Exhibit 2.1
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ASSET PURCHASE AND SALE AGREEMENT
among
GULF ISLAND FABRICATION, INC., and
NEW VISION, L.P., on the one hand
and
GULF MARINE FABRICATORS, and
TECHNIP-COFLEXIP USA HOLDINGS, INC., on the other hand
Dated as of December 20, 2005
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TABLE OF CONTENTS
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ARTICLE I DEFINED TERMS........................................................1
ARTICLE II Purchase of Assets..................................................1
Section 2.1 Sale and Purchase of the Assets...............................1
Section 2.2 Excluded Assets...............................................2
Section 2.3 Purchase Price................................................3
Section 2.4 Purchase Price Adjustment.....................................3
Section 2.5 Purchase Price Allocation.....................................5
Section 2.6 Assumed Liabilities...........................................5
Section 2.7 Excluded Liabilities..........................................5
Section 2.8 Closing.......................................................5
Section 2.9 Deliveries at Closing.........................................5
Section 2.10 Effect of Consents to Transfer Not Obtained...................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF the Seller Parties...............9
Section 3.1 Ownership.....................................................9
Section 3.2 Organization; Authority; Enforceability.......................9
Section 3.3 Legal Proceedings............................................10
Section 3.4 Qualification; Subsidiaries..................................10
Section 3.5 No Conflict..................................................10
Section 3.6 Consent......................................................11
Section 3.7 Charter Documents............................................11
Section 3.8 Financial Statements.........................................11
Section 3.9 Absence of Certain Changes...................................11
Section 3.10 Inventory....................................................12
Section 3.11 Equipment....................................................12
Section 3.12 Suppliers and Customers......................................13
Section 3.13 Real Property................................................13
Section 3.14 Real Property Leases.........................................14
Section 3.15 Personal Property............................................14
Section 3.16 Sufficiency of Assets........................................14
Section 3.17 Governmental Permits.........................................14
Section 3.18 Compliance with Laws.........................................15
Section 3.19 Material Contracts and Warranties............................15
Section 3.20 Crane Commitments............................................15
Section 3.21 Environmental Matters........................................15
Section 3.22 Employee Plans...............................................17
Section 3.23 Taxes........................................................19
Section 3.24 Certain Payments.............................................20
Section 3.25 Transactions with Certain Persons............................20
Section 3.26 Intellectual Property........................................20
Section 3.27 Insurance....................................................20
Section 3.28 Safety and Health............................................20
Section 3.29 Books and Records............................................21
Section 3.30 Labor Matters................................................21
Section 3.31 Documents and Written Materials..............................21
Section 3.32 Brokers' Fees................................................21
Section 3.33 Investment Representation....................................21
Section 3.34 Disclosure...................................................22
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GULF ISLAND AND BUYER............23
Section 4.1 Organization.................................................23
Section 4.2 Authority; Enforceability....................................23
Section 4.3 Consents and Approvals; Conflicts............................23
Section 4.4 Ownership of Subsidiary......................................24
Section 4.5 Capitalization...............................................24
Section 4.6 Legal Proceedings............................................24
Section 4.7 Financial Statements.........................................24
Section 4.8 Compliance with Laws.........................................24
Section 4.9 Certain Payments.............................................24
Section 4.10 Transaction With Certain Persons.............................24
Section 4.11 Safety and Health............................................25
Section 4.12 No Pending Acquisition.......................................25
Section 4.13 Environmental Matters........................................25
Section 4.14 Divestment...................................................25
Section 4.15 Disclosure...................................................25
ARTICLE V PRE-CLOSING COVENANTS...............................................25
Section 5.1 Access.......................................................25
Section 5.2 Inspection...................................................26
Section 5.3 Conduct of the Business......................................26
Section 5.4 Further Actions..............................................26
Section 5.5 HSR Act......................................................27
Section 5.6 Notification.................................................27
Section 5.7 Acquisition Proposals........................................28
Section 5.8 Public Announcements.........................................28
Section 5.9 Liabilities..................................................28
Section 5.10 New Bids and Contracts.......................................28
Section 5.11 Notice of Developments.......................................29
Section 5.12 Update of the Disclosure Schedules...........................29
Section 5.13 Employee Matters.............................................29
Section 5.14 WARN Act.....................................................31
Section 5.15 Confidential Information.....................................31
Section 5.16 Real Estate Matters..........................................32
Section 5.17 Standstill...................................................33
Section 5.18 Seller Board Seat............................................33
Section 5.19 Cooperation Agreement........................................34
ARTICLE VI CONDITIONS PRECEDENT...............................................34
Section 6.1 Conditions Precedent to Obligations of All Parties...........34
Section 6.2 Conditions Precedent to Obligations
of Gulf Island and Buyer.....................................35
Section 6.3 Conditions Precedent to the Obligations
of the Seller Parties........................................36
ARTICLE VII INDEMNIFICATION; REMEDIES.........................................36
Section 7.1 Indemnification by the Seller Parties........................36
Section 7.2 Indemnification by Gulf Island...............................36
Section 7.3 Nature of the Seller Parties' Liability; Limitations.........37
Section 7.4 Procedure for Indemnification - Third-Party Claims...........37
Section 7.5 Survival of Indemnification..................................38
Section 7.6 Escrow.......................................................39
ARTICLE VIII TERMINATION......................................................39
Section 8.1 Termination..................................................39
Section 8.2 Effect of Termination........................................40
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ARTICLE IX POST CLOSING COVENANTS.............................................40
Section 9.1 Further Assurances...........................................40
Section 9.2 Post Closing Tax Covenants...................................41
Section 9.3 Prorations...................................................41
Section 9.4 Name Change..................................................41
Section 9.5 Existing Warranty Liabilities................................42
Section 9.6 Corrections of Defective Work Prior to
Warranty Claims Being Made...................................42
Section 9.7 Communications Transfer......................................42
Section 9.8 Turnover of Misdirected Payments.............................42
ARTICLE X MISCELLANEOUS.......................................................42
Section 10.1 Expenses.....................................................42
Section 10.2 Notices......................................................42
Section 10.3 Amendment....................................................43
Section 10.4 Headings; Gender.............................................43
Section 10.5 Entire Agreement; No Third Party Beneficiaries...............43
Section 10.6 Governing Law................................................43
Section 10.7 Jurisdiction.................................................43
Section 10.8 Special Determination of Purchase Price Adjustments..........44
Section 10.9 Assignment...................................................44
Section 10.10 Severability.................................................44
Section 10.11 Counterparts.................................................44
Section 10.12 Mutual Drafting..............................................44
Exhibit A - Definitions
Exhibit B - Escrow Agreement
Exhibit C - Forms of Assignments
Exhibit D - Form of ▇▇▇▇ of Sale
Exhibit E - Form of Warranty Deed
Exhibit F - Form of Registration Rights Agreement
Exhibit G - Form of Non-Competition Agreement
Exhibit H - Form of Lock-Up Agreement
Exhibit I - Form of Transition Services Agreement
Exhibit J - Form of Opinion of the Counsel to the Seller Parties
Exhibit K - Form of Opinion of the Counsel to Buyer and Gulf Island
Exhibit L - Forms of Employment Agreement
Exhibit M - Disclosure Schedule
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ASSET PURCHASE AND SALE AGREEMENT
This Asset Purchase and Sale Agreement (this "Agreement"), dated and
effective as of December 20, 2005 (the "Effective Date"), is by and among Gulf
Island Fabrication, Inc., a Louisiana corporation ("Gulf Island") and New
Vision, L.P., a Texas limited partnership and indirect subsidiary of Gulf Island
("Buyer"), on the one hand, and Gulf Marine Fabricators, a Texas general
partnership ("Seller"), and Technip-Coflexip USA Holdings, Inc.(the "Parent") on
the other hand. Seller and Parent are sometimes referred to herein together as
the "Seller Parties."
RECITALS:
A Seller is primarily engaged in the business of the fabrication and sale
of drilling and production platforms and other specialized structures used in
the development and production of offshore oil and gas reserves (the
"Business").
B The boards of directors of Parent and the Partners desire that Seller
sell substantially all of the assets used in the Business to Buyer, and the
boards of directors of Gulf Island and the sole general partner of Buyer desire
that Buyer purchase such assets, each upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and in reliance upon the undertakings,
representations, warranties and indemnities contained herein, each of the
parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
As used in this Agreement, capitalized terms shall have the meanings
assigned to them in Exhibit "A."
ARTICLE II.
PURCHASE OF ASSETS
Section 2.1 Sale and Purchase of the Assets. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing Seller shall sell,
transfer, convey, assign and deliver to Buyer the Assets, which shall be free
and clear of all Liens, and Buyer shall purchase and acquire from Seller, the
Assets for the Purchase Price. "Assets" means all of the assets used or held
primarily for use in the Business, excluding the Excluded Assets, but including,
without limitation, the following:
(a) All of the Owned Real Properties listed on Schedule 2.1(a), including,
without limitation, any items listed on Schedule 2.1(b) that are classified as
real property under applicable law;
(b) Subject to Section 2.2(d) below, all of the Personal Property listed on
Schedule 2.1(b) (which list includes all major items of equipment used in the
Business);
(c) All of the inventory listed on Schedule 2.1(c);
(d) All rights of Seller under the leases, construction contracts, and
other contracts listed on Schedule 2.1(d), as such schedule is updated pursuant
to Section 5.10 (the "Assumed Contracts");
(e) All rights of Seller in and to all Owned Intellectual Property listed
on Schedule 2.1(e), including the name "Gulf Marine Fabricators;"
(f) All rights of Seller in and to all Governmental Permits held by Seller
for use in the Business listed on Schedule 2.1(f);
(g) All rights of Seller in all Warranties, if any, issued by third persons
that relate to the Assets (with Seller disclaiming any representation or
warranty with respect to the existence or enforceability of such Warranties);
(h) Subject to Section 2.2(d) below, all records (including computer
records) of Seller located on the Owned Real Properties, including all property
records, sales records, service records, customer lists, mailing lists, customer
price lists, customer files, suppliers' lists, suppliers' price lists, designs,
drawings, bid libraries and estimates and other correspondence and other
recorded knowledge relating to customers or suppliers of the Business, and,
whether or not located on the Owned Real Properties, copies of personnel records
of Seller's Employees; and
(i) All goodwill, advances and deposits of every kind and nature of Seller.
Notwithstanding the foregoing, the only contracts that shall be deemed to
be included in the Assets are those contracts expressly listed in Schedule
2.1(d), and the transfer of the Assets shall not include the assumption of any
liability related to the Assets unless expressly assumed pursuant to Section
2.6.
Section 2.2 Excluded Assets. Notwithstanding the provisions of Section 2.1
above, the following assets are expressly excluded from the purchase and sale
contemplated hereby (the "Excluded Assets"):
(a) The consideration to be delivered to Seller pursuant to this Agreement;
(b) The rights of Seller under this Agreement and all agreements and
instruments executed by Seller in connection herewith;
(c) All accounts receivable, trade receivables, notes receivable and other
receivables of Seller which are payable as a result of services provided in
connection with the Business prior to Closing;
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(d) The corporate seals, minute books, stock transfer records, blank stock
certificates, tax returns and other records relating to the organization or tax
reporting of Seller;
(e) Assets held in either Employee Plans or Benefit Arrangements, none of
which are being assumed by Gulf Island or Buyer;
(f) All cash, cash equivalents, marketable securities and bank accounts
owned by Seller;
(g) All rights under insurance policies maintained by Seller with respect
to the Assets, and all claims, causes of action under such insurance policies;
(h) All prepaid expenses of Seller and accrued receivables on completed
contracts; and
(i) Any other asset or contract specifically listed in Schedule 2.2(i).
On or prior to the Closing Date, the Seller Parties shall remove or cause
to be removed all of the Excluded Assets from, and without damage to, all
property to be occupied by Buyer hereunder after the Closing at no cost to Gulf
Island or Buyer.
Section 2.3 Purchase Price.
(a) The consideration for the sale of the Assets to Buyer (as adjusted
pursuant to Section 2.4, the "Purchase Price") shall be (i) FORTY MILLION AND
00/100 DOLLARS ($40,000,000) in cash, (ii) 1,589,067 shares of the common stock,
no par value per share, of Gulf Island (the "Gulf Island Common Stock"), and
(iii) the assumption by Buyer of the Assumed Liabilities.
(b) At the Closing, Gulf Island shall withhold the shares of Gulf Island
Common Stock otherwise deliverable to Seller hereunder (the "Indemnity Escrow
Shares") as a holdback pursuant to Section 7.6 for any indemnity claims that
Buyer and Gulf Island may bring under Article VII. The Indemnity Escrow Shares
shall be deposited in escrow in accordance with the terms and provisions of
Section 7.6 and an Escrow Agreement among the parties hereto and JPMorgan Chase
or, if JPMorgan Chase is unable to serve as escrow agent, a substitute mutually
agreed escrow agent (the "Escrow Agent") in the form attached hereto as Exhibit
B (the "Escrow Agreement").
Section 2.4 Purchase Price Adjustment.
(a) The cash portion of the Purchase Price shall be adjusted on the Closing
Date to reflect the pro-rations required under Section 9.3.
(b) As soon as practical following the Closing, Seller and Buyer shall
negotiate in good faith to attempt to agree on the difference, if any, between
the amount invoiced (whether or not collected) by Seller under each Assumed
Contract through the Closing Date and the Costs Incurred by Seller through the
Closing Date under such Assumed Contract, taking into account all retainage by
the customers which will be payable to Buyer as the assignee of the Assumed
Contracts following Closing. The cash portion of the Purchase Price shall be
adjusted pursuant to this Section 2.4(b) to reflect such difference (for each
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such Assumed Contract, the "Contract Adjustment"). If Seller and Buyer cannot
agree upon the Contract Adjustment for a particular Assumed Contract by 5:00
p.m. (Houston time) on the 30th day following the Closing Date, either Seller or
Buyer may submit the Contract Adjustment for determination under Section 10.8
below. Within 15 days following determination of the Contract Adjustment for a
particular Assumed Contract by mutual agreement or determination under Section
10.8, the party owing the Contract Adjustment shall pay the amount due to the
other party. "Costs Incurred" shall mean all direct project materials,
subcontracts, miscellaneous expenses (such as customer services, travel, and
tendering costs) actually paid prior to Closing, plus fully burdened man hours
worked (inclusive of indirect overheads and depreciation but, except as provided
in the following sentence, excluding SG&A, corporate management fees, and profit
earned). In addition, for the Modec and Bay contracts only, Costs Incurred will
be deemed to include SG&A, corporate management fees, and the profit earned
through the Closing Date on these contracts calculated under US GAAP compliant
percentage of completion.
(c) As soon as practical following the Closing, Seller and Buyer shall
calculate the difference between the book value of Seller's inventory as of June
30, 2005 and the book value of Seller's inventory on the Closing Date, and the
Purchase Price shall be adjusted to reflect the difference calculated (the
"Post-Closing Inventory Adjustment"). Such calculation shall be based upon
Seller's financial statements, accounting records, and inventory listings in the
absence of manifest error. If Seller and Buyer can not agree upon the
Post-Closing Inventory Adjustment by 5:00 p.m. (Houston time) on the 30th day
following the Closing Date, either Seller or Buyer may submit the Post-Closing
Inventory Adjustment for determination under Section 10.8 below. Within 15 days
following determination of the Post-Closing Inventory Adjustment by mutual
agreement or pursuant to Section 10.8, the party owing the Post-Closing
Inventory Adjustment shall pay the amount due to the other party as an
adjustment to the cash portion of the Purchase Price.
(d) If any Asset with a value of more than $50,000, as determined by
Buyer's Appraisal, is materially damaged or destroyed between September 30, 2005
and the Closing Date, Buyer may, within 60 days following the Closing Date,
require a refund of a portion of the Purchase Price equal to the value of the
damaged or destroyed Asset as certified by Buyer's Appraisal. If Seller
reasonably believes that the appraised value of the Asset certified by Buyer's
Appraisal exceeded the actual fair market value of such Asset by more than
$25,000, Seller may obtain its own appraisal of the Asset in question, based
upon the Asset's condition prior to the damage or loss in question, and provide
a copy of such appraisal to Buyer within 45 days following Buyer's demand for a
Purchase Price refund. If Seller's appraisal certifies a value for the Asset in
question which is within $25,000 of the value certified by Buyer's Appraisal,
the value certified by Buyer's Appraisal shall govern. If Seller's appraisal
certifies that the Asset in question is overvalued on Buyer's Appraisal by more
than $25,000, Seller and Buyer shall attempt to negotiate a refund of the
Purchase Price reflecting a mutually agreed valuation of the Asset in question.
If Seller and Buyer are unable to mutually agree upon the value of the Asset in
question within 30 days of Buyer's receipt of Seller's appraisal of the Asset,
then either party may request that the parties' respective appraisers agree upon
a third appraiser who shall value the Asset in question, based upon its
condition prior to the damage or loss in question, and whose determination shall
be binding upon the parties for purposes of determining the amount of the
Purchase Price refund. Seller and Buyer shall share equally in the cost of such
third appraiser. Within 15 days following determination of the value of the
Asset in accordance with this section, Seller shall refund to Buyer the value of
the Asset so determined as an adjustment to the cash portion of the Purchase
Price.
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Section 2.5 Purchase Price Allocation. The Purchase Price shall be
allocated to categories of Assets as set forth in Schedule 2.5, with any
adjustment of the cash portion of the Purchase Price under Sections 2.4(a) or
2.4(b) to be allocated pro-rata among all asset classes according to their
respective amount allocated to such asset classes on Section 2.5. Adjustments to
the cash portion of the Purchase Price under Sections 2.4(c) or 2.4(d) shall be
allocated to the assets involved in the adjustment. Buyer and Seller agree that
the allocation of the Purchase Price to categories of the Assets as set forth in
such Schedule 2.5 reflects and constitutes arms-length negotiations between the
parties. The Purchase Price allocation reflected in Schedule 2.5, as adjusted,
shall be binding on Buyer and Seller for United States income tax purposes in
accordance with Section 1060 of the Code and state income tax purposes and shall
be consistently reflected by Buyer and Seller on their respective United States
and state income tax returns. Both parties shall timely file Forms 8594
reflecting this allocation, and the parties shall report this purchase as a
taxable sale (and not as a tax-free reorganization) for federal and state income
tax purposes.
Section 2.6 Assumed Liabilities. Neither Gulf Island, Buyer nor any of
their respective Affiliates shall assume or become liable for any liability or
obligation of any of the Seller Parties except for liabilities and obligations
arising after the Closing under the Assumed Contracts (the "Assumed
Liabilities"). In no event shall the Assumed Liabilities include liabilities or
obligations arising out of or relating to a breach of any Assumed Contract that
occurred prior to the Closing or any Existing Warranty Liabilities.
Section 2.7 Excluded Liabilities. Buyer is not assuming, and shall not be
held liable for, any liability, debt, obligation, claim against or contract of
either of the Seller Parties of any kind or nature whatsoever, at any time
existing or asserted, whether or not accrued, whether fixed, contingent or
otherwise, whether known or unknown, whether or not related to the Business or
the Assets, that is not specifically assumed pursuant to Section 2.6 of this
Agreement (collectively, the "Excluded Liabilities").
Section 2.8 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI at the offices
of Jones, Walker, Waechter, Poitevent, Carrere & ▇▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other time and place as
the parties may agree. The date of the Closing is sometimes referred to herein
as the "Closing Date."
Section 2.9 Deliveries at Closing.
(a) At the Closing, the Seller Parties shall deliver or cause to be
delivered to Buyer:
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(i) assignments in favor of Buyer of all of the Assumed Contracts,
Warranties, and Governmental Permits duly executed by Seller in the forms
attached hereto as Exhibit "C-1," "C-2," "C-3," and "C-4" (the
"Assignments");
(ii) a ▇▇▇▇ of sale, duly executed by Seller, in the form attached
hereto as Exhibit "D" for the Personal Property other than titled vehicles
(the "▇▇▇▇ of Sale");
(iii) bills of sale and other documentation necessary to transfer all
title vehicles, duly executed by Seller (the "Vehicle Documents");
(iv) one or more warranty deeds in the form attached hereto as Exhibit
"E" to the Owned Real Properties conveying to Buyer all of Seller's right,
title and interest in and to the Owned Real Properties with full warranty
as to merchantable title and with full substitution and subrogation in and
to any claims and/or causes of action which Seller has or may have against
all preceding owners (the "Warranty Deeds");
(v) a registration rights agreement, duly executed by Seller and
Parent, in substantially the form attached hereto as Exhibit "F" but
including reasonable shelf registration and piggyback registration rights,
and with such other changes as are agreed by Seller, Parent, and Gulf
Island prior to the Closing Date (the "Registration Rights Agreement");
(vi) a non-competition agreement, duly executed by Seller and Parent,
in the form attached hereto as Exhibit "G" (the "Non-Competition
Agreement");
(vii) a lock-up agreement, duly executed by Seller and Parent, in the
form attached hereto as Exhibit "H" (the "Lock-Up Agreement");
(viii) a transition services agreement, duly executed by Seller and
Parent, in the form attached hereto as Exhibit "I" (the "Transition
Services Agreement");
(ix) certificates, dated as of the Closing Date, executed by an
appropriate executive officer of each of Seller and Parent, certifying that
(i) the representations and warranties of the Seller Parties contained in
this Agreement and any other agreement executed and delivered in connection
with the transactions contemplated hereby are true and correct as of the
Closing Date and (ii) each of the Seller Parties has performed and
complied, in all material respects, with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by
the Seller Parties prior to or on the Closing Date;
(x) a certificate of the Secretary or Assistant Secretary of each of
the Partners and of Parent as to the incumbency and signatures of the their
respective officers executing this Agreement and any other certificate or
document executed and delivered pursuant hereto;
(xi) any consents of third Persons which are necessary to effectively
transfer the Assets to Buyer;
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(xii) an affidavit or affidavits, together with such other evidence as
may be required by the Title Company insuring title to the Owned Real
Properties at Closing, which affidavits or other documentary evidence, if
required, will be in form and substance satisfactory to the Title Company
and sufficient to cause the Title Company to issue owner's title insurance
policies to Buyer with respect to the Owned Real Properties;
(xiii) non-foreign affidavits of Seller and the Partners in forms
acceptable to Buyer;
(xiv) an opinion of counsel to the Seller Parties as to the matters
attached as Exhibit "J," subject to such assumptions, qualifications, and
exceptions as are acceptable to Buyer and Gulf Island in their reasonable
discretion;
(xv) a settlement statement reflecting the adjustments to the Purchase
Price required by Section 2.4 duly executed by Seller (the "Settlement
Statement"); and
(xvi) such other documents or instruments of conveyance as may be
reasonably requested by Buyer or Gulf Island or as are reasonably necessary
to transfer title to the Assets to Buyer as contemplated hereby or
otherwise for the consummation of the transactions contemplated by this
Agreement.
(b) At the Closing, Gulf Island shall, or cause Buyer to, deliver to Seller
(or, in the case of Section 2.3(b), the Escrow Agent):
(i) the cash portion of the Purchase Price payable to Seller pursuant
to Section 2.3;
(ii) a stock certificate or stock certificates representing the shares
of Gulf Island Common Stock issuable to Seller pursuant to Section 2.3;
(iii) the Assignments, duly executed by Buyer;
(iv) the ▇▇▇▇ of Sale, duly executed by Buyer;
(v) the Vehicle Documents, duly executed by Buyer;
(vi) the Warranty Deeds, duly executed by Buyer;
(vii) the Employment Agreements, duly executed by Buyer;
(viii) the Registration Rights Agreement, duly executed by Gulf
Island;
(ix) the Non-Competition Agreement, duly executed by Buyer;
(x) the Lock-Up Agreement, duly executed by Gulf Island;
(xi) the Transition Services Agreement, duly executed by Buyer;
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(xii) certificates, dated as of the Closing Date, executed by and
appropriate executive officer of each of Buyer and Gulf Island, certifying
that (i) the representations and warranties of Gulf Island and Buyer
contained in this Agreement and any other agreement executed and delivered
in connection with the transactions contemplated hereby are true and
correct as of such date and (ii) Gulf Island and Buyer have performed and
complied, in all material respects, with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by
the Gulf Island and Buyer prior to or on the Closing Date;
(xiii) a certificate of the Secretary or Assistant Secretary of each
of Buyer and Gulf Island as to the incumbency and signatures of the their
respective officers executing this Agreement and any other certificate or
document executed and delivered pursuant hereto;
(xiv) an opinion of counsel to Buyer and Gulf Island in the form
attached as Exhibit "J," subject to such assumptions, qualifications, and
exceptions as are acceptable to Seller Parties in their reasonable
discretion; and
(xv) the Cooperation Agreement duly executed by Buyer.
(c) Each of the Seller Parties shall take such other actions as are
reasonably requested by Gulf Island or otherwise reasonably required to
consummate the transactions contemplated by this Agreement.
(d) At the Closing, Buyer must also receive employment agreements, duly
executed by each of the Key Employees, in the forms attached hereto as Exhibit
"L" (the "Employment Agreements").
Section 2.10 Effect of Consents to Transfer Not Obtained. Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not constitute
an assignment or agreement to assign any Assumed Contract, Warranty or
Governmental Permit (or any rights thereunder) if an attempted assignment
thereof, without the consent, waiver, confirmation, novation or approval (a
"Consent") of a party thereto or any other Person, would constitute a breach or
other contravention thereof, be ineffective with respect to any party thereto or
in any way adversely affect the rights of Buyer or Seller thereunder. With
respect to any such Assumed Contract, Warranty or Governmental Permit, after the
Closing, each of the Seller Parties will use all necessary good faith efforts to
obtain as expeditiously as possible the Consent of the other parties to such
Assumed Contract, Warranty or Governmental Permit for the assignment thereof to
Buyer or its designee or, alternatively, written confirmation from such parties
reasonably satisfactory in form and substance to Buyer and Seller that such
Consent is not required. To the extent that any such Consent is not obtained,
each of the Seller Parties shall use all reasonable efforts to: (a) cooperate
with Gulf Island and Buyer in any reasonable arrangement intended to provide to
Buyer or its designee the benefits of any such Assumed Contract, Warranty or
Governmental Permit; and (b) enforce for the benefit of Buyer or its designee
any rights of Seller arising from any such Assumed Contract, Warranty or
Governmental Permit.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
Except as set forth in the Disclosure Schedule attached hereto as Exhibit
"M," the Seller Parties hereby represent and warrant to Gulf Island and Buyer,
as of the Effective Date and as of the Closing Date, on a joint and several and
solidary basis as follows:
Section 3.1 Ownership. Parent is the ultimate U.S. domiciled owner of all
of the issued and outstanding capital stock of each of the Partners, and the
Partners are the sole partners comprising Seller. There is no existing
subscription, debt security, option, warrant, calls, commitment or other
agreement or right (whether statutory or contractual) to which Seller, either
Partner or Parent is a party requiring, and there are no convertible securities
of Seller or the Partners outstanding, which upon conversion would require,
directly or indirectly, the issuance of any additional shares of capital stock
or other equity securities of Seller or either Partner or other securities
convertible into or exercisable or exchangeable for shares of capital stock or
other equity securities of Seller or either Partner to any Person other than
Parent, and there are no obligations (contingent or otherwise) of Seller to make
investments in any other Person. There are no bonds, debentures, notes, lines of
credit, letters of credit or other indebtedness of Seller issued and outstanding
having the right to vote on any matters other than those owned by the Partners,
and there are no bonds, debentures, notes, lines of credit, letters of credit or
other indebtedness of the Partners outstanding other than those owned directly
or indirectly by Parent.
Section 3.2 Organization; Authority; Enforceability.
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of Delaware, and has all requisite power to carry out
its business as now being conducted. The Partner, Gulf Deepwater Fabricators,
Inc. is a corporation duly organized, validly existing and in good standing
under the laws of Texas. The Partner, Gulf Deepwater Yards, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware. Each Partner has all requisite power to carry out its business as
now being conducted. Seller is a general partnership duly organized, validly
existing and in good standing under the laws of Texas, and has all requisite
power to carry out its business as now being conducted.
(b) Each of the Seller Parties has the requisite power and authority to
execute and deliver this Agreement and to carry out their respective obligations
hereunder. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate or partnership action on the part of Parent, the
Partners, and Seller, respectively, and no other corporate or partnership
proceedings on the part of Parent, the Partners, or Seller are necessary to
authorize this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly executed and delivered by each of the Seller Parties and
the Partners and constitutes, and each other agreement, instrument or document
executed or to be executed by the Seller Parties and the Partners in connection
with the transactions contemplated hereby has been, or when executed will be,
duly executed and delivered by the Seller Parties and the Partners and
constitutes, or when executed and delivered will constitute, a valid and legally
binding obligation of each of the Seller Parties and the Partners, enforceable
against each of them in accordance with its terms.
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Section 3.3 Legal Proceedings.
(a) There are no Proceedings pending or to the knowledge of the Seller
Parties threatened (i) seeking to restrain, prohibit or obtain damages or other
relief in connection with this Agreement or the transactions contemplated
hereby, (ii) asserting that any Person, other than the Partners, is the holder
or the beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, or any other voting, equity or ownership interest in, any of the
outstanding capital stock or other equity interests of Seller or in any Assets,
or (iii) that relate to the Assumed Contracts, the Warranties or the
Governmental Permits, except as disclosed in Schedule 3.3 (a)(iii).
(b) Except as disclosed in Schedule 3.3(b), there are no Proceedings
pending, or to the knowledge of the Seller Parties, threatened against or
relating to any of Seller, the Assets or the Business and there are no facts or
circumstances that could reasonably be expected to result in any such
Proceedings. No Proceedings have been instituted or, or to the knowledge of the
Seller Parties, threatened by any Person seeking to restrain or prohibit or to
obtain damages with respect to the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
Section 3.4 Qualification; Subsidiaries.
(a) No actions or proceedings to dissolve Seller, either Partner or Parent
are pending or, to the knowledge of the Seller Parties, are threatened. Seller
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
conduct of its business requires such qualification or licensing, and each such
jurisdiction is listed on Schedule 3.4(a).
(b) Seller does not own, directly or indirectly, any membership interests,
shares of capital stock, or any other equity or ownership interest in any other
Person. Seller is not a party to any partnership or joint venture agreement
unless otherwise listed on Schedule 3.4(b).
Section 3.5 No Conflict. Neither the execution and the delivery of this
Agreement by either of the Seller Parties or of the Partners, nor the
consummation of the transactions contemplated hereby do or will: (a)(i) violate,
conflict with, or result in a breach of any provisions of, (ii) constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under; or (iii) result in the termination of or accelerate
the performance required by, any of the terms, conditions or provisions of the
respective Charter Documents of either of the Seller Parties or of the Partners
or any note, bond, mortgage, indenture, deed of trust, lease, license, loan
agreement or other agreement, instrument or obligation to or by which either of
the Seller Parties or of the Partners or any of their respective assets are
bound; (b) result in the creation of any Lien upon any of the Assets; or (c)
violate any Applicable Law binding upon either of the Seller Parties or of the
Partners or any of the Assets.
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Section 3.6 Consent. Except as set forth on Schedule 3.6, no consent,
approval, order or authorization of, or declaration, filing or registration
with, any Governmental Entity or any other Person is required to be obtained or
made by the Seller Parties or of the Partners in connection with the execution,
delivery or performance by the Seller Parties or of the Partners of this
Agreement or the consummation of the transactions contemplated hereby other than
compliance with and filings under the HSR Act, including, without limitation,
the assignment and assumption of the Assumed Contracts pursuant to Section
2.1(d).
Section 3.7 Charter Documents. Parent has provided to Gulf Island accurate
and complete copies of (a) the Charter Documents of Seller and the Partners and
(b) the minutes of all meetings of the governing body of Seller (and all
consents in lieu of such meetings) held since January 1, 2001. Such records,
minutes and consents accurately reflect the ownership of Seller and all actions
taken by the governing body, committees and members thereof. Seller is not in
violation of any provision of its Charter Documents.
Section 3.8 Financial Statements. Schedule 3.8 includes a true and complete
copy of the Financial Statements. The Financial Statements have been prepared in
accordance with GAAP consistent with prior periods from the books and records of
Seller, are complete, correct and in accordance with the books of account and
records of Seller and fairly present the financial condition and results of
operations of Seller on the dates, and for the periods indicated thereon, as
applicable. Seller does not have any liabilities, commitments, debts or
obligations of any nature (whether accrued, absolute, liquidated or
unliquidated, actual or contingent, unasserted or otherwise), except (a)
liabilities disclosed, reflected or reserved against in the Financial Statements
or Schedule 3.8 or (b) current liabilities and obligations incurred since
September 30, 2005 in the ordinary course of business and outstanding on the
Effective Date that individually do not exceed $25,000, except as disclosed in
Schedule 3.8(b).
Section 3.9 Absence of Certain Changes. Except as disclosed in Schedule
3.9, since September 30, 2005, there has not been any material adverse change in
the business, operations, properties, assets or conditions of Seller, and no
event has occurred or circumstance exists that may result in such a material
adverse change. Except as disclosed in Schedule 3.9, Seller has operated the
Business and the Assets in the ordinary course consistent with past practice and
Seller has not, since September 30, 2005 (except with Gulf Island's written
consent):
(a) incurred any obligation or liability in excess of $25,000, absolute or
contingent, except (i) trade or business obligations incurred in the ordinary
course of business or (ii) sales, income, franchise or ad valorem taxes accruing
or becoming payable in the ordinary course of business;
(b) entered into any agreement or transaction requiring payments by Seller
in excess of $25,000 not in the ordinary course of business;
(c) subjected any of the Assets to any Lien;
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(d) increased the rate of compensation (including bonuses, contingent
severance payments, retirement, profit sharing, benefits or any other payments)
payable or to become payable to any of its officers, directors or employees,
except periodic increases of such compensation in the ordinary course of
business and consistent with Seller's past practices;
(e) adopted any employee welfare, pension, retirement, profit sharing or
similar plan or made any material addition to or modification of existing plans;
(f) experienced any labor trouble or any material controversy or material
unsettled grievance involving any personnel;
(g) entered into, terminated or received notice of the termination of any
Material Contract, commitment or transaction or waived any right of material
value to it;
(h) made any change in any accounting principle, procedure or practice
followed by it;
(i) made any capital expenditure in an aggregate amount of $50,000 or more
or entered into any Lease;
(j) suffered any material damage, destruction or casualty with respect to
the Assets, or experienced any events, conditions, losses or casualties which
have resulted in or are reasonably likely to result in claims under its
insurance policies with respect to the Assets of an aggregate of $50,000 or
more;
(k) disposed of any spare parts outside the ordinary course of business;
(l) defaulted under any note, loan, mortgage, guarantee or other instrument
of indebtedness or any Material Contract;
(m) received any notification, warning or inquiry from, or given any
notification to or had any communication with, any Governmental Entity, with
respect to any proposed remedial action for any violation or alleged or possible
violation of any Applicable Law, nor are any facts known to the Seller Parties
that may reasonably be expected to give rise to any such notification, warning
or inquiry;
(n) transferred any asset, right or interest to, or entered into any
transaction with any of its Affiliates;
(o) amended its Charter Documents; or
(p) made any agreement or commitment to do any of the foregoing.
Section 3.10 Inventory. All inventory of Seller is of a quality and
quantity that is usable in the ordinary course of their respective businesses
except as disclosed in Schedule 3.10 and is sold as seen.
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Section 3.11 Equipment. Schedule 2.1 lists all items of equipment owned by
Seller as reflected on Seller's asset register. Except as otherwise noted on
Schedule 3.11, each item of equipment listed on Schedule 3.11 is in good working
order and condition, taking into account its age and normal wear and tear.
Seller has performed, or caused to be performed, all necessary maintenance and
repairs on the equipment listed on Schedule 3.11 to maintain such equipment in
good working order and condition, taking into account its age and normal wear
and tear. Seller's maintenance books and logs with respect to such equipment are
accurate in all material respects.
Section 3.12 Suppliers and Customers. Schedule 3.12 lists the top five
customers by revenue of Seller in each of 2001, 2002, 2003, and 2004. To the
knowledge of the Seller Parties, except to the extent in either case as could
not reasonably be expected to have a material adverse effect on the Business or
as stated on Schedule 3.12: (i) no supplier providing products, materials or
services to Seller intends to (A) cease selling such products, materials or
services to Seller, (B) limit or reduce such sales to Seller or (C) materially
alter the terms or conditions of such sales; and (ii) no customer of Seller
listed on Schedule 3.12 has terminated or intends to terminate, limit or reduce
its or their business relations with Seller.
Section 3.13 Real Property.
(a) Schedule 2.1(a) sets forth a true and complete list of all real
property owned by Seller (collectively, the "Owned Real Properties"). Except for
Permitted Encumbrances, Seller has good and merchantable title in fee simple to
all Owned Real Properties. Except for Permitted Encumbrances, none of the Owned
Real Properties is subject to any Liens, except for easements, rights of way,
encroachments or other restrictions or matters affecting title which do not
prevent the Owned Real Properties from being used for the purpose for which they
are currently being used or otherwise materially impair Seller's current
operations or the value of the Owned Real Properties.
(b) All improvements on the Owned Real Properties and the operations
therein conducted conform in all material respects to all applicable health,
fire, safety, zoning and building laws, ordinances and administrative
regulations.
(c) The buildings, driveways and all other structures and improvements upon
the Owned Real Properties are all within the boundary lines of such Owned Real
Properties (and do not encroach upon the property of, or otherwise conflict with
the property rights of, any other Person) or have the benefit of valid
easements, and there are no outstanding requirements by any insurance company
which has issued a title policy covering any such property which is a condition
to continued coverage under such policy at the current insurance premium.
(d) No Person, other than Seller, is in possession of all or any portion of
the Owned Real Properties under any unrecorded leases, tenancy at will or
otherwise.
(e) Seller, during the time of ownership of the Owned Real Properties, has
neither conveyed any portion of the Owned Real Properties nor done any act or
allowed any act to be done which has changed or could change the boundaries of
the Owned Real Properties, except as disclosed in the real estate records of the
counties in which the Owned Real Properties are located and except for Permitted
Encumbrances.
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(f) Seller has allowed no easements, rights of way, continuous driveway
usage, drain, sewer, water, gas or oil pipeline or other rights of passage to
others over the Owned Real Properties and has no knowledge of such adverse
rights other than those found in the real estate records of the counties in
which the Owned Real Properties are located and except for Permitted
Encumbrances.
Section 3.14 Real Property Leases. Seller has no leases or other occupancy
interests of real property owned by other Persons.
Section 3.15 Personal Property.
(a) Except as set forth in Schedule 3.15(a) and the leased Personal
Property listed on Schedule 3.15(b), Seller has good title to all personal
property Assets, including, without limitation, inventory, work in process
(subject to claims of Seller's customers), equipment, machinery, tools,
furniture, supplies, telephone and telecopy numbers, and email addresses (the
"Personal Property"), free and clear of all Liens, other than Liens for Taxes
not yet due and payable and Provider Liens.
(b) Schedule 3.15(b) sets forth a true and complete list of all Leases
relating to the Personal Property leased by Seller, the expiration date of each
such lease, and the monthly rental due under each such lease. Seller holds valid
leaseholds in all of the Personal Property leased by it, which leases are
enforceable in accordance with their respective terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally, and (ii) general equitable
principles.
(c) Seller is not in breach of or default (and, to the knowledge of the
Seller Parties, no event has occurred which, with due notice or lapse of time or
both, may constitute such a lapse or default) under any Lease of any item of
Personal Property leased by it. To the knowledge of the Seller Parties, no other
party is in breach or default under any such Lease for any item of Personal
Property.
Section 3.16 Sufficiency of Assets. The Assets, taken as a whole,
constitute all of the assets (except the Excluded Assets) used or held for use
by Seller in the operation of the Business in the manner presently operated by
Seller, except as disclosed in Schedule 3.16.
Section 3.17 Governmental Permits. Schedule 2.1(g) sets forth a complete
and correct list of all Governmental Permits held by Seller and the expiration
date of each listed Governmental Permit. Except as set forth on Schedule 2.1(g),
(a) Seller has all Governmental Permits that are necessary or required for the
conduct of its business; (b) Seller has conducted its business in compliance
with, and is in compliance with, all Governmental Permits; (c) to the best of
Seller's knowledge no Governmental Permit will be subject to suspension,
modification, revocation, termination, cancellation or non-renewal as a result
of the execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated hereby (provided, however, that Buyer shall be
14
required to apply for the re-issuance of such Governmental Permits in Buyer's
name as the result of the transaction contemplated hereby); (d) no event has
occurred or condition exists which constitutes, or after notice or lapse of time
or both would constitute, a breach or default under any Governmental Permit or
which would allow, or after notice or lapse of time or both would allow,
revocation or termination of any Governmental Permit; and (e) there has been no
notice of cancellation, default or any dispute concerning any Governmental
Permit.
Section 3.18 Compliance with Laws. Except as set forth on Schedule 3.18 and
for violations that can not reasonably be expected to have a material adverse
effect on Seller, Buyer or the Assets, Seller has at all times since January 1,
2001 complied with, and is not currently in violation of, and has not received
any notices of violation with respect to, any Applicable Law with respect to the
conduct of its business or the ownership or operation of its assets.
Section 3.19 Material Contracts and Warranties.
(a) Schedule 3.19(a) lists and briefly describes all Material Contracts. A
complete and correct copy of each Material Contract has been furnished to Gulf
Island. Each Material Contract is valid, binding and enforceable, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally, and (ii) general equitable
principles. Seller and, to the knowledge of the Seller Parties, each other party
to each Material Contract, is in compliance in all material respects with the
provisions of such Material Contract.
(b) Schedule 3.19(b) sets forth a true and complete list of all outstanding
warranty claims asserted by third parties with respect to any services,
construction or fabrication performed by Seller or products sold by Seller.
(c) All work performed by Seller for its customers under the Assumed
Contracts has been performed according to the scope of work and milestone and
other scheduling requirements thereof. Seller does not anticipate any delay in
completing the work required under the Assumed Contracts in accordance with the
Assumed Contracts' requirements, including milestone and other scheduling
requirements. Seller has not deviated in any material way from the scope of work
or schedule imposed by any Assumed Contract (taking into account all executed
change orders), and, except as set forth on Schedule 3.19(c), no change orders
under the Assumed Contracts are contemplated by Seller or, to the best of
Seller's knowledge, its customers.
Section 3.20 Crane Commitments. All commitments entered into by Seller with
respect to the renting or acquisition of additional cranes that do not
constitute Material Contracts are assignable to Buyer without the consent of any
other party thereto except as disclosed in Schedule 3.20.
Section 3.21 Environmental Matters.
(a) Except as set forth on Schedule 3.21(a):
(i) Seller has complied, and are complying with, all Environmental
Laws and the requirements of any permits, licenses or authorizations issued
under such Environmental Laws with respect to Seller, the Assets or the
Business except for instances of non-compliance which can not reasonably be
expected to have a material adverse effect on Seller, Buyer or the Assets;
15
(ii) Buyer shall not incur any liability under any Environmental Laws
as a result of conditions or contamination existing on the Owned Real
Properties as of the Closing Date or as a result of activities which
occurred at or in connection with the Owned Real Properties on or prior to
the Closing Date (including, without limitation, any liability for exposure
suffered by any of Seller's current or former employees, independent
contractors, or employees of such independent contractors to asbestos,
silica, manganese or other substances during the period ending on the
Closing Date), and, to the best of Seller's knowledge, since January 1,
2001, there are no circumstances, activities, events, conditions or
occurrences that could reasonably be anticipated to (A) form the basis of
an Environmental Claim against Seller or Parent with respect to Seller with
respect to a liability in excess of $100,000, (B) cause Seller to be
subject to any restrictions on its ownership, occupancy, use or
transferability of any of its properties or assets under any Environmental
Law, (C) require the filing or recording of any notice or restriction
relating to the presence of Hazardous Materials in any property owned,
leased, operated or otherwise used by Seller or (D) prevent or interfere
with Seller's ability to fully operate and conduct the Business in full
compliance with applicable Environmental Laws;
(iii) all Governmental Permits required under Environmental Laws to
operate and conduct the respective businesses of Seller have been obtained,
are valid and are in full force and effect;
(iv) there are no past, pending or threatened Environmental Claims
against Seller or Parent with respect to Seller, except for past
Environmental Claims that have been resolved and that can not be reasonably
expected to have a material adverse effect on Seller, Buyer or the Assets;
(v) to the best of Seller's knowledge there is no asbestos contained
in, forming part of or contaminating any part of any property owned,
leased, operated or otherwise used by Seller and no polychlorinated
biphenyls (PCBs) are used, stored, located at or contaminate any part of
any property owned, leased, operated or otherwise used by Seller;
(vi) to the best of Seller's knowledge there are no heavy metals or
other substances contained in dredged materials deposited on the Owned Real
Properties in excess of or in violation of the requirements of
Environmental Laws;
(vii) no cleanup, investigation or remedial action has occurred at any
of the properties that were formerly or are currently owned, leased,
operated or otherwise used by Seller that has resulted in or could result
in the assertion or creation of a Lien on such property by any Governmental
Entity and for which Seller would be responsible, nor has any such
assertion of a Lien been made by any Governmental Entity with respect
thereto that has not been removed; and
16
(viii) Seller is not in violation of any order or requirement of any
court or Governmental Entity pertaining to health or the environment, nor
are there any conditions existing on or resulting from the operations of
Seller that could reasonably be expected to give rise to any on-site or
off-site remedial obligations under any Environmental Law.
(b) All Hazardous Materials or solid wastes generated by or as a result of
operations of Seller and requiring disposal have been transported offsite and
have not been treated or disposed of on site, and then only by carriers
maintaining valid authorizations under applicable Environmental Laws; have been
treated and disposed of only at treatment, storage and disposal facilities
maintaining valid authorizations under applicable Environmental Laws. To the
extent required by law or regulation, appropriate manifests or shipping
documents for each such shipment were prepared and have been maintained, and
such carriers and facilities have been and are operating in substantial
compliance with such authorizations and are not the subject of any pending or
threatened action, investigation or inquiry by any Governmental Entity in
connection with any Environmental Laws.
(c) Without limiting the foregoing and except as set forth on Schedule
3.21, there is no liability (accrued or contingent) to any non-governmental
third party in tort or common law in connection with any release or threatened
release of any Hazardous Material into the environment as a result of operations
conducted by or on behalf of Seller.
Section 3.22 Employee Plans.
(a) Schedule 3.22(a) lists each Employee Plan that Seller maintains,
administers, contributes to, or has any contingent liability with respect
thereto. Seller has provided a true and complete copy of each Employee Plan
maintained for the benefit of, or relating to, either current or former
employees of Seller or any Affiliate who work in the Business, current summary
plan description (and, if applicable, related trust documents) and all
amendments thereto and written interpretations thereof together with: (i) all
annual reports (Form 5500), if any, that have been prepared in connection with
each such Employee Plan for the last three plan years; (ii) all material
communications received from or sent to the Internal Revenue Service or the
Department of Labor within the last two years (including a written description
of any oral communications); (iii) the most recent Internal Revenue Service
determination letter with respect to each Employee Plan; and (iv) all related
actuarial reports, insurance contracts, administrative service agreements.
(b) Schedule 3.22(b) identifies each Benefit Arrangement that Seller
maintains or administers. Seller has made all contributions to, and has no
contingent liability with respect to, any of its Benefit Arrangements. Seller
has furnished to Gulf Island copies or descriptions of each Benefit Arrangement.
Each Benefit Arrangement has been maintained in substantial compliance with its
terms and with the requirements prescribed by any Applicable Law.
(c) Neither Seller nor any ERISA Affiliate has ever maintained or
contributed to an Employee Plan that is or was (i) a plan subject to Title IV of
ERISA, (ii) a "multiemployer plan" (as defined in Section 3(37) of ERISA), (iii)
a "multiple employer welfare arrangement" (as defined in Section 3(40) of
ERISA), or (iv) a plan that provided benefits through a "voluntary employees'
beneficiary association" (as defined in Section 501(c)(9) of the Code).
17
(d) Each Employee Plan has been maintained and administered in compliance
with its terms and with the requirement prescribed by any and all Applicable
Laws, including, but not limited to, ERISA and the Code. Each Employee Plan that
is intended to be qualified under Section 401(a) of the Code has been the
subject of an Internal Revenue Service determination letter, and no event has
occurred since the issuance of any such determination letter that would create a
material risk of revocation of any such determination letter.
(e) Full payment has been made of all amounts that the Seller Parties have
been required to have paid as contributions or premiums to any Employee Plan or
Benefit Arrangement under Applicable Law or under the terms of any such plan or
arrangement.
(f) Neither of the Seller Parties, nor any of their respective officers,
directors or employees have engaged in any transaction with respect to an
Employee Plan that could subject any of such parties to a tax, penalty or
liability for a prohibited transaction, as defined in Section 406 of ERISA or
Section 4975 of the Code.
(g) Except for health care continuation requirements under COBRA or
applicable state law, Seller does not have any obligations for retiree health or
retiree life benefits (whether or not insured) to any current or former employee
after his or her termination of employment or service with Seller.
(h) There is no Proceeding or other dispute pending or, to the Seller
Parties' knowledge, threatened that involves any Employee Plan or Benefit
Arrangement or any fiduciary (as defined in ERISA Section 3(21)) of such
Employee Plan or Benefit Arrangement.
(i) No employee or former employee of Seller will become entitled to any
bonus, retirement, severance, job security or similar benefit or enhanced
benefit (including acceleration of compensation or deferred compensation, an
award, vesting or exercise of an incentive award) or any fee or payment of any
kind solely as a result of any of the transactions contemplated by this
Agreement.
(j) Seller is not a party to any agreement, contract, arrangement or plan
that has resulted or would result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section 280G of
the Code (i.e., a golden parachute).
(k) None of the Employee Plans and Benefit Arrangements maintained or
administered by Seller is presently under audit or examination (nor has notice
been received of a potential audit or examination) by any Governmental Entity,
and no matters are pending with respect to any Employee Plan under any voluntary
compliance resolution or similar program administered by any Governmental
Entity.
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Section 3.23 Taxes. Except as set forth on Schedule 3.23:
(a) All Returns required to be filed on or prior to the date hereof by or
on behalf of Seller and the Partners have been duly filed on a timely basis and
in correct form. Such Returns (including all attached statements and schedules)
are true, complete and correct. An extension of time within which to file any
Return that has not been filed has not been requested or granted. Seller and the
Partners have paid in full all Taxes payable on the Returns or on subsequent
assessments with respect thereto. There are no other Taxes that are payable by
Seller or the Partners or for which any of Seller or the Partners is liable with
respect to items or periods covered by the Returns (whether or not shown on or
reportable on such Returns) or with respect to any taxable period (or portions
thereof) ending on or prior to the Closing.
(b) Seller has withheld or, by the Closing Date, it will have withheld and
paid over all Taxes required to have been withheld and paid over (including any
estimated taxes) with respect to periods (or portions thereof) ending on or
prior to the Closing Date. Seller has complied with all information reporting
and backup withholding requirements, including maintenance of required records
with respect thereto in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party.
(c) There are no Liens on any of the assets of Seller with respect to
Taxes, other than Liens for current Taxes not yet due and payable.
(d) Parent has made available to Gulf Island true and complete copies of
all Returns of Seller and all Returns in which the operations of Seller are
reflected for all periods beginning on or after January 1, 2003.
(e) Seller is not party to or bound by any tax sharing or allocation
agreement, tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any Governmental Entity).
(f) Except as set forth on Schedule 3.23(f), none of the Assets:
(i) Secures any debt;
(ii) Is "tax exempt use property" within the meaning of Section 168(h)
of the Code;
(iii) Is "tax exempt bond financing property" within the meaning of
Section 168(g)(5) of the Code;
(iv) Is "limited use property" within the meaning of Revenue Procedure
76 30; or
(v) Will be treated as owned by any other person pursuant to the
provisions of Section 168(f)(8) of the Code.
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(g) Seller is not a party to any joint venture, partnership or other
arrangement or contract (other than the partnership agreement of Seller) that is
or could be treated as a partnership for federal income tax purposes.
Section 3.24 Certain Payments. Neither Seller, nor any manager, member,
agent, or employee of Seller, or any other Person associated with or acting for
or on behalf of Seller, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, whether in money, property or services (i) to obtain favorable treatment
in securing business, (ii) to pay for favorable treatment for business secured,
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of Seller or any Affiliate of Seller or (iv) in violation of
any Applicable Law; or (b) established or maintained any fund or material asset
that has not been recorded in the books and records of Seller.
Section 3.25 Transactions with Certain Persons. Except as set forth on
Schedule 3.25 and except for at-will employment relationships in the ordinary
course of business, none of (i) Parent, (ii) any director, officer or employee
of Parent or Seller, or (iii) any of such Person's Affiliates, is presently a
party to any transaction with Seller, including without limitation, any
contract, agreement or other arrangement providing for the furnishing of
services by, or the rental of real or personal property from, any such Person or
from any of such Person's Affiliates.
Section 3.26 Intellectual Property. Schedule 3.26 sets forth a true and
complete list of all Intellectual Property owned by or used in the business of
Seller, indicating whether such property is owned or licensed. Seller either
owns or has valid licenses to use all Intellectual Property used in its business
as presently conducted; provided, however, that the Seller Parties make no
representation or warranty with respect to Seller's ownership of the name "Gulf
Marine Fabricators," which is being transferred to Buyer without warranty.
Seller is in compliance with all such licenses and agreements and there are no
pending or threatened Proceedings challenging or questioning the validity or
effectiveness of any license or agreement relating to such Intellectual Property
or the right of Seller to use, copy, modify or distribute the same.
Section 3.27 Insurance. Schedule 3.27 sets forth a complete and correct
list and summary description, including coverage limitations thereunder, of all
insurance policies and binders maintained by Seller and that relate to the
Business or the Assets. Except as set forth on Schedule 3.27, all premiums due
under such policies and binders have been paid or accrued for on Seller's
accounting records as of the date of this Agreement, all such policies and
binders are in full force and effect, no notice of cancellation or nonrenewal of
any such policy or binder has been received by Seller and no notice of
disallowance of any claim under any insurance policy or binder, whether or not
currently in effect, has been received by Seller.
Section 3.28 Safety and Health. The property and assets of Seller have
been, and currently are being, operated in all material respects in compliance
with all Applicable Laws designed to protect safety and health including,
without limitation, the Occupational Health and Safety Act of 1970, as amended.
Seller has not received any written notice of any violations, deficiency,
investigation or inquiry from any Governmental Entity, employee or third party
under any such law and, to the Seller Parties' knowledge, no such investigation
or inquiry is planned or threatened.
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Section 3.29 Books and Records. Except to the extent prohibited by
Applicable Law, Gulf Island has been provided with access to or copies of all of
the books and records of Seller requested by Gulf Island, including all
personnel files, employee data and other materials relating to employees, and
such books and records are complete and correct and have been maintained in
accordance with good business practice and all Applicable Laws. Such books and
records accurately and fairly reflect, in reasonable detail, all assets,
liabilities and material transactions of Seller.
Section 3.30 Labor Matters.
(a) Schedule 3.30(a) sets forth a true and complete list of all current
employees of Seller (whether direct employees or employees seconded by
Affiliates of Seller) and their current hourly wage or monthly salary, as
applicable, and their respective hire dates.
(b) Schedule 3.30(b) lists all written employment, commission, bonus or
other compensation and consulting agreements to which Seller is a party. Except
as set forth on Schedule 3.30(b), Seller is not a party to any written or oral
employment, commission, bonus or other compensation or consulting agreement that
Seller may not terminate without any payment or penalty, at will, with or
without cause.
(c) (i) To the best of Seller's knowledge, except as disclosed on Schedule
3.30(c), Seller is in compliance with all Applicable Laws relating to employment
and employment practices, wages, hours, and terms and conditions of employment,
(ii) there is no unfair labor practice charge or complaint against Seller
pending before any Governmental Entity, (iii) there is no labor strike,
slowdown, work stoppage or lockout actually pending or threatened against or
affecting Seller, (iv) there is no representation claim or petition pending
before any Governmental Entity, (v) there are no charges with respect to or
relating to Seller pending before any Governmental Entity responsible for the
prevention of unlawful employment practices and (vi) Seller has received no
formal notice from any Governmental Entity responsible for the enforcement of
labor or employment laws of an intention to conduct an investigation of Seller
and no such investigation is in progress.
Section 3.31 Documents and Written Materials. Originals or true and
complete copies of all documents or other written materials underlying items
listed in the Disclosure Schedule have been furnished or made available to Gulf
Island in the form in which each of such documents is in effect.
Section 3.32 Brokers' Fees. None of the Seller Parties have incurred any
obligation or liability, contingent or otherwise, for brokerage or finder's fees
or investment banking fees or other similar payments in connection with this
Agreement for which either Buyer or Gulf Island is or will be responsible.
Section 3.33 Investment Representation.
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(a) Seller is acquiring the shares of Gulf Island Common Stock payable
hereunder for investment for its own account and not with a view to, or for sale
or other disposition in connection with, any distribution of all or any part
thereof. In receiving such shares, Seller is not offering or selling, and will
not offer and sell, for Gulf Island in connection with any distribution of such
shares, and Seller does not have any contract, undertaking, agreement or
arrangement with any person for the distribution of such shares and will not
participate in any undertaking or in any underwriting of such an undertaking
except in compliance with Applicable Law.
(b) Seller has been afforded access to information about Gulf Island and
Gulf Island's financial position, results of operation, business, property and
management sufficient to enable it to evaluate an investment in the shares of
Gulf Island Common Stock payable hereunder, and has had the opportunity to ask
questions of and has received satisfactory answers from Gulf Island concerning
the foregoing matters.
(c) Seller acknowledges that the certificates representing the shares of
Gulf Island Common Stock to be issued hereunder will bear a restrictive legend
substantially similar to the following:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
jurisdiction within the United States, and may not be offered, sold or
otherwise transferred, pledged or hypothecated unless and until such shares
are registered under such Act or an opinion of counsel satisfactory to Gulf
Island Fabrication, Inc. is obtained to the effect that such registration
is not required. The Shares represented by this certificate are further
subject to the terms of that certain Lock-Up Agreement dated _________
between the certificate holder and Gulf Island Fabrication, Inc., a copy of
which may be obtained from Gulf Island Fabrication, Inc."
(d) None of the Seller Parties or their respective Affiliates (i) owns any
shares of Gulf Island Common Stock, and (ii) other than the Gulf Island Common
Stock issuable to the Seller pursuant to Section 2.3, has any right or option to
acquire any such shares.
Section 3.34 Disclosure. No representation or warranty of the Seller
Parties contained in this Agreement, including in the Disclosure Schedule,
contains any misstatement of a material fact or omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. There is no fact known to
either of the Seller Parties that has specific application to Seller or the
transactions contemplated by this Agreement (other than general economic or
industry conditions) and that materially and adversely affects the business,
operations, properties, prospects, assets or conditions of Seller that has not
been set forth in this Agreement or in the Disclosure Schedule.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GULF ISLAND AND BUYER
Gulf Island and Buyer represent and warrant to the Seller Parties, as of
the date hereof and as of the date of the Closing, on a joint, several and
solidary basis as follows:
Section 4.1 Organization.
(a) Gulf Island is a corporation duly organized, validly existing and in
good standing under the laws of the State of Louisiana and has all requisite
corporate power and authority to own its properties and carry on its business as
now being conducted.
(b) Buyer is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Texas and has all requisite limited
partnership power and authority to own its properties and carry on its business
as now being conducted.
Section 4.2 Authority; Enforceability. Each of Gulf Island and Buyer have
the requisite corporate and limited partnership power and authority,
respectively, to execute and deliver this Agreement and to carry out its
respective obligations hereunder. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate and limited partnership action
on the part of Gulf Island and Buyer, respectively, and no other corporate or
limited partnership proceedings on the part of either Gulf Island or Buyer,
respectively, are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by each of Gulf Island and Buyer and constitutes a valid and binding
obligation of each of Gulf Island and Buyer, enforceable against each of them in
accordance with its terms except to the extent that such enforcement may be
limited by bankruptcy, reorganization, insolvency and other similar laws and
court decisions relating to or affecting the enforcement of creditors' rights
generally and by equitable principles.
Section 4.3 Consents and Approvals; Conflicts. No filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution by either Gulf Island or Buyer of this Agreement or
the consummation by Gulf Island or Buyer of the transactions contemplated hereby
other than compliance with and filings under the HSR Act. Neither the execution
and delivery of this Agreement by either Gulf Island or Buyer, nor the
consummation of the transactions contemplated hereby, will violate any of the
provisions of the Charter Documents of either Gulf Island or Buyer; conflict
with or result in a breach of, or give rise to a right of termination of, or
accelerate the performance required by, any terms of any court order, consent
decree, note, bond, mortgage, indenture, deed of trust, or any license or
agreement binding on either Gulf Island or Buyer or to which either Gulf Island
or Buyer is subject or a party, or constitute a default thereunder; or result in
the creation of any Lien upon any of the assets of either Gulf Island or Buyer,
except for any such conflict, breach, termination, acceleration, default or Lien
that would not have a material adverse effect on (a) the business, assets or
financial condition of either Gulf Island or Buyer or (b) either Gulf Island's
or Buyer's ability to consummate any of the transactions contemplated hereby.
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Section 4.4 Ownership of Subsidiary. Gulf Island owns all of the
outstanding ownership interests in the partners of Buyer.
Section 4.5 Capitalization.
(a) The authorized capital stock of Gulf Island consists of 20,000,000
shares of common stock, no par value per share, of which as of December 16,
2005, 12,276,821 shares were issued and outstanding, and 5,000,000 shares of
preferred stock, no par value per share, of which as of that date no shares were
issued and outstanding. All such issued and outstanding shares have been duly
authorized and are validly issued, fully paid and non-assessable.
(b) The shares of Gulf Island Common Stock to be issued hereunder, when
issued and delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable.
Section 4.6 Legal Proceedings. There are no Proceedings pending, or to the
knowledge of Gulf Island or Buyer threatened, against Gulf Island or Buyer
seeking to restrain, prohibit or obtain damages or other relief in connection
with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
Section 4.7 Financial Statements. The financial statements included in Gulf
Island's Form 10-K filings with the Securities and Exchange Commission have been
prepared in accordance with GAAP consistent with prior periods (except as
otherwise noted in such filings) from the books and records of Gulf Island, are
complete, correct, and in accordance with the books and accounts of records of
Gulf Island and fairly present the financial condition and results of operations
of Gulf Island on the dates, and for the periods indicated thereon.
Section 4.8 Compliance with Laws. Except as set forth on Schedule 4.8 and
for violations that can not reasonably be expected to have a material adverse
effect on Gulf Island, Gulf Island has at all times since January 1, 2001
complied with, and is not currently in violation of, and has not received any
notices of violation with respect to, any Applicable Law with respect to the
conduct of its business or the ownership of its assets.
Section 4.9 Certain Payments. Neither Gulf Island or Buyer nor any employee
of Gulf Island or Buyer has (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback or other payment to any Person, whether in
money, property or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of Gulf Island or Buyer or (iv) in violation of any Applicable Law;
or (b) established or maintained any fund or material asset that has not been
recorded in the books and records of Gulf Island or Buyer.
Section 4.10 Transaction With Certain Persons. Except as set forth on
Schedule 4.10 and except for employment relationships in the ordinary course of
business, none of (i) any director, officer or employee of Gulf Island or Buyer,
or (ii) any of such Person's Affiliates, is presently a party to any transaction
with Gulf Island or Buyer, including without limitation, any contract, agreement
or other arrangement providing for the furnishing of services by, or the rental
of real or personal property from, any such Person or from any of such Person's
Affiliates.
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Section 4.11 Safety and Health. The property and assets of Gulf Island and
Buyer have been, and currently are being, operated in all material respects in
compliance with all Applicable Laws designed to protect safety and health
including, without limitation, the Occupational Health and Safety Act of 1970,
as amended, except where non-compliance can not reasonably be anticipated to
have a material adverse effect on Gulf Island. Neither Gulf Island nor Buyer
have received any written notice of any violations, deficiency, investigation or
inquiry from any Governmental Entity, employee or third party under any such law
and, to Gulf Island's and Buyer's knowledge, no such investigation or inquiry is
planned or threatened.
Section 4.12 No Pending Acquisition. Neither Gulf Island nor any of its
subsidiaries is currently a party to any negotiations that can be reasonably
anticipated to result, prior to or within 60 days of the Closing Date, in (i)
another Person's acquisition of Gulf Island or all or substantially all of Gulf
Island's assets or (ii) except for the transaction contemplated by this
Agreement, the acquisition by Gulf Island or one of its subsidiaries of another
Person or all or substantially all of another Person's assets, in each instance,
whether through a stock purchase, asset purchase, merger or other similar
transaction.
Section 4.13 Environmental Matters. Except as set forth in Gulf Island's
2004 Annual Report, Buyer and Gulf Island have complied, and are complying with,
all Environmental Laws and the requirements of any permits, licenses or
authorizations issued under such Environmental Laws with respect to Gulf Island,
except for instances of non-compliance which can not reasonably be expected to
have a material adverse effect on Seller, Buyer or Gulf Island.
Section 4.14 Divestment. Buyer and Gulf Island hereby agree not to sell the
Assets until the Chevron Tahiti Project is completed; provided, however, that,
prior to such time, Buyer may sell or otherwise dispose of (i) the Owned Real
Property in Refugio, Texas and all improvements and Personal Property thereon,
(ii) any obsolete, damaged or destroyed equipment or inventory, (iii) any
inventory or equipment that is incorporated into work delivered to customers,
and (iv) any other Assets that are not material to the continued operation of
the Business.
Section 4.15 Disclosure. No representation or warranty of either Buyer or
Gulf Island contained in this Agreement contains any misstatement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE V
PRE-CLOSING COVENANTS
Section 5.1 Access.
(a) During the period beginning on the date hereof and ending at the
Closing, the Seller Parties will (i) give or cause to be given to Gulf Island
and its representatives such access, during normal business hours, to the
properties, books and records of Seller as Gulf Island shall from time to time
reasonably request and (ii) furnish or cause to be furnished to Gulf Island such
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financial and operating data and other information with respect to Seller as
Gulf Island shall from time to time reasonably request. Gulf Island and its
representatives shall be entitled to such access to the representatives,
officers and employees of Seller as Gulf Island may reasonably request.
(b) From and after the Closing, Gulf Island will, and will cause Buyer to,
use their commercially reasonable efforts to (i) cause to the employees of
Seller as of immediately prior to the Closing that are employed by Buyer after
the Closing to be reasonably available to Seller for the purpose of assisting
Seller with the prosecution or defense of the Proceedings listed on Schedule
3.3(b) and (ii) make available to Seller for Seller to copy, at Seller's
expense, such documents or other information obtained by Buyer from Seller
pursuant to this Agreement as Seller may reasonably require for the prosecution
or defense of such Proceedings or for other matters such as tax audits, warranty
claims, and employee matters. Seller shall promptly reimburse Buyer the salaries
or wages that are paid by Buyer to such Employees with respect to the time that
such Employees assist Seller with respect to such Proceedings.
Section 5.2 Inspection. Gulf Island shall have the right, at its sole risk
and cost, to inspect the Assets at any reasonable time and from time to time
prior to the Closing, provided that such inspection shall be conducted in a
manner that does not unreasonably interfere with the operation of the Business.
Section 5.3 Conduct of the Business. Except as specifically required or
contemplated by this Agreement or otherwise consented to or approved in writing
by Gulf Island, during the period commencing on the date hereof and ending at
the Closing, Seller shall operate the Business in the ordinary course consistent
with past practice, and shall not take any action or fail to take any action,
except as required by Applicable Law, that would cause any of the
representations and warranties of the Seller Parties contained in Section 3.9 to
be untrue as of the date of the Closing. Except as specifically required or
contemplated by this Agreement or otherwise consented to or approved in writing
by Seller, Buyer or Gulf Island shall not take any action or fail to take any
action, except as required by Applicable Law, that would cause any of the
representations and warranties of Buyer or Gulf Island contained in Article IV
to be untrue in any material respect as of the Closing.
Section 5.4 Further Actions. Subject to the terms and conditions hereof,
the Seller Parties will each use their best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement, including using best efforts: (a) to obtain prior to the Closing
all Governmental Permits, consents, approvals, authorizations, qualifications
and orders of Governmental Entities and parties to contracts with Seller as are
necessary for the consummation of the transactions contemplated hereby; (b) to
effect all necessary registrations and filings; and (c) to furnish to Gulf
Island such information and assistance as reasonably may be requested in
connection with the foregoing. Where the consent of any third party is required
under the terms of any of the Assumed Contracts to the transactions contemplated
by this Agreement, the Seller Parties will use their best efforts to obtain such
consent on terms and conditions not less favorable than as in effect on the date
hereof. The Seller Parties shall cooperate fully with Gulf Island and Buyer to
the extent reasonably required to obtain such consents.
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Section 5.5 HSR Act. Gulf Island, Buyer and the Seller Parties shall, (i)
as promptly as practicable, but in no event later than three business days
following the execution and delivery of this Agreement, file with the United
States Federal Trade Commission (the "FTC") and the United States Department of
Justice (the "DOJ") the notification and report form required for the
transactions contemplated hereby and any supplemental information requested in
connection therewith pursuant to the HSR Act and (ii) use their reasonable best
efforts to cause to be taken on a timely basis, all other actions necessary or
appropriate for the purpose of consummating and effectuating the transactions
contemplated by this Agreement by January 30, 2006. Any notification and report
form and supplemental information shall be in substantial compliance with the
requirements of the HSR Act. Gulf Island, Buyer and the Seller Parties shall
furnish to the other such necessary information and reasonable assistance as the
other may request in connection with its preparation of any filing or submission
that is necessary under the HSR Act. Gulf Island, Buyer and the Seller Parties
shall keep each other party apprised of the status of any communications with,
and any inquiries or requests for additional information from, the FTC and the
DOJ and shall comply promptly with any such inquiry or request and shall
promptly provide any supplemental information requested in connection with the
filings made hereunder pursuant to the HSR Act. Any such supplemental
information shall be in substantial compliance with the requirements of the HSR
Act. Each party shall use its reasonable best efforts to obtain any clearance
required under the HSR Act for the consummation of the transactions contemplated
by this Agreement. Notwithstanding anything in this Agreement to the contrary,
(i) neither Gulf Island, Buyer nor any of their respective Affiliates shall be
required to commence or defend any Proceeding or to divest, dispose of or hold
separate any assets or any business to secure such HSR Act clearance and (ii)
none of the Seller Parties shall agree to any divestiture or disposal of any of
the Assets or enter into any agreement with the FTC or any other Governmental
Entity regarding the transactions contemplated by this Agreement without the
prior written consent of Gulf Island. Gulf Island and Buyer, on the one hand,
and the Seller Parties, on the other hand, shall each be responsible for 50% of
any filing fees incurred by the Seller Parties, Buyer and Gulf Island associated
with the HSR Act filing.
Section 5.6 Notification. The Seller Parties shall promptly notify Gulf
Island in writing and keep it advised as to (i) any litigation or administrative
proceeding filed or pending against Parent, the Partners or Seller or, to their
knowledge, threatened against any of them that challenges the transactions
contemplated hereby or could have a material adverse effect on Buyer, the
Business or the Assets; (ii) any material damage or destruction of any of the
Assets; and (iii) any material adverse change in the condition, results of
operations earnings or prospects of the Business. Gulf Island shall promptly
notify the Seller Parties in writing and keep them advised as to any litigation
or administrative proceeding filed or pending against Gulf Island or Buyer or,
to their knowledge, threatened against any of them, that challenges the
transactions contemplated hereby and shall provide the Seller Parties with
copies of all press releases and Forms 8-K filed after the Effective Date and
prior to the Closing Date. Notwithstanding the foregoing, any notice given
pursuant to this Section 5.6 shall not be deemed to alter, amend or modify the
representations and warranties of the Seller Parties contained in this
Agreement.
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Section 5.7 Acquisition Proposals. None of the Seller Parties, nor any
Affiliate, director, officer, employee or representative of any of them shall,
directly or indirectly (i) solicit, initiate or knowingly encourage any offer or
proposal for or any indication of interest in, a merger or other business
combination involving Seller or any of their Affiliates, or the acquisition of
an equity interest in or substantial portion of the Assets other than the
transactions contemplated by this Agreement (each, an "Acquisition Proposal") or
(ii) engage in discussions or negotiations with any Person that is considering
making or has made an Acquisition Proposal. The Seller Parties shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons other than Buyer and Gulf Island conducted
heretofore with respect to any Acquisition Proposal and shall promptly request
each such Person who has heretofore entered into a confidentiality agreement in
connection with an Acquisition Proposal (other than Gulf Island) to return to
the Seller Parties all confidential information hereto furnished to such Person
by or on behalf of either of the Seller Parties.
Section 5.8 Public Announcements. Except as may be required by any
Applicable Law or the rules of any securities exchange or trading market on
which Gulf Island's and Seller's ultimate parent's securities are traded,
neither Gulf Island and Buyer on the one hand, nor the Seller Parties on the
other hand, shall issue any press release or otherwise make any public
statements with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the other party. Gulf Island, Buyer,
and the Seller Parties contemplate, however, that a mutually acceptable press
release will be issued immediately following the execution of this Agreement.
Section 5.9 Liabilities. Except as set forth on Schedule 3.9 and subject to
Sections 5.3 and 5.10, Seller shall not, and Parent shall not cause Seller to,
after the Effective Date and prior to the Closing, incur any liability or
obligation (whether accrued, absolute, contingent, unliquidated or otherwise),
except (i) current liabilities that have arise in the ordinary course of
business (none of which is a material liability for breach of contract, tort or
infringement) and (ii) liabilities arising under executory contracts entered
into in the ordinary course of business.
Section 5.10 New Bids and Contracts.
(a) Gulf Island and Buyer acknowledge that Seller has, on the Effective
Date, outstanding bids for future work ("Existing Bids"). Following the
Effective Date, if Seller intends to submit a bid for new work other than Minor
Work, Seller shall ask Buyer and Gulf Island if they or any of their
subsidiaries intend also to submit a bid for the same work. If none of Buyer,
Gulf Island or their subsidiaries intends to submit a bid for such work, then
Seller shall review Seller's proposed bid with Buyer and Gulf Island, and Buyer
and Gulf Island shall inform Seller, in writing, whether they approve of the bid
terms, in which event the bid shall be deemed an "Approved Bid" and, if still
outstanding on the Closing Date, included among the Assumed Contracts on the
Closing Date. If Buyer and Gulf Island do not approve the bid in writing, Seller
may nevertheless elect to submit the bid but all obligations resulting from such
bid shall, unless otherwise subsequently agreed in writing by Buyer, remain
Seller's sole responsibility following the Closing Date. If Seller and Buyer,
Gulf Island or one of their subsidiaries are both bidding upon a particular
piece of work following the Effective Date, Seller shall not, except as provided
in Section 5.10(b), share any information concerning such bid with Buyer, Gulf
Island or their subsidiaries and such bid shall be deemed a "Competitive Bid."
28
(b) At least seven calendar days prior to the Closing Date, Seller and
Buyer shall review all (i) Existing Bids and Competitive Bids then outstanding
and all contracts and letters of award received by Seller since the Effective
Date as the result of Existing Bids and Competitive Bids and (ii) all contracts
and letters of award resulting from Approved Bids but which deviate from the
terms of the Approved Bid in some material way to allow Buyer to determine
whether Buyer will assume such Seller's obligations under such bids, contracts
and letters of award as Assumed Contracts.
(c) Buyer and Seller shall, prior to Closing, initial a substitute Schedule
2.1(d) to add (i) all Minor Work bid or contracted by Seller prior to the
Closing Date and not yet completed, (ii) all Approved Bids and any resulting
contracts and letters of award that conform to such Approved Bids, and (iii) all
other bids, contracts and letters of award which Buyer has agreed to assume
pursuant to Section 5.10(b). All obligations resulting from bids, contracts, and
letters of award that Buyer is not required to assume under this Section and
which Buyer declines to assume shall remain obligations solely of Seller
following the Closing Date.
Section 5.11 Notice of Developments. The Seller Parties, on the one hand,
and Gulf Island and Buyer, on the other hand, will promptly notify the other
parties of any material fact, event, circumstance or action (a) which, if known
on the Effective Date, would have been required to be disclosed by the notifying
parties pursuant to this Agreement or (b) the existence or occurrence of which
would cause the notifying parties' representations or warranties under this
Agreement not to be correct and complete. Notwithstanding the foregoing, any
notice given pursuant to this Section 5.11 shall not be deemed, subject to
Section 5.12, to alter, amend or modify the representations and warranties of
the parties contained in this Agreement.
Section 5.12 Update of the Disclosure Schedules. Effective as of the
Closing Date, the Seller Parties shall provide an updated Exhibit M to Buyer and
Gulf Island for review. If Buyer and Gulf Island so consent, such Exhibit M
shall be substituted for all purposes for Exhibit M under this Agreement
effective as of the Closing Date. Buyer and Gulf Island may, however, decline to
agree to such substitution if they conclude, in their reasonable discretion,
that the changes to such Exhibit M proposed by Buyer reflect a material adverse
change in the business, operations, properties, assets or conditions of Seller
or a material adverse event or circumstance that should have been disclosed on
the Effective Date.
Section 5.13 Employee Matters.
(a) Buyer covenants and agrees that (i) Buyer shall make offers of "at
will" employment to substantially all of the Employees listed on Schedule
3.30(a) on terms substantially consistent with the level of compensation and
benefits received as of the Effective Date by Seller's current Employees (each
Person who accepts, an "Offeree") and as of the Closing Date shall employ "at
will" each Offeree effective at 11:59 p.m. on the Closing Date; and (ii) for the
12-month period beginning on the Closing Date, the Offerees will be eligible to
receive compensation at substantially the same rate as, and employee benefits
29
substantially comparable to, the compensation and employee benefits received by
such Offeree as of the Effective Date. Buyer shall be under no obligation to
offer employment to any particular Employee or to continue to employ any Offeree
who after the Closing Date fails to adequately perform his or her job functions,
violates Buyer's policies, or engages in any other behavior that Buyer believes
merits termination of employment. Further, Buyer reserves the right to lay off
Offeree under adverse economic circumstances for the Business.
(b) Seller shall terminate all of its Employees who are Offerees as of the
Closing Date. Seller shall pay its Employees for all accrued and unused
vacation, holiday and sick pay entitlements in respect of the period prior to
Closing. If Seller has a severance plan or other severance obligations, Seller
shall pay all severance benefits due its Employees as the result of the
transactions contemplated by this Agreement. Buyer and Gulf Island shall have no
liability or responsibility for accrued vacation, sick leave, comp time or other
leave, or severance benefits owed by Seller to its Employees as of the Closing
Date, all of which obligations are being retained by Seller.
(c) Neither Gulf Island nor Buyer shall assume or be responsible for any
liability or obligation of the Seller Parties under any of their respective
Employee Plans or Benefit Arrangements. Without limiting the generality of the
foregoing, all medical, dental, vision, travel accident, accidental death and
dismemberment, and life insurance expenses incurred by Seller's Employees and
their beneficiaries and dependents on or before the Closing Date, pursuant to
any Employee Plan or Benefit Arrangement, irrespective of the time such claims
are presented, shall be the responsibility of the Seller Parties. The Seller
Parties shall be responsible for any medical, dental or life insurance coverage
due to any Employees (and their beneficiaries and dependents) who retired on or
before the Closing Date. All short-term, long-term and extended disability
benefits payable to Employees and their beneficiaries and dependents who became
disabled before the Closing are the responsibility of Seller and shall be paid
directly by Seller or its insurance carrier to such Employees and their
dependents. If any Employee is terminated from employment on or before the
Closing Date by Seller, any obligations arising out of such termination,
including severance, accrued vacation pay, COBRA obligations, employment
discrimination complaints, unfair labor practice charges, grievance under any
collective bargaining agreement, wrongful termination and related tort claims
and breach of contract claims shall be the sole responsibility of Seller. Seller
will be responsible for all obligations to current or former Employees (and
their dependents) who are entitled to elect COBRA continuation coverage prior to
or as of the Closing Date, and to any current or former Employees (and their
dependents) who become so entitled due to the consummation of the transaction
contemplated herein. Buyer will be responsible for all obligations to Employees
(and their dependents) hired by Buyer who become entitled to elect COBRA
continuation coverage after the Closing Date for reasons other than the
consummation of the transaction contemplated by this Agreement.
(d) In furtherance of the provisions of Section 5.13(a) above, Buyer and
Seller will agree promptly after the Effective Date upon the procedures by which
the Employees who will receive an offer of employment will be identified, and by
which key Employees may be made reasonably available to be interviewed by Buyer,
with such Employee's prior consent, during normal business hours. Also in
furtherance of the foregoing provisions of Section 5.13(a), and subject to any
applicable Laws, the Seller Parties will afford Buyer reasonable access during
normal business hours following prior written notice to Seller to review the
personnel files, performance evaluations and other relevant employee records of
Seller.
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(e) The Seller Parties hereby covenant and agree that neither they nor any
of their respective Affiliates shall, without the express written consent of
Buyer, for a period of two years from the Closing Date (i) hire any of the
Offerees, (ii) solicit the employment of (or assist any other entity in
soliciting the employment of) any Offeree or (iii) encourage any Offeree to
terminate his or her employment relationship with Buyer or any of its
Affiliates; provided, however, that clause (ii) shall not prevent the Seller
Parties or their Affiliates from conducting generalized searches for employees
through media advertisements, employment firms or which are not specifically
targeting any Offeree.
Section 5.14 WARN Act. Seller shall comply with the WARN Act, and any
applicable similar state or local Laws during the period beginning on the
Effective Date and ending at the Closing. The Seller Parties shall be
responsible for all notification and other obligations, if any, under the WARN
Act and any applicable similar state or local Laws with respect to employment
terminations prior to or on the Closing Date.
Section 5.15 Confidential Information. Gulf Island and Buyer, on the one
hand, and the Seller Parties, on the other hand, until the fifth anniversary of
the Effective Date and not withstanding the earlier termination of this
Agreement, shall keep, and shall cause their Affiliates, attorneys, accountants,
counsel, financial advisors and other representatives to keep, any and all
Confidential Information (as defined below) confidential and not to disclose any
Confidential Information to any Person other than such parties' Affiliates,
directors, managers, members, officers, employees or agents, and then only on a
confidential basis; provided, however, that such parties may disclose
Confidential Information (a) as required by law, rule, regulation, judicial
process or stock exchange requirement, including as required to be disclosed in
connection with the consummation of the transactions contemplated by this
Agreement, (b) to such parties' attorneys, accountants and financial advisors
who have agreed to keep the Confidential Information confidential in accordance
with the terms hereof or (c) as requested or required by any Governmental
Entity; and provided further that Gulf Island may disclose such information to
its financing sources. Gulf Island may also disclose this Agreement and related
Confidential Information to the creditors, customers or potential customers of
the Seller Parties to the extent Gulf Island reasonably determines that such
disclosure is appropriate to facilitate the fulfillment of the conditions
precedent set forth in Article VI hereof and to the extent the Confidential
Information constitutes an Asset acquired by Gulf Island, as necessary to run
the Business after the Closing Date. For purposes of this Agreement, the term
"Confidential Information" shall include all information about Gulf Island and
its Affiliates, on the one hand, and the Seller Parties and their Affiliates on
the other hand, which has been furnished to the other parties or their
Affiliates pursuant to or in connection with this Agreement; provided, however,
that the term "Confidential Information" shall not be deemed to include
information which (x) is or becomes generally available to the public other than
as a result of a disclosure by Gulf Island and its Affiliates, on the one hand,
or the Seller Parties and their Affiliates, on the other hand, not permitted by
this Agreement, (y) was available to the disclosing party on a non-confidential
basis prior to its disclosure by the other parties to this Agreement or (z)
becomes available to the disclosing party on a non-confidential basis from a
person other than the other parties to this Agreement who, to the knowledge of
the disclosing party, is not otherwise bound by a confidentiality agreement with
the other parties to this Agreement or is not otherwise prohibited from
transmitting the relevant information to such parties. This Agreement shall
supersede that certain Confidentiality Agreement, dated August 3, 2005, between
Seller and Gulf Island.
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Section 5.16 Real Estate Matters.
(a) Gulf Island, at its sole cost and expense, may order an owner's title
policy commitment (the "Commitment") to be issued by a title company reasonably
acceptable to Gulf Island (the "Title Company"), accompanied by copies of all
recorded documents relating to restrictions, easements, rights-of-way, and other
matters affecting the Owned Real Properties. The Commitment will commit the
Title Company to issue at the Closing an ALTA form of Owner's Title Insurance
Policy to Buyer, such policy to be in an amount as determined jointly by Gulf
Island and the Title Company and with such endorsements as are requested by
Buyer. Gulf Island may also obtain a survey of the Owned Real Properties at Gulf
Island's expense (the "Survey"). Gulf Island shall promptly notify Seller in
writing of objections to the condition of title set forth in the Commitment or
on the Survey which affect the merchantability of Seller's title or the use of
the Owned Real Properties as presently utilized (the "Title Objections").
(b) In addition to the foregoing, Gulf Island shall have the right to
conduct and to cause its engineers, accountants, attorneys, consultants,
appraisers, and other agents to conduct such other reviews, inquiries,
examinations, and inspections of the Owned Real Properties as Gulf Island deems
necessary or appropriate prior to the Closing ("Gulf Island's Inspections").
Seller shall cooperate with Gulf Island in all reasonable respects in making
Gulf Island's Inspections. Gulf Island shall promptly notify Seller in writing
of any objections to the condition of the Owned Real Properties identified as a
result of any of Gulf Island's Inspections which affect the merchantability of
Seller's title or the use of the Owned Real Properties as presently utilized
(the "Other Objections").
(c) The Seller Parties may voluntarily undertake to eliminate all of the
Title Objections and Other Objections (collectively, "Gulf Island Objections")
to the satisfaction of Gulf Island and Buyer, but the Seller Parties are under
no obligation to do so. If, however, the Seller Parties elect not to, or cannot,
eliminate Gulf Island's Objections to the reasonable satisfaction of Gulf Island
and Buyer prior to the Closing Date, either Gulf Island and Buyer, on the one
hand, or the Seller Parties, on the other hand, may terminate this Agreement by
written notice to the other parties pursuant to Section 8.1(b)(iii); provided,
however, that the Seller Parties may not terminate this Agreement under Section
8.1(b)(iii) if Buyer and Gulf Island agree, in writing, prior to Closing to
waive any right to indemnification under Article VII with respect to the Gulf
Island Objections in question. If none of the parties elects to terminate this
Agreement, and they instead elect to proceed to the Closing, such election shall
not, except in the case of a waiver of indemnification rights by Buyer and Gulf
Island under the preceding sentence, in any way release or diminish the Seller
Parties' obligations under Article VII to the extent that any Losses suffered by
Gulf Island or Buyer as a result of the matters raised in the Gulf Island
Objections are subject to indemnification thereunder.
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(d) All title matters shown on the Commitment and the Survey which are not
the subject of Title Objections shall be deemed to be "Permitted Encumbrances."
Further, if Gulf Island makes any Title Objections which Seller Parties elect
not to, or can not, cure and Buyer and Gulf Island waive their rights to
indemnification under Article VII with respect to such Title Objections pursuant
to Section 5.16(c) above, such Title Objections shall likewise be deemed
"Permitted Encumbrances."
Section 5.17 Standstill. From and after the Effective Date and for a period
of two years thereafter (the "Restricted Period"), without the prior written
consent of Buyer, the Seller Parties will not, and will cause their respective
Affiliates not to, directly or indirectly acquire any shares of Gulf Island
Common Stock in addition to the shares of Gulf Island Common Stock issuable
pursuant to Section 2.3, except for any shares of Gulf Island Common Stock they
may acquire by way of stock split, stock dividend or other distributions
(including any additional shares acquired by participation in a rights offering
or primary offering) made available generally to all holders of the Gulf Island
Common Stock. During the Restricted Period, neither the Seller Parties nor any
of their respective Affiliates will confer any proxy to any third party (other
than Gulf Island's designee at any annual or special meeting of stockholders) to
vote any shares of Gulf Island Common Stock, and Gulf Island shall be entitled
to disregard any proxy so granted, to the extent that the aggregate number of
shares voted by the Seller Parties and the holder of such proxy would exceed the
number of shares of Gulf Island Common Stock issuable pursuant to Section 2.3;
provided, however, that this covenant shall not be deemed to be violated to the
extent that the Seller Parties solely grant a revocable proxy or consent to
another person in response to a public proxy or consent solicitation conducted
by such person that is made pursuant to the applicable rules and regulations
under the Securities and Exchange Act of 1934.
Section 5.18 Seller Board Seat.
(a) Subject to Sections 5.18(c). 5.18(d), and 5.18(e) below, so long as
Seller and its Affiliates holds at least 5% of all issued and outstanding shares
of Gulf Island Common Stock, Seller shall be entitled to recommend to Gulf
Island an employee of Seller or of one of Seller's Affiliates for service on
Gulf Island's Board of Directors (the "Seller Director"). Gulf Island shall
forward such recommendation to its Board of Directors (or, if Gulf Island's
Board of Directors then has a nominating committee, to such nominating
committee), who shall nominate the Seller Director for election by Gulf Island's
shareholders during Gulf Island's next regularly scheduled election of
directors. Seller acknowledges, however, that such nomination is non-binding and
may be rejected by Gulf Island's shareholders.
(b) If Seller wishes to replace the Seller Director at any time or if the
Seller Director resigns his board seat, dies or becomes disabled, Seller may
recommend a replacement director to Gulf Island who shall forward such
recommendation to Gulf Island's Board of Directors or the nominating committee
thereof. Gulf Island is, however, under no obligation to recommend that any
action be taken to implement the change of Seller Directors prior to the next
regularly scheduled election of Gulf Island's directors.
(c) Gulf Island and Seller acknowledge that Section 8 of the ▇▇▇▇▇▇▇ Act,
15 U.S.C. ss. 19(a)(1) and certain other antitrust laws prohibit a person from
serving as director or board-elected or board-appointed officer of two or more
corporations under certain circumstances, that it is the intent of the parties
to comply with federal and state antitrust laws in all respects, and such laws
may, depending on the respective business operations of the parties, preclude
the election to, or the continued service of the Seller Director, on Gulf
Island's Board of Directors.
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(d) Prior to Seller's initial exercise of its rights under Section 5.18(a)
and annually thereafter, Seller and Buyer shall exchange reports summarizing
their respective business activities to identify activities which are
competitive for purposes of 15 U.S.C. ss.19(a)(2) and other applicable antitrust
laws ("Competitive Work") and shall mutually estimate their respective revenue
from Competitive Work in relation to their respective aggregate revenues, on a
consolidated group-wide basis. In reliance on this information and such other
information as Gulf Island may reasonably request from Seller and its Affiliates
or may obtain from other sources, Gulf Island shall, in its sole but reasonable
discretion, determine whether Gulf Island may recommend the election or
reelection of the Seller Director to Gulf Island's Board of Directors or the
nominating committee thereof.
(e) If Gulf Island ever notifies Seller that Gulf Island has determined
that the Seller Director may not continue serving on Gulf Island's Board of
Directors due to applicable antitrust laws, Seller shall cause the Seller
Director to immediately resign from Gulf Island's Board of Directors.
(f) If Gulf Island's Board of Directors includes the Seller Director and
Gulf Island's Board of Directors elects to discuss Competitive Work, the Seller
Director shall be excluded from all such discussions and shall have no right to
obtain or review documents or information related to Competitive Work.
(g) If Seller transfers its shares of Gulf Island Common Stock to an
Affiliate of Seller, Seller's rights and obligations under this Section 5.18
shall automatically transfer to such successor holder of such shares. If Seller
transfers its shares of Gulf Island Common Stock to more than one Affiliate of
Seller, Seller shall cause such Affiliates to agree among themselves on their
recommendation for the Seller Director, and Gulf Island may disregard any
recommendation which is not unanimously endorsed by those Affiliates of Seller
then holding Seller's former Gulf Island Common Stock.
Section 5.19 Cooperation Agreement. As of the Effective Date, Gulf Island
and Parent have entered into that certain Cooperation Agreement (the
"Cooperation Agreement"). The Cooperation Agreement is not effective until the
Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions Precedent to Obligations of All Parties. The
respective obligations of the parties to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by each party) at or prior to the Closing of each of the following conditions:
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(a) No suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any court or
Governmental Entity in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby, and no investigation that might result in
any such suit, action or proceeding shall be pending or threatened.
(b) No statute, rule, regulation, executive order or decree shall have been
enacted, promulgated or enforced which prohibits or restricts the consummation
of the transactions contemplated by this Agreement.
(c) Subject to Section 2.10, all Governmental Permits, authorizations,
consents, orders or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity or any other
third parties reasonably necessary for the consummation of the transactions
contemplated by this Agreement and Buyer's continued, uninterrupted operation of
the Business after the Closing Date shall have been obtained or filed or shall
have occurred or, in the case of Governmental Permits that must be reissued in
Buyer's name following the Closing, shall, in Buyer's opinion, be available on a
basis that does not require interruption of the Business' operations.
Section 6.2 Conditions Precedent to Obligations of Gulf Island and Buyer.
The obligations of Gulf Island and Buyer under this Agreement are subject to the
satisfaction (or waiver by Gulf Island) at or prior to the Closing of each of
the following conditions:
(a) All representations and warranties of the Seller Parties contained
herein or in any certificate or document delivered to Gulf Island or Buyer
pursuant hereto shall be true and correct in all material respects on and as of
the Closing Date, with the same force and effect as though such representations
and warranties had been made on and as of the Closing Date, except as expressly
permitted by this Agreement.
(b) The Seller Parties shall have performed all obligations and agreements,
and complied with all covenants and conditions, contained in this Agreement to
be performed or complied with by them prior to or at the Closing Date.
(c) Except as disclosed on Schedule 3.9, there shall have been no material
adverse change in the business, operations, properties, assets or condition of
Seller from September 30, 2005 until the Closing.
(d) Buyer shall have obtained the Survey and a commitment from a Title
Company to provide title insurance covering the Owned Real Properties.
(e) At least 80% of the Employees who have received offers of employment
from Buyer pursuant to Section 5.13(a) shall have accepted such offers of
employment and all the Key Employees shall have agreed to execute their
respective Employment Agreements, with such changes as are agreed by Buyer and
such Key Employees.
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Section 6.3 Conditions Precedent to the Obligations of the Seller Parties.
The obligations of the Seller Parties under this Agreement are subject to the
satisfaction (or waiver by Parent) at or prior to the date of the Closing of
each of the following conditions:
(a) All representations and warranties of Gulf Island or Buyer contained
herein or in any certificate or document delivered to the Seller Parties
pursuant hereto shall be true and correct in all material respects on and as of
the Closing, with the same force and effect as though such representations and
warranties had been made on and as of the Closing, except as expressly permitted
by this Agreement.
(b) Gulf Island and Buyer shall have performed all obligations and
agreements, and complied with all covenants and conditions contained in this
Agreement to be performed or complied with by them prior to or at the Closing.
ARTICLE VII
INDEMNIFICATION; REMEDIES
Section 7.1 Indemnification by the Seller Parties. The Seller Parties shall
defend, indemnify and hold harmless Gulf Island, Buyer and any directors,
officers, employees, Affiliates and subsidiaries of Gulf Island or Buyer and any
successors to the foregoing (Gulf Island, Buyer, and such Persons, collectively,
the "Gulf Island Indemnified Persons"), and shall reimburse the Gulf Island
Indemnified Persons, for, from and against each and every demand, claim, action,
loss (which shall include any diminution in value), liability, judgment, damage,
cost and expense (including, without limitation, interest, penalties, costs of
preparation and investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and other professional advisors)
(collectively, "Losses"), as incurred, imposed on or by the Gulf Island
Indemnified Persons, directly or indirectly, relating to, resulting from or
arising out of:
(a) any inaccuracy in any representation or warranty of the Seller Parties
in this Agreement or any certificate, document or other instrument delivered or
to be delivered pursuant hereto in any respect whether or not the Gulf Island
Indemnified Persons relied thereon or had knowledge thereof;
(b) any breach or nonperformance of any covenant, agreement or other
obligation of the Seller Parties under this Agreement or any certificate,
document or other instrument delivered or to be delivered pursuant hereto;
(c) any Losses sustained by any Gulf Island Indemnified Person arising out
of or related to Seller's ownership, operation or use of the Assets prior to the
Closing;
(d) the Excluded Assets; or
(e) the Excluded Liabilities (including, without limitation, any Existing
Warranty Liabilities).
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Section 7.2 Indemnification by Gulf Island. Except as otherwise expressly
provided in this Article VII, Gulf Island and Buyer shall defend, indemnify and
hold harmless the Seller Parties, and shall reimburse the Seller Parties for,
from and against all Losses imposed on or incurred by the Seller Parties,
directly or indirectly, relating to, resulting from or arising out of:
(a) any inaccuracy in any representation or warranty of Gulf Island or
Buyer in this Agreement or any certificate, document or other instrument
delivered or to be delivered pursuant hereto in any respect, whether or not the
Seller Parties relied thereon or had knowledge thereof; or
(b) any breach or nonperformance of any covenant, agreement or other
obligation of Gulf Island or Buyer under this Agreement or any certificate,
document or other instrument delivered or to be delivered pursuant hereto.
(c) any Losses sustained by any of the Seller Parties or their Affiliates
arising out of or related to Seller's ownership, operation or use of the Assets
after the Closing Date (including, without limitation, any Losses resulting from
a draw on a letter of credit provided by Seller or its Affiliate or a payment
demand on an guaranty provided by an Affiliate of Seller, resulting, in either
case, from Buyer's failure to perform under an Assumed Contract after the
Closing Date and not from Seller's failure to perform under the Assumed Contract
prior to or on the Closing Date).
Section 7.3 Nature of the Seller Parties' Liability; Limitations.
Notwithstanding anything to the contrary in this Article VII, the obligations of
the Seller Parties to indemnify the Gulf Island Indemnified Persons shall be
joint and several and solidary, with the intent of the parties being that each
of the Seller Parties shall be liable under this Article VII to the Gulf Island
Indemnified Persons for any amounts that may be due hereunder; provided,
however, that (i) the Seller Parties shall not be liable for any Losses under
Section 7.1(a) until the aggregate amount of such Losses shall exceed $250,000
(at which point the Seller Parties shall be liable for all such Losses from the
first dollar) and (ii) any liability of the Seller Parties for indemnification
pursuant to any section of this Article VII shall not exceed $40 million in the
aggregate. The limitation imposed by clause (i) of this Section does not apply
to claims under Section 7.1(b), 7.1(c), 7.1(d) or 7.1(e).
Section 7.4 Procedure for Indemnification - Third-Party Claims.
(a) Promptly after receipt by either of the Seller Parties of notice of the
commencement of any Proceeding against it, the Seller Parties shall, if a claim
is to be made against Gulf Island and Buyer under Section 7.2 with respect to
such Proceeding, give notice to Gulf Island of the commencement of such claim;
provided, however, that the failure of the Seller Parties to notify Gulf Island
of the commencement of such claim will not relieve Gulf Island or Buyer of any
liability that they may have to the Seller Parties, except to the extent that
Gulf Island and Buyer demonstrate that the defense of such action is prejudiced
by the Seller Parties' failure to give such notice.
(b) Promptly after receipt by Gulf Island or Buyer of notice of the
commencement of any Proceeding against it, Gulf Island or Buyer shall, if a
claim is to be made against the Seller Parties under Section 7.1 with respect to
such Proceeding, give notice to Parent of the commencement of such claim;
provided, however, that the failure of Gulf Island or Buyer to notify Parent of
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the commencement of such claim will not relieve the Seller Parties of any
liability that they may have to the Gulf Island Indemnified Persons, except to
the extent that the Seller Parties demonstrate that the defense of such action
is prejudiced by Gulf Island's and Buyer's failure to give such notice.
(c) In the case of a Proceeding referenced in Section 7.5(a), and if any
Proceeding is brought against any Gulf Island Indemnified Person or either of
the Seller Parties or otherwise involves the Assets or the Business, and Gulf
Island, in its reasonable discretion, determines that any of the Gulf Island
Indemnified Persons may incur Losses as a result of such Proceeding for which a
Gulf Island Indemnified Person would be entitled to indemnification under this
Agreement, Gulf Island will be entitled to participate in such Proceeding
(whether or not Gulf Island or any other Gulf Island Indemnified Party is a
party to such Proceeding) and, to the extent that it wishes, to assume the
defense of such Proceeding.
Section 7.5 Survival of Indemnification.
(a) The obligation of the Seller Parties to indemnify the Gulf Island
Indemnified Persons pursuant to Section 7.1(a) shall survive the consummation of
the transactions contemplated by this Agreement, as follows:
(i) with respect to the representations and warranties in Section 3.1
(Ownership), Section 3.2 (Organization; Authority; Enforceability), Section
3.3 (Legal Proceedings), and Section 3.4 (Organization; Qualification;
Subsidiaries), indefinitely;
(ii) with respect to the representations and warranties in Section
3.21 (Environmental Matters), Section 3.22 (Employee Plans) and Section
3.23 (Taxes), until the expiration of the fifth anniversary of the Closing
Date; and
(iii) with respect to all other representations and warranties of the
Seller Parties, until the second anniversary of the Closing Date.
(b) The obligation of Gulf Island to indemnify the Seller Parties pursuant
to Section 7.2(a) shall survive the consummation of the transactions
contemplated by this Agreement, as follows:
(i) with respect to the representations and warranties in Section 4.1
(Organization), Section 4.2 (Authority; Enforceability) and Section 4.3
(Consents and Approvals; Conflicts), indefinitely; and
(ii) with respect to all other representations and warranties of Gulf
Island and any other matters covered by Section 7.2, until the second
anniversary of the Closing Date.
(c) The obligations of the parties for indemnification under Section 7.1(a)
or Section 7.2(a) shall terminate after the expiration of the periods indicated
in subsections (a) and (b) of this Section 7.5, except with respect to any Loss
which has been the subject of written notice to the party against whom such
claim of Loss is asserted prior to the expiration of such period, which notice
will preserve such claim until it is liquidated or otherwise finally resolved.
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Section 7.6 Escrow.
(a) As security for the Seller Parties' obligation to indemnify Buyer and
Gulf Island under this Article VII, the Indemnity Escrow Shares shall be
maintained in the escrow account established pursuant to the Escrow Agreement
until the earlier of (i) second anniversary of the Closing Date or (ii) the
Release Date (the "Escrow Period"). Upon expiration of the Escrow Period, and
subject to the terms of the Escrow Agreement, the Escrow Agent shall deliver or
cause to be delivered to Seller the balance of the Indemnity Escrow Shares, if
any, remaining in the escrow account. The Seller Parties' obligations under this
Article VII are limited by Section 7.3 above but are not otherwise limited to
the value of the Indemnity Escrow Shares.
(b) If a Gulf Island Indemnified Person makes a claim under Section 7.1
which (i) the Seller Parties do not dispute as to liability or amount or (ii) is
determined by a final judgment of a court of competent jurisdiction, which is no
longer subject to suspensive appeal, to be due and payable to the Gulf Island
Indemnified Person, and at such time the Escrow Agent continues to hold
Indemnity Escrow Shares in escrow, the Seller Parties shall have the option, for
a period of ten calendar days from their agreement to pay or the issuance of the
final judgment, as applicable, to pay the amount due to the Gulf Island
Indemnified Person in cash, but, failing such timely payment, the Escrow Agent
shall, as further provided in the Escrow Agreement and subject to applicable
securities laws, on behalf of Seller, sell a sufficient number of the Indemnity
Escrow Shares to pay the amount due to the Gulf Island Indemnified Person and
shall remit the amount due to the Gulf Island Indemnified Person in cash;
provided, however, that, in the case of a claim by Buyer or Gulf Island, the
Escrow Agent shall instead deliver the shares in kind, calculating the number of
shares to be delivered by using the closing market price for Gulf Island Common
Stock on the trading day preceding the date of delivery.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated:
(a) by the mutual written consent of Gulf Island and Seller;
(b) by either Gulf Island or Buyer:
(i) in the event of a breach by either of the Seller Parties of any
representation, warranty, covenant or agreement contained in this Agreement
which (A) would give rise to the failure of a condition set forth in
Section 6.2, or (B) cannot be cured or, if curable, has not been cured
within 15 days following receipt by Parent of written notice of such
breach;
(ii) if a court of competent jurisdiction or other Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in
each case permanently restraining, enjoining, or otherwise prohibiting
transactions contemplated by this Agreement, and such order, decree or
ruling shall have become final and non-appealable;
39
(iii) pursuant to Section 5.16(c);
(iv) if the Closing shall not have occurred by 5:00 p.m. (Houston
time) on the 90th day following the Effective Date; provided, however, that
the right to terminate this Agreement under this Section 8.1(b)(iv) shall
not be available to Gulf Island if either Gulf Island's or Buyer's breach
of this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur by such date.
(c) by Seller:
(i) in the event of a breach by Gulf Island or Buyer of any
representation, warranty, covenant or agreement contained in this Agreement
which (A) would give rise to the failure of a condition set forth in
Section 6.3, or (B) cannot be cured or, if curable, has not been cured
within 15 days following receipt by Gulf Island of written notice of such
breach;
(ii) if a court of competent jurisdiction or other Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in
each case permanently restraining, enjoining, or otherwise prohibiting
transactions contemplated by this Agreement, and such order, decree or
ruling shall have become final and non-appealable; or
(iii) if the Closing shall not have occurred by 5:00 p.m. (Houston
time) on the 90th day following the Effective Date; provided, however, that
the right to terminate this Agreement under this Section 8.1(c)(iii) shall
not be available to Seller if either of the Seller Parties' breach of this
Agreement has been the cause of, or resulted in, the failure of the Closing
to occur by such date.
Section 8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to this Article VIII, written notice thereof shall be
forthwith given to the other parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void and of no further force or effect; provided, however, the provisions of
Section 5.15, this Section 8.2 and Section 10.1 shall survive such termination.
In the event this Agreement is terminated by either Gulf Island or Parent as
provided above, there shall be no liability of either Gulf Island and Seller, on
the one hand, or the Seller Parties, on the other hand, except (a) for liability
arising out of a willful breach of, or misrepresentation under this Agreement
and (b) as provided in the proviso to the preceding sentence.
ARTICLE IX
POST CLOSING COVENANTS
Section 9.1 Further Assurances. Following the Closing, the parties will
take, and shall cause their Affiliates to take, all appropriate action and
execute all documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out this Agreement and to consummate
the transactions contemplated hereby, including, without limitation, putting
Buyer (or its designee) in possession and operating control of the Assets.
40
Section 9.2 Post Closing Tax Covenants.
(a) Following the Closing, the Seller Parties shall pay or arrange for the
payment of all Taxes when due with respect to the ownership of the Assets and
the operation of the Business for taxable periods, or portions thereof, ending
on or before the Closing Date.
(b) The Seller Parties, Buyer and Gulf Island acknowledge and agree that
(i) the Seller Parties will be responsible for and will perform all Tax
withholding, payment and reporting duties with respect to any wages and other
compensation paid by the Seller Parties to any Employee in connection with the
operation or conduct of the Business prior to or on the Closing Date and (ii)
Buyer will be responsible for and will perform all Tax withholding, payment and
reporting duties with respect to any wages and other compensation paid by Buyer
to any Employee hired by Buyer in connection with the operation or conduct of
the Business after the Closing Date.
Section 9.3 Prorations. The following liabilities that call for periodic
payments shall be prorated between the Seller Parties and Buyer: (i) utility
charges (which shall include water, sewer, electricity, gas and other utility
charges) with respect to the Owned Real Properties, (ii) rental charges for
leased Personal Property and (iii) any Taxes that are imposed on a periodic
basis with respect to the ownership of the Assets and are payable for a taxable
period that includes (but does not end on) the Closing Date, including but not
limited to real and personal property Taxes and ad valorem Taxes ("Periodic
Taxes") but excluding franchise taxes. With respect to measurement periods
during which the Closing Date occurs (all such periods of time being hereinafter
called "Proration Periods"), the liabilities described in clauses (i) and (ii)
of the preceding sentence shall be apportioned between the Seller Parties and
Buyer as of the Closing Date, with Buyer bearing only the expense thereof in the
proportion that the number of days remaining in the applicable Proration Period
after the Closing Date bears to the total number of days covered by such
Proration Period. Periodic Taxes shall be prorated between Buyer and the Seller
Parties based on the relative periods the Asset was owned by each respective
party during the fiscal period for which Periodic Taxes were assessed by the
taxing jurisdiction (as such fiscal period is reflected on the ▇▇▇▇ rendered by
such taxing jurisdiction). Buyer and the Seller Parties shall pay or be
reimbursed for Periodic Taxes (including instances in which such property Taxes
have been paid before the Closing Date) on this prorated basis. If a payment on
a Periodic Tax ▇▇▇▇ is due after the Closing, the party that is legally required
to make such payment shall make such payment and promptly forward an invoice to
the other party for its pro rata share, if any. If the other party does not pay
the invoice within thirty (30) calendar days of receipt, the amount of such
payment shall bear interest at the rate of eight percent (8%) per annum.
Section 9.4 Name Change. Promptly following Closing, Seller shall change
its name to a new name that will not include the term "Gulf Marine Fabricators"
or any portion thereof. Parent shall not thereafter allow any of its Affiliates
to utilize the name "Gulf Marine Fabricators" or any portion thereof.
41
Section 9.5 Existing Warranty Liabilities. Seller is retaining all warranty
liabilities, whether arising under contract or by operation of law, with respect
to work performed and materials supplied by Seller on or prior to the Closing
Date (the "Existing Warranty Liabilities") and shall have the sole liability for
the cost of any warranty claims by its customers and former customers resulting
from the Existing Warranty Liabilities. In the case of Existing Warranty
Liabilities that arise under the Assumed Contracts as a result of work performed
or materials supplied by Seller on or prior to the Closing Date, Buyer shall
perform any resulting warranty work on Seller's behalf, but Seller shall
reimburse Buyer for the costs of all such warranty work within 30 days of
Seller's receipt of an invoice therefor from Buyer. In all other circumstances,
Seller may request that Buyer or its Affiliates perform warranty work on behalf
of Seller and at Seller's expense, but any such warranty work shall be subject
to a separate agreement which is mutually acceptable to Seller and Buyer.
Section 9.6 Corrections of Defective Work Prior to Warranty Claims Being
Made. If, prior to delivering any work to a customer under an Assumed Contract,
Buyer discovers that all or any portion of the work performed or material
acquired by Seller under such Assumed Contract does not comply with the Assumed
Contract's terms or is otherwise defective, Buyer shall so notify Seller within
a reasonable time period, and Buyer shall make all necessary corrections to the
work and obtain all necessary replacement materials at Seller's sole expense.
Buyer shall invoice Seller for the cost of such work, and Seller shall pay any
such invoice within 30 days of its receipt of the invoice.
Section 9.7 Communications Transfer. Following the Closing Date, Seller
shall cooperate with Buyer to transfer all telephone numbers and internet
addresses belonging to Seller to Buyer. Further, Seller shall promptly transmit
to Buyer any mail received by Seller following the Closing Date which is
relevant to Buyer's operation of the Business and the ownership of the Assets.
Section 9.8 Turnover of Misdirected Payments. If either Seller or Buyer
receives any payment from a former customer of Seller following the Closing Date
which is due to the other party under this Agreement's terms, then the party
receiving the misdirected payment shall, within 15 days of its receipt of such
misdirected payment, turn over such misdirected payment to the party entitled
thereto.
ARTICLE X
MISCELLANEOUS
Section 10.1 Expenses. Each of Gulf Island, Buyer and the Seller Parties
shall pay all of their own expenses incurred in connection with the
authorization, preparation, execution and performance of this Agreement
including, but not limited to, the fees and expenses of its legal and financial
advisors responsible for the payment of any legal or financial advisory fees.
Section 10.2 Notices. All notices hereunder must be in writing and shall be
deemed to have been given upon delivery by (a) personal delivery to the
designated address, (b) certified or registered mail, postage prepaid, return
receipt requested, (c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) facsimile transmission with confirmation of
receipt. All such notices must be addressed as follows or to such other address
as to which any party hereto may have notified the other in writing:
42
If to Gulf Island or Buyer, to:
Gulf Island Fabrication, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to the Seller Parties, to:
Technip-Coflexip USA Holdings, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Section 10.3 Amendment. This Agreement shall not be altered or amended
except by an instrument in writing signed by or on behalf of each of the parties
hereto.
Section 10.4 Headings; Gender. When a reference is made in this Agreement
to a section, exhibit or schedule, such reference shall be to a section, exhibit
or schedule of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. All
personal pronouns used in this Agreement shall include the other genders,
whether used in the masculine, feminine or neuter gender, and the singular shall
include the plural and vice versa, whenever and as often as may be appropriate.
Section 10.5 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents, exhibits and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements, and
understandings and communications, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 10.6 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Texas without regard to any
applicable principles of conflicts of law.
Section 10.7 Jurisdiction. Any legal action or proceeding against the
Seller Parties with respect to this Agreement may be brought in any state court
sitting in the County of ▇▇▇▇▇▇ of the State of Texas or the United States
District Court for the Eastern District of Texas located in Houston, Texas, and
the Seller Parties hereby irrevocably accept the jurisdiction of such courts for
the purpose of any action or proceeding. The Seller Parties further irrevocably
consent to the service of process by the mailing thereof by Gulf Island by U.S.
registered or certified mail postage prepaid to the party to be served at its
43
address designated in Section 10.2. Nothing in this Section 10.7 shall affect
the right of Gulf Island to serve legal process in any other manner permitted by
law or affect the right of Gulf Island to bring any action or proceeding against
either of the Seller Parties or their respective properties in the courts of any
other jurisdiction. the Seller Parties hereby irrevocably waive any objection
which they may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Agreement brought in any state
court sitting in the County of ▇▇▇▇▇▇ of the State of Texas or the United States
District Court for the Eastern District of Texas located in Houston, Texas, and
hereby further irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
Section 10.8 Special Determination of Purchase Price Adjustments. If any
party is entitled to and requests determination of a Contract Adjustment or the
Post-Closing Inventory Adjustment under this section pursuant to Sections 2.4(b)
or 2.4(c), as applicable, the issue in question shall be resolved by a firm of
certified public accountants appointed by mutual agreement of Seller and Buyer,
who shall equally in the cost of such certified public accountants and shall be
bound by the determination of such certified public accountants. Any such
certified public accountants so appointed shall be without current material
financial ties to either Seller or Buyer or their respective Affiliates. If
Seller and Buyer are unable to agree upon a mutually acceptable firm of
certified public accountants, either may submit the matter in question to the
American Arbitration Association for resolution by binding arbitration in
accordance with the rules thereof.
Section 10.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties.
Section 10.10 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
Section 10.11 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same document.
Section 10.12 Mutual Drafting. This Agreement is the mutual product of the
parties hereto and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed themselves or by their respective duly authorized officers as of the date
first written above.
GULF ISLAND FABRICATION, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
NEW VISION, L.P.
By: New Vision General Partner, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Manager
TECHNIP-Coflexip USA Holdings, Inc.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Director
GULF MARINE FABRICATORS
By: Gulf Deepwater Fabricators, Inc.,
its partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: Treasurer
By: Gulf Deepwater Yards, Inc., its partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: Treasurer
45
EXHIBIT "A"
"Acquisition Proposal" is defined in Section 5.7.
"Affiliate" means a person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, another person.
"Ancillary Agreements" means, collectively, the Assignments, the ▇▇▇▇
of Sale, the Warranty Deeds, the Registration Rights Agreement, the
Non-Competition Agreement, the Lock-Up Agreement, and the Transition Services
Agreement.
"Applicable Law" means any statute, law, rule, regulation or ordinance,
or any judgment, order, writ, injunction or decree of any Governmental Entity to
which a specified Person or its property is subject.
"Approved Bid" is defined in Section 5.10.
"Assets" is defined in Section 2.1.
"Assignments" is defined in Section 2.9(a).
"Assumed Contracts" is defined in Section 2.1(d).
"Assumed Liabilities" is defined in Section 2.6.
"Benefit Arrangement" means any employment, severance or similar
contract, or any other contract, plan, policy or arrangement (whether or not
written) providing for compensation, bonus, profit-sharing, stock option or
other stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured arrangement),
health or medical benefits, disability benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension, health,
medical or life insurance benefits), other than the Employee Plans, that is
maintained, administered or contributed to by the employer and covers any
employee or former employee of the employer.
"▇▇▇▇ of Sale" is defined in Section 2.9(a).
"Business" is defined in the recitals hereof.
"Buyer" is defined in the preamble paragraph hereof.
"Buyer's Appraisal" means the appraisal obtained by Buyer, at Buyer's
expense, of the Assets prior to the Effective Date from GB Asset Advisors, LLC.
A-1
"Charter Documents" means, as each is applicable to any Person, the
articles of incorporation, certificate of incorporation, by-laws, memorandum of
association, articles of association, articles of organization, operating
agreement, limited liability company agreement, certificate of partnership or
limited partnership, partnership agreement and any other similar organizational
documents for such Person.
"Closing" is defined in Section 2.8.
"Closing Date" is defined in Section 2.8.
"COBRA" means the Consolidated Omnibus Reconciliation Act of 1985, as
amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competitive Bid" is defined in Section 5.10.
"Consent" is defined in Section 2.10.
"Contract Adjustment" is defined in Section 2.4(b).
"Cooperation Agreement" is defined in Section 5.19.
"Costs Incurred" are defined in Section 2.4(b).
"Disclosure Schedule" means the disclosure schedules and other
documents attached hereto as Exhibit "M" prepared by the Seller Parties in
accordance with the applicable provisions of this Agreement.
"DOJ" is defined in Section 5.5.
"Effective Date" is defined in the preamble paragraph hereof.
"Employees" means all persons employed by Seller (on a full or
part-time basis), whose employment is primarily related to the operation of the
Business.
"Employee Plan" means a plan or arrangement as defined in Section 3(3)
of ERISA, that (a) is subject to any provision of ERISA, (b) is maintained,
administered or contributed to by the employer and (c) covers any employee or
former employee of the employer.
"Employment Agreement" is defined in Section 2.9(d).
A-2
"Environmental Claims" means any and all administrative, regulatory, or
judicial actions, proceedings, executory decrees, judgments, penalties, fees,
demands, orders, or directives, relating in any way to any Environmental Law or
any permit, license or authorization required or issued under any such
Environmental Law, or arising from the presence or release or threatened release
(or alleged presence or release or threatened release) into the environment of
any Hazardous Materials (hereinafter "Claims") including, without limitation,
any and all Claims by any Governmental Entity or by any third party for
enforcement, cleanup, removal, response, remedial or other actions or damages,
punitive or exemplary damages, contribution, indemnification, cost recovery,
compensation or declaratory or injunctive relief pursuant to any Environmental
Law or any alleged injury or threat of injury to health, safety or the
environment.
"Environmental Laws" means all foreign, federal, state and local laws,
statutes, ordinances, regulations, criteria, guidelines, rules of common or
civil law in effect at the Closing, and any judicial or administrative
interpretation thereof (including any judicial or administrative order, consent
decree or judgment) relating to the regulation and protection of human health,
safety, the environment, and natural resources, including, without limitation,
laws and regulations relating to emissions, discharges, disposal, releases or
threatened releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use treatment, storage, disposal,
transport or handling of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any entity that, together with Seller, would be
treated as a single employer under Section 414 of the Code.
"Escrow Agent" is defined in Section 2.3(b).
"Escrow Agreement" is defined in Section 2.3(b).
"Escrow Period" is defined in Section 7.6.
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.7.
"Existing Warranty Liabilities" as defined in Section 9.5.
"Financial Statements" means the Balance Sheets and Income Statements
of Seller as of, and for the nine-month period ending, September 30, 2005, and
as of, and for the one-year periods ending, respectively, December 31, 2003 and
December 31, 2004.
"FTC" is defined in Section 5.5.
"GAAP" means generally accepted accounting principles as applied in the
United States.
"Governmental Entity" means any court or tribunal in any jurisdiction
or any public, governmental or regulatory body, agency, department, commission,
board, bureau or other authority or instrumentality.
A-3
"Governmental Permit" means all licenses, franchises, permits,
privileges, immunities, approvals and other authorizations, including without
limitation, adoption, commitments or agreements, from a Governmental Entity that
are necessary to entitle Seller to own or lease, operate and use their
respective assets and properties and to carry on and conduct their business as
presently conducted.
"Gulf Island" is defined in the recitals hereof.
"Gulf Island's Inspections" is defined in Section 5.16(b).
"Gulf Island Objections" is defined in Section 5.16(c).
"Hazardous Materials" means, collectively: (a) any petroleum or
petroleum products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, lead paint, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls (PCBs) and radon gas; (b) any
chemicals, materials, substances or wastes that are now or hereafter become
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "pollutants," "contaminants," "solid waste," "toxic chemical,"
"hazardous chemical," "hazardous materials," "extremely hazardous substances,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants," "oil
field waste" or words of similar import, under any applicable Environmental Law;
and (c) any other chemical, material, substance, or waste, exposure to which is
now or hereafter prohibited, limited or regulated by any governmental or
regulatory authority.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Indemnity Escrow Shares" is defined in Section 2.3(b).
"Intellectual Property" means (a) inventions (whether patentable or
unpatentable), improvements thereto, patents and patent applications, together
with all provisionals, reissuances, continuations, continuations-in-part,
divisionals and reexaminations thereof, (b) trademarks, service marks, trade
dress and trade names, together with all goodwill associated therewith, and
applications, registrations and renewals in connection therewith, (c) works of
authorship and copyrights therein, including, but not limited to, all platform
and other structure designs and fabrication processes, (d) trade secrets and
confidential information, (e) computer software and databases and (f) copies and
tangible embodiments of any of the foregoing.
"Key Employees" mean Johannes Ikdal, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Lease" means any executory lease to which Seller is subject.
"Licensed Intellectual Property" means all Intellectual Property
licensed by Seller.
A-4
"Liens" means pledges, liens, defects, leases, licenses, equities,
conditional sales contracts, charges, claims, encumbrances, security interests,
easements, restrictions, chattel mortgages, mortgages or deeds of trust, of any
kind or nature whatsoever.
"Lock-Up Agreement" is defined in Section 2.9(a).
"Material Contract" means any executory contract, agreement or
understanding (i.e., one that has not been fully performed), whether or not
reduced to writing to which Seller or any of their respective property is
subject, which provides for payments or potential future payments to another
Person by such Seller, or to such Seller by another Person, of more than $25,000
in the aggregate.
"Minor Work" means work with an aggregate contract price of less than
$5,000,000.
"Multiemployer Plan" is defined in Section 3.22(c).
"Multiple Employer Welfare Arrangement" is defined in Section 3.22(c).
"Non-Competition Agreement" is defined in Section 2.9(a).
"Other Objections" is defined in Section 5.16(b).
"Owned Intellectual Property" means all Intellectual Property owned by
Seller.
"Owned Real Properties" is defined in Section 3.13(a).
"Parent" is defined in the recitals hereof.
"Partners" mean Gulf Deepwater Fabricators, Inc. and Gulf Deepwater
Yards, Inc..
"Permitted Encumbrance" is defined in Section 5.16(d).
"Person" means an individual, firm, corporation, general or limited
partnership, limited liability company, limited liability partnership, joint
venture, trust, Governmental Entity, association, unincorporated organization or
other entity.
"Personal Property" is defined in Section 3.15(a).
"Post-Closing Inventory Adjustment" is defined in Section 2.4(c).
"Provider Liens" means Liens in favor of transportation carriers,
warehousemen, laborers, and repairmen who provide services with respect to the
Assets subject to the Liens.
"Proceedings" means any suit, action, proceeding, dispute or claim
before, or investigation by, any Governmental Entity, tribunal, mediation or
arbitration.
A-5
"Purchase Price" is defined in Section 2.3.
"Release Date" means the later of (i) the first anniversary of the
Closing Date or (ii) the date on which Gulf Island receives financial statements
of Parent confirming that Parent has maintained shareholder's equity minus
goodwill in an amount of $80,000,000 or more as of the last day of two
consecutive fiscal quarters, with the financial statements for the second such
quarter to be audited.
"Restricted Period" is defined in Section 5.17.
"Returns" means all returns, reports, estimates, declarations,
statements and any other documents of any nature relating to, or required to be
filed in connection with, any Taxes, including information returns or reports
with respect to backup withholding and other payments to third parties.
"Seller" is defined in the recitals hereof.
"Seller Parties" is defined in the recitals hereof.
"Settlement Statement" is defined in Section 2.9(a).
"Survey" is defined in Section 5.16(a).
"Taxes" means any income, corporation, gross receipts, profits, gains,
capital stock, capital duty, franchise, withholding, social security,
unemployment, disability, property, wealth, welfare, stamp, excise, occupation,
sales, use, value added, alternative minimum, estimated or other similar tax
(including any fee, assessment or other charge in the nature of or in lieu of
any tax) imposed by any Governmental Entity (whether foreign, national, local,
municipal or otherwise) or political subdivision thereof, and any interest,
penalties, additions to tax or additional amounts in respect of the foregoing,
and including any transferee or secondary liability in respect of any tax
(whether imposed by law, contractual agreement or otherwise) and any liability
in respect of any tax as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group.
"Title Company" is defined in Section 5.16(a).
"Title Objections" is defined in Section 5.16(a).
"Transition Services Agreement" is defined in Section 2.9(a).
"Vehicle Documents" is defined in Section 2.9(a).
"Voluntary Employees' Beneficiary Association" is defined in Section
3.22(c).
"WARN Act" means the Worker Adjustment and Retraining Notification Act
of 1988, as amended.
"Warranties" means all existing outstanding warranties and guaranties
of contractors, manufacturers, equipment providers, subcontractors, maintenance
and servicing companies and materialmen relating to the construction,
manufacturing, repair, maintenance, servicing or refurbishment of any of the
Assets, or in connection with or under any agreement relating to the purchase or
acquisition of the Assets.
"Warranty Deeds" is defined in Section 2.9(a).
A-6
