February 20, 1998
Board of Directors of Dominion Bridge Corporation
C/o Mr. K. Mitchell Posner
Managing Director
Legg Mason Wood Walker, Incorporated
1735 Market Street, Suite 1100
Philadelphia, Pennsylvania 19103
RE: LETTER OF INTENT
DOMINION BRIDGE CORPORATION
Gentlemen:
This letter sets forth the mutual intentions of
American Eco Corporation, an Ontario, Canada corporation
("American Eco"), and Dominion Bridge Corporation, a Delaware
corporation ("Dominion Bridge"), with respect to (a) the purchase
of US $5 million of Dominion Bridge common stock by American Eco
(the "Dominion Bridge Stock Purchase"), (b) a working capital
loan facility to be provided by American Eco to Dominion Bridge
(the "Loan Transaction"), (c) the engagement of American Eco to
provide certain management services to Dominion Bridge ("the
"Management Arrangement"), and (d) the acquisition by American
Eco of the business and assets of Dominion Bridge (the
"Acquisition Transaction" and, collectively, the "Transactions").
The terms and conditions set forth in this letter, in the time
schedule attached hereto (the "Time Schedule") and in the letter
agreement, dated February 18, 1998 (the "Letter Agreement"),
shall supersede the terms and conditions contained in our letters
of January 15, 1998, January 28, 1998 and February 2, 1998 with
respect to the proposed Transactions.
Upon your execution and return of this letter, the
parties intend to negotiate in good faith one or more definitive
agreements reflecting the Transactions, the basic terms of which
will be as follows:
1. The Dominion Bridge Stock Purchase
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1.01 Purchase of Common Stock. (a) American Eco will
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purchase, in a private placement, 1,923,077 units at a purchase
price of US $2.60 per unit. Each unit will consist of (a) one
share of Dominion Bridge common stock; and (b) 1/10 of a Dominion
Bridge common stock purchase warrant. Each whole warrant will
entitle American Eco to purchase one additional share of Dominion
Bridge Common Stock at a purchase price of US $3.00 per share
(subject to customary anti-dilution provisions), exercisable for
a period of three years following the date of its original
issuance. American Eco shall have the right to require Dominion
Bridge to register the purchased shares of Dominion Bridge common
stock, as well as the shares of Dominion Bridge common stock
underlying the warrants under the US Securities Act of 1933, as
amended (the "Securities Act"); provided, however that Dominion
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Bridge shall not be required to commence such registration
process unless and until American Eco and Dominion Bridge shall
terminate their negotiations (or any definitive agreement) with
respect to the Acquisition Transaction. Should the $5 million
gross proceeds from the above-mentioned stock purchase not be
received by Dominion Bridge in an account designated by it by
5:00 PM, Montreal time, on February 20, 1998, this letter of
intent shall be null and void ab initio.
(b) Upon consummation of the Dominion Bridge Stock
Purchase, the Board of Directors of Dominion Bridge shall elect
Michael E. McGinnis as the representative of American Eco to
serve on Dominion Bridge's Board of Directors and on the
Executive Committee thereof.
1.02 Documentation. The specific terms of the Dominion
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Bridge Stock Purchase shall be included in a mutually acceptable
subscription agreement (and a related warrant agreement) which
shall contain the provisions outlined above and such other terms,
conditions and provisions customary for such a stock purchase
transaction, including representations, warranties and
affirmative and negative covenants.
2. The Loan Transaction
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2.01 Amount. American Eco will provide Dominion Bridge
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with a loan facility (the "Loan Facility") of up to US $25
million. The specific amount that may be borrowed by Dominion
Bridge pursuant to the Loan Facility shall be determined by
American Eco and the Executive Committee of the Dominion Bridge
Board of Directors based upon their mutual assessment of the
working capital requirements of Dominion Bridge; provided,
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however, that a minimum of US $10 million shall be (a) placed in
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trust by American Eco by March 5, 1998, and (b) funded by
American Eco under the Loan Facility by March 23, 1998.
2.02 Interest Rate; Term. Outstanding borrowings under
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the Loan Facility shall bear interest at the rate of 9% per
annum, payable monthly in arrears on the last day of each
calendar month (or on such other day of the month which is
consistent with Dominion Bridge's payment obligations under its
existing loan facility with The Bank of New York ("BNY")). The
Loan Facility shall terminate, and all borrowings thereunder
shall be repaid to American Eco, on the first anniversary of
Dominion Bridge's initial borrowing under the Loan Facility (the
"Termination Date"); provided, however, that (a) if American Eco
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and Dominion Bridge shall terminate their negotiations with
respect to the Acquisition Transaction, Dominion Bridge shall not
be permitted to make any additional borrowings under the Loan
Facility and all outstanding amounts thereunder (together with
accrued interest thereon) shall be repaid in twelve consecutive
monthly payments of equal amount, commencing on the last day of
the month during which such negotiations were terminated, and (b)
if Dominion Bridge shall consummate a Third-Party Acquisition
Transaction (as defined in Paragraph 4.07 below) with a third
party prior to the Termination Date, the Loan Facility shall
terminate and the outstanding principal amount thereunder,
together with accrued interest thereon and any fees thereunder,
shall be repaid on the closing date of such Third-Party
Acquisition Transaction.
2.03 Security. As security for the loans to be made by
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American Eco under the Loan Facility, Dominion Bridge shall grant
American Eco a pledge and security interest in all of its
properties and assets, subject only to the prior pledge and
security interest granted by Dominion Bridge to BNY pursuant to
Dominion Bridge's existing loan with BNY.
2.04 Warrants. Concurrently with the closing of the
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Loan Facility, Dominion Bridge shall authorize the issuance to
American Eco of warrants (the "Warrants") to purchase up to 10%
of the outstanding shares of Dominion Bridge Common Stock as of
the closing date of the Loan Facility. The number of Warrants to
be issued will be based, pro rata, upon the maximum amount of
Dominion Bridge's outstanding borrowings under the Loan Facility
during the term thereof, less pass-through costs as described in
Paragraph 2.05 below (the "Peak Borrowing") (e.g., if Dominion
Bridge's Peak Borrowing is US $25 million, American Eco will
receive Warrants to purchase 10% of the outstanding Common Stock
of Dominion Bridge; if Dominion Bridge's Peak Borrowing is US
$12.5 million, American Eco will receive Warrants to purchase 5%
of the outstanding Common Stock of Dominion Bridge). Dominion
Bridge shall issue such Warrants to American Eco (a) at the time
of Dominion Bridge's initial borrowing under the Loan Facility,
and (b) at the time of each subsequent borrowing which results in
a new Peak Borrowing under the Loan Facility. The Warrants shall
be exercisable for a period of two years following the date of
their original issuance at an exercise price of US $3.00 per
share, subject to customary anti-dilution provisions. American
Eco shall have the right to require Dominion Bridge to register
the shares of Dominion Bridge common stock underlying the
Warrants under the US Securities Act of 1933, as amended;
provided, however that Dominion Bridge shall not be required to
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commence such registration process unless and until American Eco
and Dominion Bridge shall terminate their negotiations (or any
definitive agreement) with respect to the Acquisition
Transaction.
2.05 Pass-through of Funding Costs. All fees and costs
-----------------------------
borne by American Eco in obtaining such funds shall be passed-
through to Dominion Bridge and shall be included in, and deducted
from, the amounts to be borrowed by Dominion Bridge under the
Loan Facility. Such fees and costs shall be documented to
Dominion Bridge and shall be based, pro rata, upon Dominion
Bridge's Peak Borrowing under the Loan Facility (e.g., if
Dominion Bridge's Peak Borrowing is US $25 million, Dominion
Bridge shall pay all of such fees and costs; if Dominion Bridge's
Peak Borrowing is US $12.5 million, Dominion Bridge shall pay 50%
of such fees and costs); provided, however, that, assuming a Peak
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Borrowing of US $25 million, Dominion Bridge shall not be
required to pay more than US $1.2 million in fees and costs.
2.06 Documentation. The specific terms of the Loan
-------------
Transaction shall be included in either (a) a mutually acceptable
direct loan agreement (and related agreements) between American
Eco and Dominion Bridge, or (b) a mutually acceptable amendment
to Dominion Bridge's existing loan agreement with BNY pursuant to
which American Eco will become a subordinated lender thereunder.
In either case, the loan documentation shall contain the
provisions outlined above and such other terms, conditions and
provisions customary for such a Loan Transaction, including
representations, warranties, affirmative and negative covenants,
default provisions and remedies. The obligation of American Eco
to enter into the Loan Facility shall be subject to the execution
of a satisfactory subdivision and inter-creditor agreement with
BNY, and the consents of the third parties, as required by
Dominion Bridge and American Eco. Upon the execution and return
of this letter of intent by Dominion Bridge, American Eco will
promptly commence discussions with BNY with a view to
implementation of the Loan Facility as soon as practicable.
3. The Management Transaction
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3.01 Services to be Provided. American Eco will
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provide Dominion Bridge with management services in connection
with its ongoing, day-to-day operations. During the term of
American Eco's engagement, American Eco shall, subject to the
general supervision and control of the Executive Committee of the
Board of Directors of Dominion Bridge, furnish Dominion Bridge
with the following management services: (i) financing and
administrative support services, including oversight of
collection of accounts receivable and payment of accounts
payable; (ii) marketing administration and support services;
(iii) human resources management; and (iv) oversight and
administration of Dominion Bridge's operating units. In order to
facilitate the provision of these services, the Chief Executive
and Chief Financial Officers of American Eco shall be given
responsibilities within Dominion Bridge's organization which are
customarily performed by a corporation's Chief Executive and
Chief Financial Officers, respectively.
3.02 Term. American Eco's engagement to provide
----
management services for Dominion Bridge shall commence upon the
execution by the parties of definitive agreements with respect to
the Transactions and shall terminate upon the later to occur of
(i) the termination of the Loan Facility and the repayment of all
outstanding borrowings thereunder, or (ii) the termination by
American Eco and Dominion Bridge of their discussions (and any
definitive agreement) with respect to the Acquisition
Transaction.
3.03 Management Fee. As compensation for the
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management services to be rendered by American Eco to Dominion
Bridge, Dominion Bridge shall (i) pay to American Eco a
management fee of US $100,000 per month, and (ii) reimburse
American Eco for all reasonable out-of-pocket expenses and
disbursements incurred in rendering such services; provided,
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however, that (a) such management fee shall be increased to
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$250,000 if the parties shall terminate their discussions (and
any definitive agreement) with respect to the Acquisition
Transaction, and (b) such out-of-pocket expenses and
disbursements shall not include the hourly costs of American
Eco's personnel when engaged in performing the management
services.
3.04 Documentation. The specific terms of the
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Management Arrangement shall be included in a mutually acceptable
management services agreement which shall contain the provisions
outlined above and such other terms, conditions and provisions
customary for such a management relationship, including
representations, warranties, affirmative and negative covenants
and indemnification provisions.
4. The Acquisition Transaction
---------------------------
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
--------------
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
--------------------------
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
-------------------------
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
-----------------
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
---
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
-------------
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.
5. General
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5.01 Expenses. Each party hereto shall bear its own
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costs and expenses including, without limitation, costs and
expenses with respect to legal, accounting, investment banking
and due diligence, in connection with the investigation,
negotiation and consummation of the Transactions.
5.02 Disclosure. Except as and to the extent required
----------
by law, without the prior written consent of the other party
hereto, neither American Eco nor Dominion Bridge shall make,
directly or indirectly, any public comment, statement, or
communication with respect to, or otherwise to disclose or permit
the disclosure of the existence of discussions regarding any of
the terms, conditions or other aspects of the Transactions
proposed in this letter of intent, in the Time Schedule attached
hereto or in Letter Agreement. If either party is required by
law to make any such disclosure, not less than 24 hours prior to
the release of such disclosure (or such shorter period as may be
required by law upon the advice of counsel) it shall provide to
the other party hereto the content of the proposed disclosure,
the reasons that such disclosure is required to be made publicly
by law, and the time and place that such disclosure will be made.
5.03 Notices. All notices, requests, claims, demands
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or other communications hereunder shall be in writing and shall
be deemed to have been duly given (i) when delivered in person,
by courier or by fax; and (ii) upon receipt if sent by express
mail, or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties as follows:
If to American Eco then to:
American Eco Corporation
11011 Jones Road
Houston, Texas 77070
Attention: Michael E. McGinnis, President
with a copy to:
Bruce A. Rich, Esq.
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
If to Dominion Bridge then to:
Michel L. Marengere
Chairman of the Board of Directors of Dominion Bridge
Corporation
500 Notre Dame Street
Lachine, Quebec
with copies to:
Mr. K. Mitchell Posner
Managing Director
Legg Mason Wood Walker, Incorporated
1735 Market Street, Suite 1100
Philadelphia, Pennsylvania 19103
and
Joseph P. Galda, Esq.
Buchanan Ingersoll
1835 Market Street
Philadelphia, Pennsylvania 19103
or to such other address as the person to whom such notice is
given may have previously furnished to the other party in writing
in the manner set forth above; provided, however, that any notice
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of a change of address shall be effective only upon receipt
thereof.
5.04 Legal Effect. This letter of intent does not
------------
create any legally binding obligations, except with respect to
the matters set forth in Paragraphs 4.04, 4.05, 4.06, 4.07, 5.01
and 5.02 hereof. The purpose of this letter of intent is to set
forth the basis upon which the parties shall enter into good
faith negotiations to conclude definitive agreements with respect
to the Transactions. Drafts of such agreements shall be prepared
by counsel to American Eco upon the execution and return of this
letter of intent by Dominion Bridge. The parties will commence
the negotiations of the definitive agreements immediately, with a
view to their execution as soon as practicable. If (a) any of
the events set forth in the Time Schedule attached hereto are not
completed by the deadlines provided for therein, (b) definitive
agreements with respect to the Loan Transaction and the
Management Arrangement are not executed on or prior to March 23,
1998, or (c) a definitive agreement with respect to the
Acquisition Transaction is not executed on or prior to April 6,
1998, or, in each case, by such later date or dates as shall be
mutually agreed to by the parties (the "Termination Date"), this
letter of intent shall be of no further force or effect and
American Eco and Dominion Bridge shall not have any liability to
each other, except, if applicable, with respect to the matters
set forth in Paragraphs 4.07(b) and (c), 5.01 and 5.02 hereof.
5.05 Entire Agreement. This letter of intent and the
----------------
attached addendum constitute the entire agreement between
Dominion Bridge and American Eco as to the subject matter herein,
and supersede all prior oral and written agreements except the
letter referred to in Paragraph 4.04 herein. This letter of
intent and the attached addendum cannot be amended, modified or
terminated except by a writing executed by the parties hereto.
5.06 Governing Law. This letter of intent shall be
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governed by, and construed in accordance with, the laws of the
State of Delaware.
* * *
If the foregoing accurately summarizes our
understanding, please so indicate by having a duly authorized
officer of Dominion Bridge execute and date both copies of this
letter in the space provided below and return one copy to the
undersigned. If this letter is not executed and returned by 3:00
PM, Montreal time, on the date hereof, the proposed Transactions
shall be null and void and this letter shall be without any legal
force or effect.
Very truly yours,
AMERICAN ECO CORPORATION
By: /s/ Michael E. McGinnis
---------------------------------
Name: Michael E. McGinnis
Title: Chairman, President,
and CEO
ACCEPTED AND AGREED TO THIS
20th DAY OF FEBRUARY, 1998
DOMINION BRIDGE CORPORATION
By: /s/ Michel L. Marengere
-------------------------------
Name: Michel L. Marengere
Title:Chairman and CEO
PRIVATE AND CONFIDENTIAL
LETTER AGREEMENT, DATED AS OF FEBRUARY 18, 1998, BETWEEN AND
AMONG AMERICAN ECO CORPORATION, MICHEL L. MARENGERE, NICOLAS MATOSSIAN
AND RENE AMYOT.
This Letter Agreement forms an integral component of the
Letter of Intent (the "Letter of Intent") between American Eco
Corporation and Dominion Bridge Corporation.
PART 1
- ------
(1) Services Agreements:
Michel L. Marengere February 28, 1998
(base salary US $360,000 + minimum guaranty bonus US $180,000) x 5 years
= US $2,700,000
Nicolas V. Matossian January 31, 1998
(base salary US $240,000 + minimum surplus bonus US $96,000) x 6 years
= US $2,106,000
Rene Amyot one time payment of US $250,000
(2) Non-compete signing bonus for Michel L. Marengere to equal
250,000 free trading shares of American Eco Corporation.
(3) Cause the Dominion Bridge Corporation to:
(i) Write-off or cancel the US $1,850,000 subscription
receivable.
(ii) Cancel the Roger Miller/Fidutech International
guaranty for Edinov Corporation transaction. The total
amount was written off as of September 30, 1997 fiscal
year end.
(4) Waiver and indemnification letters from each party for past up
to closing of AEC/DBC Acquisition Transaction.
(5) Satisfactory release of Michel L. Marengere, Nicholas
Matossian and Rene Amyot from personal liabilities relating to
Dominion Bridge's outstanding fiduciary deductions of
approximately Can $14,500,000.
PART 2
- ------
MICHEL L. MARENGERE
- -------------------
(1) Co-Chairman of combined entity for 3 years at US $250,000 per
year plus related expenses (resignation side letter post dated
6 months from close of Acquisition Transaction).
(2) Remain chairman of McConnell Dowell Corporation until the next
annual meeting.
(3) Commission plan on a case-by-case basis for each transaction
that Michel L. Marengere is involved with and accepted by
American Eco Corporation.
(4) Services of Rosa Nespeca as Executive Secretary to Michel L.
Marengere paid by American Eco Corporation up to one year.
(5) Office space for Michel L. Marengere and Rosa Nespeca for one
year.
NICHOLAS V. MATOSSIAN
- ---------------------
Consulting Agreement for 3 years at US $150,000 per year plus related
expenses.
RENE AMYOT
- ----------
Board of combined entity or a consulting agreement for 3 years at US
$120,000 per year plus Board fees of McConnell Dowell Corporation.
GENERAL
- -------
Part 1 and 2 of this Letter Agreement dated 02/18/98 to the Letter of
Intent Agreement 02/20/98 shall become effective and be in full force
and payable at the Closing upon the successful completion of all Phase
3 events as outlined in the Time Schedule attached to the Letter of
Intent.
American Eco Corporation
By: /s/ Michael E. McGinnis
--------------------------
/s/ Michel L. Marengere
--------------------------
Michel L. Marengere
/s/ Nicolas V. Matossian
--------------------------
Nicolas V. Matossian
/s/ Rene Amyot
--------------------------
Rene Amyot