel Fabrication Inc., a Louisiana corporation (the "Company"). This
Release is being executed and delivered in accordance with Section 6.2.4 of the
Agreement and Plan of Merger, dated as of October 31, 1997 (the "Agreement") by
and among Halter Marine Group, Inc., a Delaware corporation (the "Parent"),
Buyer, the Company and the Shareholders. Capitalized terms used in this Release
without definition have the respective meanings given to them in the Agreement.
RECITAL
WHEREAS, the undersigned, being all of the Shareholders of the Company,
acknowledge that the execution and delivery of this Release is a condition to
Buyer's obligation to effect the merger of the Company with and into Buyer
pursuant to the Agreement and that Buyer is relying on this Release in
consummating such transaction.
AGREEMENT
Each Shareholder, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and intending to be legally bound,
in order to induce Parent and Buyer to cause the merger of the Company into
Buyer pursuant to the Agreement, hereby agrees as follows:
1. Each Shareholder, on behalf of himself, and his heirs, successors,
representatives, and agents (together with the Shareholder, the "Releasing
Party"), hereby releases and forever discharges Buyer, Parent, the Company and
each of their past, present and future officers, directors, representatives,
affiliates, stockholders, controlling persons, subsidiaries, parents,
successors, insurers, and assigns (other than the Releasing Party)
(individually, a "Releasee" and collectively, "Releasees") from any and all
claims, demands, proceedings, causes of action, orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, that the Releasing Party
now has, has ever had or may hereafter have against the respective Releasees on
account of or arising out of any matter, cause or event occurring
contemporaneously with or prior to the Closing Date, including, but not limited
to, any rights to payment, indemnification, or reimbursement from the Company,
whether pursuant to the articles of incorporation or bylaws of the Company,
contract or otherwise and whether or not relating to claims for payment,
indemnification or reimbursement pending on, or asserted after, the Closing
Date; provided, however, that nothing contained herein shall operate to release
any obligations of Buyer or Parent arising under the Agreement.
92
2. Each Shareholder hereby irrevocably agrees not to assert, directly or
indirectly, any claim or demand, or to commence, institute or cause to be
commenced or instituted, any proceeding of any kind against any Releasee, based
upon any matter purported to be released hereby.
3. Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each Shareholder shall indemnify and hold harmless
each Releasee from and against any and all loss, liability, claim, damage
(including, without limitation, incidental and consequential damages) or expense
(including, without limitation, costs of investigation and defense and
reasonable attorney's fees) whether or not involving third party claims, arising
directly or indirectly from or in connection with (i) the assertion by or on
behalf of the Releasing Party of any claim or other matter purported to be
released pursuant to this Release and (ii) the assertion by any third party of
any claim or demand against any Releasee which claim or demand arises directly
or indirectly from, or in connection with, any assertion by or on behalf of the
Releasing Party against such third party of any claims or other matters
purported to be released pursuant to this Release.
4. If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
5. This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This Release shall
be governed by and construed under the laws of the State of Louisiana without
regard to its principles of conflicts of law.
6. All words used in this Release will be construed to be of such gender
or number as the circumstances require.
IN WITNESS WHEREOF, each of the undersigned has executed and delivered this
Release as of the date first above written.
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
___________________________________
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
93
___________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
___________________________________
▇▇▇▇ ▇▇▇▇▇▇▇, AS TRUSTEE OF THE
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST
94