This is in today's DBCO-ECGOF SEC filings. I begin to understand how it works and what you were saying:
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4. The Acquisition Transaction
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4.01 Form of Transaction. American Eco (or a wholly-
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owned subsidiary) and Dominion Bridge will enter into a merger or
other mutually acceptable transaction providing for the
acquisition by American Eco of the business and assets of
Dominion Bridge.
4.02 Purchase Price. As consideration for the
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Acquisition Transaction, American Eco will issue to the
stockholders of Dominion Bridge convertible notes (the
"Convertible Notes") in the principal amount of US $3.00 for each
outstanding share of Dominion Bridge common stock as of the
closing. The parties intend to investigate the possibility of
restructuring the consideration so that the transaction will be
tax-free to the holders of Dominion Bridge common stock.
4.03 Terms of Convertible Notes. (a) The Convertible
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Notes will bear interest at the rate of 7-1/2% per annum (payable
quarterly in arrears) and the Convertible Notes will be payable
three years after the closing date of the Acquisition
Transaction.
(b) The Convertible Notes will, at the option of the
holder, be convertible into American Eco common stock at a
conversion rate of US $15 per share, subject to standard anti-
dilution provisions, as follows: (i) commencing 180 days
following the issuance date, one-third of each holder's
Convertible Notes will be convertible, (ii) commencing 360 days
following the issuance date, two-thirds of each holder's
Convertible Notes will be convertible, and (iii) commencing 540
days following the issuance date, all of the Convertible Notes
will be convertible. American Eco will have the right to force
conversion at a rate of US $15 per share of American Eco common
stock if the average closing price of American Eco common stock
on the Nasdaq National Market shall equal or exceed US $16.00 per
share for any twenty consecutive-day trading period, and the
Convertible Notes are in good standing and not in arrears.
(c) Upon 60 days prior written notice to the holders,
American Eco will have the right to redeem the outstanding
Convertible Notes, at US$3.00, plus accrued and unpaid interest;
provided, however, that, following the receipt of such notice and
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prior to the date set for redemption, the holders shall have the
right to convert all or a portion of their Convertible Notes into
American Eco common stock at a rate of US $15 per share of
American Eco common stock.
(d) Both the Convertible Notes and the underlying
shares of American Eco common stock will be registered under the
Securities Act and will be listed on the Nasdaq National Market
or such national securities exchange or market system as such
shares are then listed or traded, prior to the closing of the
Acquisition Transaction.
4.04 Due Diligence. We are confident that the results
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of our due diligence, thus far, have provided us with the
necessary comfort to move forward with this transaction.
However, American Eco will continue with its due diligence
investigation of Dominion Bridge promptly following Dominion
Bridge's execution and delivery of this letter of intent in
accordance with the letter, dated November 29, 1997, from Legg,
Mason, Wood Walker, Incorporated to American Eco, the terms of
which letter are incorporated herein.
Subject to the execution by Dominion Bridge of a
satisfactory confidentiality agreement, American Eco shall make
available to Dominion Bridge and its representatives, at
reasonable times, all information relating to its business which
Dominion Bridge or its representatives may reasonably request in
order to evaluate the Acquisition Transaction.
4.05 Conduct of Business. Dominion Bridge will, from
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and after the date it accepts and agrees to the terms herein,
conduct its business in the ordinary course and in substantially
the same manner as previously conducted, including not making any
changes in its capital stock. Dominion Bridge shall keep
American Eco advised of any and all material developments in its
business in addition to any information employees of American Eco
may learn by reason of the management arrangement. Dominion
Bridge shall use its reasonable best efforts to preserve in full
force and effect its franchises, licenses, permits, contracts,
and the goodwill of its suppliers, employees, customers and
others having business relationships with Dominion Bridge.
4.06 Conditions to Acquisition. The consummation of
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the Acquisition Transaction will be subject, among other things,
to (a) the approval of the acquisition by the Board of Directors
and shareholders of Dominion Bridge; (b) the agreement of
beneficial owners of more than 5% of the outstanding Dominion
Bridge common stock to vote their shares for approval of the
Acquisition Transaction, (c) the approval of the acquisition by
the Board of Directors and, if required, shareholders of American
Eco; and (d) the receipt of all consents, approvals, clearances
and other authorizations necessary to consummate the acquisition,
including (i) compliance with the Hart-Scott-Rodino Antitrust
Improvements Act and the Australian Corporations Law; (ii) the
consent of the Province of Quebec Finance Administration; and
(iii) clearance by the U.S. Securities and Exchange Commission
and any required Canadian authorities of definitive proxy
material for the Dominion Bridge stockholders meeting and of the
registration statement for the Convertible Notes (including
receipt of any required valuation or fairness opinion); and (iv)
the consent of the respective lenders of American Eco and
Dominion Bridge. Upon the execution by the parties of a
definitive acquisition agreement, American Eco will promptly
apply to the Australian Securities Commission for relief from the
requirements of the Australian Corporations Law.
4.07 Exclusive Dealing. (a) In order to induce
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American Eco to expend the out-of-pocket expenses necessary for
its due diligence investigation of Dominion Bridge and the
drafting of definitive agreements reflecting the Transactions,
Dominion Bridge agrees that (a) Dominion Bridge and its officers,
directors, employees, representatives and agents shall
immediately cease any discussions or negotiations with any
parties conducted heretofore with respect to any Third-Party
Acquisition Transaction (as defined below) and cause any such
party in possession of confidential information about Dominion
Bridge that was furnished by or on behalf of Dominion Bridge or
its agents with respect to a possible Third-Party Acquisition
Transaction to return or destroy all such information in the
possession of any such party or in the possession of any agent or
adviser of any such party; and (b) Dominion Bridge and its
subsidiaries, and their respective officers, directors,
employees, representatives and agents, will not solicit,
initiate, encourage, continue or enter into negotiations or
discussions of any type, directly or indirectly, with, or furnish
any information or data to, any person, firm or corporation
relating to a Third-Party Acquisition Transaction; provided,
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however, that if Dominion Bridge receives an unsolicited written
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bona fide proposal for a Third-Party Acquisition Transaction,
Dominion Bridge may participate in discussions or negotiations
with, or furnish information to, such third party pursuant to an
appropriate confidentiality agreement if the Board of Directors
of Dominion Bridge concludes in good faith, based upon written
advice of outside counsel, that the failure to provide such
information or participate in such discussions or negotiations
would cause the members of the Board of Directors to breach their
fiduciary duties to Dominion Bridge's stockholders. Dominion
Bridge shall promptly provide American Eco with a copy of any
written proposal with respect to a Third-Party Acquisition
Transaction received and inform American Eco of the status and
content of any discussion with such third party. Representatives
of American Eco, as part of the management services they are to
render to Dominion Bridge pursuant to Paragraph 3.01 herein,
will, at the request of Dominion Bridge s Board of Directors,
cooperate in the due diligence requests of any such third party
for information which is part of the records of Dominion Bridge.
(b) If, (i) during the period commencing on the date
hereof and ending on the Termination Date (as defined in
Paragraph 5.04 below) (the Exclusivity Period ), Dominion Bridge
or its directors, officers or employees shall (a) breach their
obligations in Paragraph 4.07(a) above, or (b) participate in
discussions or negotiations with, or furnish information to, a
third party in accordance with the proviso in Paragraph 4.07(a)
above, and (ii) within one year after the Termination Date
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Dominion Bridge's Board of Directors shall authorize entry into
an agreement with any person or entity with which it had such
discussions or negotiations during the Exclusivity Period, or
shall recommend acceptance of, or shall fail to recommend
rejection of, a tender offer or exchange offer that, if
successful, would result in a Third-Party Acquisition
Transaction, or a Third-Party Acquisition Transaction otherwise
shall have been consummated (each, a "Payment Event"), then
Dominion Bridge shall pay to American Eco a fee of US $3,500,000
(such fee to be payable by wire transfer of immediately available
funds upon the closing of any such Payment Event.) Nothing
contained in this Paragraph 4.07 shall constitute or shall be
deemed to constitute liquidated damages.
(c) For purposes of this Paragraph 4.07, "Third-Party
Acquisition Transaction" shall mean any bona fide proposal made
by a third party to acquire (i) beneficial ownership (as defined
under Rule 13(d) of the Securities Exchange Act of 1934, as
amended) of a majority or greater equity interest in Dominion
Bridge pursuant to a merger, consolidation or other business
combination, sale of shares of capital stock, tender offer,
exchange offer or similar transaction involving Dominion Bridge
including, without limitation, any single or multi-step
transaction which is structured in good faith to permit such
third party to acquire beneficial ownership of a majority or
greater equity interest in Dominion Bridge, or (ii) 50% or more
of Dominion Bridge's business (measured by revenues for the
preceding fiscal year or the current fiscal year through the last
complete fiscal quarter preceding such proposal) or consolidated
assets of Dominion Bridge.
4.08 Documentation. The specific terms of the
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Acquisition Transaction between Dominion Bridge and American Eco
shall be included in a mutually acceptable acquisition agreement
which shall contain the provisions outlined above and such other
terms, conditions and provisions customary for such a
transaction, including (i) representations and warranties as to
the business, operations and historical financial position and
results of operations of the parties; (ii) compliance with all
applicable laws and regulations by the parties; (iii) the
obtaining of all necessary consents and approvals by the parties
for the Acquisition Transaction; (iv) the absence of any adverse
material change in the financial condition, operations or
prospects of each party from that represented to the other party;
(v) the compliance by the parties with all contracts, licenses
and real property leases and the enforceability thereof against
each other party thereto; (vi) the absence of regulatory
problems; and (vii) such other representations and warranties,
conditions precedent and opinions of legal counsel customary to a
transaction of this kind. The acquisition agreement shall
contain a termination provision which shall state, among other
things, that the acquisition agreement (and the parties'
obligation to consummate the Acquisition Transaction) shall
terminate six months after the execution date of the acquisition
agreement, subject to extension by the mutual agreement of the
parties. |
