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Exhibit 10.17
AGREEMENT, dated as of August 15, 1996, between XXXXXX INDUSTRIES,
INC., a Delaware corporation having its principal address at 0000 Xxxxx Xxxxx
Xxxxx, Xxxxx 000, Ashley Corporate Center, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 (the
"Company"), and AVONDALE XXXXX, INC., an Alabama corporation having its
principal address at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxx 00000 ("Avondale").
WITNESSETH
WHEREAS, Avondale is the record and beneficial owner of that certain
Subordinated 10% Promissory Note of the Company in the aggregate principal
amount of $7,500,000 (the "Avondale Note");
WHEREAS, Avondale desires to exchange the Avondale Note for shares of
Common Stock of the company at the exchange rate of $3.50 per share, and the
Company desires to effect such exchange, in each case on the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
Section 1. Exchange of Avondale Note
1.1 Exchange of Avondale Note. The parties agree that at a closing (the
"Closing") to take place on such date as the parties hereto shall agree, but in
no event later than August 29, 1996 (the "Closing Date"), and subject to the
conditions hereinafter set forth in Section 1.2 below, Avondale shall be deemed
to have delivered the Avondale Note to the Company for cancellation, and in
exchange therefor the Company shall issue to Avondale shares of its Common Stock
equal in number to the result obtained by dividing (I) the sum of (a) the
principal amount of the Avondale Note and (b) accrued interest on the Avondale
Note through and including the day prior to the Closing Date by (ii) $3.50. The
shares to be issued are hereinafter referred to as the "Shares" and the exchange
of Shares for the Avondale Note hereinafter if referred to as the "Exchange".
The Company acknowledges that Avondale has previously delivered to the Company
the Avondale Note on June 26, 1996 in connection with its request to exchange
the Avondale Note for the Replacement Note (referred to in Section 4.1 of the
Note Purchase Agreement dated December 28, 1995 between Avondale, the Company
and Xxxxxx X. Xxxxxx, hereinafter the "Note Purchase Agreement"). The Company
further acknowledges that the Company has not delivered the Replacement Note to
Avondale. Consequently, at the Closing, Avondale shall not be required to
deliver the Avondale Note to the Company for cancellation.
1.2 Conditions to the Parties' Obligations. The respective obligations
of the parties to effect the Exchange as provided for herein shall be subject to
the fulfillment, on or before the Closing Date, of each of the following
conditions:
1.2.1 Fairness Opinion. The Board of Directors of the Company, acting
upon the recommendation of a specially appointed Independent Committee and the
Audit Committee of the Board of Directors, shall have received the opinion of
its financial advisor to the effect that the Exchange is fair from a financial
point of view to the Company and the holders of Common Stock of the Company and
such opinion shall not have been withdrawn as of the Closing Date.
1.2.2 Approvals and Consents. There shall have been obtained by
Avondale and the Company all consents, approvals, authorizations, waivers,
permits and orders necessary or required for purposes of legally consummating
the transactions contemplated by this Agreement, including, without limitation,
any consent and/or waiver required form the New York Stock Exchange needed to
permit the Company to effect the Exchange without shareholder approval.
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Exhibit 10.17
1.2.3 Legal Actions or Proceedings. No action or proceeding by any
governmental authority or other person shall have been instituted or threatened
which could reasonably be expected to enjoin, restrain or prohibit, or could
reasonably be expected to result in substantial damages in respect of, any
provision of this Agreement or the consummation of the transactions
contemplated hereby.
1.3 Closing. The Closing of the Exchange on the Closing Date shall take
place at the office of the Company at 11:00 a.m. on the Closing Date or at such
other time and place as the Company and Avondale mutually agree upon. At the
Closing, the parties shall consummate the Exchange.
Section 2. Avondale Right to Board Representation
As soon as practicable after the Closing, the Company will take all
necessary actions to cause a second representative of Avondale to be appointed
to the Company's Board of Directors. Thereafter, and until the third
anniversary of the Closing Date, the Company will nominate and recommend to the
Company's shareholders the election to the Company's Board of Directors of, and
use its best efforts to cause the election to the Company's Board of Directors
of, a number of designees of Avondale that is equal to the result obtained by
multiplying (I) Avondale's percentage ownership of the issued and outstanding
share of Common Stock of the Company on the date of such determination by (ii)
the aggregate number of directors then serving on the Company's Board of
Directors. If the determination of the number of designees to which Avondale is
so entitled results in a fraction, such fraction shall be rounded up to the
next number if such fraction is one-half (1/2) or more.
Section 3. Certain Agreements.
Avondale agrees that during the period from the Closing Date through the
third anniversary of the Closing Date, neither it nor any of its affiliates (as
defined in Rule 12b-2 promulgated pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act") will, unless specifically invited in
writing by the Company, directly or indirectly, in any manner, acquire, offer
or propose to acquire, solicit an offer to sell or agree to acquire, directly
or indirectly, alone or in concert with others, by purchase or otherwise, any
direct or indirect beneficial interest in any voting securities or direct or
indirect rights, warrants or options to acquire, or securities convertible into
or exchangeable for, any voting securities of the Company having, in the
aggregate, in excess of 15% of the voting power of the Company's then
outstanding voting securities.
Section. 4. Shares to be Restricted Securities. It is understood and
acknowledged that the Shares shall be "restricted securities" (as defined in
Rule 144 under the Securities Act of 1933, as amended), but that the Shares
shall be subject to the Registration Rights Agreement executed by the Company
and Avondale and referred to in Section 1.2.4 of the Note Purchase Agreement,
and such Shares shall be deemed "Registrable Shares" (as defined in the
Registration Rights Agreement) for all purposes under the Registration Rights
Agreement. In connection with the issuance of the Shares, Avondale hereby
repeats (and at the Closing Avondale shall be deemed to repeat again) its
representations set forth in Section 7.3 of the Note Purchase Agreement.
Section 5. Representations and Warranties. The Company represents and
warrants to Avondale as follows: (1) the Shares issueable upon the Exchange have
been duly authorized and validly reserved, and, upon issuance in accordance with
the terms hereof, shall be duly and validly issued, fully paid and
nonassessable, and fully authorized for listing on the New York Stock Exchange,
subject to official notice of issuance; (ii) the Company has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and the execution and delivery of the Agreement by the
Company and the performance by the Company of its obligations hereunder have
been duly and validly authorized by all necessary corporate action on the part
of the Company; (iii) the Board of Directors of the Company has approved the
execution, delivery, and performance of this Agreement and the consummation of
the Exchange; (iv) this Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding
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Exhibit 10.17
Agreement of the Company enforceable against it in accordance with its terms;
(v) no consent, approval, authorization, order or declaration of or from, or
registration, qualification or filing with, any court or governmental agency or
body is required in connection with the execution, delivery and performance of
this Agreement and the consummation of the Exchange by the Company, other than
the consent of the New York Stock Exchange; and (vi) the execution, delivery and
performance of this Agreement by the Company and the consummation of the
Exchange do not and will not, with the passing of time or the giving of notice
or both, violate or conflict with or constitute a breach of or a default under
any term or provision or the charter or by-laws of the Company, any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which the
Company is a party or any of its properties is subject, or any judgment, decree
or order of any court or governmental authority or agency to which the Company
is a party or to which any of its properties is subject.
Section 6. Confidentiality. The Parties agree that (I) immediately
following execution of this Agreement, the Company shall issue the press release
attached as Annex A and incorporate the same into a letter to the Company's
shareholders, and (ii) except for the press release and letter referred to in
clause (i), neither party will issue any press release or make any public
disclosure concerning the transactions contemplated by this Agreement except as
may be required by law or stock exchange rule or regulation. Notwithstanding the
foregoing, the parties hereto acknowledge and agree that this Section 6 shall
not prohibit Avondale from filing a Schedule 13D under the Securities Exchange
Act of 1934 or disclosing the contents of this Agreement and/or filing this
Agreement as exhibit to the Registration Statement on Form S-4 originally filed
by Avondale and Avondale Xxxxx, Inc., on June 7, 1996 (Registration No. 333-5455
and 333-5455-01).
Section 7. Governing Law. This agreement shall be governed by New York
law.
Section 8. Counterparts. This Agreement may be executed in
counterparts, each of which will constitute an original and all of which, taken
together, shall constitute one and the same instrument.
Section 9. Termination of Standby Agreement. The parties hereto hereby
agree that effective as of the date of this Agreement, the Standby Agreement
referred to in the Note Purchase Agreement is hereby terminated and shall be of
no further force of effect.
IN WITNESS WHEREOF, the Company and Avondale have executed this
Agreement as of the day and year first above written.
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Chairman
AVONDALE XXXXX, INC.
By: /s/ G. Xxxxxxx Xxxxxx
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Name: G. Xxxxxxx Xxxxxx
Title: Chairman, President & CEO
I hereby agree to the provisions
of Section 9 above:
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, individually
