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EXHIBIT 10.3
STOCK PURCHASE AND MERGER AGREEMENT
AMONG
TRANSCOASTAL MARINE SERVICES, INC.
TRANSCOASTAL ACQUISITION, INC.
AND
▇▇▇▇▇▇▇ GMP INTERNATIONAL, INC.
▇▇▇▇▇▇▇ MARINE, INC.
DICKSON NIGERIA, LTD.
SERVICIOS Y CONSTRUCCIONES PETROLERAS VENTURA, C.A.
VENTURA RESOURCES, INC.
AND
THE SHAREHOLDER OF THE ▇▇▇▇▇▇▇ GROUP
AUGUST 1, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
ARTICLE II
PURCHASE, SALE AND MERGER; CLOSING
2.01 The Merger 1
2.02 Transfer of Stock 2
2.03 Purchase Price 3
2.04 Closing 3
2.05 Assumption of Debts and Liabilities 4
2.06 Deliveries at Closing 4
2.07 Contingent Consideration 4
2.08 Calculation and Payment of Contingent Consideration 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER
3.01 Good Title 7
3.02 Authorization and Validity of Agreements 7
3.03 No Withholding 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
▇▇▇▇▇▇▇ GROUP AND THE SHAREHOLDER AND EACH TRANSFEREE
4.01 Organization 8
4.02 Qualification 8
4.03 Authority; Enforceability 8
4.04 Consents; Absence of Conflicts 8
4.05 Capitalization of the ▇▇▇▇▇▇▇ Group; Transfer of Shares 9
4.06 Equity Investments and Affiliates 9
4.07 Absence of Changes 9
4.08 Affiliate Transactions 11
4.09 Real Property 11
4.10 Tangible Personal Property 12
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4.11 Permits 12
4.12 Contracts 13
4.13 Intellectual Property 14
4.14 Accounts Receivable 15
4.15 Brokers' Fees 16
4.16 Financial Statements 16
4.17 Legal Compliance 16
4.18 Taxes 16
4.19 Inventory 18
4.20 Litigation 18
4.21 Product and Service Warranty 18
4.22 Employees; Employee Relations 19
4.23 Employee Benefit Matters 20
4.24 Environmental Matters 23
4.25 Customers, Vendors and Suppliers 25
4.26 Bank Accounts 25
4.27 Insurance 25
4.28 Books and Records 25
4.29 Certain Payments 26
4.30 Investment 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
AND ACQUISITION CORP.
5.01 Organization 26
5.02 Qualification 26
5.03 Authority; Enforceability 26
5.04 Consents; Absence of Conflicts 27
5.05 Capitalization of the Acquiror 27
5.06 Reports; Financial Statements 27
5.07 Absence of Certain Changes or Events 28
5.08 Representations as to Shares Issued 28
5.09 Brokers' Fees 28
ARTICLE VI
COVENANTS OF THE ▇▇▇▇▇▇▇ GROUP AND THE SHAREHOLDER
6.01 Affirmative Covenants of the ▇▇▇▇▇▇▇ Group and the Shareholder 28
6.02 Negative Covenants of the ▇▇▇▇▇▇▇ Group and the Shareholder 29
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ARTICLE VII
COVENANTS OF THE SHAREHOLDER
7.01 Covenants of the Shareholder 31
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 Notification of Certain Matters 32
8.02 Access and Information 32
8.03 Appropriate Action; Consents; Filings 33
8.04 Public Announcements 34
8.05 Expenses 34
8.06 Board of Directors; Employment Agreements 34
8.07 Transfer Taxes 34
8.08 Conduct of Business During Earn-Out Period 34
8.09 Tax Reports 35
8.10 No Name Change of ▇▇▇▇▇▇▇ GMP or Location 35
ARTICLE IX
INDEMNIFICATION
9.01 By Shareholder 35
9.02 By Acquiror and Acquisition Corp. 36
9.03 Defense of Third Party Claims 36
9.04 Waiver 37
9.05 Required Setoff 37
9.06 Basket 37
9.07 Termination of Representations, Warranties and Indemnities 38
ARTICLE X
CONDITIONS
10.01 Conditions Precedent to Obligations of Each Party 38
10.02 Conditions Precedent to Obligations of Acquiror 39
10.03 Conditions Precedent to Obligations of the Shareholder 40
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ARTICLE XI
MISCELLANEOUS
11.01 Termination 41
11.02 Effect of Termination 41
11.03 Waiver and Amendment 41
11.04 Entire Agreement; Third Party Beneficiaries 42
11.05 Assignment 42
11.06 Notices 43
11.07 Governing Law 45
11.08 Severability 45
11.09 Counterparts 45
11.10 Headings 45
11.11 Specific Performance 45
11.12 FORUM 45
11.13 Further Assurances 46
11.14 Texas Deceptive Trade Practices Act 46
EXHIBITS:
Exhibit A -- Definitions
Exhibit B -- Form of Escrow Agreement
Exhibit C -- Form of ▇▇▇▇▇▇▇▇▇ Employment Agreement
Exhibit D -- Form of ▇▇▇▇▇▇▇ Employment Agreement
Exhibit E -- Form of ▇▇▇▇▇▇ Employment Agreement
Exhibit F -- Form of ▇▇▇▇▇▇▇ Employment Agreement
Exhibit G -- Form of Registration Rights Agreement
Exhibit H -- (Intentionally Blank)
Exhibit I -- Form of Appointment of Shareholder Representative
Annex I -- Determination of Adjusted EBTDA
Annex II -- Calculation of Earn-Out Payment
Annex III -- Disclosure Schedules
Annex IV -- Principal Terms of Preferred Stock
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STOCK PURCHASE AND MERGER AGREEMENT
This Stock Purchase and Merger Agreement (the "Agreement") is made and
entered into as of the 1st day of August, 1998 by and among TransCoastal Marine
Services, Inc., a Delaware corporation ("Acquiror"), and TransCoastal
Acquisition, Inc., a Louisiana corporation, ("Acquisition Corp."); ▇▇▇▇▇▇▇ GMP
International, Inc., a Louisiana corporation ("▇▇▇▇▇▇▇ GMP"); Dickson Marine,
Inc., a Louisiana corporation ("▇▇▇▇▇▇▇ Marine"); Dickson Nigeria, Ltd., a
Nigerian corporation ("▇▇▇▇▇▇▇ Nigeria"); Servicios y Construcciones Petroleras
Ventura, C.A., a Venezuelan corporation ("Servicios y Construcciones"); Ventura
Resources, Inc., a Louisiana corporation ("Ventura"), (Dickson GMP, ▇▇▇▇▇▇▇
Marine, Dickson Nigeria, Servicios y Construcciones and Ventura being referred
to individually or collectively as the "▇▇▇▇▇▇▇ Group"); and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇. ("▇▇▇▇▇▇▇▇▇" or "Shareholder"); The spouse of the Shareholder is joining
in and consenting to the execution of the Agreement. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
("▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), each
a potential Transferee, if assigned stock in the ▇▇▇▇▇▇▇ Group pursuant to
Section 11.05, also join in this Agreement and, together with ▇▇▇▇▇▇▇▇▇ are
referred to collectively as "Shareholder."
WHEREAS, as of the date hereof the Shareholder is the record and
beneficial owner of all of the issued and outstanding shares of capital stock
or its equivalent of the various entities that comprise the ▇▇▇▇▇▇▇ Group
("Dickson Shares"); and
WHEREAS, pursuant to the terms and subject to the conditions set forth
in this Agreement, the Shareholder desires to transfer to Acquiror and/or
Acquisition Corp. through merger of ▇▇▇▇▇▇▇ GMP into Acquisition Corp., and by
sale to Acquiror of all the issued and outstanding ▇▇▇▇▇▇▇ Shares owned by such
Shareholder in the other members of the ▇▇▇▇▇▇▇ Group, and Acquiror and
Acquisition Corp. desire to acquire all of the issued and outstanding ▇▇▇▇▇▇▇
Shares through such merger and purchase;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement but not defined in the body
hereof shall have the meanings ascribed to them in Exhibit "A." Capitalized
terms defined in the body of this Agreement are listed in Exhibit "A" by
location herein.
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ARTICLE II
PURCHASE, SALE AND MERGER; CLOSING
2.01 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, the following transaction shall take place concurrently with
and on the Closing Date:
(a) ▇▇▇▇▇▇▇ GMP and Acquisition Corp. shall enter into a
merger transaction (the "Merger") pursuant to which ▇▇▇▇▇▇▇ GMP shall
be merged with and into Acquisition Corp. upon the terms and
conditions hereinafter set forth and as permitted in accordance with
Section 112 of the Louisiana Business Corporation Law, effective as of
the effective date of the filing of the Certificate of Merger (the
"Certificate of Merger") as contemplated hereunder. Thereupon, the
separate existence of ▇▇▇▇▇▇▇ GMP shall cease and Acquisition Corp.,
as the surviving corporation (the "Surviving Corporation"), shall
continue to exist in accordance with the Louisiana Business
Corporation Law.
(b) Pursuant to the Merger, the Shareholder, as the
record and beneficial owner of all of the issued and outstanding
shares of capital stock of ▇▇▇▇▇▇▇ GMP shall surrender such shares to
the Surviving Corporation, for cancellation, and shall receive in
consideration thereof (i) the Acquiror Common Stock and other
consideration set forth in Section 2.03 hereof, exclusive of the cash
consideration allocated to the stock transfer set forth in Section
2.02, as allocated in Schedule 2.03(b)(i), and (ii) the "Contingent
Consideration" set forth in Section 2.03(c) hereof, exclusive of the
cash consideration allocated to the stock transfer set forth in
Section 2.02, as allocated in Schedule 2.03(b)(i).
(c) Acquisition Corp., as the Surviving Corporation,
through its appropriate officers and agents, shall cause to be filed a
Certificate of Merger, in a form to be mutually agreed upon by
Acquiror and Shareholder, to be executed, acknowledged and filed with
the Secretary of State of Louisiana in accordance with the Louisiana
Business Corporation Law.
(d) Until further amended in accordance with the
provisions of applicable law, the Articles of Incorporation of
Acquisition Corp., as amended on the Closing Date to provide for the
change of the name of the Surviving Corporation to "▇▇▇▇▇▇▇ GMP
International, Inc." shall be the Articles of Incorporation of the
Surviving Corporation, and the Surviving Corporation shall operate by
such name through the Earn-Out Period.
(e) It is the intent of the parties hereto that as of the
Closing Date, the Merger qualify as a forward triangular merger in
accordance with IRC Section 368(a)(1)(A) and Section 368(a)(2)(D), and
Acquiror represents and warrants that it shall be not less than the
80% controlling parent corporation of Acquisition Corp.
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(f) Acquiror agrees to cause the Merger to be effected,
and Shareholder agrees to vote for and to effect the Merger.
2.02 TRANSFER OF STOCK. Upon the terms and subject to the
conditions of this Agreement, the following transactions shall take place
concurrently with and on the Closing Date:
(a) Acquiror agrees to purchase and Shareholder agrees to
sell all of the capital stock of ▇▇▇▇▇▇▇ Marine;
(b) Acquiror agrees to purchase and Shareholder agrees to
sell all of Shareholder's right, title and interest in and to the
capital stock or its equivalent of ▇▇▇▇▇▇▇ Nigeria;
(c) Acquiror agrees to purchase and Shareholder agrees to
sell all of Shareholder's right, title and interest in and to the
capital stock or its equivalent of Servicios y Construcciones; and
(d) Acquiror agrees to purchase and Shareholder agrees to
sell all of the capital stock of Ventura Resources.
2.03 PURCHASE PRICE. Subject to satisfaction or, if permissible,
the waiver of the conditions set forth in Article X, the total consideration to
be paid by the Acquiror, and Acquisition Corp. to Shareholder pursuant to the
Merger and for the sale, transfer, assignment, conveyance and delivery of the
▇▇▇▇▇▇▇ Shares as set forth in Section 2.01 and 2.02 shall be as follows (the
"Purchase Price"):
(a) U.S. $1,200,000 (the "Escrowed Amount") shall be
delivered to Whitney National Bank, as escrow agent ("Escrow Agent"),
pursuant to an escrow agreement substantially in the form of Exhibit
"B" ("Escrow Agreement");
(b) (i) Delivery by the Acquiror of $8,800,000, less
Long-Term Debt plus accrued interest as of the Closing Date (as
hereinafter defined) of the ▇▇▇▇▇▇▇ Group as set forth on Annex
III-Disclosure Schedule ("Schedule") 2.03(b)(i) as adjusted to the
Closing Date, such remaining funds to be paid by wire transfer or
other immediately available funds approved by Shareholder in
accordance with the instructions set forth in Schedule 2.03(b)(i) and
(ii) issuance by the Acquiror of 1,029,703 shares of Acquiror Common
Stock to Shareholder in accordance with the sharing ratio set forth in
Schedule 2.07, as updated to the date of Closing (collectively, the
"Initial Consideration"). The number of Acquiror Common Stock issued
as part of the Initial Consideration pursuant to this Section 2.03(b)
hereof shall be adjusted to account for any changes in the outstanding
Acquiror Common Stock resulting from a subdivision or consolidation of
shares, share split, reverse share split, share distribution or
combination of shares or the payment of a share dividend; and
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(c) Delivery by the Acquiror of any amounts due to
Shareholder pursuant to Section 2.07 (the "Contingent Consideration"),
such amounts to be payable to Shareholder in accordance with Section
2.07.
(d) If ▇▇▇▇▇▇▇▇▇ assigns a portion of the ▇▇▇▇▇▇▇ Shares
to the Transferees as defined in and pursuant to Section 11.05 at or
prior to the Closing, such Initial Consideration (both cash and stock)
and the Contingent Consideration (both cash and stock), if earned,
shall be pro rated among the Shareholders in the sharing ratios set
forth on Schedule 2.07, as updated to the date of Closing.
2.04 CLOSING. The Closing shall take place (a) at 10:00 a.m. on
the fifth (5th) business day following the date on which the conditions set
forth in Article X have been satisfied or, if permissible, waived, at the
offices of Sessions & ▇▇▇▇▇▇▇, L.L.P. located at ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or (b) at such other date, place and time
as the parties hereto may agree in writing ("Closing Date").
2.05 ASSUMPTION OF DEBTS AND LIABILITIES. Acquiror acknowledges
and agrees that the transactions to be consummated under and pursuant to this
Agreement involve merger of entities and transfer and sale of stock, as opposed
to transfer and sale of assets, and therefore upon consummation of the
transactions contemplated hereunder on the Closing Date, Acquisition Corp. with
respect to ▇▇▇▇▇▇▇ GMP shall be liable and responsible for all debts,
obligations and liabilities of the ▇▇▇▇▇▇▇ Group as of the Closing Date whether
known or unknown, liquidated, unliquidated, fixed, contingent or otherwise,
except for any debts, liabilities and obligations expressly assumed in writing
by the Shareholder under Section 6.01(f) and for such liabilities as the
Shareholder has agreed to indemnify the Acquisition Corp. pursuant to Article
IX hereof. By way of illustration and without limiting the foregoing,
Acquisition Corp. covenants and agrees that as of the Closing Date,
Acquisition Corp. as to ▇▇▇▇▇▇▇ GMP shall be deemed to have assumed and shall
pay and be solely responsible for any and all liabilities, accounts payable,
debts, claims and other obligations of the ▇▇▇▇▇▇▇ Group including, without
limitation, (a) the outstanding obligations remaining on the Note to Mr. and
▇▇▇. ▇▇▇▇▇▇▇ dated December 7, 1990 which is secured by a Lien on the Belle
▇▇▇▇▇▇ Real Property owned by ▇▇▇▇▇▇▇ GMP ("Building Debt"); provided however,
that any amounts due in excess of $385,000.00, plus accrued interest, shall be
deducted from the cash portion of the Initial Consideration delivered to the
Shareholder at Closing; (b) those certain capital lease transactions in the
approximate amount of $165,000 described on Schedule 4.16 attached hereto;
provided that $165,000 shall be deducted from the cash portion of the Initial
Consideration delivered to the Shareholder at Closing; (c) debts and
liabilities disclosed on or for which adequate reserves have been made on the
financial statements of the ▇▇▇▇▇▇▇ Group; and (d) all other liabilities,
accounts payable, debts, claims and other obligations of the ▇▇▇▇▇▇▇ Group
incurred in the Ordinary Course of Business except those which Shareholder
expressly agrees to assume pursuant to Section 6.01(f) below and for such
liability as the Shareholder has agreed to indemnify the Acquiror or
Acquisition Corp. pursuant to Article IX hereof.
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2.06 DELIVERIES AT CLOSING. At the Closing (a) the Shareholder and
the ▇▇▇▇▇▇▇ Group will deliver to the Acquiror, and the Acquiror will deliver
to the Shareholder and the ▇▇▇▇▇▇▇ Group, the various certificates,
instruments, resolutions, guaranty agreements, if required, Certificate of
Merger and documents required to be delivered pursuant to Article X; (b) the
▇▇▇▇▇▇▇ Group, Shareholder and Acquiror will take all actions necessary to
merge ▇▇▇▇▇▇▇ GMP into Acquisition Corp.; (c) the Acquiror will deliver to the
Shareholder the Initial Consideration described in Section 2.03; (d) the
Acquiror will deliver to the Escrow Agent the Escrowed Amount; (e) the
Shareholder will deliver certificates (or equivalent documentation)
representing the ▇▇▇▇▇▇▇ Shares of the ▇▇▇▇▇▇▇ Group to Acquiror duly endorsed
in blank or with properly executed stock powers; and (f) the parties shall take
all other actions and execute such other documents, certificates, and
instruments reasonably required by the other party in order to consummate the
transaction contemplated hereunder.
2.07 CONTINGENT CONSIDERATION. In addition to the Initial
Consideration and the Escrowed Amount, the Acquiror agrees to pay to
Shareholder, if earned, the following Contingent Consideration:
(a) an earned payout amount (the "Earn-Out Payment")
based upon the Adjusted EBTDA of the ▇▇▇▇▇▇▇ Group for the twelve
month period commencing on the first day of the month following
Closing (the "Earn-Out Period"), to be calculated as follows:
(i) if the ▇▇▇▇▇▇▇ Group's Adjusted EBTDA for the
Earn-Out Period is $4,000,000 or less, the Earn-Out Payment
shall equal zero;
(ii) if the ▇▇▇▇▇▇▇ Group's Adjusted EBTDA for the
Earn-Out Period is between $4,000,001 and $7,000,000, the
Gross Earn-Out Payment shall be prorated in accordance with
Annex II; and
(iii) if the ▇▇▇▇▇▇▇ Group's Adjusted EBTDA for the
Earn-Out Period is greater than $7,000,000, the Gross Earn-Out
Payment shall equal 670,297 shares of Acquiror's Common Stock
and $7,268,750 in cash. The number of shares of Acquiror
Common Stock issued as part of the Contingent Consideration
pursuant to this Section 2.07 hereof shall be adjusted to
account for any change in the outstanding Acquiror Common
Stock resulting from a subdivision or consolidation of shares,
share split, reverse share split, share distribution or
combination of shares or the payment of a share dividend.
If ▇▇▇▇▇▇▇▇▇ assigns a portion of the ▇▇▇▇▇▇▇ Shares to the Transferees as
defined in and pursuant to Section 11.05 at or prior to Closing, such
Contingent Consideration (both cash and stock) shall be pro rated among the
Shareholders in the sharing ratios set forth on Schedule 2.07 as updated to the
date of Closing.
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(b) In the event ▇▇▇▇▇▇▇▇▇ directs Acquiror to issue
Preferred Stock of Acquiror in lieu of cash to be paid pursuant to
(a), ▇▇▇▇▇▇▇▇▇ shall notify Acquiror one (1) Business Day preceding
the Earn-Out Period and Acquiror shall issue to ▇▇▇▇▇▇▇▇▇ Preferred
Stock of the Acquiror with substantially the same terms as set forth
in Annex IV. It is understood and agreed that ▇▇▇▇▇▇▇▇▇ may specify
the amounts of the cash portion of the Contingent Consideration to be
paid in cash or in Preferred Stock or a combination of cash and
Preferred Stock, in any portions as Shareholder in his sole and
absolute discretion may determine.
(c) Subject to (b) above, the Earn-Out Payment, if any,
shall be paid by wire transfer or other immediately available funds
approved by Shareholder in accordance with the instructions set forth
in Schedule 2.03(b)(i) for the cash component of the Earn-Out Payment
and by the issuance of the Acquiror Common Stock and Preferred Stock,
if applicable, in accordance with the provisions of Schedule 2.07.
2.08 CALCULATION AND PAYMENT OF CONTINGENT CONSIDERATION.
(a) A computation of the Adjusted EBTDA of the ▇▇▇▇▇▇▇
Group for the Earn-Out Period and Net Earn- Out Payment will be prepared by
the Acquiror in consultation with the Shareholder (and the Shareholder
Representative) in the form of a report in accordance with the principles set
forth in Annex I and Annex II, respectively, attached hereto and delivered by
the Acquiror to the Shareholder or Shareholder Representative as set forth in
Section 11.05 below within 45 days after expiration of the Earn-Out Period (the
"Earn-Out Report"). The Shareholder or Shareholder Representative shall have
the right for 30 days following his receipt of the Earn-Out Report to object to
the Acquiror's calculation of Adjusted EBTDA. Any objection made by the
Shareholder or Shareholder Representative shall be accompanied by materials
showing in reasonable detail the Shareholders' support for the determination of
Adjusted EBTDA and the Net Earn-Out Payment. The Shareholders through the
Shareholder or Shareholder Representative shall be deemed to have waived any
rights to object under this Section 2.08 unless written objections, together
with supporting materials, are delivered to the Acquiror within such 30-day
period. The Acquiror and the Shareholder or Shareholder Representative shall
meet to resolve any differences in their respective calculations of Adjusted
EBTDA and the Net Earn-Out Payment. If the parties are unable to agree upon
the same dollar value of and other issues concerning Adjusted EBTDA and the Net
Earn-Out Payment, the Acquiror and the Shareholder must submit the matter to
arbitration to be conducted in accordance with Section 2.08(c). The
participation or consultation of Shareholder (and the Shareholder
Representative) in the preparation of the above-referenced computations and
calculation shall in no way affect, alter or diminish Shareholder's (and the
Shareholder Representative's) right to object to such calculations hereunder or
to invoke arbitration under Section 2.08(b) hereof.
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(b) If the Shareholder or Shareholder Representative fail
to object to the Acquiror's calculation of Adjusted EBTDA and/or the Net
Earn-Out Payment in the manner set forth in Section 2.08(a), Acquiror shall
make a payment to the Shareholder or Shareholder Representative in cash and
shares pro rata in accordance with Schedule 2.07, as updated to the date of
Closing, of an amount equal to the Net Earn-Out Payment (as set forth in Annex
II hereto) as calculated in accordance with the Earn-Out Report (unless
Adjusted EBTDA is not greater than $4,000,000 in which case no payment shall be
made). If the Acquiror and the Shareholder or Shareholder Representative agree
upon a different amount of Adjusted EBTDA or Net Earn-Out Payment or if, absent
such agreement, the matter is submitted to arbitration and decided thereby,
then, the Acquiror shall make the Net Earn-Out Payment, if any, determined in
accordance with Schedule 2.07, as updated to the date of Closing, based on such
agreed or arbitration determined amount of Adjusted EBTDA or Net Earn-Out
Payment. All payments and issuances of stock under this Section 2.08(b) shall
be payable and made on and as of the fifth Business Day following the 30-day
period in which the Shareholder or Shareholder Representative had the
opportunity but failed to make any objection, after agreement by the parties or
upon a final determination by the arbitrators, as applicable.
(c) The Acquiror or the Shareholder or Shareholder
Representative, as applicable, desiring to refer a controversy or claim
concerning any dispute to the Earn-Out Report to arbitration must provide
notice to the other party, stating that the applicable dispute will be
determined by arbitration under this Section 2.08(c). The arbitrator shall be
PricewaterhouseCoopers LLP or if PricewaterhouseCoopers LLP resigns, becomes
incapacitated or otherwise refuses or fails to serve or to continue to serve as
an arbitrator, then the Acquiror or the Shareholder or Shareholder
Representative may request the American Arbitration Association (or its
successor) to designate another arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "Rules"). On or
before the 15th day following the foregoing notice from the Acquiror or the
Shareholder or Shareholder Representative, the Acquiror and the Shareholder or
Shareholders' Representative shall present to the other its proposed resolution
of the disputed item, including its calculation of the disputed item, the
effect on Adjusted EBTDA and the Net Earn-Out Payment and any materials it
wishes to present to justify the resolution that it so presents. Within five
Business Days after the expiration of such 15-day period, the Acquiror and the
Shareholder or Shareholder Representative shall attend a meeting in Houston,
Texas at a mutually acceptable time and place to discuss fully the dispute and
to determine whether either desires to modify its calculation of the disputed
item. Such meeting shall occur before the Acquiror or the Shareholder or
Shareholder Representative involves or otherwise notifies the arbitrator. If
the parties have been unable to resolve their dispute at the end of such
meeting, the arbitrator shall be notified. If at any time the parties resolve
their dispute, then notwithstanding the preceding provisions of this Section
2.08(c), the arbitration procedures promptly shall be discontinued and the
Earn-Out Report shall be revised, if necessary, to reflect such resolution and
thereupon shall be
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final and binding on the Shareholder (Shareholders and Shareholder
Representative) and the Acquiror. The Shareholder (or Shareholder
Representative) and Acquiror shall each bear one-half of all costs and expenses
of the arbitrator. The determination and decision of the arbitrator shall be
final and nonappealable and shall be valid and binding upon the Acquiror and
the Shareholder (Shareholders and Shareholder Representative) and their
respective successors and assigns and may be enforced in any court of competent
jurisdiction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER
Shareholder and, if ▇▇▇▇▇▇▇▇▇ assigns a portion of the ▇▇▇▇▇▇▇ Shares
to the Transferees as defined in and pursuant to Section 11.05 at or prior to
the Closing Date, each Transferee who becomes a Shareholder, severally and not
jointly, represent and warrant to Acquiror that:
3.01 GOOD TITLE. Except as set forth in Schedule 3.01, such
Shareholder is the sole record and beneficial owner (except for the community
property interest of the Shareholder's spouse) of, and has good and valid title
to, the number of shares (or their equivalent) of the various entities that
comprise the ▇▇▇▇▇▇▇ Group set forth opposite such Shareholder's name on
Schedule 3.01 hereto, free and clear of all Liens except the Liens granted by
Shareholder in favor of Mr. and ▇▇▇. ▇▇▇▇▇▇▇ by those three certain acts of
pledge of shares of common stock dated December 7, 1990 and July 2, 1997, which
will be released at or prior to Closing. Upon Closing of the transaction
contemplated hereunder by the Shareholder, the ▇▇▇▇▇▇▇ Group, Acquisition Corp.
and Acquiror of this Agreement against payment of the Initial Consideration,
Acquiror and/or the Acquisition Corp. shall be the owner of, and have good and
valid title to, all of the shares of the various entities that comprise the
▇▇▇▇▇▇▇ Group free and clear of all Liens.
3.02 AUTHORIZATION AND VALIDITY OF AGREEMENTS. Such Shareholder
has the full power, legal right, capacity and authority to enter into, execute
and deliver this Agreement, the Escrow Agreement and the Registration Rights
Agreement and to carry out and perform the transactions contemplated hereby and
thereby. Each of this Agreement, the Escrow Agreement and the Registration
Rights Agreement constitutes a valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms,
except as limited by bankruptcy, insolvency, reorganization, moratorium or
other similar law now or hereafter in effect relating to or affecting
creditors' rights generally, or subject to the limitations imposed by general
rules of equity (regardless of whether such enforceability is considered at law
or in equity) (collectively "Creditors' Rights").
3.03 NO WITHHOLDING. Neither Acquiror, Acquisition Corp. nor any
of their Affiliates are required to deduct or withhold from the consideration
otherwise payable at the Closing pursuant to this Agreement or the Escrow
Agreement to such Shareholder any amounts under the Code or any other provision
of federal, state or local tax law.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
▇▇▇▇▇▇▇ GROUP AND THE SHAREHOLDER AND EACH TRANSFEREE
Subject to Section 11.05 hereof, each of the ▇▇▇▇▇▇▇ Group and the
Shareholder and each Transferee who becomes a Shareholder hereby represent and
warrant to the Acquiror as of the Closing Date as follows:
4.01 ORGANIZATION. Each of the ▇▇▇▇▇▇▇ Group is a duly organized
corporation under the laws of its jurisdiction of incorporation and is validly
existing and in good standing under the laws of such jurisdiction.
4.02 QUALIFICATION. Each of the ▇▇▇▇▇▇▇ Group is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of the Business as now conducted or the
character of the property owned or leased by it makes such qualification
necessary, which jurisdictions are listed on Schedule 4.02. Each of the
members of the ▇▇▇▇▇▇▇ Group has all requisite power and authority to own its
properties and assets and to carry on its Business.
4.03 AUTHORITY; ENFORCEABILITY. Each of the ▇▇▇▇▇▇▇ Group has all
requisite power and authority to execute and deliver this Agreement and the
other Transaction Documents to which it is a party and to perform its
respective obligations hereunder and thereunder. The execution and delivery of
this Agreement and the other Transaction Documents to which each of the ▇▇▇▇▇▇▇
Group is a party and the performance of the transactions contemplated hereby
and thereby have been duly and validly approved by such action necessary on
behalf of such party. With respect to each of the ▇▇▇▇▇▇▇ Group, this
Agreement and each of the Transaction Documents to which it is a party
constitute the legal, valid and binding obligations of such entity, enforceable
against it in accordance with their terms, subject to Creditors' Rights.
4.04 CONSENTS; ABSENCE OF CONFLICTS. Except as set forth on
Schedule 4.04, neither the execution and delivery of this Agreement or the
other Transaction Documents by the Shareholder or the ▇▇▇▇▇▇▇ Group, nor the
consummation of the transactions contemplated hereby and thereby will (a)
violate or breach the terms of, cause a default under, conflict with, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify in a manner adverse to the ▇▇▇▇▇▇▇ Group or cancel, require any notice
or consent or give rise to any preferential purchase or similar right under (i)
any applicable Law, (ii) such entity's charter or bylaws or (iii) any Material
Contract to which such entity is a party or by which they, or any of their
properties, is bound; (b) result in the creation or imposition of any Lien
(other than a Permitted Lien) on any of the Dickson Shares or the ▇▇▇▇▇▇▇
Assets; (c) result in the cancellation, forfeiture, revocation, suspension or
modification of any existing consent, approval, authorization, license, permit,
certificate or order of any Governmental Authority that adversely
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affects such entity; or (d) with the passage of time or the giving of notice or
the taking of any action of any third party have any of the effects set forth
in clause (a), (b) or (c) of this Section 4.04.
4.05 CAPITALIZATION OF THE ▇▇▇▇▇▇▇ GROUP; TRANSFER OF SHARES.
(a) The number of shares of capital stock issued and
outstanding for each of the ▇▇▇▇▇▇▇ Group is listed in Schedule 4.05. The
issued and outstanding shares for each of the ▇▇▇▇▇▇▇ Group have been duly
authorized, are validly issued, are fully paid and non-assessable and were not
issued in violation of any preemptive rights of any Person. The shares of each
of the ▇▇▇▇▇▇▇ Group are held beneficially (except for the community property
interest of the Person's spouse) and of record by the Person indicated in
Schedule 4.05, and will be free and clear of all Liens at or before the
Closing. There are no treasury shares held by any of the ▇▇▇▇▇▇▇ Group.
(b) Except as set forth on Schedule 4.05(b), there are no
Contracts (including, without limitation, options, warrants, calls and
preemptive rights) obligating the Shareholder or the ▇▇▇▇▇▇▇ Group (i) to
issue, sell, pledge, dispose of or encumber any shares of any class of capital
stock of any of the ▇▇▇▇▇▇▇ Group, or any securities convertible, exercisable
or exchangeable into any class of capital stock of any of the ▇▇▇▇▇▇▇ Group,
(ii) to redeem, purchase or acquire in any manner any class of capital stock of
any of the ▇▇▇▇▇▇▇ Group or any securities that are convertible, exercisable or
exchangeable into any shares of any class of capital stock of any of the
▇▇▇▇▇▇▇ Group or (iii) to make any dividend or distribution of any kind with
respect to capital stock of any of the ▇▇▇▇▇▇▇ Group.
(c) There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights affecting
the capital stock of any of the ▇▇▇▇▇▇▇ Group. There are no voting trusts,
proxies, or other shareholder or similar agreements or understandings with
respect to the voting of the capital stock of any of the domestic members of
the ▇▇▇▇▇▇▇ Group other than as set forth on Schedule 4.05(c).
(d) Upon delivery of the certificates or other
documentation reasonably acceptable to Acquiror and Acquisition Corp.
evidencing the ▇▇▇▇▇▇▇ Shares together with any other documents reasonably
requested by the Acquiror, Shareholders at Closing will transfer valid title
thereto to the Acquiror and/or Acquisition Corp., free of any Lien.
4.06 EQUITY INVESTMENTS AND AFFILIATES. Except for the
Subsidiaries set forth on Schedule 4.06(i), if any, none of the ▇▇▇▇▇▇▇ Group
owns, directly or indirectly, any equity interest, or any security convertible,
exercisable or exchangeable into any equity interest, in any Person. Other
than as disclosed in Schedule 4.06(i) or (ii), none of the ▇▇▇▇▇▇▇ Group is a
party to, or bound by, any Contract that would require Acquiror to make an
additional capital contribution to any Person. Schedule 4.06(ii) identifies
all Persons who may be deemed to be affiliates of the ▇▇▇▇▇▇▇ Group within the
meaning of that term as used in Rule 144 promulgated
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pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
including, without limitation, all directors and executive officers of the
▇▇▇▇▇▇▇ Group.
4.07 ABSENCE OF CHANGES. Except as set forth on Schedule 4.07 or
otherwise previously disclosed in writing to Acquiror, since December 31, 1997:
(a) there has not been any Material Adverse Effect on the
▇▇▇▇▇▇▇ Group, individually or collectively;
(b) the Business has been operated and maintained in the
Ordinary Course of the Business consistent with past practices;
(c) there has not been any material Damage, destruction
or loss to any material portion of any of the ▇▇▇▇▇▇▇ Assets, whether
or not covered by insurance;
(d) there has been no issuance by the ▇▇▇▇▇▇▇ Group of
any shares of their capital stock, or any repurchase or redemption by
any of them, of any shares of their capital stock;
(e) there has been no merger or consolidation of the
▇▇▇▇▇▇▇ Group with any other Person or any acquisition by the ▇▇▇▇▇▇▇
Group, individually or collectively, of the stock or business of any
other Person;
(f) there has been no declaration or payment of any
dividend on, or any other distribution with respect to, the securities
of the ▇▇▇▇▇▇▇ Group;
(g) there has been no borrowing of funds, agreement to
borrow funds, guaranty or agreement to maintain the financial position
of any Person by the ▇▇▇▇▇▇▇ Group;
(h) the Dickson Group has not entered into any
employment, consulting, severance or indemnification agreement with
any of its employees, nor has any such Person incurred or entered into
any collective bargaining agreement or other obligation with any labor
organization or employee;
(i) to the knowledge of the Shareholder or the ▇▇▇▇▇▇▇
Group, there has been no adverse change in the relationship of the
▇▇▇▇▇▇▇ Group with any material customer, supplier, distributor or
sales representative thereof;
(j) there has been no increase in the compensation or
benefits of any officer or employee of the ▇▇▇▇▇▇▇ Group;
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(k) there has been no payment by the ▇▇▇▇▇▇▇ Group to any
director, officer, shareholder, partner or employee, or any Affiliate
of the foregoing (whether as a loan or otherwise) except regular
compensation and usual benefits payments consistent with past
practices;
(l) the ▇▇▇▇▇▇▇ Group has not entered into any Contract
with any director, officer, shareholder or employee or any Affiliate
of the foregoing other than on an arms-length basis;
(m) there is no Contract to do any of the foregoing,
except as expressly permitted by this Agreement; and
(n) no lawsuit is pending or threatened against the
▇▇▇▇▇▇▇ Group alleging Damages in excess of $10,000.
4.08 AFFILIATE TRANSACTIONS. Schedule 4.08 describes all
agreements entered into between the Shareholder and any of his Affiliates
(other than the ▇▇▇▇▇▇▇ Group), and services and assets owned, licensed to or
otherwise held by the Shareholder or any of his Affiliates (other than the
▇▇▇▇▇▇▇ Group), made available or provided to the ▇▇▇▇▇▇▇ Group or used in
connection with the Business. Except as set forth in Schedule 4.08, (a) there
are no outstanding notes payable to, accounts receivable from or advances by
the ▇▇▇▇▇▇▇ Group to, and the ▇▇▇▇▇▇▇ Group is not otherwise creditors of, the
Shareholder or any of his Affiliates (other than the ▇▇▇▇▇▇▇ Group), or any
director, officer, shareholder, member or partner thereof and (b) except as
described on Schedule 4.08, since December 31, 1997, the ▇▇▇▇▇▇▇ Group has not
purchased, transferred or leased any real or personal property from or for the
benefit of, paid any commission, salary or bonus to or for the benefit of, the
Shareholders or any of his Affiliates, or any director, officer, shareholder,
member or partner thereof, other than regular compensation to employees
consistent with past practices.
4.09 REAL PROPERTY.
(a) Schedule 4.09(a) lists all real property owned in fee
(beneficially or of record) by the ▇▇▇▇▇▇▇ Group (the "Scheduled Fee Lands").
The Dickson Group has good and merchantable title to the Scheduled Fee Lands.
The Scheduled Fee Lands are not encumbered by any Lien other than Permitted
Liens.
(b) Schedule 4.09(b) lists all surface leases (and the
lands covered thereby) pursuant to which the ▇▇▇▇▇▇▇ Group leases real property
for use in connection with the Business (collectively, the "Scheduled Leases"),
together with a general description of any improvements located thereon, in
each case specifying the name of the lessor, lessee, sublessor or sublessee,
the date and term of the lease. A true and complete copy of each of the
Scheduled Leases, as amended to date, save and except any verbal lease as shown
on Schedule 4.09(b), has been furnished to the Acquiror. No event has occurred
that constitutes, or that with the giving of
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notice or the passage of time or both would constitute, a material default by
any party to any Scheduled Lease. Each Person identified on Schedule 4.09(b)
as the lessee or sublessee under any particular Scheduled Lease either owns the
improvements located on the lands covered by such lease or validly occupies
such improvements in accordance with the terms of such lease free and clear of
all Liens, except Permitted Liens. At or prior to Closing, all consents
required under the Scheduled Leases in connection with the transactions
contemplated by this Agreement have been obtained and furnished in writing to
the Acquiror, except as indicated on Schedule 4.09(b) and except for those
consents of Governmental Authorities that are customarily obtained post closing
and which are identified on Schedule 4.09(b).
(c) The Scheduled Fee Lands and the Scheduled Leases
constitute all of the real property ("Real Property") which are used in
connection with the ownership and operations of the Business. Other than the
▇▇▇▇▇▇▇ Group, there are no parties in possession of any portion of any Real
Property as lessees, subtenants, tenants at sufferance or trespassers. The
▇▇▇▇▇▇▇ Group has full right and authority to use and operate all of the
improvements located on the Real Property, subject to applicable Law and the
Permitted Liens. Except as listed on Schedule 4.09(c), such improvements are
being used, occupied, and maintained in all material respects by the ▇▇▇▇▇▇▇
Group in accordance with all applicable easements, contracts, permits,
insurance requirements, restrictions, building setback lines, covenants and
reservations. Except as listed on Schedule 4.09(c), certificates of occupancy
and all other material licenses, permits, authorizations, and approvals
required by any Governmental Authority having jurisdiction over the Real
Property, have been issued for the ▇▇▇▇▇▇▇ Group's occupancy of each of such
improvements and all such certificates, licenses, permits, authorizations and
approvals have been paid for and are in full force and effect. The Shareholder
and the ▇▇▇▇▇▇▇ Group have received no notice of any pending or threatened
condemnation, eminent domain or similar proceeding or special assessment
affecting any of the Real Property, nor has any of the ▇▇▇▇▇▇▇ Group received
notification that any such proceeding or assessment is contemplated. Except as
set forth on Schedule 4.09(c) and except with respect to defects for which the
▇▇▇▇▇▇▇ Group has no liability or obligation, the improvements located on the
Real Property covered by the Scheduled Leases or the Scheduled Fee Lands (the
"Facilities") are free from material structural and mechanical defects
(including roofs) and have been used by the ▇▇▇▇▇▇▇ Group and the Subsidiaries,
if any, in the Ordinary Course of Business and remain as of the date hereof in
suitable and adequate condition for such continued use. The ▇▇▇▇▇▇▇ Group has
not deferred maintenance of the Facilities in contemplation of the transactions
set forth herein.
(d) The Shareholder has furnished the Acquiror true and
complete copies of all deeds, leases, title opinions, title insurance policies
and surveys in his possession or in the possession of any of the ▇▇▇▇▇▇▇ Group
that relate to the Real Property, together with copies of all reports of any
engineers, environmental consultants or other consultants in his possession
relating to any of the Real Property.
(e) All utilities (including, without limitation, water,
sewer or septic, gas, electricity, trash removal and telephone service) are
currently available to the Real Property in
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sufficient quantities and quality to adequately serve the Real Property in
connection with the operation of the Business currently conducted therefrom.
4.10 TANGIBLE PERSONAL PROPERTY. Schedule 4.10 lists for the
▇▇▇▇▇▇▇ Group each item of equipment, tools, machinery, parts, materials,
supplies, furniture, vessels, cars, trucks, trailers and other rolling stock
and each other item of tangible personal property used or held for use thereby
in connection with the Business having a fair market value or book value of
$10,000 or more (the "Scheduled Tangible Personal Property"). The Scheduled
Tangible Personal Property constitutes all of the tangible personal property
necessary for the continued ownership, use and operation of the Business
consistent in all material respects with the past practices of the ▇▇▇▇▇▇▇
Group. The Dickson Group has good title to or leases such items free and clear
of all Liens, except Permitted Liens. Except as indicated on Schedule 4.10,
each item of Scheduled Tangible Personal Property is in good working order and
repair, ordinary wear and tear excepted, and has been operated and maintained
in the Ordinary Course of Business and remains in suitable and adequate
condition for use consistent with its primary use. The ▇▇▇▇▇▇▇ Group has not
deferred maintenance of any such item in contemplation of the transactions set
forth herein.
4.11 PERMITS. Schedule 4.11 lists for the ▇▇▇▇▇▇▇ Group all
permits, licenses, certificates, authorizations and approvals granted by any
Governmental Authority (each, a "Permit") and used or held by one or more of
the ▇▇▇▇▇▇▇ Group, or any of their Affiliates in connection with the ownership
and operation of the Business (the "Scheduled Permits"). The Scheduled Permits
constitute all Permits necessary for the continued ownership, use and operation
of the Business consistent in all material respects with the past practices of
the ▇▇▇▇▇▇▇ Group, except the Air Quality Permit as set forth on Schedule 4.24.
Except as set forth in Schedule 4.11, the Scheduled Permits are valid and in
full force and effect and no Scheduled Permit is in default, and no condition
exists that with notice or lapse of time or both would constitute a default,
under the Scheduled Permits. All fees and other payments due and owing in
connection with the Scheduled Permits have been paid in full and in a timely
manner so as to prevent any lapse or revocation thereof.
4.12 CONTRACTS.
(a) Schedule 4.12 identifies each of the following
Contracts to which any of the ▇▇▇▇▇▇▇ Group is a party or by which they or
their properties is bound (each, a "Material Contract"):
(i) any Contract that provides for the payment by such
entity of more than $100,000 in any consecutive 12-month period or
more than $100,000 over the remaining life of such Contract other than
a Contract that (A) is terminable by any party thereto giving notice
of termination to the other party thereto not more than 60 days in
advance of the proposed termination date and (B) even if so
terminable, contains no post-termination obligations, termination
penalties, buy-back obligations or similar obligations other than
payments of not more than $100,000 in the aggregate;
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(ii) any Contract that constitutes a purchase order or
other Contract relating to the sale, purchase, lease or provision by
such entity of goods or services in excess of $100,000 in any 12-month
period;
(iii) any Contract that grants any Person the exclusive
right to sell products or provide services within any geographical
region and that cannot, by the express terms thereof, be canceled by
such entity on no more than 60 days' advance notice without penalty,
fee or premium of any nature (including, without limitation, any
buy-back obligation);
(iv) any Contract that limits the freedom of such entity
to compete in any line of business or to conduct business in any
geographic location;
(v) any Contract that is for the sale of goods or
services and has not been substantially completed by such entity as of
the Closing Date and which (A) was entered into by such entity on
terms known at the time the Contract was entered into not to be
commercially reasonable or (B) was entered into with the expectation
that such entity would incur a loss;
(vi) any Contract that was entered into outside of the
Ordinary Course of Business of such entity, including the purchase or
sale of all or substantially all of the assets of any such entity or
operating division (by asset sale, stock sale, merger or otherwise);
(vi) any Contract constituting a partnership, joint
venture or other similar Contract;
(vii) any Contract relating to indebtedness for borrowed
money, any Contract creating a capital lease obligation, any Contract
for the sale of Accounts Receivable, any Contract constituting a
guarantee of debt of any third Person or any Contract requiring such
entity to maintain the financial position of any other Person;
(viii) any Contract in respect of Intellectual Property
Rights granted to or by such entity;
(ix) any lease (including any master lease covering
multiple items of personal property) of any item or items of personal
property with a rental expense under such lease (whether for a single
item or multiple items) in excess of $25,000 in any consecutive
12-month period;
(x) any Contract providing for the deferred payment of
any purchase price including any so called "earn out" or other
contingent fee arrangement that involves the possibility of payments
in excess of $10,000;
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(xi) any Contract creating a Lien on any of the ▇▇▇▇▇▇▇
Assets that will not be discharged at or prior to the Closing except
Permitted Liens;
(xii) any Contract between any of the ▇▇▇▇▇▇▇ Group and any
Governmental Authority;
(xiii) any Contract involving interest rate swaps, cap or
collar agreements, commodity or financial future or option contracts
or similar derivative or hedging Contracts;
(xiv) any Contract entered into since January 1, 1996, (i)
relating to the sale of stock of a direct or indirect Subsidiary of
any of the ▇▇▇▇▇▇▇ Group or (ii) relating to the sale of assets not in
the Ordinary Course of Business involving proceeds to any of the
▇▇▇▇▇▇▇ Group or their direct or indirect subsidiaries in excess of an
aggregate of $100,000; and
(xv) any Contract between any of the ▇▇▇▇▇▇▇ Group and any
consultant.
(b) True and complete copies (including all amendments)
of each Material Contract have been made available to the Acquiror. With
respect to each Material Contract except as disclosed in Schedule 4.12: (i)
the Material Contract is the legal, valid obligation of the applicable ▇▇▇▇▇▇▇
Group entity and any other Person that is a party thereto, binding and
enforceable against such ▇▇▇▇▇▇▇ Group entity and any other Person that is a
party thereto, in accordance with its terms, subject to Creditors' Rights; (ii)
the Material Contract has not been terminated, and neither any of the ▇▇▇▇▇▇▇
Group nor any other Person is in material breach or default thereunder, nor has
any event occurred that with notice or lapse of time, or both, would constitute
a material breach or default, or permit termination, modification in any manner
adverse to any of the ▇▇▇▇▇▇▇ Group or acceleration thereunder; and (iii) no
party has asserted nor has (except by operation of law) any right to offset,
discount or otherwise ▇▇▇▇▇ any amount owing under the Material Contract except
as expressly set forth in such Contract.
4.13 INTELLECTUAL PROPERTY.
(a) Schedule 4.13 separately identifies all Intellectual
Property Rights owned or used in the conduct of the Business (the "Scheduled
Intellectual Property"). The Scheduled Intellectual Property constitutes all
Intellectual Property Rights necessary for the continued operation of the
Business consistent in all material respects with the past practices of the
Business.
(b) The ▇▇▇▇▇▇▇ Group has good title to the Scheduled
Intellectual Property identified on Schedule 4.13 as owned thereby, free and
clear of all Liens other than Permitted Liens.
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(c) With respect to each item of Scheduled Intellectual
Property, Schedule 4.13 specifies the following: (i) the nature of such
Scheduled Intellectual Property (e.g. patent, trademark, trade secret) and the
termination date, if any, thereof, (ii) whether such item is owned or licensed
by any of the ▇▇▇▇▇▇▇ Group, (iii) the jurisdictions by or in which such
Scheduled Intellectual Property has been issued or registered or in which an
application for such issuance or registration has been filed, including the
respective registration or application numbers; and (iv) any Contract pursuant
to which any of the ▇▇▇▇▇▇▇ Group or any other Person is authorized to use such
Scheduled Intellectual Property including the identity of all parties thereto,
a description of the nature and subject matter thereof, the applicable royalty
and term thereof and whether such Contract grants exclusive or non-exclusive
rights in any particular geographic region. Each such Contract constitutes the
legal, valid and binding obligation of the ▇▇▇▇▇▇▇ Group and the other parties
thereto and is enforceable against the applicable ▇▇▇▇▇▇▇ Group and the other
parties thereto in accordance with their respective terms, subject to
Creditors' Rights. Except as provided in Section 4.13, each item of Scheduled
Intellectual Property will continue to be held by the applicable ▇▇▇▇▇▇▇ Group
on identical terms and conditions immediately following the consummation of the
transactions contemplated herein as are in effect immediately prior to such
consummation.
(d) Except as disclosed on Schedule 4.13, none of the
▇▇▇▇▇▇▇ Group has been a party to any judicial or administrative proceeding
alleging, nor have any such entities been notified of any allegation of, any
infringement or misappropriation of any item of Scheduled Intellectual
Property, whether owned by one of the ▇▇▇▇▇▇▇ Group or any other Person. No
Shareholder has any knowledge of any other material infringement or
misappropriation (or facts that are reasonably likely to give rise to a
material infringement or misappropriation) by any of the ▇▇▇▇▇▇▇ Group of any
Intellectual Property Rights of third persons or of any continuing material
infringement or misappropriation (or facts that are reasonably likely to give
rise to a material infringement or misappropriation) by any other Person of any
of the Scheduled Intellectual Property. No Scheduled Intellectual Property is
subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by any of the ▇▇▇▇▇▇▇ Group.
(e) Except as set forth on Schedule 4.13, all statutory
obligations and all fees, annuities and other payments which are due on or
before the Closing Date for any of the Scheduled Intellectual Property
including, without limitation, all United States or foreign patents, patent
applications, trademark registrations, service ▇▇▇▇ registrations, copyright
registrations and any applications for any of the preceding, have been met or
paid in full.
4.14 ACCOUNTS RECEIVABLE. Except as disclosed in Schedule 4.14,
each of the Accounts Receivable arose in the Ordinary Course of Business and
represents the genuine, valid and legally enforceable indebtedness of the
account debtor (subject only to Creditors' Rights) and no contra account,
set-off, defense, counterclaim, allowance or adjustment (other than discounts
for prompt payment shown on the invoice) has been asserted or is threatened by
any of
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the account debtors of such Accounts Receivable. All Accounts Receivable are
valid, genuine and fully collectible within the ▇▇▇▇▇▇▇ Group's customary
collection cycle in the aggregate amount of such receivables, subject to normal
and customary trade discounts, less any reserve for doubtful accounts recorded
on the Closing Date Balance Sheet. To the knowledge of the ▇▇▇▇▇▇▇ Group and
the Shareholder, none of the account debtors of the Accounts Receivable is
involved in a bankruptcy or insolvency proceeding or is generally unable to pay
its debts as they become due, except as disclosed in Schedule 4.14. The
▇▇▇▇▇▇▇ Group has good and valid title to the Accounts Receivable free and
clear of all Liens except Permitted Liens. No material amount of goods or
services, the sale or provision of which gave rise to any Accounts Receivable,
have been returned or rejected by any account debtor or lost or damaged prior
to receipt thereby, except as disclosed on Schedule 4.14. Except for those
listed on Schedule 4.14, none of the Accounts Receivable as of the date hereof
have remained uncollected for more than 90 days. The ▇▇▇▇▇▇▇ Group has
delivered to the Acquiror prior to the date hereof a listing of aged accounts
receivable as of a date no more than 10 days prior to the date hereof.
4.15 BROKERS' FEES. Neither any of the ▇▇▇▇▇▇▇ Group, the
Shareholder nor their respective Affiliates or agents has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the
Acquiror or its Affiliates (including the ▇▇▇▇▇▇▇ Group after the Closing)
could become liable or obligated.
4.16 FINANCIAL STATEMENTS. The ▇▇▇▇▇▇▇ Group has delivered to the
Acquiror true and complete copies of the following financial statements
(collectively, the "Financial Statements"): (a) the balance sheet of the
combined ▇▇▇▇▇▇▇ Group as of December 31, 1997, 1996 and 1995, and the related
statements of income, cash flow and retained earnings for the fiscal years then
ended (including the notes thereto) and (b) the balance sheet of the combined
▇▇▇▇▇▇▇ Group as of June 30, 1998 (the "Interim Balance Sheet") and the related
statement of income for the six-month period then ended. Except as disclosed
in the Interim Balance Sheet and except for liabilities which will be reflected
in the Closing Date Balance Sheet or contingent liabilities set forth on
Schedule 4.16, the ▇▇▇▇▇▇▇ Group has no liabilities or obligations (whether
accrued, absolute, contingent or otherwise) other than those incurred in the
Ordinary Course of Business. The Financial Statements present fairly the
financial position of the ▇▇▇▇▇▇▇ Group and the results of their operations and
changes in cash flow as of the dates and for the periods indicated therein and
have been prepared in accordance with GAAP (except that the Interim Balance
Sheet and related statements of income and cash flow do not contain all of the
footnote disclosures required for year-end financial statements required under
GAAP) applied on a consistent basis throughout the periods covered thereby. As
of the date of this Agreement, the amount of Debt, including Long-Term Debt, of
the ▇▇▇▇▇▇▇ Group is set forth on Schedule 4.16.
4.17 LEGAL COMPLIANCE. Except as otherwise disclosed in this
Agreement or the Disclosure Schedules, the ▇▇▇▇▇▇▇ Group is in compliance in
all material respects with all applicable Law.
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4.18 TAXES.
(a) Except as set forth in Schedule 4.18(a), (i) all
returns (including, without limitation, income, franchise, corporation, capital
gains, VAT, sales and use, unemployment compensation, excise, severance,
property, gross receipts, profits, payroll and withholding tax returns and
information returns) and reports (all such returns and reports herein referred
to collectively as the "Tax Returns" or singularly as a "Tax Return") of or
relating to any foreign, federal, state or local tax, assessment, impost, duty,
levy or charge of any nature whatsoever (all, together with any penalties,
additions to tax, fines and interest thereon, or related thereto, herein
referred to collectively as "Taxes" or singularly as a "Tax") which are
required to be filed on or before the Closing Date by or with respect to the
▇▇▇▇▇▇▇ Group have been or will be duly and timely filed or the filing due date
thereof has been or will be timely extended, (ii) all Tax Items required to be
included in each such Tax Return have been so included and all information
provided in each such Tax Return is true, correct and complete, (iii) all Taxes
which are or have become due with respect to the period covered by each such
Tax Return have been paid or accrued, and (iv) all withholding Tax and Tax
deposit requirements imposed on or with respect to the ▇▇▇▇▇▇▇ Group or their
respective employees for any and all periods or portions thereof ending on or
prior to the Closing Date have been or will be paid or accrued by the ▇▇▇▇▇▇▇
Group.
(b) All Tax sharing or indemnity agreements or
arrangements with respect to or involving the ▇▇▇▇▇▇▇ Group have been
terminated prior to the Closing Date, and after the Closing Date the ▇▇▇▇▇▇▇
Group shall have no obligation to indemnify or make a payment to any person in
respect of any Tax under any such agreement for any past, current or future
period.
(c) There is no claim against the ▇▇▇▇▇▇▇ Group for any
Taxes, and no assessment, deficiency or adjustment has been asserted, proposed
or threatened with respect to any Tax Return of or with respect to the ▇▇▇▇▇▇▇
Group, other than those disclosed (and to which are attached true and complete
copies of all audit or similar reports) in Schedule 4.18(c). None of the
property of the ▇▇▇▇▇▇▇ Group is subject to any Lien for any Tax except Liens
for current Taxes not yet due.
(d) Except as set forth on Schedule 4.18(d), the ▇▇▇▇▇▇▇
Group is not obligated to take any action or refrain from taking any action in
connection with any agreement with any taxing authority involving an abatement
of any Tax.
(e) The ▇▇▇▇▇▇▇ Group will not be required to include any
amount in income for any taxable period or portion thereof beginning after the
Closing Date as a result of a change in accounting method for any taxable
period or portion thereof ending on or before the Closing Date.
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(f) Except as set forth in Schedule 4.18(f), none of the
property of the ▇▇▇▇▇▇▇ Group is held in an arrangement that could be
classified as a partnership for U.S. Tax purposes, and the ▇▇▇▇▇▇▇ Group does
not own any interest in any controlled foreign corporation (as defined in
section 957 of the Code), passive foreign investment Acquiror (as defined in
section 1296 of the Code) or other entity the income of which is required to be
included in the income of the ▇▇▇▇▇▇▇ Group.
(g) Except as set forth in Schedule 4.18(g), none of the
property of the ▇▇▇▇▇▇▇ Group is subject to a safe-harbor lease (pursuant to
section 168(f)(8) of the Internal Revenue Code of 1954 as in effect after the
Economic Recovery Tax Act of 1981 and before the Tax Reform Act of 1986) or any
lease which is not treated as a lease for federal income tax purposes or is
"tax-exempt use property" (within the meaning of section 168(h) of the Code) or
"tax-exempt bond financed property" (within the meaning of section 168(g)(5) of
the Code).
(h) None of the Tax Returns of or with respect to the
▇▇▇▇▇▇▇ Group for which the statute of limitations is open are currently under
audit by the applicable governmental or jurisdictional authority, nor has the
Shareholder or the ▇▇▇▇▇▇▇ Group received written notice by any such
governmental or jurisdictional authority of any intent to audit such Tax
Returns.
(i) Except as set forth in Schedule 4.18(i), there is not
in force any extension of time with respect to the due date for the filing of
any Tax Return of or with respect to any of the ▇▇▇▇▇▇▇ Group or any waiver or
agreement for any extension of time for the assessment or payment of any Tax of
or with respect to the ▇▇▇▇▇▇▇ Group.
(j) The total amounts accrued as liabilities for current
Taxes in the Closing Date Balance Sheet will be adequate and sufficient to
cover the payment of all Taxes known as due and/or accrued through the Closing
Date in accordance with GAAP.
(k) Neither the Shareholder nor the ▇▇▇▇▇▇▇ Group has
consented to have the provisions of section 341(f)(2) of the Code apply with
respect to a sale of their stock.
(l) Except as set forth in Schedule 4.18(l), neither the
Shareholder nor the ▇▇▇▇▇▇▇ Group has ever been included in a consolidated,
combined or unitary Tax Return.
(m) Schedule 4.18(m) contains a list of all countries,
states and jurisdictions to which any Tax may be payable by the ▇▇▇▇▇▇▇ Group
(excluding employee withholding).
4.19 INVENTORY. The ▇▇▇▇▇▇▇ Group owns their inventory, if any,
free and clear of all Liens except Permitted Liens. None of such inventory is
covered by any financing statements except those filed in connection with
Permitted Liens. Such inventory was acquired for sale in the Ordinary Course
of Business of the ▇▇▇▇▇▇▇ Group and is in good and saleable condition and is
not obsolete, slow moving or damaged subject to any reserves reflected in the
Interim Balance Sheets. Except as disclosed on Schedule 4.19, all of such
inventory is located on the Real Property and none of such inventory is subject
to any consignment, bailment, warehousing or similar arrangement.
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4.20 LITIGATION. Except as set forth in Schedule 4.20, there are
no actions, suits or proceedings pending or to the knowledge of the Shareholder
or the ▇▇▇▇▇▇▇ Group, threatened at law or in equity, or before or by any
Governmental Authority or before any arbitrator of any kind, against any of the
▇▇▇▇▇▇▇ Group or the Shareholders or their respective Affiliates that affect or
would affect the Business or the assets and properties of the ▇▇▇▇▇▇▇ Group or
the consummation of the transactions contemplated hereby.
4.21 PRODUCT AND SERVICE WARRANTY. Schedule 4.21 includes copies
of the standard terms and conditions (including warranties) set forth in the
documentation of the ▇▇▇▇▇▇▇ Group governing the sale or lease of goods or
provision of services by the ▇▇▇▇▇▇▇ Group. Schedule 4.21 further identifies
any warranty claim asserted during the three year period prior to the date
hereof from which the ▇▇▇▇▇▇▇ Group has incurred costs in excess of $25,000.
4.22 EMPLOYEES; EMPLOYEE RELATIONS.
(a) Schedule 4.22(a) identifies for the ▇▇▇▇▇▇▇ Group the
following:
(i) the name and current weekly salary (or rate of pay)
of each of its employees now payable to each of its salaried
employees;
(ii) any increase to become effective after the date of
this Agreement in the total compensation or rate of total compensation
(including, without limitation, normal bonus, profit-sharing, pension
benefits and other compensation) payable to each such person;
(iii) all presently outstanding loans and advances (other
than routine travel advances to be repaid or formally accounted for
within 60 days) made by the ▇▇▇▇▇▇▇ Group to, or made to the ▇▇▇▇▇▇▇
Group by, any director, officer or employee;
(iv) all transactions outside of the Ordinary Course of
Business between such entity and any director, officer or employee
thereof since January 1, 1997;
(v) the name of each director and officer of such entity
(including the title of any officer).
(b) Except as disclosed on Schedule 4.22(b), the ▇▇▇▇▇▇▇
Group is not a party to, or is bound by, the terms of any collective bargaining
agreement or any other Contract with any labor union or representative of
employees, and no such agreements are being negotiated. Except as set forth on
Schedule 4.22(b), there are no labor disputes existing or threatened involving,
by way of example, strikes, work stoppages, slowdowns, picketing, or any other
27
22
interference with work or production, or any other concerted action by
employees, and none of the ▇▇▇▇▇▇▇ Group has experienced any material labor
difficulties during the last five years. No grievance or other legal action
arising out of any such collective bargaining agreement or relationship exists
or is threatened.
(c) The ▇▇▇▇▇▇▇ Group's relationship with their
employees, as a group, are satisfactory and no facts exist which would indicate
that such employees will not continue in their employ on a basis acceptable to
the Acquiror following the Closing. Except as listed on Schedule 4.22(c), none
of the ▇▇▇▇▇▇▇ Group is a party to any employment, consulting, non-compete,
management, severance, termination pay or similar Contract with any individual
or employee, either express or implied.
(d) Except as disclosed on Schedule 4.20, no legal
proceedings, charges, complaints, grievances or similar actions are pending
with respect to any of the ▇▇▇▇▇▇▇ Group under any federal, state or local laws
affecting the employment relationship including, but not limited to: (i)
anti-discrimination statutes such as Title VII of the Civil Rights Act of 1964,
as amended (or similar state or local laws prohibiting discrimination because
of race, sex, religion, national origin, age and the like); (ii) the Fair Labor
Standards Act or other federal, state or local laws regulating hours of work,
wages, overtime and other working conditions; (iii) requirements imposed by
federal, state or local governmental contracts such as those imposed by
Executive Order 11246 (as none of the ▇▇▇▇▇▇▇ Group is subject to such
Executive Order); (iv) state laws with respect to tortious employment conduct,
such as slander, false light, invasion of privacy, negligent hiring or
retention, intentional infliction of emotional distress, assault and battery,
or loss of consortium; or (v) the Occupational Safety and Health Act, as
amended, as well as any similar state laws, or other regulations respecting
safety in the workplace; and no proceedings, charges, or complaints are
threatened under any such laws or regulations and no facts or circumstances
exist which would give rise to any such proceedings, charges, complaints, or
claims. None of the ▇▇▇▇▇▇▇ Group is subject to any settlement or consent
decree with any present or former employee, employee representative or any
Governmental Authority relating to claims of discrimination or other claims in
respect to employment practices and policies; no Governmental Authority has
issued a judgment, order, decree or finding with respect to the labor and
employment practices (including practices relating to discrimination) of the
▇▇▇▇▇▇▇ Group.
(e) The Dickson Group has hired their employees in
compliance with the Immigration Reform and Control Act of 1986 and the rules
and regulations thereunder ("IRCA") and have complied with all record keeping
and other regulatory requirements under IRCA.
(f) None of the ▇▇▇▇▇▇▇ Group has incurred any liability
or obligation under the Worker Adjustment and Retraining Notification Act or
similar state laws.
(g) The ▇▇▇▇▇▇▇ Group is in compliance with the
provisions of the Americans with Disabilities Act (the "ADA").
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4.23 EMPLOYEE BENEFIT MATTERS.
(a) Schedule 4.23(a) lists for the ▇▇▇▇▇▇▇ Group a true
and complete description of each of the following (collectively referred to as
the "Plans," and individually referred to as a "Plan") which is sponsored,
maintained or contributed to or by the ▇▇▇▇▇▇▇ Group for the benefit of the
current or former employees of the ▇▇▇▇▇▇▇ Group, or has been so sponsored,
maintained or contributed to within six years prior to the Closing Date:
(i) each "employee benefit plan," as such term is defined
in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), (including, but not limited to, employee
benefit plans, such as foreign plans, which are not subject to the
provisions of ERISA); and
(ii) each personnel policy, stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, severance pay plan, policy or
agreement, deferred compensation agreement or arrangement, executive
compensation or supplemental income arrangement, consulting agreement,
employment agreement and each other employee benefit plan, agreement,
arrangement, program, practice or understanding which is not described
in Section 4.23(a)(i).
(b) True, correct and complete copies of each of the
Plans, and related trusts, if applicable, including all amendments thereto,
have been furnished or disclosed in writing to the Acquiror. There has also
been furnished or disclosed in writing to the Acquiror, with respect to each
Plan required to file such report and description, the most recent report on
Form 5500 and the summary plan description.
(c) Except as set forth on Schedule 4.23(c), the ▇▇▇▇▇▇▇
Group does not have an obligation to contribute to, and has not at any time
within six years prior to the Closing Date contributed to or had an obligation
to contribute to, and no Plan is (i) a multiemployer plan within the meaning of
Section 3(37) of ERISA or (ii) a plan subject to Title IV of ERISA, Section 302
of ERISA or Section 412 of the Code. No Plan is funded through a trust that is
intended to be exempt from federal income taxation pursuant to Section
501(c)(9) of the Code.
(d) Except as otherwise set forth on Schedule 4.23(d):
(i) the ▇▇▇▇▇▇▇ Group has substantially performed all
obligations, whether arising by operation of law or by contract,
required to be performed by it in connection with the Plans, and there
have been no defaults or violations by any other party to the Plans;
29
24
(ii) all reports and disclosures relating to the Plans
required to be filed with or furnished to Governmental Authorities,
Plan participants or Plan beneficiaries have been filed or furnished
in accordance with applicable law in a timely manner, and each Plan
has been administered in substantial compliance with its governing
documents and applicable law;
(iii) each of the Plans intended to be qualified under
Section 401 of the Code (A) satisfies the requirements of such
Section, (B) has received a favorable determination letter from the
Internal Revenue Service regarding such qualified status and covering
amendments required under the Tax Reform Act of 1986, the Unemployment
Compensation Amendments of 1992, the Omnibus Budget Reconciliation Act
of 1993, and the final nondiscrimination regulations under Section
401(a)(4) of the Code, and (C) has not been amended or operated in a
way which would adversely affect such qualified status;
(iv) there are no actions, suits or claims pending (other
than routine claims for benefits) or threatened against, or with
respect to, any of the Plans or their assets;
(v) all contributions required to be made to the Plans
pursuant to their terms and provisions or pursuant to applicable law
have been made timely;
(vi) as to any Plan intended to be qualified under Section
401 of the Code, there has been no termination or partial termination
of the Plan within the meaning of Section 411(d)(3) of the Code;
(vii) no act, omission or transaction has occurred which
would result in imposition on the ▇▇▇▇▇▇▇ Group of (A) breach of
fiduciary duty liability damages under Section 409 of ERISA, (B) a
civil penalty assessed pursuant to subsections (c), (i) or (l) of
Section 502 of ERISA or (C) a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code;
(viii) there is no matter pending (other than routine
qualification determination filings) with respect to any of the Plans
before any Governmental Authority;
(ix) with respect to any employee benefit plan, within the
meaning of Section 3(3) of ERISA, which is not listed in Schedule
4.23(a) but which is sponsored, maintained or contributed to, or has
been sponsored, maintained or contributed to within six years prior to
the Closing Date, by any corporation, trade, business or entity under
common control with any member of the ▇▇▇▇▇▇▇ Group or within the
meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001
of ERISA ("Commonly Controlled Entity"), (A) no withdrawal liability,
within the meaning of Section 4201 of ERISA, has been incurred, which
withdrawal liability has not been satisfied, (B) no liability to the
Pension Benefit Guaranty Corporation has been incurred by the ▇▇▇▇▇▇▇
30
25
Group or any Commonly Controlled Entity, which liability has not been
satisfied, (C) no accumulated funding deficiency, whether or not
waived, within the meaning of Section 302 of ERISA or Section 412 of
the Code has been incurred and (D) all contributions (including
installments) to such plan required by Section 302 of ERISA and
Section 412 of the Code have been timely made; and
(x) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (A)
require any of the ▇▇▇▇▇▇▇ Group to make a larger contribution to, or
pay greater benefits under, any Plan than it otherwise would, whether
or not some other subsequent action or event would be required to
cause such payment or provision to be triggered, or (B) create or give
rise to any additional vested rights or service credits under any
Plan.
(e) The ▇▇▇▇▇▇▇ Group is not a party to any agreement,
nor has the ▇▇▇▇▇▇▇ Group established any policy or practice, requiring it to
make a payment or provide any other form of compensation or benefit to any
person performing services for the ▇▇▇▇▇▇▇ Group upon termination of such
services which would not be payable or provided in the absence of the
consummation of the transactions contemplated by this Agreement.
(f) In connection with the consummation of the
transactions contemplated by this Agreement, no payments of money or property,
acceleration of benefits, or provisions of other rights have or will be made
hereunder and under the Plans which, in the aggregate, would be reasonably
likely to result in imposition of the sanctions imposed under Sections 280G and
4999 of the Code, whether or not some other subsequent action or event would be
required to cause such payment, acceleration or provision to be triggered.
(g) Except as shown on Schedule 4.23(g), each Plan which
is an "employee benefit plan", as such term is defined in Section 3(3) of
ERISA, may be unilaterally amended or terminated in its entirety without
liability except as to benefits accrued thereunder prior to such amendment or
termination.
(h) Except as set forth in Schedule 4.23(a)(b)(c)(d)(i),
the ▇▇▇▇▇▇▇ Group is not a party to any agreement, nor has the ▇▇▇▇▇▇▇ Group
established any policy or practice requiring, nor does any applicable Law
require, it to make a payment or provide any other form of compensation or
benefit to any person performing services for such entity or any of its
subsidiaries upon termination of such services that would not be payable or
provided in the absence of the consummation of the transactions contemplated by
this Agreement.
(i) The ▇▇▇▇▇▇▇ Group has furnished to Acquiror true,
correct and complete (i) copies of the form of each employment agreement to
which the ▇▇▇▇▇▇▇ Group is a party and a list of each employee who is a party
to each such form of agreement that includes the compensation level of such
employee pursuant to such agreement and the termination date of such agreement,
and (ii) copies of each other agreement in effect between the ▇▇▇▇▇▇▇ Group
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26
and any employee or former employee that provides severance, health, deferred
compensation or other employee benefit. Schedule 4.23(i) lists each such
document described in the preceding sentence.
4.24 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 4.24, (i) the ▇▇▇▇▇▇▇
Group has never generated, manufactured, refined, transported, used, stored,
treated, disposed of, transferred, produced, processed or managed any Hazardous
Material (as defined below) or solid waste in material violation of any
Environmental Law (as defined below); (ii) no Hazardous Material has ever been
or is threatened to be Released (as defined below) or disposed of at any
property presently or formerly owned by the ▇▇▇▇▇▇▇ Group or has ever come to
be located in the Environment (as defined below) at any property presently or
formerly owned by the ▇▇▇▇▇▇▇ Group; (iii) no Hazardous Material has ever been
or is threatened to be Released or disposed of by the ▇▇▇▇▇▇▇ Group at any
property presently or formerly operated, leased or used by the ▇▇▇▇▇▇▇ Group
during any period when the Dickson Group operated, leased or used such
property; (iv) none of the ▇▇▇▇▇▇▇ Group presently owns any property at which
underground storage tanks, pits or sumps are or were located; and (v) none of
the ▇▇▇▇▇▇▇ Group, to the knowledge of the Shareholder or the ▇▇▇▇▇▇▇ Group,
presently operates or leases any property at which underground storage tanks,
pits or sumps are or were located.
(b) Except as set forth in Schedule 4.24 of the
Disclosure Schedule, (i) the ▇▇▇▇▇▇▇ Group has no material liability under any
Environmental Law; (ii) each property owned by the ▇▇▇▇▇▇▇ Group and any
facilities and operations thereon and, with respect to the operations by the
▇▇▇▇▇▇▇ Group on property operated, leased or used by the ▇▇▇▇▇▇▇ Group and any
facilities and operations thereon, are presently in compliance in all material
respects with all applicable Environmental Laws; (iii) the ▇▇▇▇▇▇▇ Group has
not entered into or been subject to any consent decree, compliance order or
administrative order with respect to any property owned, operated, leased or
used by the ▇▇▇▇▇▇▇ Group or any facilities or operations thereon; (iv) the
▇▇▇▇▇▇▇ Group has not received notice under the citizen suit provision of any
Environmental Law; (v) the ▇▇▇▇▇▇▇ Group has never received any written
request for information, written notice, demand letter, administrative inquiry
or formal or informal complaint or claim from any Governmental Authority that
gives rise to, or is reasonably expected to give rise to, any material
liability of the ▇▇▇▇▇▇▇ Group under any applicable Environmental Law; (vi) the
▇▇▇▇▇▇▇ Group has no knowledge that any of the items enumerated in clauses
(iii)-(v) of this Section 4.24(b) will be forthcoming; (vii) there exist no
Environmental Conditions (as defined below) with respect to any property owned
by the ▇▇▇▇▇▇▇ Group and any facilities and operations thereon; and (viii) to
the knowledge of the ▇▇▇▇▇▇▇ Group, there exist no Environmental Conditions
resulting from the operations of the ▇▇▇▇▇▇▇ Group with respect to any property
or facility operated, leased or used by the ▇▇▇▇▇▇▇ Group.
(c) Except as set forth in Schedule 4.24 of the
Disclosure Schedule, no property presently owned by the ▇▇▇▇▇▇▇ Group contains
any asbestos or asbestos-containing
32
27
material, polychlorinated biphenyls (PCBs), equipment containing PCBs,
radioactive materials or urea formaldehyde foam insulation and the ▇▇▇▇▇▇▇
Group has not placed any asbestos or asbestos-containing material, PCBs,
equipment containing PCBs, radioactive materials or urea formaldehyde foam
insulation at any property operated, leased or used by the ▇▇▇▇▇▇▇ Group.
(d) The Dickson Group has provided to Acquiror copies of
all significant documents, records and information (including copies of all
Phase I environmental assessments, audits or surveys prepared within the last
ten years with respect to any property owned, leased or operated by the ▇▇▇▇▇▇▇
Group during such period) in the possession of the ▇▇▇▇▇▇▇ Group concerning any
matter related to compliance with Environmental Laws or the presence or Release
of Hazardous Materials at any property owned, operated, leased or used by the
▇▇▇▇▇▇▇ Group and any facilities or operations thereon, whether generated by
the ▇▇▇▇▇▇▇ Group or any third party, including, without limitation,
environmental audits, environmental risk assessments, site assessments, soil
and/or groundwater sampling reports, documentation regarding off-site disposal
of Hazardous Materials, spill control plans and reports, correspondence,
permits, licenses, approvals, consents and other authorizations issued by any
Governmental Authority concerning any matter related to Environmental Laws or
the Environment.
(e) No lien has been imposed on any property owned by the
▇▇▇▇▇▇▇ Group, and no lien has been imposed on any property operated, leased or
used by the ▇▇▇▇▇▇▇ Group on account of any activities by the ▇▇▇▇▇▇▇ Group, by
any Governmental Authority in connection with the presence of any Hazardous
Material.
(f) Except as set forth on Schedule 4.24, the ▇▇▇▇▇▇▇
Group has all permits, licenses, approvals, consents or authorizations
necessary for its activities and operations at any property owned, operated,
leased or used by the ▇▇▇▇▇▇▇ Group and any facilities or operations thereon
and for any past or ongoing alterations or improvements at any property owned,
operated, leased or used by the ▇▇▇▇▇▇▇ Group.
(g) For purposes of this Section 4.24 and subject to the
foregoing provisions of this Section 4.24, (i) "Environment" shall mean soil,
surface waters, groundwaters, land, stream sediments, surface or subsurface
strata, air, natural resources and any environmental medium; (ii)
"Environmental Condition" shall mean any condition as of the Closing Date with
respect to the Environment on or off any property owned by the ▇▇▇▇▇▇▇ Group or
at any time operated, leased or used by the ▇▇▇▇▇▇▇ Group, whether or not
discovered as of the Closing Date, which could or does result in any damage,
loss, cost, expense, claim, demand, order or liability to or against the
▇▇▇▇▇▇▇ Group or Acquiror by any third party (including, without limitation,
any Governmental Authority), including, without limitation, any condition
resulting from the operation of the ▇▇▇▇▇▇▇ Group's business and/or the
operation of the business of any other property owner or operator in the
immediate vicinity of any property owned by the ▇▇▇▇▇▇▇ Group or at any time,
operated, leased or used by the ▇▇▇▇▇▇▇ Group and/or any activity or operation
formerly conducted by any person or entity on or off any property owned by the
▇▇▇▇▇▇▇ Group; (iii) "Hazardous Material" shall mean any pollutant, toxic
substance, hazardous
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waste, hazardous material, hazardous substance, petroleum product, oil or
contaminant, as defined or regulated under any Environmental Law, or any other
substance or compound, exposure to which is regulated under any Environmental
Law, that may pose a threat to the Environment or to human or animal health or
safety; (iv) "Environmental Law" shall mean any and all laws, common laws,
statutes, ordinances, rules, regulations, codes, licenses, permits, consents,
approvals, authorizations, orders, judgments, decrees, injunctions,
requirements, agreements or determinations of any Governmental Authority in any
and all jurisdictions in which the ▇▇▇▇▇▇▇ Group presently or formerly owned,
operated, leased or used any property, whether existing as of the date hereof,
previously enforced or subsequently enacted, that are related to (A) the
protection, preservation or restoration of the Environment or to human and/or
animal health or safety or (B) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, Release or disposal of any Hazardous Material or solid waste; and
(v) "Release" shall mean and include any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, migrating,
dumping or disposing into the Environment except in compliance with
Environmental Law. For all other words used in this Section 4.24, words
defined elsewhere in this Agreement shall be defined in accordance with those
definitions located in other sections of this Agreement, except that "the
▇▇▇▇▇▇▇ Group" in this Section 4.24 shall include the ▇▇▇▇▇▇▇ Group, both
collectively and individually as that term is defined throughout this
Agreement, and all predecessors in interest and other entities for whose
conduct the ▇▇▇▇▇▇▇ Group is or may be held responsible under any Environmental
Law. Other words used in this Section shall be interpreted according to
context and the most common usage of the word except where such word may be a
technical term or a term of art in any Environmental Law.
4.25 CUSTOMERS, VENDORS AND SUPPLIERS. To the knowledge of the
Shareholder and the ▇▇▇▇▇▇▇ Group, there is no present intent of any
significant customer, vendor or supplier of the ▇▇▇▇▇▇▇ Group to discontinue or
substantially alter its relationship as such with the ▇▇▇▇▇▇▇ Group or the
Acquiror upon consummation of the transactions contemplated hereby.
4.26 BANK ACCOUNTS. Schedule 4.26 sets forth each bank, savings
institution, credit union and other financial institution with which the
▇▇▇▇▇▇▇ Group has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto. Except as disclosed on
Schedule 4.26, none of the ▇▇▇▇▇▇▇ Group has given any revocable or irrevocable
powers of attorney or similar grant of authority to any Person relating to its
business for any purpose whatsoever.
4.27 INSURANCE. Schedule 4.27 sets forth a true and complete list
of all policies, binders, and insurance contracts under which the ▇▇▇▇▇▇▇
Group, the Business, or any of the properties or assets of the ▇▇▇▇▇▇▇ Group is
insured (the "Insurance Policies"). With respect to each Insurance Policy,
Schedule 4.27 sets forth a true and correct description of (a) the scope of
coverage, (b) the limits of liability, (c) deductibles and other similar
amounts, and (d) the aggregate limits and available coverage (if less than the
aggregate limits) as of the date hereof. Each of the Insurance Policies is in
full force and effect, the ▇▇▇▇▇▇▇ Group has received no
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written or other notice of any cancellation or any threatened cancellation of
any Insurance Policy, and the ▇▇▇▇▇▇▇ Group is a named insured or loss payee,
as applicable, under each Insurance Policy.
4.28 BOOKS AND RECORDS. All books and records relating to the
ownership and operation of the Business and of the ▇▇▇▇▇▇▇ Group are located at
the premises of the Business to which such books and records primarily relate,
have been maintained substantially in accordance with applicable Law, comprise
all of the books and records relating to the ownership of the ▇▇▇▇▇▇▇ Group and
the operation of the Business and will not be removed from such premises prior
to or at the Closing.
4.29 CERTAIN PAYMENTS. None of the ▇▇▇▇▇▇▇ Group nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the ▇▇▇▇▇▇▇ Group has used any funds of the ▇▇▇▇▇▇▇ Group for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity, made any direct or indirect unlawful payment to any foreign
or domestic governmental official or employee, violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977 or made any illegal
bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
4.30 INVESTMENT. The Shareholder or each of the Transferees who
become a Shareholder, as to himself, (a) understands that the shares of
Acquiror Common Stock to be issued to such Shareholder have not been, and will
not be, registered under the Federal securities laws or any state securities
laws, and are being offered and sold in reliance upon Federal and state
exemptions for transactions not involving any public offering, (b) is acquiring
the shares of the Acquiror's Common Stock solely for his own account for
investment purposes, and not with a view to the distribution thereof, (c) is a
sophisticated investor with knowledge and experience in business and financial
matters, (d) has received certain information concerning the Acquiror, and has
had the opportunity to obtain additional information if desired in order to
evaluate the merits and risks inherent in holding the shares of Acquiror Common
Stock, (e) is able to bear the economic risk and lack of liquidity inherent in
holding the shares of Acquiror Common Stock, and (f) is an Accredited Investor.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
AND ACQUISITION CORP.
The Acquiror and Acquisition Corp. represent and warrant to the
Shareholder as follows:
5.01 ORGANIZATION. The Acquiror is a corporation duly organized
under the laws of the State of Delaware and is validly existing and in good
standing under the laws of such jurisdiction. Acquisition Corp. is a
corporation duly organized under the laws of the State of Louisiana and is
validly existing and in good standing under the laws of such jurisdiction.
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5.02 QUALIFICATION. Each of the Acquiror and Acquisition Corp. is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the nature of the Business as now conducted or
the character of the property owned or leased by it makes such qualification
necessary. Each of the Acquiror and Acquisition Corp. has all requisite
corporate power and authority to own its properties and assets and to carry on
the Business as it currently conducts.
5.03 AUTHORITY; ENFORCEABILITY. Each of the Acquiror and
Acquisition Corp. has all requisite corporate power and authority to execute
and deliver this Agreement and any other Transaction Documents to which such
entity is a party and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the other Transaction Documents to
which Acquiror and Acquisition Corp. is a party and the performance of such
entity's obligations contemplated hereby and thereby have been duly and validly
approved by all corporate action, if any, necessary on behalf of such entity.
This Agreement and each of the Transaction Documents to which Acquiror and
Acquisition Corp. is a party constitutes the legal, valid and binding
obligations of such entity, enforceable against it in accordance with their
terms, subject to Creditors' Rights. All other documents required hereunder to
be executed and delivered by the Acquiror and/or Acquisition Corp. at the
Closing have been duly authorized, executed and delivered by such entity and
constitute the legal, valid and binding obligations of such entity, enforceable
against it in accordance with their terms, subject to the Creditors' Rights.
5.04 CONSENTS; ABSENCE OF CONFLICTS. Neither the execution and
delivery by the Acquiror and Acquisition Corp. of this Agreement or the other
Transaction Documents to which such entity is a party, nor the consummation of
the transactions contemplated hereby and thereby will (a) violate or breach the
terms of, cause a default under, conflict with, result in acceleration of,
create in any party the right to accelerate, terminate, modify or cancel,
require any notice or consent or give rise to any preferential purchase or
similar right under (i) any applicable Law, (ii) such entity's charter or
bylaws, or (iii) any Contract to which such entity is a party or by which it,
or any of its properties, is bound, (b) result in the creation or imposition of
any Lien (other than a Permitted Lien) on any of such entity's assets or
properties, (c) result in the cancellation, forfeiture, revocation, suspension
or adverse modification of any existing consent, approval, authorization,
license, permit, certificate or order obtained by such entity from any
Governmental Authority having jurisdiction over such entity or (d) with the
passage of time or the giving of notice or the taking of any action of any
third party have any of the effects set forth in clause (a), (b) or (c) of this
Section 5.04.
5.05 CAPITALIZATION OF THE ACQUIROR. As of the date hereof, the
authorized capital stock of the Acquiror consists of 20,000,000 shares of
common stock, par value $.001 per share, of which 8,898,441 shares are issued
and outstanding and 1,050,000 shares are reserved for issuance under existing
stock option plans, 3,000,000 shares of Restricted Common Stock, par value
$.001 per share, of which 250,000 shares are issued and outstanding, and
2,000,000 shares of Preferred Stock, $.001 par value of which no shares are
outstanding. The issued and outstanding shares of the Acquiror have been duly
authorized, validly issued and are fully paid and non-assessable.
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5.06 REPORTS; FINANCIAL STATEMENTS.
(a) Since December 31, 1997, Acquiror has filed all
forms, reports, statements and other documents required to be filed with the
Securities and Exchange Commission (the "Commission"), including without
limitation (i) the Annual Reports on Form 10-K, (ii) all Quarterly Reports on
Form 10-Q, (iii) all proxy statements relating to meetings of shareholders
(whether annual or special), (iv) all Current Reports on Form 8-K and (v) all
other reports, schedules, registration statements or other documents
(collectively referred to as the "Acquiror SEC Reports"). The Acquiror SEC
Reports were prepared in all material respects in accordance with the
requirements of applicable Law (including the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the Commission
thereunder applicable to the Acquiror SEC Reports) and the Acquiror SEC Reports
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Acquiror has
provided the Shareholders with true and complete copies of all Acquiror SEC
Reports.
(b) Each of the historical consolidated financial
statements (including, in each case, any related notes thereto) contained in
the Acquiror SEC Reports (i) have been prepared in accordance with the
published rules and regulations of the Commission and GAAP applied on a
consistent basis throughout the periods involved (except (A) to the extent
disclosed therein or required by changes in GAAP, (B) as may be indicated in
the notes thereto and (C) in the case of the unaudited financial statements, as
permitted by the rules and regulations of the Commission) and (ii) fairly
present the consolidated financial position of Acquiror and its subsidiaries as
of the respective dates thereof and the consolidated results of operations and
cash flows for the periods indicated (subject, in the case of unaudited
consolidated financial statements for interim periods, to adjustments,
consisting only of normal, recurring accruals, necessary to present fairly such
results of operations and cash flows).
5.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Acquiror SEC Reports filed prior to the date of this Agreement or as
contemplated by this Agreement, since March 31, 1998, Acquiror and its
Subsidiaries have conducted their respective businesses only in the Ordinary
Course of Business and in a manner consistent with past practice, and there has
not been any Acquiror Material Adverse Effect.
5.08 REPRESENTATIONS AS TO SHARES ISSUED. Upon consummation of the
transactions contemplated by this Agreement and issuance of the Acquiror Common
Stock in connection therewith or the Preferred Stock to be designated pursuant
to the terms and provisions set forth on Annex IV ("Preferred Stock") that
▇▇▇▇▇▇▇▇▇ has the option to receive in lieu of cash pursuant to Section
2.07(c), the Acquiror Common Stock and Preferred Stock will be duly authorized,
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validly issued, fully paid and non assessable, and free and clear of any Lien
other than restrictions noted on the legends on the stock certificates
evidencing such shares in compliance with federal or state securities laws.
The issuance of the Acquiror Common Stock or Preferred Stock will not violate
Acquiror's charter or bylaws or any agreement or other document to which
Acquiror is a party or by which the Acquiror is bound or give rise to
preemptive rights, preferential rights or any such other rights or claims on
the part of any Person that have not been previously waived.
5.09 BROKERS' FEES. Neither the Acquiror nor any of its Affiliates
have any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which the Shareholder or any Affiliates thereof could become
liable or obligated.
ARTICLE VI
COVENANTS OF THE ▇▇▇▇▇▇▇ GROUP AND THE SHAREHOLDER
6.01 AFFIRMATIVE COVENANTS OF THE ▇▇▇▇▇▇▇ GROUP AND THE
SHAREHOLDER. The ▇▇▇▇▇▇▇ Group and the Shareholder hereby covenant and agree
that, prior to the Closing, unless otherwise expressly contemplated by this
Agreement or consented to in writing by Acquiror and Acquisition Corp. (which
consent shall not be unreasonably withheld), the ▇▇▇▇▇▇▇ Group and the
Shareholder will cause the ▇▇▇▇▇▇▇ Group to:
(a) operate its Business in the Ordinary Course of
Business;
(b) use all reasonable efforts to preserve substantially
intact its Business organization, maintain its rights and franchises, retain
the services of its respective officers and key employees and maintain its
relationships with its respective customers and suppliers;
(c) maintain and keep its properties and assets in as
good repair and condition as at present, ordinary wear and tear excepted, and
maintain supplies and inventories in quantities consistent with its customary
business practice;
(d) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage to those
currently maintained;
(e) submit to Acquiror for review any and all bids,
proposed Contracts, cost estimates and reports on the status of
work-in-progress in excess of $100,000 for any of the ▇▇▇▇▇▇▇ Group during the
interim period between the execution of this Agreement and Closing;
(f) assign and convey to the Shareholder all of the
▇▇▇▇▇▇▇ Group's benefits, claims, rights and/or interests and shall cause the
Shareholder to assume all future costs and liabilities with respect to the
following causes of action and corresponding contingent receivables or
contingent payables: (i) the Dickson IV casualty 1992; (ii) the Phoenix
construction controversy; and (iii) the UMIC Group controversy; and (iv) the
automobiles referenced on Schedule 6.02; and
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(g) cause all inter company balances between any of the
▇▇▇▇▇▇▇ Group and ▇▇▇▇▇▇▇ International Sales Corp. or any other Shareholder
Affiliate to be settled or paid.
6.02 NEGATIVE COVENANTS OF THE ▇▇▇▇▇▇▇ GROUP AND THE SHAREHOLDER.
Except as expressly contemplated by this Agreement, as set forth on Schedule
6.02 or otherwise consented to in writing by Acquiror, from the date of this
Agreement until the Closing, the ▇▇▇▇▇▇▇ Group and the Shareholder will not do,
and will not permit any of the ▇▇▇▇▇▇▇ Group Affiliates to do, any of the
following:
(a) (i) increase the compensation payable to or to become
payable to any director or executive officer; (ii) increase the compensation
payable or pay bonuses to any employees other than in the Ordinary Course of
Business, (iii) grant any severance or termination pay (other than pursuant to
the normal severance practices of the ▇▇▇▇▇▇▇ Group as in effect on the date of
this Agreement) to, or enter into any employment or severance agreement with,
any director, officer or employee; (iv) establish, adopt or enter into any
employee benefit plan or arrangement or (v) except as may be required by
applicable Law, amend, or take any other actions (including, without
limitation, the acceleration of vesting, waiving of performance criteria or the
adjustment of awards or any other actions permitted upon a "change in control"
(as defined in the respective plans) of the ▇▇▇▇▇▇▇ Group), with respect to any
of the Benefit Plans or any of the plans, programs, agreements, policies or
other arrangements described in Section 4.23 of this Agreement;
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of its or any of its
Subsidiaries' capital stock or other equity interests;
(c) (i) redeem, purchase or otherwise acquire any shares
of the Affiliates' or any of their Subsidiaries' capital stock, any securities
or obligations convertible into or exchangeable for any shares of the
Affiliates' or their Subsidiaries' capital stock (other than any such
acquisition directly from any wholly owned subsidiary of the ▇▇▇▇▇▇▇ Group in
exchange for capital contributions or loans to such Subsidiary), or any options,
warrants or conversion or other rights to acquire any shares of the Affiliates'
or their Subsidiaries' capital stock or any such securities or obligations;
(ii) effect any reorganization or recapitalization of the ▇▇▇▇▇▇▇ Group or
their Affiliates; or (iii) split, combine or reclassify any of the Affiliates'
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of the
Affiliates' capital stock;
(d) (i) issue (whether upon original issue or out of
treasury), sell, grant, award, deliver or limit the voting rights of any shares
of any class of the ▇▇▇▇▇▇▇ Group or their Affiliates' capital stock, any
securities convertible into or exercisable or exchangeable for any such shares,
or any rights, warrants or options to acquire, any such shares; (ii) amend or
otherwise modify the terms of any such rights, warrants or options the effect
of which shall be to
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make such terms materially more favorable to the holders thereof; or (iii) take
any action to accelerate the vesting of any stock options;
(e) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets of any other person (other
than the purchase of assets from suppliers or vendors in the Ordinary Course of
Business and consistent with past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of their assets, the Affiliates' assets
or any assets of any of their Subsidiaries, except for pledges or dispositions
of assets in the Ordinary Course of Business and consistent with past practice;
(g) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal relating to, or that may reasonably
be expected to lead to, any Competing Transaction (as defined below), or enter
into discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to, or endorse, any
Competing Transaction, or authorize any of the officers, directors, employees
or agents of the ▇▇▇▇▇▇▇ Group or of the Affiliates or any agent, investment
banker, financial advisor, attorney, accountant or other representative
retained by the ▇▇▇▇▇▇▇ Group or their Affiliates to take any such action, and
the ▇▇▇▇▇▇▇ Group shall promptly notify Acquiror or promptly provide Acquiror
with a copy of all relevant terms of any such inquiries or proposals received
by the ▇▇▇▇▇▇▇ Group, the Shareholder or any of their Affiliates. For purposes
of this Agreement, the term "Competing Transaction" shall mean any proposal or
offer from any person or entity (other than Acquiror or an affiliate of
Acquiror) relating to any acquisition or purchase of all or (other than in the
ordinary course of business) any material portion of the assets of, or any
possible disposition or issuance of any ▇▇▇▇▇▇▇ Shares or any capital stock or
other equity interests in the ▇▇▇▇▇▇▇ Group or their Affiliates (or any rights
or securities exercisable for or convertible into ▇▇▇▇▇▇▇ Shares or any such
capital stock or other equity interests), or any merger or other business
combination with, the ▇▇▇▇▇▇▇ Group or their Affiliates;
(h) release any third party from its obligations under
any existing standstill agreement or arrangement relating to a Competing
Transaction or otherwise under any confidentiality or other similar agreement
relating to information material to the ▇▇▇▇▇▇▇ Group, the Affiliates or any of
their Subsidiaries;
(i) propose to adopt any amendments to their charter or
bylaws;
(j) (i) change any of its significant accounting policies
or (ii) make or rescind any express or deemed election relating to Taxes,
settle or compromise any material claim,
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action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, or change any of its methods of reporting income
or deductions for Tax purposes from those employed in the preparation of Tax
returns for the taxable year ending December 31, 1997, except, in the case of
clause (i) or clause (ii), as may be required by any Law or by GAAP;
(k) incur any obligation for borrowed money or purchase
money indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument or under any financing lease, whether pursuant to a
sale-and-leaseback transaction or otherwise, except in the Ordinary Course of
Business consistent with past practice;
(l) enter into any material arrangement, agreement or
contract with any third party other than in the Ordinary Course of Business;
(m) take any action that reasonably could be expected to
result in any of the conditions set forth in Article X not being satisfied; or
(n) agree in writing or otherwise to do any of the
foregoing.
ARTICLE VII
COVENANTS OF THE SHAREHOLDER
7.01 COVENANTS OF THE SHAREHOLDER. The Shareholder (and each
Transferee to the extent such has become a Shareholder) covenants and agrees
that, prior to the Closing, such Shareholder will not:
(a) take any action that reasonably could be expected to
result in any of the conditions set forth in Article X not being satisfied; or
(b) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal relating to, or that may reasonably
be expected to lead to, any Competing Transaction, or enter into discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to, or endorse, any Competing
Transaction, or authorize any agent, investment banker, financial advisor,
attorney, accountant or other representative retained by such Shareholder to
take any such action, and such Shareholder shall promptly notify Acquiror or
promptly provide Acquiror with a copy of all relevant terms of any such
inquiries or proposals received by such Shareholder.
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ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 NOTIFICATION OF CERTAIN MATTERS. The ▇▇▇▇▇▇▇ Group, the
Shareholder and each Transferee to the extent such has become a Shareholder
shall give prompt notice to Acquiror and Acquisition Corp., and Acquiror and
Acquisition Corp. shall give prompt notice to the ▇▇▇▇▇▇▇ Group and the
Shareholder, orally and in writing, of (i) the occurrence, or failure to occur,
of any event which occurrence or failure would be likely to cause any
representation or warranty of the party giving such notice contained in this
Agreement to be untrue or inaccurate at any time from the date hereof to the
Closing in any material respect (unless said representation and warranty is
given as of the Closing Date through an amendment in addition to the
Schedules), (ii) any material failure of the party giving such notice to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by such person hereunder within the time specified therefor and (iii)
any change or event having, or which, insofar as can be reasonably foreseen,
could have a Material Adverse Effect.
8.02 ACCESS AND INFORMATION.
(a) The ▇▇▇▇▇▇▇ Group shall, and shall cause their
Affiliates to, (i) afford to Acquiror and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives
(collectively, the "Acquiror Representatives") access during ordinary business
hours and at other reasonable times, upon reasonable prior notice, to the
officers, employees, accountants, agents, properties, offices and other
facilities of the ▇▇▇▇▇▇▇ Group and its Subsidiaries and to the books and
records thereof and (ii) furnish promptly to Acquiror and the Acquiror
Representatives such information concerning the business, properties,
contracts, records and personnel of the ▇▇▇▇▇▇▇ Group and its Subsidiaries
(including, without limitation, financial, operating and other data and
information) as may be reasonably requested, from time to time, by Acquiror or
the Acquiror Representatives.
(b) The terms and provision of the mutual confidentiality
and non-disclosure agreement, dated December 30, 1997, between the Acquiror and
the ▇▇▇▇▇▇▇ Group shall remain in full force and effect in accordance with its
terms.
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8.03 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) The ▇▇▇▇▇▇▇ Group, the Shareholder, the Acquiror and
the Acquisition Corp. shall use, all reasonable efforts promptly (i) to take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the transactions contemplated by this Agreement,
(ii) to obtain from any Governmental Authority any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained by the
▇▇▇▇▇▇▇ Group, the Shareholder or Acquiror or Acquisition Corp., respectively,
in connection with the authorization, execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby and
(iii) to make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the transactions contemplated
hereby under (A) the Exchange Act, the rules and regulations thereunder and any
other applicable U. S. federal or state securities laws, (B) the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act ("HSR" Act) and (C) any other applicable Law; provided
that Acquiror, the Shareholder, the ▇▇▇▇▇▇▇ Group and Acquisition Corp. shall
cooperate with each other in connection with the making of all such filings,
including providing copies of all such documents to the nonfiling party and its
advisors prior to filing (except, with respect to the HSR Act, for such
documents that are not customarily provided to the other party) and, if
requested, shall accept all reasonable additions, deletions or changes
suggested in connection therewith. The ▇▇▇▇▇▇▇ Group, Acquiror, the
Shareholder, and Acquisition Corp. shall furnish all information required for
any application or other filing to be made pursuant to the rules and
regulations of any applicable Law in connection with the transactions
contemplated by this Agreement.
(b) ▇▇▇▇▇▇▇ Group, the Acquiror and, to the extent
applicable to a particular Shareholder, such Shareholder agree to cooperate and
to use all reasonable efforts to contest and resist any action, including
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) (an "Order") that is in effect and that
restricts, prevents or prohibits the consummation of the transactions
contemplated by this Agreement, including, without limitation, by vigorously
pursuing all available avenues of administrative and judicial appeal and all
available legislative action. Acquiror, the Shareholder, and the ▇▇▇▇▇▇▇ Group
also agree to take all reasonable actions, including, without limitation, the
disposition of assets or the withdrawal from doing business in particular
jurisdictions, required by regulatory authorities as a condition to the
granting of any approvals required in order to permit the consummation of the
transactions contemplated hereby or as may be required to avoid, lift, vacate
or reverse any legislative or judicial action that would otherwise cause any
condition to Closing not to be satisfied; provided, however, that in no event
shall any party take, or be required to take, any action that could reasonably
be expected to have a Material Adverse Effect.
(c) The ▇▇▇▇▇▇▇ Group, Acquiror, the Shareholder and
Acquisition Corp. shall each promptly give any notices regarding this Agreement
or the transactions contemplated
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hereby to third parties required by Law or by any contract, license, lease or
other agreement to which such person is a party or by which such person is
bound, and use all reasonable efforts to obtain any third party consents (i)
necessary to consummate the transactions contemplated by this Agreement, or
(ii) otherwise required under any contracts, licenses, leases or other
agreements in connection with the consummation of the transactions contemplated
by this Agreement.
(d) If the ▇▇▇▇▇▇▇ Group, the Shareholder, Acquisition
Corp. or Acquiror shall fail to obtain any third party consent described in
subsection (c)(i) above, such party shall use all reasonable efforts, and shall
take any such actions reasonably requested by the other parties, to limit the
adverse effect upon the ▇▇▇▇▇▇▇ Group, Acquiror, the Affiliates, their
respective businesses and the Shareholder resulting, or which could reasonably
be expected to result after the Closing, from the failure to obtain such
consent.
8.04 PUBLIC ANNOUNCEMENTS. Acquiror and the ▇▇▇▇▇▇▇ Group shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such press release or make any such
public statement prior to such consultation; provided, however, that a party
may, without consulting with the other party, issue such a press release or
make such a public statement if required by applicable Law or the rules of the
NASD or a national securities exchange if such party has used commercially
reasonable efforts to consult with the other party but has been unable to do so
in a timely manner.
8.05 EXPENSES. All costs and expenses incurred by the Shareholder
or by the Acquiror in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
Without limiting the foregoing, if a Closing of the transaction contemplated
hereunder should occur, it is expressly agreed that Acquiror shall pay all
filing fees to obtain necessary consents under the HSR Act; provided, however,
if the Closing does not occur, the Acquiror and the Shareholder shall each pay
one-half of such filing fees. Expenses incurred by the ▇▇▇▇▇▇▇ Group and the
Shareholder in connection with this Agreement shall be borne and paid for by
the ▇▇▇▇▇▇▇ Group prior to Closing.
8.06 BOARD OF DIRECTORS; EMPLOYMENT AGREEMENTS.
(a) Acquiror shall take such action as may be necessary
to cause ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. to be appointed or elected to the Board of
Directors of Acquiror as a director from the Closing until the regularly
scheduled election of the Board of Directors in 1999. Further, during the
term of ▇▇▇▇▇▇▇▇▇'▇ Employment Agreement, and so long as ▇▇▇▇▇▇▇▇▇ shall own or
control by proxy at least 7% of the issued and outstanding capital stock of the
Acquiror, the Acquiror shall nominate ▇▇▇▇▇▇▇▇▇ for election by its
shareholders to serve on the Board of Directors of Acquiror.
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(b) The Acquisition Corp. (and Acquiror, as guarantor)
and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
shall execute the Employment Contracts attached hereto as Exhibits C, D, E and
F and become full-time employees of Acquisition Corp. immediately upon Closing
the transactions contemplated by this Agreement.
8.07 TRANSFER TAXES. The Shareholder shall be responsible for the
payment of all transfer, sales, use or other similar Taxes resulting from the
transactions contemplated by this Agreement.
8.08 CONDUCT OF BUSINESS DURING EARN-OUT PERIOD. During the
Earn-Out Period, ▇▇▇▇▇▇▇▇▇ shall be entitled to operate and manage the business
of the ▇▇▇▇▇▇▇ Group consistent with the Ordinary Course of Business and shall
cause the books and records of the ▇▇▇▇▇▇▇ Group to be maintained in a manner
so that Adjusted EBTDA may be properly determined. Acquiror shall have the
right to supervise or consult with ▇▇▇▇▇▇▇▇▇ concerning the operations and
management of the business of the ▇▇▇▇▇▇▇ Group during the Earn-Out Period.
Acquisition Corp. and ▇▇▇▇▇▇▇▇▇ will not be allowed to borrow funds or to incur
Long-Term Debt; provided, however, that in the event Acquisition Corp. requires
cash or working capital during the Earn-Out Period, Acquiror shall loan the
necessary funds to Acquisition Corp. in the Ordinary Course of Business in
accordance with substantially similar terms and conditions as ▇▇▇▇▇▇▇ GMP's
current working capital line of credit. Under no circumstance shall Acquiror
be required to loan funds to Acquisition Corp. for capital expenditures or
investments other than for normal maintenance and repair items during the
Earn-Out Period.
8.09 TAX REPORTS. Shareholder shall prepare and file all requisite
federal and state tax returns for the period ending on the date on which any or
all of the ▇▇▇▇▇▇▇ Group loses its tax filing requirements as an "S"
corporation; provided, however, that Acquiror or a designated representative
will have the right to approve same, which approval shall not be unreasonably
withheld.
8.10 NO NAME CHANGE OF ▇▇▇▇▇▇▇ GMP OR LOCATION. Acquiror covenants
and agrees that from and after the Closing Date through the Earn-Out Period
Acquiror shall not amend the articles of incorporation of the Surviving
Corporation to change its name or operate ▇▇▇▇▇▇▇ GMP under any name other
than "▇▇▇▇▇▇▇ GMP International, Inc.," or voluntarily change the location of
the Fabricating Facility and office located on the Scheduled Fee Lands and
Leases, without the approval of Shareholder.
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ARTICLE IX
INDEMNIFICATION
9.01 BY SHAREHOLDER. Subject to the terms and conditions of this
Article IX, the Shareholder hereby agrees to indemnify, defend and hold
harmless Acquiror and its directors, officers, employees, consultants,
Affiliates and controlling persons (hereinafter, including the ▇▇▇▇▇▇▇ Group
and its Subsidiaries after the Closing, collectively, the "Acquiror Indemnified
Parties") from and against all Claims (as defined below) asserted against,
imposed upon or incurred by Acquiror or any Acquiror Indemnified Party,
directly or indirectly, by reason of, arising out of, or resulting from (a) the
inaccuracy or breach of any representation or warranty of the ▇▇▇▇▇▇▇ Group or
such Shareholder contained in or made pursuant to this Agreement, including,
but not limited to, any environmental matter in Section 4.24; and (b) the
breach of any covenant or agreement of the ▇▇▇▇▇▇▇ Group or such Shareholder
contained in or made pursuant to this Agreement; provided, however, Acquiror
and Acquiror Indemnified Parties covenant and agree that in no event shall the
liability, in the aggregate, of the Shareholder, in his capacity as
indemnifying party, for any and all indemnified Claims under this Article IX
exceed the Purchase Price, subject, however, to the provisions of Section
9.07(b). As used in this Section 9.01, the term "Claim" shall include (i) all
debts, liabilities and obligations; (ii) all losses, damages, reasonable costs
and expenses (including, without limitation, interest (including prejudgment
interest in any litigated matter), but excluding any allocation of overhead
costs and expenses of Acquiror or any of its Subsidiaries), penalties, court
costs and reasonable legal, accounting, consulting and engineering fees and
expenses; (iii) all reasonable and necessary costs that may be attributable to
an Environmental Condition or that may be necessary to comply with
Environmental Laws, including, but not limited to, the removal of Hazardous
Materials and the remediation of any property according to standards
established by Environmental Law or standards established on a case-by-case
basis by any Governmental Authority according to Environmental Law; and (iv)
all demands, Claims, actions, costs of investigation, causes of action,
proceedings, arbitrations, judgments, settlements and assessments, whether or
not ultimately determined to be valid. Acquiror has no obligation to seek
recovery of any Claim, or any portion thereof, from any insurance policies
covering the ▇▇▇▇▇▇▇ Group and/or Shareholder in effect prior to the Closing,
but will reasonably cooperate with Shareholder in Shareholder's seeking such
recovery. In the event that the ▇▇▇▇▇▇▇ Group and/or the Shareholder recover
from such an insurance policy for a Claim, or a portion thereof made by
Acquiror, and such insurance recovery was paid to Acquiror by the insurance
company, then Acquiror shall reimburse the ▇▇▇▇▇▇▇ Group and/or the Shareholder
for that portion of the Claim that was paid by both the ▇▇▇▇▇▇▇ Group and/or
the Shareholder to Acquiror on the one hand and the insurance company on the
other.
9.02 BY ACQUIROR AND ACQUISITION CORP. Subject to the terms and
conditions of this Article IX, Acquiror and Acquisition Corp., jointly and
severally, hereby agree to indemnify, defend and hold harmless the Shareholder
and his legal representatives, heirs and assigns
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(collectively, the "Shareholder Indemnified Parties") from and against all
Claims (as defined below) asserted against, imposed upon or incurred by the
Shareholder or any Shareholder Indemnified Party, by reason of, arising out of,
or resulting from (a) the inaccuracy or breach of any representation or
warranty of the Acquiror and/or Acquisition Corp. contained in or made
pursuant to this Agreement; (b) the breach of any covenant or agreement of
Acquiror and/or Acquisition Corp. contained in or made pursuant to this
Agreement; and (c) matters assumed by Acquiror and/or Acquisition Corp.
pursuant to Section 2.05 of, or elsewhere in, this Agreement. As used in this
Section 9.02, the term "Claim" shall include (i) all debts, liabilities and
obligations, (ii) all losses, damages, reasonable costs and expenses
(including, without limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs and reasonable legal, accounting,
consulting and/or engineering fees and expenses), and (iii) all demands,
Claims, actions, costs of investigations, causes of action, proceedings,
arbitrations, judgments, settlements and assessments, whether or not ultimately
determined to be valid.
9.03 DEFENSE OF THIRD PARTY CLAIMS. The obligation of the
Shareholder to indemnify the Acquiror Indemnified Parties under this Article IX
with respect to Claims under Section 9.01 and the obligation of Acquiror to
indemnify the Shareholder Indemnified Parties under this Article IX with
respect to Claims under Section 9.02 relating to or arising from third parties
(a "Third Party Claim") shall be subject to the terms and conditions set forth
below. As used in this Section 9.03, Acquiror Indemnified Parties and
Shareholder Indemnified Parties are each referred to as an "Indemnified Party."
(a) NOTICE AND DEFENSE. The Indemnified Party will give
the party obligated to indemnify the Indemnified Party under this Article IX
(referred to in this Section as the "Indemnifying Party") prompt written notice
of any such Third Party Claim, and the Indemnifying Party may undertake the
defense thereof by representatives chosen by the Indemnifying Party upon
written notice to the Indemnified Party provided within 20 days of receiving
notice of such Third Party Claim (or sooner if the nature of the Third Party
Claim so requires and an extension cannot be obtained with minimal expense or
cost). Failure of the Indemnified Party to give such notice shall not affect
the indemnification obligations under this Article IX, except to the extent the
Indemnifying Party's defense of a Third Party Claim is materially prejudiced
thereby. The Indemnified Party shall make available to the Indemnifying Party
or its representatives all records and other materials required by the
Indemnifying Party and in the possession or under the control of the
Indemnified Party for the use of the Indemnifying Party and its representatives
in defending any such clam, and shall in other respects give reasonable
cooperation in such defense. If notice or consent is required to be given or
obtained under this Section 9.03 to or from Shareholder or a Shareholder
Indemnified Party, then notice will be sent to or consent will be requested
from the Shareholder Representative at the address for the Shareholder
Representative set forth in Section 11.06, if notice or consent is required to
be given or obtained under this Section 9.03 to or from Acquiror or an Acquiror
Indemnified Party, then notice will be sent to or consent will be requested
from the Acquiror at the address for Acquiror set forth in Section 11.06.
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(b) FAILURE TO DEFEND. If the Indemnifying Party, within
20 days after notice of any such Third Party Claim (or sooner if the nature of
any Third Party Claim so requires), fails to undertake the defense of such
Third Party Claim actively and in good faith, then the Indemnified Party will
have the right to undertake the defense, compromise or settlement of such Third
Party Claim, or consent to the entry of a judgment with respect thereto.
(c) INDEMNIFIED PARTY'S RIGHTS. Anything in this Article
IX to the contrary notwithstanding, (i) if there is a reasonable probability
that the Third Party Claim may materially adversely affect the Indemnified
Party other than as a result of money damages and such Third Party Claim is
reasonably likely to result in money payments in an aggregate amount of less
than $25,000, the Indemnified Party shall have the right to defend, compromise
or settle such Third Party Claim (provided that the Indemnified Party shall not
settle such Third Party Claim or consent to any judgment without first
obtaining the written consent of the Indemnifying Party, which shall not be
unreasonably withheld), and (ii) the Indemnifying Party shall not without the
written consent of the Indemnified Party, settle or compromise any Third Party
Claim or consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of an unconditional release from all liability in respect of
such Third Party Claim.
9.04 WAIVER. The Shareholder hereby agrees to waive, and to not
assert, any and all rights such Shareholder may have under any applicable Law
or otherwise to make a claim against or otherwise demand or receive payment
from the Acquisition Corp., the ▇▇▇▇▇▇▇ Group or any of its Subsidiaries
arising out of or with respect to the inaccuracy or breach of any
representation or warranty of the ▇▇▇▇▇▇▇ Group set forth in this Agreement,
the breach by the Acquisition Corp. or the ▇▇▇▇▇▇▇ Group of any covenant or
agreement of the ▇▇▇▇▇▇▇ Group set forth in this Agreement or the payment of
any amounts to the Acquiror Indemnified Parties pursuant to this Article IX or
the Escrow Agreement.
9.05 REQUIRED SETOFF. Notwithstanding anything to the contrary
contained herein with regard to any Claims for which Acquiror Indemnified
Parties are entitled to indemnification under Section 9.01 hereof, Acquiror or
any other Acquiror Indemnified Party first must offset any such amounts to
which it is entitled to be indemnified under Section 9.01 of this Agreement
against the Contingent Consideration.
9.06 BASKET. No Claim for indemnification under Section 9.01 may
be made by an Acquiror Indemnified Party after determination of The Balance
Sheet Adjustments and Working Capital Adjustments, as defined in the Escrow
Agreement, unless and until, and only to the extent that, the amount of all
Claims, in the aggregate, exceeds $300,000.00.
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9.07 TERMINATION OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES.
(a) All representations and warranties contained herein
or pursuant to this Agreement shall survive the consummation of the
transactions provided for in this Agreement for eighteen months from the
Closing; save and except any Claims for breaches of the representations and
warranties made solely as to Taxes set forth in Section 4.18, any penalties or
fines attributable to the Air Quality Permit; or representations as to the
Acquiror Common Stock and Preferred Stock set forth in Section 5.08, each of
which shall survive until 30 days following the expiration of the applicable
statute of limitation; otherwise, covenants and indemnities shall survive the
Closing.
(b) All Claims of the Acquiror or Acquisition Corp. for
breaches of any representation, warranty, covenant, or indemnity of the
Shareholder and the ▇▇▇▇▇▇▇ Group contained herein or pursuant to this
Agreement as such relates in any way to ▇▇▇▇▇▇▇ Nigeria and/or Servicios y
Construcciones shall be limited to an aggregate of $1.0 million.
ARTICLE X
CONDITIONS
10.01 CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY. The
respective obligations of Acquiror, Acquisition Corp., the ▇▇▇▇▇▇▇ Group and
the Shareholder to effect the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
or all of which may be waived by the agreement of the parties, in whole or in
part, to the extent permitted by applicable Law:
(a) Acquiror, the Shareholder, the Shareholder
Representative and the Escrow Agent shall each have executed and delivered the
Escrow Agreement and the Registration Rights Agreement substantially in the
form set forth on Exhibits B and G, respectively;
(b) no Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Order which is in effect and which
has the effect of making the transactions contemplated in this Agreement
illegal or otherwise prohibiting consummation of the transaction or such other
transactions contemplated by this Agreement;
(c) the applicable waiting period under the HSR Act shall
have expired or been terminated;
(d) Shareholder and the ▇▇▇▇▇▇▇ Group shall have received
the consent of Chevron to the assignment of the Chevron Contracts to
Acquisition Corp.;
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(e) Each of the Transferees and ▇▇▇▇▇▇▇▇▇, if required,
shall have executed the Appointment of Shareholder Representative substantially
in the form attached as Exhibit I; and
(f) ▇▇▇▇▇▇▇▇▇, Gariepy, Frantom, ▇▇▇▇▇▇ and Acquisition
Corp., and Acquiror, as guarantor, shall have delivered to Acquiror executed
copies of their respective Employment Agreements in substantially the same form
as Exhibits C, D, E and F.
10.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIROR. The
obligations of Acquiror to effect the Transaction contemplated hereby shall be
subject to the satisfaction at or prior to the Closing of the following
conditions, any or all of which may be waived by Acquiror, in whole or in part,
to the extent permitted by applicable Law:
(a) each of the representations and warranties of the
▇▇▇▇▇▇▇ Group and the Shareholder contained in this Agreement shall be true and
correct in all material respects (without duplication of any materiality
exception contained in any individual representation and warranty) as of the
date of this Agreement (unless the representation and warranty is made as of
the Closing through an amendment or addition to the Schedules) and as of the
Closing as though made again as of the Closing. Each Schedule shall be amended
or revised as necessary to accurately reflect the applicable information
through the Closing Date. Acquiror shall have received a certificate (i) of the
President and the Chief Financial Officer of each of the ▇▇▇▇▇▇▇ Group, dated
the Closing Date, to such effect as it relates to the ▇▇▇▇▇▇▇ Group and (ii)
from the Shareholder, dated the Closing Date, to such effect;
(b) the ▇▇▇▇▇▇▇ Group and the Shareholder or Shareholders
or Shareholder Representative shall have performed or complied with all
agreements and covenants required by this Agreement to be performed or complied
with by the ▇▇▇▇▇▇▇ Group or the Shareholder or Shareholders or Shareholder
Representative on or prior to the Closing. Acquiror shall have received a
certificate (i) of the President and the Chief Financial Officer of each of the
▇▇▇▇▇▇▇ Group, dated the Closing Date, to such effect as it relates to the
▇▇▇▇▇▇▇ Group and (ii) from each of the Shareholders, dated the Closing Date,
to such effect as it relates to Article VII;
(c) the resignations, effective at Closing, of each of
directors and officers of the ▇▇▇▇▇▇▇ Group shall have been delivered to
Acquiror;
(d) the Shareholder and Shareholders or Shareholder
Representative shall have executed a stock power (or other appropriate
documentation) that effects the valid transfer of title to all of the issued
and outstanding ▇▇▇▇▇▇▇ Shares of the ▇▇▇▇▇▇▇ Group to Acquiror, except for the
Shares in ▇▇▇▇▇▇▇ GMP which shall be surrendered to the Acquisition Corp.
pursuant to the Merger;
(e) Acquiror shall have received a title commitment to
the Belle ▇▇▇▇▇▇ Real Property showing as the only encumbrance the Building
Debt to be assumed by Acquiror at Closing, but all other exceptions listed on
the existing Policy of Title Insurance issued by first
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American Title Insurance Company, Policy No. FA-31-231568 and Permitted Liens
shall be accepted as exceptions to the title commitment issued to Acquiror;
(f) the Shareholder or Shareholders or Shareholder
Representative shall have complied with any requirements of the Articles of
Incorporation or Bylaws of the ▇▇▇▇▇▇▇ Group regarding the sale or transfer of
stock of the ▇▇▇▇▇▇▇ Group;
(g) the ▇▇▇▇▇▇▇ Group shall have submitted an application
or request for any Permit described or referenced in Schedule 4.11 and/or
Schedule 4.24 of the Disclosure Schedule; and
(h) the Shareholder Representative shall have duly
executed and delivered the Escrow Agreement, the Registration Rights Agreement
and the Appointment of Shareholder Representative and appropriate resolutions.
10.03 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDER. The
obligations of the Shareholder to effect the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing of the
following conditions, any or all of which may be waived by the Shareholder, in
whole or in part, to the extent permitted by applicable Law:
(a) forty percent of the Total Consideration received by
the Shareholder for tax purposes at the date of Closing shall be payable in
Acquiror Common Stock, without the necessity for Acquiror to obtain any further
consent, approval or vote;
(b) each of the representations and warranties of
Acquiror and the Acquisition Corp. contained in this Agreement shall be true
and correct in all material respects (without duplication of any materiality
exception contained in any individual representation and warranty) as of the
date of this Agreement and as of the Closing as though made again as of the
Closing. Each of the Schedules shall be amended or revised as necessary to the
Closing Date. The Shareholder shall have received a certificate of the
President and the Chief Financial Officer of Acquiror and the Acquisition
Corp., dated the Closing Date, to such effect;
(c) Acquiror and the Acquisition Corp. shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
The Shareholder shall have received a certificate of the President and the
Chief Financial Officer of Acquiror and the Acquisition Corp., dated the
Closing Date, to such effect;
(d) Acquiror and the Acquisition Corp. shall have duly
executed and delivered the Escrow Agreement, appropriate resolutions, and
Acquiror shall have duly executed and delivered the Registration Rights
Agreement;
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(e) Acquiror and the Acquisition Corp. shall have (i)
paid the Initial Consideration to the Shareholder and (ii) delivered the
Escrowed Amount to the Escrow Agent pursuant the Escrow Agreement;
(f) Acquisition Corp. shall have duly executed the
Certificate of Merger;
(g) Acquiror shall pay to Power Offshore Services, Inc.
("Power Offshore") the entire principal balance plus accrued interest, if any,
of the July 2, 1997 promissory note executed by ▇▇▇▇▇▇▇ GMP to Power Offshore
and shall cause Power Offshore to deliver to ▇▇▇▇▇▇▇▇▇ the conditional guaranty
of ▇▇▇▇▇▇▇▇▇ to Power Offshore dated June 5, 1998 marked "canceled"; provided
that the entire principal balance plus accrued interest, if any, shall be
deducted from the cash portion of the Initial Consideration paid to the
Shareholder on the Closing Date; and
(h) Acquiror shall pay and extinguish the Debt of the
▇▇▇▇▇▇▇ Group to First National Bank of Commerce ("FNBC Debt") and shall cause
FNBC to deliver to ▇▇▇▇▇▇▇▇▇ all guaranty agreements of ▇▇▇▇▇▇▇▇▇ and the
Affiliates of the ▇▇▇▇▇▇▇ Group to FNBC marked "canceled" and Acquiror's
payment of the FNBC Debt shall not reduce the Purchase Price.
ARTICLE XI
MISCELLANEOUS
11.01 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual consent of Acquiror, the ▇▇▇▇▇▇▇ Group and
the Shareholder;
(b) by Acquiror, the ▇▇▇▇▇▇▇ Group or the Shareholder if
the Closing has not occurred on or before October 31, 1998;
(c) by Acquiror, upon a material breach of any covenant
or agreement on the part of the ▇▇▇▇▇▇▇ Group or the Shareholder set forth in
this Agreement, or if any representation or warranty of the ▇▇▇▇▇▇▇ Group or
the Shareholder shall have become untrue (a "Terminating ▇▇▇▇▇▇▇ Group
Breach"); provided that, if such Terminating ▇▇▇▇▇▇▇ Group Breach is curable by
the ▇▇▇▇▇▇▇ Group or the Shareholder through the exercise of reasonable efforts
and for so long as the ▇▇▇▇▇▇▇ Group or the Shareholder continues to exercise
such reasonable efforts, Acquiror may not terminate this Agreement under this
Section 11.01(c);
(d) by the ▇▇▇▇▇▇▇ Group or the Shareholder, upon a
material breach of any covenant or agreement on the part of Acquiror and
Acquisition Corp. set forth in this Agreement, or if any representation or
warranty of Acquiror shall have become untrue (a "Terminating Acquiror
Breach"); provided that, if such Terminating Acquiror Breach is curable by
Acquiror
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through the exercise of its reasonable efforts and for so long as Acquiror
continues to exercise such reasonable efforts, the ▇▇▇▇▇▇▇ Group and the
Shareholder may not terminate this Agreement under this Section 11.01(d); or
(e) by Acquiror, the ▇▇▇▇▇▇▇ Group or the Shareholder if
there shall be any Order which is final and nonappealable preventing the
consummation of the Agreement, unless the party relying on such Order has not
complied with its obligations under Section 8.03.
11.02 EFFECT OF TERMINATION. In the event of any termination of
this Agreement pursuant to Section 11.01, the ▇▇▇▇▇▇▇ Group, the Shareholders
and Acquiror shall have no obligation or liability to each other except that
(i) the provisions of Sections 8.02(b) and 8.05 shall survive any such
termination, and (ii) nothing herein and no termination pursuant hereto will
relieve any party from liability for any breach of this Agreement.
11.03 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits thereof, and
if said party that is entitled to the benefits of such provision with knowledge
that a provision has not been satisfied proceeds with the Closing on the
Closing Date without having required the terms and conditions of such provision
to be met, then said party shall conclusively be deemed to have waived the
benefits of said provision. This Agreement may not be amended or supplemented
at any time, except by an instrument in writing signed on behalf of each party
hereto. The waiver by any party hereto of any condition or of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any other condition or subsequent breach.
11.04 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
(including the Schedules and Exhibits hereto) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both oral and
written, among the parties or any of them, with respect to the subject matter
hereof. Neither this Agreement nor any document delivered in connection with
this Agreement confers upon any person not a party hereto any rights or
remedies hereunder.
11.05 ASSIGNMENT. This Agreement shall inure to the benefit of and
will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. Except as set forth in this
Agreement, this Agreement shall not be assignable by any party hereto without
the consent of the other parties hereto. Acquiror may, upon notice to the
Shareholder, assign or delegate its rights and obligations under this Agreement
or any part hereof to any direct or indirect wholly owned subsidiary of
Acquiror, but no such assignment shall in any way operate to enlarge, alter or
change any obligation of or due to the ▇▇▇▇▇▇▇ Group or the Shareholder or
relieve Acquiror of its obligations hereunder. If Acquiror assigns or
delegates its obligations hereunder, Acquiror shall execute a guarantee
agreement in form and content acceptable to Shareholder on the Closing Date.
Acquiror expressly grants its consent to ▇▇▇▇▇▇▇▇▇ and agrees that ▇▇▇▇▇▇▇▇▇
shall be entitled to assign or cause to be issued a portion of the ▇▇▇▇▇▇▇
Shares in each of the members of ▇▇▇▇▇▇▇ Group to each of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and
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▇▇▇▇▇▇ (each a "Transferee") at or prior to Closing (the "Assignment Right").
Acquiror agrees that if ▇▇▇▇▇▇▇▇▇ exercises his Assignment Right said
Transferees shall be entitled to the rights and benefits and will be subject to
the obligations and liabilities hereunder of a Shareholder of the ▇▇▇▇▇▇▇
Group, on a pro rata basis in the sharing ratios set forth on Schedule 2.07, as
then updated as of the date of Closing, and that all obligations including,
without limitation, indemnity obligations of the Shareholder shall be several
and not joint in proportion to their respective sharing ratios set forth on
Schedule 2.07.
Each Transferee and his spouse intervene in the execution and delivery
of this Agreement and each hereby agrees as follows:
(a) if ▇▇▇▇▇▇▇▇▇ exercises his Assignment Right, which
▇▇▇▇▇▇▇▇▇ is not obligated to do, the Transferee agrees that the ▇▇▇▇▇▇▇ Shares
shall be subject to all of the terms and conditions of this Agreement and the
Transferee shall be bound by all of the terms and conditions hereof;
(b) ▇▇▇▇▇▇▇▇▇ shall be the "Shareholder Representative"
as such term is defined and used in this Agreement for the purposes of notices
and determinations to be made under this Agreement and subject to the rights
and obligations set forth in the Appointment of Shareholder Representative,
attached hereto as Exhibit I;
(c) the Acquiror Common Stock received by each Transferee
under the terms of this Agreement shall be subject to an irrevocable proxy in
favor of ▇▇▇▇▇▇▇▇▇ for a period of three (3) years from the date of issuance of
such Acquiror Common Stock to the Transferee and the Transferee agrees to
execute and deliver such an irrevocable proxy to ▇▇▇▇▇▇▇▇▇ on the Closing Date;
and
(d) in the event of the unavailability or refusal of the
Transferee or his spouse to execute and deliver documents to which he is a
party and perform his obligations at Closing, the Transferee and the
Transferee's spouse hereby names and appoints ▇▇▇▇▇▇▇▇▇ as his agent and
attorney-in-fact to take all action which ▇▇▇▇▇▇▇▇▇ shall consider necessary or
advisable in connection with consummating the transactions contemplated under
this Agreement, hereby giving ▇▇▇▇▇▇▇▇▇ full power and authority to act in and
to the same extent as if the Transferee were personally present and hereby
ratifying and confirming all that ▇▇▇▇▇▇▇▇▇ shall lawfully do or cause to be
done by virtue of this power of attorney, so long as ▇▇▇▇▇▇▇▇▇'▇ interest is
handled substantially on the same terms and conditions as the Transferee's
interest. The power of attorney granted pursuant to this Section is a special
power of attorney, is irrevocable, and shall survive the incapacity of the
Transferee.
Each party to this Agreement hereby agrees that if ▇▇▇▇▇▇▇▇▇ exercises
his Assignment Right under this Section 11.05, then the term "Shareholder" as
used in this Agreement shall be deemed to be plural "Shareholders" and all
rights, benefits, and obligations of the Shareholders shall be shared on a
several and not joint basis, pro rata in proportion to their respective sharing
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ratios set forth on Schedule 2.07, which shall be updated and the updated
Schedule 2.07 shall replace and supersede the Schedule 2.07 attached hereto on
the date of this Agreement.
11.06 NOTICES. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and (i) delivered in person or by courier, (ii) sent by
telecopy or facsimile transmission, or (iii) mailed, certified first class
mail, postage prepaid, return receipt requested, to the appropriate party at
the following addresses:
if to the ▇▇▇▇▇▇▇ Group or to the Affiliates:
▇▇▇▇▇▇▇ GMP International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
if to Acquiror or Acquisition Corp.:
TransCoastal Marine Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ "Bo" ▇▇▇▇▇
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with copies to:
▇▇▇▇▇▇▇ Rice & Company L.L.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
2300 First City Tower
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: T. ▇▇▇▇ ▇▇▇▇▇
if to the Shareholder/Shareholder Representative:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ GMP International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the parties set forth above shall have furnished to
the other parties set forth above by notice given in accordance with this
Section 10.07. Such notices shall be effective (i) if delivered in person or by
courier, upon actual receipt by the intended recipient, (ii) if sent by
telecopy or facsimile transmission, when the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee, or (iii) if mailed, upon the earlier of five days after deposit in
the mail and the date of delivery as shown by the return receipt therefor.
11.07 GOVERNING LAW. THE CONSTRUCTION, INTERPRETATION, AND VALIDITY
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAW OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES
OF CONFLICTS OF LAW THEREOF.
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11.08 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement shall continue in full force and effect and
shall in no way be affected, impaired or invalidated so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term,
provision, covenant or restriction is invalid, void or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
11.09 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
11.10 HEADINGS. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
11.11 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy available at law or in equity. Notwithstanding anything contained
herein to the contrary, the parties hereto agree that no party shall have any
right to assert or collect from any other party to this Agreement any punitive
damages, consequential damages, or exemplary damages in any way arising in
connection with this Agreement or the transactions contemplated hereunder.
11.12 FORUM. EXCEPT IN EACH CASE FOR ALL MATTERS RELATING IN ANY
RESPECT TO THE ESCROW AGREEMENT OR THE FUNDS HELD PURSUANT THERETO, INCLUDING
THE DETERMINATION OF ANY AND ALL AMOUNTS TO BE DISTRIBUTED FROM THE FUNDS HELD
PURSUANT THERETO, (WHICH MATTERS SHALL BE GOVERNED BY THE TERMS (INCLUDING THE
ARBITRATION PROVISIONS) OF THE ESCROW AGREEMENT), ACQUIROR, THE ▇▇▇▇▇▇▇ GROUP,
THE SHAREHOLDER REPRESENTATIVE AND THE SHAREHOLDERS FOR THEMSELVES, THEIR
SUCCESSORS AND ASSIGNS, HEREBY (A) IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS LOCATED IN TEXAS AND AGREE AND CONSENT THAT SERVICE
OF PROCESS MAY BE MADE UPON ANY OF THEM IN ANY LEGAL PROCEEDING ARISING
EXCLUSIVELY OUT OF OR IN CONNECTION WITH THIS AGREEMENT BY SERVICE OF PROCESS
AS PROVIDED BY TEXAS LAW (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY LITIGATION ARISING EXCLUSIVELY OUT OF OR IN CONNECTION
WITH THIS AGREEMENT BROUGHT IN THE COURTS LOCATED IN
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TEXAS, (C) FOR SUCH PURPOSES IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (D)
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS WITH RESPECT TO ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES THEREOF
BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO SUCH PARTY AND
ITS COUNSEL AT THEIR ADDRESSES SET FORTH HEREIN, AND (E) IRREVOCABLY AGREES
THAT ANY LEGAL PROCEEDING AGAINST ACQUIROR, THE ▇▇▇▇▇▇▇ GROUP, THE SHAREHOLDER
REPRESENTATIVE OR ANY OF THE SHAREHOLDERS ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR ITS OBLIGATIONS HEREUNDER SHALL, BE BROUGHT IN THE COURTS OF
TEXAS.
11.13 FURTHER ASSURANCES. The Acquiror, Acquisition Corp., the
▇▇▇▇▇▇▇ Group and the Shareholder, each agree that it will, upon request of the
other at any time after the Closing Date and without further consideration,
execute and deliver such other documents and instruments and take such other
action as may reasonably be requested to carry out more effectively the purpose
and intent of this Agreement.
11.14 TEXAS DECEPTIVE TRADE PRACTICES ACT. Each party hereto
specifically does hereby waive any claim it or he has or may have had related
to this Agreement or the transactions contemplated hereby pursuant to the Texas
Deceptive Trade Practices Act, as amended from time to time.
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IN WITNESS WHEREOF, Acquiror, the ▇▇▇▇▇▇▇ Group, the Shareholder and
the Transferees have each executed or caused this Agreement to be executed on
its behalf by its officer thereunto duly authorized, as applicable, all as of
the date first above written.
ACQUIROR:
TRANSCOASTAL MARINE SERVICES, INC.
By:
Name:
Title:
TRANSCOASTAL ACQUISITION, INC.
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
DICKSON GROUP:
▇▇▇▇▇▇▇ GMP INTERNATIONAL, INC.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
▇▇▇▇▇▇▇ MARINE, INC.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
▇▇▇▇▇▇▇ NIGERIA, LTD.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
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SERVICIOS Y CONSTRUCCIONES PETROLERAS
VENTURA, C.A.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
VENTURA RESOURCES, INC.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
SHAREHOLDER:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
TRANSFEREE:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT A
DEFINED TERMS
"Accounts Receivable" means all accounts and notes receivable from
account, note and other debtors of the ▇▇▇▇▇▇▇ Group or any of the Subsidiaries
outstanding as of the date hereof.
"Accredited Investor" means the meaning as set forth in Rule 501 of
Regulation D adopted pursuant to the Securities Act of 1933, as amended.
"Acquiror Common Stock" means common stock, par value $.001 per share,
of TransCoastal Marine Services, Inc.
"ADA" has the meaning set forth in Section 4.22.
"Adjusted EBTDA" means earnings before taxes, depreciation, and
amortization (prepared on an accrual basis of accounting and in accordance with
GAAP, consistently applied), during the Earn-Out Period (as defined in Section
2.05), and as determined in accordance with Annex I attached hereto.
"Affiliate" means with respect to any Person, any Person which,
directly or indirectly, controls, is controlled by, or is under a common
control with, such Person. The term "control" (including the terms "controlled
by" and "under common control with") as used in this definition means the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of a Person, whether through the ownership
of voting securities, by contract, or otherwise. With respect to any natural
person, the term "Affiliate" shall also mean (1) the spouse and children
(including those by adoption) of such Person; and any trust whose primary
beneficiary is such Person, such Person's spouse and/or one or more members of
such Person's lineal descendants, (2) the legal representative or guardian of
such Person or of any such immediate family member in the event such Person or
any such immediate family member becomes mentally incompetent and (3) any
Person controlled by or under the common control with any one or more of such
Person and the Persons described in clauses (1) or (2) preceding.
"beneficial owner" and words of similar import shall have the meaning
ascribed to such term in Rule 13d-3 under the Exchange Act.
"Benefit Plan" or "Benefit Plans" shall mean each Plan and each
personnel policy, stock option plan, collective bargaining agreement, bonus
plan or arrangement, incentive award plan or arrangement, vacation policy,
severance pay plan, policy or agreement, deferred compensation agreement or
arrangement, executive compensation or supplemental income arrangement,
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consulting agreement, employment agreement, and each other employee benefit
plan, agreement, arrangement, program, practice or understanding that is not a
Plan and that is sponsored, maintained or contributed to by the ▇▇▇▇▇▇▇ Group
or any of its subsidiaries for the benefit of the employees, former employees,
independent contractors, or has been so sponsored, maintained or contributed to
since 1974;
"Business" means the business and operations as are currently being
performed by the ▇▇▇▇▇▇▇ Group.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday under the laws of the United States or the State of Texas.
"Chevron Contracts" shall mean the two (2) Chevron Global Technology
Services Contracts (Construction Contract Nos. 6804-0007 and 6804-0010) for
work to be performed in New Orleans, Louisiana, and Venezuela and the Chevron,
USA Alliance contract for work to be performed in California..
"Claim" means any and all claims, causes of action, demands, lawsuits,
suits, proceedings, governmental investigations or audits and administrative
orders.
"Closing" shall mean a meeting, which shall be held in accordance with
Section 2.03 of this Agreement, of persons interested in the transactions
contemplated by this Agreement at which all documents deemed necessary by the
parties to this Agreement to evidence the fulfillment or waiver of all
conditions precedent to the consummation of the Acquisition are executed and
delivered;
"Closing Date" shall mean the date of the Closing as determined
pursuant to Section 2.03 of this Agreement;
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract, agreement, option, right to acquire,
preferential purchase right, preemptive right, warrant, indenture, debenture,
note, bond, loan, loan agreement, collective bargaining agreement, lease,
mortgage, franchise, license, purchase order, bid, commitment, letter of
credit, guaranty, surety or any other legally binding arrangement, whether oral
or written.
"control" (including the terms "controlled," "controlled by" and
"under common control with") shall mean the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock or
as trustee or executor, by contract or credit arrangement or otherwise;
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"Damages" means all debts, liabilities, obligations, losses, including
diminution of value, damages, cost and expenses, whether actual, consequential
or punitive, interest (including, without limitation, prejudgment interest),
penalties, reasonable legal fees, disbursements and costs of investigations,
deficiencies, levies, duties and imposts.
"Debt" means, without duplication, (i) all indebtedness of the ▇▇▇▇▇▇▇
Group for borrowed money, (ii) all obligations of the ▇▇▇▇▇▇▇ Group evidenced
by bonds, notes, debentures or other similar instruments, (iii) all obligations
of the ▇▇▇▇▇▇▇ Group as lessee under leases that have been or should be, in
accordance with GAAP, recorded as capital leases, (iv) all Debt of the type
described in clauses (i) through (iii) above secured by any Lien on property of
the ▇▇▇▇▇▇▇ Group.
"Dickson Assets" means all of the assets, whether real, personal
(tangible or intangible) or mixed, owned (in fee or any lesser interest
including leasehold interests) by the ▇▇▇▇▇▇▇ Group in connection with the
Business.
"Environmental Laws" has the meaning set forth in Section 4.24.
"Environment" shall have the meaning set forth in Section 4.24.
"Environmental Condition" shall have the meaning set forth in Section
4.24.
"Governmental Authority" means any governmental, quasi-governmental,
state, county, city or other political subdivision of the United States or any
other country, or any agency, court or instrumentality, foreign or domestic, or
statutory or regulatory body thereof.
"Hazardous Material" has the meaning set forth in Section 4.24.
"Intellectual Property Rights" means any trademark, service ▇▇▇▇,
trade name, invention, patent, trade secret, know-how, copyright (including to
the extent applicable, any registrations thereof or applications for
registration of any of the foregoing), or any other similar type of proprietary
intellectual property right, exclusive of over-the-counter software.
"Law" means any law, statute, code, ordinance, order, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization, or other directional requirement (including, without
limitation, any of the foregoing that relates to environmental standards or
controls, energy regulations and occupational, safety and health standards or
controls including those arising under Environmental Laws) of any Governmental
Authority.
"Lien" means any lien, pledge, condemnation award, claim, restriction,
charge, preferential purchase right, security interest, mortgage or encumbrance
of any nature whatsoever including as a statutory landlord lien.
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"Material Adverse Effect" means, in relation to any Person, any
material and adverse effect on the assets, liabilities, financial condition,
business, operations, affairs or prospects, taken as a whole, of the Person
referred to.
"Ordinary Course of Business" means, when used in reference to any
Person, the ordinary course of business consistent with past customs and
practices of such Person.
"Permitted Liens" means:
(i) Liens for taxes which are not yet due and payable;
(ii) inchoate Liens arising by operation of law, including
materialman's, mechanic's, repairman's, laborer's, warehousemen,
carrier's, employee's, contractor's and operator's Liens arising in
the Ordinary Course of Business but only to the extent such liens
secure obligations that, as of the Closing, are not due and payable
and are not being contested unless being contested in good faith and a
reserve or other appropriate provision, if any, as required by GAAP is
made therefor in the Closing Date Balance Sheet.
(iii) minor defects, irregularities in title, easements,
rights of way, servitudes and similar rights (whether affecting fee
interests, a landlord's interest in leased properties or a tenant's
interest in leased properties) that individually or in the aggregate
(1) have not had, and are not reasonably likely to have a material
adverse effect on the ability of the ▇▇▇▇▇▇▇ Group or its Affiliates
to use such property in the manner previously owned or used by the
▇▇▇▇▇▇▇ Group or the Subsidiaries or (2) materially impair the value
of such property;
(iv) Liens on Belle ▇▇▇▇▇▇ Property to secure the Building
Debt being assumed by Acquiror at Closing;
(v) Liens affecting a landlord's interest in property
leased to the ▇▇▇▇▇▇▇ Group or the Subsidiaries so long as such Lien
does not breach and is not reasonably likely to breach a customary
covenant of quiet enjoyment (due to the existence of a non-disturbance
agreement or other arrangement in which the tenant's interest is
recognized and protected);
(vi) Liens on Belle ▇▇▇▇▇▇ Property and other ▇▇▇▇▇▇▇
Assets to secure Debt in favor of First National Bank of Commerce,
which Debt is to be paid in full by Acquiror at Closing; and
(vii) the capital lease transactions described on Schedule
4.16 attached hereto.
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"Person" means any natural person, firm, partnership, association,
corporation, limited liability company, company, trust, entity, public body or
government.
"Plan" or "Plans" shall mean each "employee benefit plan," as such
term is defined in Section 3(3) of ERISA, including, but not limited to, any
employee benefit plan that may be exempt from some or all of the provisions of
ERISA, that is sponsored, maintained or contributed to by the ▇▇▇▇▇▇▇ Group or
any of its subsidiaries for the benefit of the employees, former employees,
independent contractors, or agents of the ▇▇▇▇▇▇▇ Group or any of its
subsidiaries, or has been so sponsored, maintained or contributed to since
1974;
"Release" has the meaning set forth in Section 4.24.
"Rules" means the Commercial Arbitration Rules of the American
Arbitration Association.
"subsidiary" or "subsidiaries" of the ▇▇▇▇▇▇▇ Group, Acquiror or any
other person, shall mean any corporation, partnership, joint venture or other
legal entity of which the ▇▇▇▇▇▇▇ Group, Acquiror or any such other person, as
the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity;
"Tax" or "Taxes" shall mean any and all taxes, charges, fees, levies,
assessments, duties or other amounts payable to any federal, state, local or
foreign taxing authority or agency, including, without limitation, (i) income,
franchise, profits, gross receipts, minimum, alternative minimum, estimated, ad
valorem, value added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, disability, employment, social security,
workers compensation, unemployment compensation, utility, severance, excise,
stamp, windfall profits, transfer and gains taxes, (ii) customs, duties,
imposts, charges, levies or other similar assessments of any kind, and (iii)
interest, penalties and additions to tax imposed with respect thereto; and
"Tax Item" means all items of income, gain, loss, deduction and credit
and other tax items.
"Third-Party Claim" means a third-party claim asserted against an
Indemnified Party by a Person other than (a) an Affiliate of such Indemnified
Party or (b) any director, stockholder, officer, member, partner or employee of
any such Indemnified Party or its Affiliates.
"Total Consideration" means the Purchase Price set forth in Section
2.03, including all cash payable to the Shareholder at Closing (including the
Escrowed Amount) and the cash portion of the Contingent Consideration, and the
fair market value of 1,700,000 shares of Acquiror Common Stock determined in
accordance with the following principles:
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(a) All Acquiror Common Stock shall be valued as of the
close of the financial markets on the last Business
Day preceding the Closing Date; and
(b) It shall be assumed that the entire Contingent
Consideration has been earned; and
(c) It shall be assumed that ▇▇▇▇▇▇▇▇▇ has not elected to
accept any Acquiror Preferred Stock in lieu of cash
as provided for in Section 2.07(b).
"Transaction Documents" means this Agreement and all agreements,
conveyances, documents, instruments and certificates delivered at the Closing
pursuant to this Agreement.
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EXHIBIT B
[See Attached]
ESCROW AGREEMENT
67
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EXHIBIT C
[See Attached]
▇▇▇▇▇▇▇▇▇ EMPLOYMENT AGREEMENT
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EXHIBIT D
[See Attached]
▇▇▇▇▇▇▇ EMPLOYMENT AGREEMENT
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EXHIBIT E
[See Attached]
▇▇▇▇▇▇ EMPLOYMENT AGREEMENT
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EXHIBIT F
[See Attached]
▇▇▇▇▇▇▇ EMPLOYMENT AGREEMENT
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EXHIBIT G
[See Attached]
REGISTRATION RIGHTS AGREEMENT
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ANNEX I
DETERMINATION OF ADJUSTED EBTDA
For the purposes of the Agreement by and among Acquiror; Acquisition
Corp., ▇▇▇▇▇▇▇ GMP; ▇▇▇▇▇▇▇ Marine, ▇▇▇▇▇▇▇ Nigeria; Servicios y
Construcciones; Ventura Resources and Shareholder, adjusted earnings before
taxes, depreciation and amortization ("Adjusted EBTDA") of the ▇▇▇▇▇▇▇ Group
for the period indicated in Section 2.07 of the Agreement shall be determined
in the following manner.
The term "Business" as used in this Annex I means the business and
assets of the ▇▇▇▇▇▇▇ Group and the Subsidiaries acquired by Acquiror and
Acquisition Corp. pursuant to the Agreement. Except as specifically provided
in this Annex I, the Business shall not include any other business or assets of
any other business entity owned or acquired by the ▇▇▇▇▇▇▇ Group, the
Subsidiaries or the Acquisition Corp. during the term of the Earn-Out Period
other than assets acquired by the ▇▇▇▇▇▇▇ Group or the Subsidiaries in the
ordinary course of business, unless otherwise agreed to in writing by the
parties. Any capitalized term not defined in this Annex I shall have the
meaning assigned to the term in the Agreement.
A. There shall first be determined revenues of the
Business for the Earn-Out Period, by application of the accrual method
of accounting and generally accepted principles of accounting.
Revenues shall not include any interest income, income tax refunds,
non-recurring or extraordinary items as defined under generally
accepted accounting principles.
B. There shall then be determined the "expenses" of the
Business for such period. For this purpose, "expenses" shall consist
of those expenses incurred by the Business which are allocable to the
Earn-Out Period pursuant to the accrual method of accounting and
pursuant to generally accepted principles of accounting employed by
the Business consistently applied in arriving at net income for
accounting purposes, subject to the following provisions and
exceptions:
1. Expenses shall include:
(a) the aggregate amount of all Taxes
(excluding all foreign, Federal, state and local
income taxes, VAT or any other governmental or
jurisdictional assessment of any kind computed using
revenue or income as a basis for such assessment)
imposed on the Business with respect to the
particular period. Expenses shall not be reduced by
any income tax refunds.
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(b) all direct operating expenses paid
to third parties on the ▇▇▇▇▇▇▇ Group's behalf by the
Acquiror, Acquisition Corp. or any of its Affiliates,
with no ▇▇▇▇-up to ▇▇▇▇▇▇▇ Group.
(c) the Acquiror's general corporate
overhead and administrative expenses, but only to the
extent they reflect significant and extraordinary
time and expenses incurred working directly for the
benefit of the ▇▇▇▇▇▇▇ Group and an estimate of such
expenses has been approved by the Shareholder
Representative in advance.
(d) all negotiated cost transfers of
Acquiror including capital, labor, assets and
services will be charged as expenses of the ▇▇▇▇▇▇▇
Group to the extent agreed to in writing by the
Acquiror and the Shareholder Representative, which
consent shall not be unreasonably withheld;
(e) All negotiated cost transfers from
the ▇▇▇▇▇▇▇ Group to Acquiror or any of its
subsidiaries, including capital, labor, assets and
services will be included as an expense reduction to
the extent agreed to in writing by the Shareholder
Representative and the Acquiror, which consent shall
not be unreasonably withheld;
(f) all salaries, bonuses and costs of
benefits for the ▇▇▇▇▇▇▇ Group employees, including
the Shareholders and any other Person in the ▇▇▇▇▇▇▇
Group management team, will be charged as expenses of
the ▇▇▇▇▇▇▇ Group;
(g) The Acquiror will charge 8% APR
monthly to the ▇▇▇▇▇▇▇ Group on the daily balance of
net funds advanced to the ▇▇▇▇▇▇▇ Group during the
period.
2. Expenses shall not include any expense related to (i)
all depreciation and amortization, (ii) material expenses associated
with any new ventures by the ▇▇▇▇▇▇▇ Group, which are proposed by the
Acquiror, unless agreed to by the Shareholder Representative in
writing, (iii) any other expenses recovered by Acquiror through escrow
deductions; and (iv) any extraordinary expenses or increases in
existing expenses related to the ▇▇▇▇▇▇▇ Group's Benefit Plans
resulting from the consummation of the transactions contemplated under
this Agreement.
3. Expenses shall reflect such charges, recoveries,
credits, adjustments and reallocations to reserve accounts with
respect to all balance sheet and income statement accounts as shall
be necessary under GAAP.
4. The ▇▇▇▇▇▇▇ Group shall not be required to expense
any items that otherwise could be capitalized in accordance with GAAP.
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ANNEX II
CALCULATION OF EARN-OUT PAYMENT
I. For the purposes of this Agreement by and among Acquiror; Acquisition
Corp.; ▇▇▇▇▇▇▇ GMP; ▇▇▇▇▇▇▇ Marine, ▇▇▇▇▇▇▇ Nigeria; Servicios y
Construcciones; Ventura Resources and Shareholder, the calculation of
the Earn-Out Payment and the Net Earn-Out Payment for the period
indicated in Section 2.07 of the Agreement shall be performed in the
following manner:
A. The Gross Earn-Out Payment shall be determined by subtracting
$4,000,000 from the ▇▇▇▇▇▇▇ Group's EBTDA as determined in
accordance with Annex I (Earn-Out EBTDA), and dividing the
difference by 3,000,000 then multiplying the product times
$11,500,000.
B. Deductions from Gross Earn-Out Payment:
1. Any short-fall in the amounts escrowed ($300,000) at
closing to cover unidentified liabilities or
reduction in assets to the balance sheet at closing
(the Balance Sheet Adjustments);
2. Retainage for a portion of the estimated earned gross
profit recognized on all contracts with work in
progress at the end of the Earn-Out Period.
The Acquiror and the Shareholder Representative shall estimate
the earned gross profit recognized during the Earn-Out Period
on all contracts with work in progress at the end of the
Earn-Out Period in accordance with GAAP.
The estimated earned gross profit shall be computed during the
Earn-Out Period for each project in process as of the end of
the Earn-Out Period on a job-by-job basis. The result shall
then be multiplied by 3.833, then by 10%. The end product
shall then be subtracted from the Earn-Out Payment and held as
"Retainage".
II. Within 30 days of completion of each project identified as being in
progress at the end of the Earn-Out Period, the Acquiror and the
Shareholder Representative shall determine in good faith whether the
estimated earned gross profit attributable to each project during the
Earn-Out Period was fair and reasonable at the time such estimate was
made, considering the facts and circumstances at the end of the
Earn-Out Period.
In the event such estimated earned gross profit at Earn-Out Period is
deemed to be deficient due to some fact or circumstance occurring on
or before the end of the Earn-Out Period but not included in such
estimate, then a recalculation of the estimated earned gross profit
shall be computed by the Acquiror and Shareholder Representative. The
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deficit between the original estimated earned gross profit and the
recalculated earned gross profit as of the end of the Earn-Out Period
shall be multiplied by 3.833, then 10% and the resulting product shall
be paid from the Retainage to the Acquiror and any remaining Retainage
attributable to that particular project will be within five (5)
Business Days released to the Shareholders.
In no case is the Acquiror able to recover any amount in excess of the
Retainage amount on a job-by-job basis.
EXAMPLE OF EARN-OUT PAYMENT CALCULATION
----------------------------------------------------------------------------------------------------
A $ 6,500,000 EBTDA From Annex I
----------------------------------------------------------------------------------------------------
B (4,000,000) Base EBTDA
----------------------------------------------------------------------------------------------------
C $ 2,500,000 Net Earn-Out EBTDA
----------------------------------------------------------------------------------------------------
D $ 3,000,000 Maximum Earn-Out EBTDA
----------------------------------------------------------------------------------------------------
E .833333 Quotient (6 decimal points) ("C" divided by "D")
----------------------------------------------------------------------------------------------------
F $ 11,500,000 Maximum Earn-Out Payment
----------------------------------------------------------------------------------------------------
G $ 9,583,330 Gross Earn-Out Payment ("E" x "F")
----------------------------------------------------------------------------------------------------
H $ (83,330) Short Fall in $300,000 Escrow as Defined in Escrow
Agreement
----------------------------------------------------------------------------------------------------
I $ (500,000) Retainage for Estimated Earned Gross Profit for
Work in Progress at End of Escrow Period
----------------------------------------------------------------------------------------------------
$ 9,000,000 Net Earn-Out Payment Due before Release of
========= Retainage ("G" - "H" - "I")
----------------------------------------------------------------------------------------------------
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ANNEX III
INDEX TO
DISCLOSURE SCHEDULES
Schedule 2.03(b)(i) - Purchase Price Allocation and Initial Shareholder's
Instructions
Schedule 2.07 - Shareholder's Sharing Ratio
Schedule 3.01 - Ownership of ▇▇▇▇▇▇▇ Group
Schedule 4.02 - Jurisdictions
Schedule 4.04 - Consents, Absence of Conflicts
Schedule 4.05 - Capital Stock of the ▇▇▇▇▇▇▇ Group
Schedule 4.05(b) - Contracts to Sell Securities
Schedule 4.05(c) - Rights Affecting Capital Stock
Schedule 4.06(i) - Subsidiaries
Schedule 4.06(ii) - Affiliates
Schedule 4.07 - Absence of Changes
Schedule 4.08 - Affiliate Transactions
Schedule 4.09(a) - Scheduled Fee Lands
Schedule 4.09(b) - Scheduled Leases
Schedule 4.09(c) - Facilities Condition
Schedule 4.10 - Scheduled Tangible Personal Property
Schedule 4.11 - Scheduled Permits
Schedule 4.12 - Material Contracts
Schedule 4.12(b) - Included on Schedule 4.12
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Schedule 4.13 - Scheduled Intellectual Property
Schedule 4.14 - Accounts Receivable
Schedule 4.16 - Debt
Schedule 4.18(a) - Tax Returns
Schedule 4.18(c) - Adverse Tax Claims
Schedule 4.18(d)
Schedule 4.18(f) -
Schedule 4.18(g) -
Schedule 4.18(i) -
Schedule 4.18(l) -
Schedule 4.18(m) -
Schedule 4.19 - Inventory
Schedule 4.20 - Litigation
Schedule 4.21 - Standard Terms of Sale and Purchase
Schedule 4.22(a) - Employee Matters
Schedule 4.22(b) - Collective Bargaining
Schedule 4.22(c) - Employment Agreement
Schedule 4.23(a) - Benefit Plans
Schedule 4.23(c)
Schedule 4.23(d) - Exceptions to Benefit Plans
Schedule 4.23(g)
Schedule 4.23(i)
Schedule 4.24 - Environmental Matters
Schedule 4.26 - Accounts
Schedule 4.27 - Insurance
Schedule 6.02
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ANNEX IV
TRANSCOASTAL MARINE SERVICES, INC.
PRINCIPAL TERMS OF PREFERRED STOCK
Dividends . . . . . . . . . . . . . . . Dividends on the Preferred Stock are
cumulative from the date of original
issue and are payable quarterly,
when and as declared, at the rate of
_____% per annum of the $100
liquidation preference (equivalent
to an annual dividend rate of
$_______ per share). The Dividend
rate will be established at the date
of issuance and will be in the
amount necessary to generate a
market value equal to the
Liquidation Preference.
Liquidation Preference . . . . . . . . $100 per share of Preferred Stock,
plus an amount equal to accumulated,
accrued and unpaid dividends
(whether or not earned or declared).
Redemption . . . . . . . . . . . . . . The Preferred Stock is not
redeemable prior to five years after
issuance. The Preferred Stock will
be redeemed upon notice from the
holder at any time after five years
from the date of issuance.
Ranking . . . . . . . . . . . . . . . . The Preferred Stock will rank on a
parity with any authorized shares of
preferred stock on the date of
issuance and senior to Acquiror's
Common Stock, including restricted
Common Stock, with respect to the
payment of dividends and the
distribution of amounts upon
liquidation, dissolution or winding
up.
Voting Rights . . . . . . . . . . . . . Holders of Preferred Stock will
generally have no voting rights.
However, whenever dividends on the
shares of Preferred Stock are in
arrears for six or more quarterly
periods (whether or not
consecutive), the holders of such
shares (voting together as a single
class with all other shares of any
class or series of stock ranking on
a parity with the Preferred Stock
which are entitled to similar voting
rights) will be entitled to vote for
the election of two additional
directors of the Acquiror until all
dividends in arrears on outstanding
shares of Preferred Stock have been
paid or declared and set apart for
payment. In addition, certain
changes to the terms of the
Preferred Stock that
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would be materially adverse to the
rights of holders of Preferred Stock
cannot be made without the
affirmative vote of holders of at
least 6 2/3% of the outstanding
shares of Preferred Stock and shares
of any class or series of stock
ranking on a parity with the
Preferred Stock which are entitled
to similar voting rights, voting as
a single class.
Participation . . . . . . . . . . . . . Dividends on the Preferred Stock
will increase in accordance with an
increase in the EBITDA of the
Acquiror from and after the date of
issuance until redeemed, as follows.
Beginning in the first year after
issuance, if EBITDA increases by 20%
over the EBITDA for the year prior
to the issuance, the Dividend rate
will be increased by $0.25 per
preferred share. Similarly an
increase in EBITDA by 40% will
increase the dividend rate by $0.50
per share and 60% or more by $0.75
per share. Distributions on the
Common Stock including dividends,
will entitle holders of the
Preferred Stock to distributions on
a pro rata basis.
