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STOCK PURCHASE AGREEMENT
by and between
GULF ISLAND FABRICATION, INC.
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Dated as of November 12, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE OF SOUTHPORT COMMON STOCK........... 1
1.1 Purchase and Sale..................................... 1
1.2 Closing............................................... 1
1.3 Purchase Price........................................ 1
1.4 Stock Certificates.................................... 4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS....... 4
2.1 Ownership of Southport Common Stock................... 5
2.2 Authority of Shareholders............................. 5
2.3 Agreement Valid and Binding........................... 5
2.4 No Conflicts.......................................... 5
2.5 Consents.............................................. 6
2.6 Brokers; Other Transaction Expenses................... 6
2.7 Corporate Organization................................ 6
2.8 Foreign Qualification................................. 7
2.9 Capitalization........................................ 7
2.10 Financial Condition................................... 7
2.11 Absence of Changes or Events.......................... 8
2.12 Legal Proceedings..................................... 8
2.13 Tax Audits and Payment of Taxes....................... 8
2.14 Benefit Plans........................................ 10
2.15 Compliance with Applicable Laws; Permits............. 12
2.16 Certain Contracts.................................... 13
2.17 Undisclosed Liabilities.............................. 15
2.18 Title to Property.................................... 16
2.19 Insurance............................................ 17
2.20 Intellectual Property................................ 17
2.21 Environmental Matters................................ 18
2.22 Employee and Labor Matters........................... 20
2.23 Condition of Assets.................................. 20
2.24 Absence of Changes................................... 21
2.25 Accounts Receivable and Accounts Payable............. 22
2.26 Inventory............................................ 22
2.27 Books and Records.................................... 23
2.28 Bank Accounts and Powers of Attorney................. 23
2.29 Questionable Payments................................ 23
2.30 Affiliate Transactions............................... 23
2.31 Zoning............................................... 23
2.32 No Misrepresentations or Omissions................... 23
ARTICLE III REPRESENTATIONS AND WARRANTIESOF PURCHASER......... 24
3.1 Corporate Organization............................... 24
3.2 Authority; Execution and Delivery; Enforceability.... 24
3.3 No Conflicts; Consents............................... 24
ARTICLE IV COVENANTS 25
4.1 Covenants of Seller Relating to Conduct of
Southport's Business................................. 25
4.2 Access to Information................................ 26
4.3 Confidentiality...................................... 27
4.4 Reasonable Efforts................................... 27
4.5 Expenses............................................. 27
4.6 Employees and Employment Agreements.................. 28
4.7 Updating Information................................. 28
4.8 Schedules; Advice of Changes......................... 28
4.9 Covenant Not to Compete.............................. 28
4.10 Acquisition Proposals................................ 29
4.11 No Inconsistent Arrangements by the Shareholders..... 30
4.12 Exercise of Option by Westport....................... 31
ARTICLE V CONDITIONS PRECEDENT................................. 31
5.1 Conditions to Each Party's Obligation To Consummate
the Closing.......................................... 31
5.2 Conditions to Obligation of Purchaser................ 31
5.3 Conditions to Obligation of Shareholders............. 32
ARTICLE VI TERMINATION AND AMENDMENT 33
6.1 Termination.......................................... 33
6.2 Effect of Termination................................ 33
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION........................................... 33
7.1 Survival of Representations, Warranties and Covenants.33
7.2 Indemnification by the Shareholders 33
7.3 Purchaser's Right of Set-Off; Limitation on
Indemnification...................................... 34
ARTICLE VIII GENERAL PROVISIONS................................ 36
8.1 Assignment........................................... 36
8.2 Third Party Beneficiaries............................ 36
8.3 Notices.............................................. 36
8.4 Interpretation....................................... 37
8.5 Counterparts; Signatures............................. 39
8.6 Entire Agreement..................................... 39
8.7 Governing Law........................................ 40
8.8 Severability......................................... 40
8.9 Shareholders' Representative......................... 40
8.10 Waiver............................................... 40
8.11 Amendment............................................ 41
8.12 Successors........................................... 41
INDEX TO SCHEDULES AND EXHIBITS
Schedule 1.1 List of Shareholders Prior to Stock Purchase Agreement
Schedule 2.4 Consents of Third Parties to Southport
Schedule 2.5 Consents of Third Parties to Shareholders
Schedule 2.6 Brokers' Agreements
Schedule 2.8 Qualification to do Business
Schedule 2.10 Financial Statements of Southport
Schedule 2.11 Absence of Changes or Events
Schedule 2.12 Legal Proceedings
Schedule 2.13 Tax Issues
Schedule 2.14 Employee Benefit Plans
Schedule 2.15 Compliance with Applicable Laws; Permits
Schedule 2.16 Certain Contracts
Schedule 2.17 Undisclosed Liabilities
Schedule 2.18 Title to Property
Schedule 2.19 Insurance
Schedule 2.20 Intellectual Property
Schedule 2.21 Environmental Matters
Schedule 2.22 Employee and Labor Matters
Schedule 2.24 Absence of Changes
Schedule 2.25 Accounts Receivable and Accounts Payable
Schedule 2.27 Books and Records
Schedule 2.28 Bank Accounts and Powers of Attorney
Schedule 2.30 Affiliate Transactions
Schedule 2.32 No Misrepresentations or Omissions
Schedule 3.8(f) There is no Schedule 3.8(f)
Schedule 4.9 Jurisdictions in which Competition is Restricted
Exhibit 4.6 Forms of Employment Agreements between Southport
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as
of November 12, 1997, by and among Gulf Island Fabrication,
Inc., a Louisiana corporation ("Purchaser"), and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the holders of all of the issued and
outstanding shares of common stock (each such person, a
"Shareholder" and, collectively, the "Shareholders") of
Southport, Inc., a Louisiana corporation ("Southport"), sets
forth the terms and conditions pursuant to which Purchaser will
acquire (the "Acquisition") from the Shareholders all of the
outstanding shares of common stock of Southport ("Southport
Common Stock"), par value $10.00 per share.
In consideration of the premises, mutual covenants and
agreements of the parties signatory hereto (each a "Party" and,
collectively, the "Parties") and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SOUTHPORT COMMON STOCK
1.1 Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as
defined in Section 1.2), each Shareholder shall sell, transfer
and convey to Purchaser, and Purchaser shall purchase and
acquire from each Shareholder, the number of shares of
Southport Common Stock (the "Shares") set forth opposite such
Shareholder's name on Schedule 1.1 free and clear of all liens,
encroachments, easements, encumbrances, claims, charges or
restrictions of any kind whatsoever (each of the foregoing,
whether ▇▇▇▇▇▇ or inchoate, a "Lien" and, collectively,
"Liens"), for the Purchase Price specified in Section 1.3.
1.2 Closing. The closing of the purchase and sale of the
Southport Common Stock ("Closing") shall take place at the
offices of Jones, Walker, Waechter, Poitevent, Carrere &
▇▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, at 10:00 a.m. local time on the third
business day following the satisfaction or waiver of all
conditions to the obligations by the Parties set forth in
Article VI hereof, or at such other time and place as Purchaser
and Shareholders' Representative (as defined in Section 8.9)
may agree. For purposes of this Agreement, the "Closing Date"
shall mean the date on which the Closing is completed.
1.3 Purchase Price.
(a) Upon the terms and subject to the conditions of
this Agreement, in consideration of the sale to Purchaser of
the Southport Common Stock, Purchaser shall pay to Shareholders
(i) the sum of $6,000,000, subject to adjustment as provided in
subsection 1.3(b), (the "Initial Purchase Price") of which
$4,500,000 shall be payable in cash at the Closing, and (ii)
such additional cash amounts to which Shareholders shall be
entitled by virtue of subsection 1.3(c) hereof (the "Deferred
Purchase Price" and, collectively with the Initial Purchase
Price, the "Purchase Price").
(b) On or before the 60th day after the Closing
Date, Purchaser shall furnish to the Shareholders a balance
sheet of Southport as of the Closing Date (the "Closing Date
Balance Sheet"), which shall be prepared by Purchaser in
accordance with generally accepted accounting principles
applied on a basis consistent with that of the Interim Balance
Sheet. If total consolidated shareholders' equity shown on the
Closing Date Balance Sheet plus the Transaction Expenses (as
defined in Section 2.6) ("Adjusted Closing Date Shareholders'
Equity") equals or exceeds $1,528,877, there shall be no
adjustment to the Initial Purchase Price and Purchaser shall
pay $1,500,000 in cash to the Shareholders within ten days
after the Closing Date Balance Sheet has been delivered to the
Shareholders. If the Adjusted Closing Date Shareholders'
Equity is less than $1,528,877, within ten days of the delivery
of the Closing Date Balance Sheet to the Shareholders,
Shareholders may notify Purchaser of their disagreement with
the determination of the Adjusted Closing Date Shareholders'
Equity as shown on the Closing Date Balance Sheet and of the
reasons for such disagreement. If the Shareholders do not so
notify Purchaser, the Adjusted Closing Date Shareholders'
Equity shall be as determined by Purchaser. If the
Shareholders do so notify Purchaser and if the Parties have not
resolved any such disagreement within twenty days after the
giving of such notice, Shareholders and Purchaser shall select
and submit the determination of the Adjusted Closing Date
Shareholders' Equity to a nationally recognized accounting firm
(the "Arbitrator"). If Purchaser and the Shareholders are
unable to agree upon and select the Arbitrator within ten days
after the expiration of such twenty-day period, the Arbitrator
shall be selected in accordance with the rules of the American
Arbitration Association. The Parties shall cause the
Arbitrator to submit its determination of the Adjusted Closing
Date Shareholders' Equity as promptly as reasonably
practicable. Such determination by the Arbitrator shall be
binding upon the Parties. If the Adjusted Closing Date
Shareholders' Equity, as determined in accordance with this
subsection 1.3(b), is less than $1,528,877, the Initial
Purchase Price shall be reduced by the amount of the shortfall
and, within fifteen days of such determination, (i) Purchaser
shall pay to the Shareholders the excess, if any, of $1,500,000
over such shortfall or (ii) the Shareholders shall deliver to
the Purchaser any amount by which such shortfall exceeds
$1,500,000. Interest at the Purchaser Borrowing Rate (as
hereinafter defined) shall be payable on any amounts payable
under this subsection 1.3 (b) from the Closing Date until paid.
(c) (i) Purchaser shall pay to Shareholders
amounts, in cash, equal to (A) the lesser of (1) one-half of
Net After-Tax Income (as hereinafter defined) for the year
ending December 31, 1998 and (2) $1,250,000; (B) the amount by
which the lesser of (1) one-half of Net After-Tax Income for
the two years ending December 31, 1999 and (2) $2,500,000
exceeds the amount payable to Shareholders pursuant to
subsection 1.3(c)(i)(A); (C) the amount by which the lesser of
(1) one-half of Net After-Tax Income for the three years ending
December 31, 2000 and (2) $3,750,000 exceeds the aggregate
amount payable to Shareholders pursuant to subsections
1.3(c)(i)(A) and (B); and (D) the amount by which the lesser of
(1) one-half of Net After-Tax Income for the four years ending
December 31, 2001 and (2) $5,000,000 exceeds the aggregate
amounts payable to Shareholders pursuant to subsections
1.3(c)(i)(A), (B) and (C). Any payment required to be made by
Purchaser to the Shareholders pursuant to subsection 1.3(c)
shall be paid not later than 90 days after the end of the year
to which such payment relates.
(ii) "Net After-Tax Income" shall mean the
consolidated net after-tax income or loss of Southport and the
Subsidiary (as hereinafter defined), prepared in accordance
with generally accepted accounting principles by the
independent public accounting firm generally engaged by
Purchaser as its auditor, taking into account intercompany
charges and calculated as if Southport were the common parent
corporation of Southport and the Subsidiary and not a member of
the consolidated group of which Purchaser if the common parent,
adjusted to exclude amortization of good will, if any,
resulting from the Acquisition and to exclude interest, if any,
payable on debt incurred by Southport and the Subsidiary or by
Purchaser in connection with the Acquisition, other than
interest payable by Southport or the Subsidiary (A) on debt in
existence on the Closing Date, (B) on debt incurred to fund
capital expenditures (including the acquisition of real
property pursuant to the Option (as defined in subsection
2.18(c), if it occurs) of Southport after the Closing Date
(provided, however, that for purposes of calculating Net After-
Tax Income, the interest payable on any debt incurred to
acquire real property pursuant to the Option may not exceed the
amount of rent paid by Southport with respect to such property
on the date hereof), or (C) on any other debt incurred to fund
operations of Southport after the Closing Date, whether third-
party debt or intercompany debt; provided, that the interest
rate on such intercompany debt does not exceed the interest
rate required to be paid by Purchaser under its credit
agreement with First National Bank of Commerce and Whitney
National Bank or any successor agreement (the "Purchaser
Borrowing Rate"); and provided, further, that sales, general
and administrative expenses of Southport and the Subsidiary
("SG&A") may be included in the calculation of SG&A for any
year only to the extent that it does not exceed the greater of
(i) SG&A for the year ended December 31, 1997, or (ii) such
amount as would cause the ratio of SG&A to revenue of Southport
and the Subsidiary for such year to exceed such ratio for the
year ended December 31, 1997.
(iii) The Shareholders acknowledge and agree
that, not
1.2 Closing. The closing of the purchase and sale of the
Southport Common Stock ("Closing") shall take place at the
offices of Jones, Walker, Waechter, Poitevent, Carrere &
▇▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, at 10:00 a.m. local time on the third
business day following the satisfaction or waiver of all
conditions to the obligations by the Parties set forth in
Southport's Net After-Tax Income within the limits
set forth in subsection 1.3(c)(ii).
(iv) (A) At any time after Closing Purchaser
may, in lieu of any payments otherwise required to be made
under subsection 1.3(c)(i), pay to the Shareholders an amount
(the "Early Payment Amount") equal to the maximum amount of
such remaining payments, discounted to the present value of
such remaining payments at the time the Early Payment Amount is
paid, on the basis of a discount rate equal to 9%.
(B) Purchaser shall not sell, transfer or
otherwise dispose of a majority of the shares of voting capital
stock of Southport or cause or permit Southport to sell shares
of voting capital stock after which sale Purchaser shall own
less than a majority of the outstanding shares of such capital
stock or cause or permit Southport to merge into or with, or
consolidate with, or sell, lease, transfer or otherwise dispose
of all or substantially all of its assets to, or effect a share
exchange with, any corporation, partnership or other business
entity or person, or voluntarily liquidate or dissolve unless,
in connection with any such transaction, Purchaser shall pay to
the Shareholders the Early Payment Amount; provided, however,
that this subsection 1.3(c)(iv)(B) shall not apply to any
transaction as a result of which Purchaser remains the owner,
directly or indirectly, of a majority of the outstanding shares
of voting capital stock of Southport.
(C) If the employment of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. under the Employment Agreement between him and
Southport provided for in Section 4.6 is terminated by
Southport for reasons other than Cause, as defined therein, or
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. for Good Reason, as defined therein,
Purchaser shall pay to the Shareholders the Early Payment
Amount within 10 days of the date of such termination as such
date is determined under such Employment Agreement.
(d) Each Shareholder agrees that if, at any time
after the Closing during which he or she is otherwise entitled
to receive any payment by the Purchaser under subsection 1.3,
such Shareholder engages in any of the activities prohibited to
any Shareholder by subsection 4.9(a) or 4.9(c), such
Shareholder shall forever forfeit his or her right to receive
any such payment and Purchaser shall be forever relieved from
making any such payment to such Shareholder. The Shareholders
and Purchaser acknowledge and agree that this subsection 1.3(d)
sets forth conditions upon the payment of a portion of the
Purchase Price hereunder and does not restrain any Shareholder
from engaging in any activity that is competitive with the
business of Southport or in any other activity.
(e) Purchaser shall pay all payments under this
subsection 1.3 by wire transfer to an account and bank
specified in writing (including account and routing numbers) by
Shareholders' Representative on or prior to the date such
payment is due. All such payments shall be allocated among
Shareholders as their interests appear in Schedule 1.1,
Shareholders acknowledging and agreeing that Purchaser shall
have no responsibility for payment to any individual
Shareholder beyond its obligation to transfer funds to the
account so specified. The Shareholders, in proportion to their
respective interests as shown on Schedule 1.1, shall pay any
amounts due to Purchaser under this subsection 1.3 by wire
transfer to an account and bank specified in writing (including
account and routing numbers) by Purchaser on or prior to date
such payment is due.
1.4 Stock Certificates. At the Closing, each Shareholder
shall deliver to Purchaser certificates representing the Shares
that are duly endorsed or with duly executed stock powers
attached and in proper form for transfer to Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder warrants and represents to Purchaser, as
an inducement to Purchaser, as follows:
2.1 Ownership of Southport Common Stock. The
Shareholders as a group own and have an unqualified right to,
and at the Closing shall transfer to Purchaser, good, valid and
marketable title to, all of the Southport Common Stock, free
and clear of all Liens. The Southport Common Stock represents
all equity interests owned by each such Shareholder in
Southport.
2.2 Authority of Shareholders. Each Shareholder has full
power, authority and legal capacity to execute, deliver, and
perform this Agreement and all other agreements and documents
contemplated by this Agreement to be executed and delivered by
such Shareholder in connection with the transactions
contemplated hereby (all such other agreements and documents
are referred to as the "Related Agreements").
2.3 Agreement Valid and Binding. This Agreement has
been, and each of the Related Agreements will be, duly executed
and delivered by each Shareholder and this Agreement is, and
each of the Related Agreements will be, when duly executed and
delivered, the legal, valid and binding obligations of each
Shareholder, enforceable against each Shareholder in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and by general
principles of equity. Neither the execution and delivery by
such Shareholder of this Agreement or of any of the Related
Agreements to which such Shareholder is a party, nor the
consummation by such Shareholder of the transactions
contemplated hereby or thereby, nor the compliance by such
Shareholder with or fulfillment by such Shareholder of the
terms and provisions hereof or thereof will (i) with or without
the giving of notice or lapse of time or both, conflict with or
result in a breach or violation of, or default under, or permit
the acceleration of any obligation under any provision of any
agreement, indenture, mortgage, lien, lease or other instrument
or restriction of any kind to which such Shareholder is a party
or by which such Shareholder is otherwise bound or affected, or
(ii) violate any judgment, order, writ, injunction, decree,
statute, rule or regulation applicable to such Shareholder,
except in the case of the preceding clauses, for those
conflicts, breaches, violations, defaults or accelerations that
would not, individually or in the aggregate, have, or be
reasonably likely to have, a material adverse effect on the
ability of such Shareholder to perform his or her obligations
under this Agreement or any of the Related Agreements or to
consummate the transactions contemplated by this Agreement or
by any of the Related Agreements.
2.4 No Conflicts. The execution and delivery by each
Shareholder of this Agreement does not, and the execution by
each Shareholder of the Related Agreements and the consummation
of the Acquisition and the other transactions contemplated
hereby and compliance with the terms hereof and thereof will
not, result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of
any mortgages, liens, security interests, charges, easements,
leases, subleases, covenants, rights of way, options, claims or
Liens upon any assets of Southport or its Subsidiary under any
provision of: (i) the articles or certificate of incorporation
or bylaws of Southport or its Subsidiary; (ii) any mortgage,
loan agreement, contract or other agreement to which Southport
or its Subsidiary is a party; or (iii) any judgment, order or
decree ("Judgment") or statute, law (including common law)
ordinance, rule or regulation ("Applicable Law") applicable to
Southport or its Subsidiary, or any of their properties or
assets except, in the case of clause (iii), for those that, in
the aggregate, would not have a Material Adverse Effect.
Except as set forth on Schedule 2.4, no consent of, or
registration, declaration or filing with any Federal, state,
local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign
(a "Governmental Entity") or any private third party is
required to be obtained or made by or with respect to Southport
or its Subsidiary in connection with (A) the execution,
delivery and performance of this Agreement or the consummation
of the Acquisition or the other transactions contemplated
hereby or by the Related Agreements or (B) the conduct by
Purchaser after the Closing Date of the business of designing,
manufacturing and marketing living quarters for offshore
drilling and production platforms (the "Business").
2.5 Consents. Except as set forth on Schedule 2.5, no
consent, approval, waiver, order or authorization of, or
registration, declaration or filing with or notice to, any
Governmental Entity (as defined in Section 2.4) or third party
is required in connection with the execution and delivery of
this Agreement or any of the Related Agreements by such
Shareholder or the consummation by such Shareholder of the
transactions contemplated hereby or thereby. All consents,
approvals, waivers, orders, authorizations, registrations,
declarations, filings and notices ("Consents") set forth in
Schedule 2.5 include a description of the Consent required to
be obtained, given or made.
2.6 Brokers; Other Transaction Expenses. Except as set
forth on Schedule 2.6, (i) no Shareholder and neither Southport
nor the Subsidiary has taken any action that could give rise to
any claim against Purchaser, Southport or the Subsidiary for
any broker's, finder's or similar fee in connection with the
transactions contemplated by this Agreement or any Related
Agreement, and (ii) neither Southport nor the Subsidiary has
incurred any such broker's or finder's fee or expense or any
legal, accounting or other similar expense in connection with
this Agreement or the transactions contemplated hereby that are
not reflected in the Interim Financial Statements. (All such
fees and expenses of brokers, finders, lawyers and accountants
and other similar fees and expenses incurred by Southport or
the Subsidiary in connection with such transactions, to the
extent that they exceed $40,000 and are not reflected in the
Interim Financial Statements, are referred to herein as the
"Transaction Expenses").
2.7 Corporate Organization.
(a) Each of Southport and the Subsidiary is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Louisiana (in the case
of Southport) and Barbados (in the case of the Subsidiary) and
has the corporate power and authority necessary to enable it to
own, lease or otherwise hold all of its properties and assets
and to carry on its business as it is now being conducted.
(b) Each of Southport and the Subsidiary possesses
all governmental franchises, licenses, permits, authorizations
and approvals necessary to enable it to own, lease or otherwise
hold all of its properties and assets and to carry on its
business as it is now being conducted, except for governmental
franchises, licenses, permits, authorizations and approvals the
absence of which, individually or in the aggregate, would not
have or be reasonably likely to have a material adverse effect
on the operations, assets or financial position of Southport
and the Subsidiary, taken as a whole, or on the ability of
Shareholders to perform their obligations under this Agreement
or any of the Related Agreements ("Material Adverse Effect").
2.8 Foreign Qualification. Schedule 2.8 sets forth the
states and other jurisdictions in which Southport and the
Subsidiary are qualified to do business as a foreign
corporation and each state and other jurisdiction in which
either corporation is doing business. Each of Southport and
its Subsidiary is duly licensed or qualified to do business as
a foreign corporation and is in good standing in each
jurisdiction in which its ownership or leasing of property or
the conduct of its business requires such qualification, except
for jurisdictions in which the failure to become so qualified
or to be in good standing would not have a Material Adverse
Effect.
2.9 Capitalization.
(a) The authorized capital stock of Southport
consists of 30,000 shares of Common Stock, $10 par value per
share. As of the date of this Agreement, there are 10,350
shares of Southport Common Stock issued and outstanding and no
shares of Southport Common Stock held in Southport's treasury.
The Shares held by the Shareholders constitute, in the
aggregate, all of the issued and outstanding shares of
Southport Common Stock. All of the issued and outstanding
shares of Southport Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the
ownership thereof. Southport does not have and is not bound by
any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the
purchase or issuance of any shares of Southport Common Stock or
any other equity security of Southport or any securities
representing the right to purchase or otherwise receive any
shares of Southport Common Stock or any other equity security
of Southport.
(b) Southport International, a wholly owned
subsidiary of Southport, is Southport's only direct or indirect
subsidiary (the "Subsidiary").
(c) Except for the Subsidiary, Southport does not
own, directly or indirectly, an equity interest in any other
business entity. Southport owns directly all of the issued and
outstanding shares of the capital stock of the Subsidiary, free
and clear of all Liens, and all of such shares are duly
authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability
attaching to the ownership thereof. The Subsidiary does not
have, nor is it bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of
capital stock or any other equity security or any securities
representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of the
Subsidiary.
2.10 Financial Condition. Southport has delivered to
Purchaser its audited consolidated balance sheets of Southport
and its Subsidiary as of, and the audited consolidated
statements of operations and cash flows of Southport and its
Subsidiary for the fiscal year ended December 31, 1996,
together with the notes thereto and the opinions of Southport's
independent auditors (collectively, the "Year-end Financial
Statements"). The Year-end Financial Statements are true,
correct and complete in all material respects, are in
accordance with the books and records of Southport and its
Subsidiary, have been prepared in conformity with generally
accepted accounting principles as in effect from time to time
("GAAP"), consistently applied, and on that basis fairly
present the financial condition, results of operations and cash
flows of Southport and its Subsidiary for the periods
presented. Additionally, Southport has delivered to Purchaser
its unaudited monthly financial statements of Southport and its
Subsidiary for the nine months ended September 30, 1997 (the
"Interim Financial Statements" and, collectively with the Year-
end Financial Statements, the "Southport Financial
Statements"). Such monthly financial statements are in
accordance with the books and records of Southport and its
Subsidiary, have been prepared in accordance with GAAP
consistently applied, and are true, correct and complete in all
material respects except for adjustments and accruals normally
made at year end. Except as set forth in the balance sheet
included in the Interim Financial Statements (the "Interim
Balance Sheet"), Southport and its Subsidiary do not have any
liabilities or obligations of any kind or nature, whether
fixed, contingent or otherwise, except for liabilities and
obligations incurred in the ordinary course of the business and
consistent with past practice. Copies of the Southport
Financial Statements are attached hereto as Schedule 2.10.
2.11 Absence of Changes or Events. Except as set forth on
Schedule 2.11, since September 30, 1997, there has not occurred
any change in the condition (financial or other) of Southport
or its Subsidiary that could have a Material Adverse Effect on
Southport or its Subsidiary, and none of the Shareholders of
Southport has any knowledge of any threat or intention by any
significant customer, supplier, or subcontractor of Southport
or its Subsidiary to modify materially its business
relationship with Southport or its Subsidiary. Since September
30, 1997, Southport and its Subsidiary have been operating in
the ordinary course and in substantially the same manner as
previously operated and all reasonable efforts have been made
consistent with past practices to preserve the relationships of
Southport and its Subsidiary with customers, suppliers and
others with whom each deals. Since September 30, 1997, except
as set forth on Schedule 2.11, neither Southport nor its
Subsidiary has taken any action that, if taken after the date
of this Agreement, would constitute a breach of any of the
covenants set forth in Article IV.
2.12 Legal Proceedings. Except as set forth on Schedule
2.12, neither Southport nor its Subsidiary is a party to any,
and there are no pending or, to the knowledge of any
Shareholder or Southport, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature ("Proceedings")
against any Shareholder or Southport or its Subsidiary, or
challenging the validity or propriety of the transactions
contemplated by this Agreement. There is no injunction, order,
judgment, decree, or regulatory restriction imposed upon any
Shareholder or Southport or its Subsidiary or any of their
respective assets or properties that has had, or could
reasonably be expected to have a Material Adverse Effect.
12.13 Tax Audits and Payment of Taxes. Except as set forth
on Schedule 2.13 or disclosed or recorded in the Southport
Financial Statements:
(a) All federal, state, local and foreign returns
(by or on behalf of Southport and its Subsidiary) and reports
of Southport and its Subsidiary concerning Taxes (as defined in
subsection 2.13 (h)) that are required by Applicable Law to be
filed with any taxing authority prior to the Closing Date
("Returns") have been or will be filed when due (including
extensions). The U.S. corporation income tax return (Form
1120) and all foreign and state corporation franchise and
income tax returns for the taxable years of Southport and its
Subsidiary through the taxable year ending on December 31, 1996
were or will be filed on or before their respective due dates
as extended. Neither Southport nor its Subsidiary has at any
time executed or filed with any taxing authority any agreement
extending the period for assessment or collection of any Taxes
to a period extending beyond the Closing Date. Each
Shareholder and Southport have no knowledge of any pending
examination, audit, claim, asserted deficiency or assessment
for additional Taxes with respect to any Returns that are open
for examination under applicable statutes of limitation.
(b) All income Tax and state corporation franchise
Tax Returns filed by or on behalf of Southport and its
Subsidiary have been prepared in accordance with Southport's or
its Subsidiary's, as applicable, books and records and are
correct and accurate in all material respects, and all Taxes
shown on such Returns have been paid when due. The provision
for Taxes of Southport and its Subsidiary reflected in the
Southport Financial Statements for the fiscal year ending
December 31, 1997 is sufficient to provide (i) for all Taxes
which, as of the date of such statements, were due and unpaid,
and (ii) for an appropriate reserve or accrual for other Taxes
of Southport and its Subsidiary that are properly the subject
of a reserve or an accrual under GAAP as of the date of such
financial statements.
(c) Southport has never been included in a group of
corporations filing a consolidated federal income tax return
other than with its wholly-owned Subsidiary. As of the Closing
Date, neither Southport nor any its Subsidiary will have any
outstanding liabilities under any tax sharing agreement, and
will not be a party to any tax sharing agreement that will then
be in effect.
(d) None of the property owned or leased by
Southport or its Subsidiary constitutes tax-exempt bond
financed property or tax-exempt leased property within the
meaning of Section 168 of the Internal Revenue Code of 1986
("Code") and none of the property owned by Southport or its
Subsidiary is subject to a lease, safe harbor lease or other
arrangement as a result of which Southport or its Subsidiary is
not treated as the owner of the property for federal income tax
purposes.
(e) Neither Southport nor its Subsidiary is
obligated to make, or will as a result of any event connected
with the transactions contemplated in this Agreement become
obligated to make, any "excess parachute payment" as defined in
Section 280G of the Code (without regard to subsection (b)(4)
thereof).
(f) Neither Southport nor its Subsidiary is or has
been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the
Code. No Shareholder is a "foreign person" (as that term is
defined in Section 1445 of the Code) and each Shareholder will
provide an affidavit to that effect prior to or at the Closing
in the form attached hereto as Schedule 3.8(f).
(g) There are no Liens for Taxes upon any property
or assets of Southport or its Subsidiary, except for Liens for
Taxes not yet due and payable and Liens for Taxes that are
being contested in good faith and by appropriate proceedings.
(h) "Tax" or "Taxes" means any and all taxes,
charges, fees, duties, levies and other assessments, including
additions to tax, interest or penalties related thereto, that
may be imposed by any taxing authority upon or against
Southport or its Subsidiary, including without limitation
federal, state, local and foreign income taxes and any tax
measured by income, franchise taxes, alternative or add-on
minimum taxes, gross receipts taxes, use, sales, value added,
personal or real property taxes, taxes imposed on capital,
excise taxes, employment and unemployment taxes and withheld
taxes and interest or penalties relating thereto pursuant to
wage withholding, withholding pursuant to the Federal Insurance
Contributions Act or withholding with respect to certain
payments made to nonresident persons and payments in lieu of
taxes.
2.14 Benefit Plans.
(a) Schedule 2.14 contains a list and brief
description of all "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") ("Company Pension Plans")),
"employee welfare benefit plans" (as defined in Section 3(1) of
ERISA), bonus, incentive, stock option, stock purchase, life
insurance (including any individual life insurance policy as to
which Southport or any ERISA Affiliate (as defined below) is
owner, beneficiary, or both of such policy), health insurance
(including any self-insured arrangement or other health or
wellness benefit) or other insurance coverage, deferred
compensation plans or arrangements, excess benefit plans,
severance pay, holiday pay, vacation pay, "cafeteria" or
"flexible benefit" plans, fringe benefits, perquisites, and
other employee benefit plans, arrangements, agreements, trusts,
contracts, policies, or commitments, whether written or
unwritten, funded or unfunded (all the foregoing, including the
Company Pension Plans, being herein called "Company Benefit
Plans") now or during the five years prior to the Closing Date
maintained, or contributed to, by Southport or by any ERISA
Affiliate for the benefit of any present or former employees,
officers, directors, or other persons. As used herein, "ERISA
Affiliate" means the Subsidiary of Southport and any trade or
business (whether or not incorporated) that is or was during
the five years prior to the Closing Date part of the same
controlled group, or under common control with, or part of an
affiliated service group that includes Southport within the
meaning of Code Sections 414(b), (c), (m) or (o).
(b) Southport has delivered to Purchaser, or by the
Closing will have delivered to Purchaser, to the extent the
following items exist, true, complete and correct copies of:
(i) each Company Benefit Plan (or, in the case of any unwritten
Company Benefit Plans, descriptions thereof) and all amendments
thereto; (ii) the three most recent annual reports on Form 5500
(including all schedules and attachments thereto, and financial
statements and accountant's opinion, if applicable) filed with
the Internal Revenue Service ("IRS") with respect to each
Company Benefit Plan, if any such report was required; (iii)
the three most recent actuarial valuations and Pension Benefit
Guaranty Corporation ("PBGC") premium reports for each Company
Pension Plan that is a defined benefit plan; (iv) the most
recent summary plan description for each Company Benefit Plan
for which such a summary plan description is required; (v) each
trust agreement, group annuity contract or other funding and
financing arrangement relating to any Company Benefit Plan, if
any such arrangement was required or maintained; (vi) the most
recent determination letters received from and applications
pending with the IRS with respect to Company Benefit Plans; and
(vii) all prohibited transaction applications made and
exemptions received from the Department of Labor with respect
to Company Benefit Plans.
(c) Except as disclosed in Schedule 2.14: (i) each
Company Pension Plan has received a favorable determination
letter from the IRS stating that such Company Pension Plan
meets all the requirements of Section 401(a) of the Code, and
that any trust or trusts associated with such Company Pension
Plan are tax exempt under Section 501(a) of the Code; (ii) to
the knowledge of each Shareholder and Southport, there is no
reason why the tax-qualified status of any such Company Pension
Plan should be revoked, whether retroactively or prospectively,
by the IRS and, to the knowledge of each Shareholder and
Southport, nothing has occurred since the date of any such
determination letter that could adversely affect any Company
Pension Plan's qualification or any trust's tax exempt status;
(iii) all amendments to the Company Pension Plans that are
required to be made through the date hereof and the Closing
Date under Section 401(a) of the Code, and any other Applicable
Law, subsequent to the issuance of each such Company Pension
Plan's IRS determination letter have been made.
(d) Southport does not maintain and has never
maintained or contributed to or been required to contribute to,
a multiemployer plan as defined in Section 3(37) of ERISA and
no Shareholder nor Southport has any liability (contingent or
otherwise) relating to the withdrawal or partial withdrawal
from a multiemployer plan. Further, there are no Company
Benefit Plans that promise or provide health, life or other
benefits to retirees or former employees of the Company or any
ERISA Affiliate other than as required by Section 602 of ERISA
or Section 4980B of the Code.
(e) All Company Benefit Plans comply (and have been
funded and administered in form and in operation) in all
material respects with their terms and any related documents or
agreements and with the requirements of all statutes, orders or
governmental rules and regulations currently in effect and
applicable to such plans or arrangements, including ERISA and
the Code; no Shareholder nor Southport has received any notice
from any governmental agency questioning or challenging such
compliance; and all contributions, payments, premiums and
reports required by such statutes, orders, and governmental
rules and regulations have been made.
(f) There is no litigation, administrative or
arbitration proceeding or other claim or dispute pending or, to
any Shareholder's or Southport's knowledge, threatened, that
involves any Company Benefit Plan that could reasonably be
expected to have a Material Adverse Effect on Southport or any
adverse effect on any employees or directors of Southport or
any fiduciary (as defined in ERISA Section 3(21)) of any
Company Benefit Plan, nor, to any Shareholder's or Southport's
knowledge, is there any reasonable basis for any such claim,
suit or proceeding.
(g) To the knowledge of each Shareholder and
Southport all contributions and payments made or accrued with
respect to each Company Benefit Plan are deductible in full for
income Tax purposes under the Code; all contributions, premiums
or payments required to be made with respect to each such
Company Benefit Plan for any period ending on or before the
Closing Date have been paid on or before their due date(s) to
each such Company Benefit Plan or, if not yet due, accrued in
accordance with past practices of the Company; and all premiums
or other payments due for all periods ending on or before the
Closing Date have been or will be paid with respect to each
Company Benefit Plan that is an "employee welfare benefit plan"
except for claims for benefits submitted in the ordinary course
of administration of such "employee welfare benefit plans."
(h) Neither the consummation of the transactions
contemplated by this Agreement nor the subsequent sale of all
or part of Southport's assets will accelerate or terminate, nor
does there exist any basis for the acceleration or termination
of: (i) benefits payable to current or former employees of
Southport or an ERISA Affiliate under any Company Benefit Plan;
(ii) a participant's vesting credits or years of service under
any Company Benefit Plan; or (iii) accruals with respect to any
other benefits or amounts reserved under any such plan or
arrangement. Only current and former employees (excluding
"leased employees" as defined in Code Section 414(n)(2)) of
Southport and its ERISA Affiliates participate in, and are
entitled to receive benefits from, the Company Benefit Plans.
(i) With respect to each Company Benefit Plan, to
the knowledge of each Shareholder and Southport, there has not
occurred, and no person is contractually bound to enter into,
any nonexempt "prohibited transaction" within the meaning of
Section 4975 of the Code or Section 406 of ERISA.
(j) Southport and its Subsidiary have never had any
Company Pension Plan that is subject to Title IV of ERISA
("Defined Benefit Plan") or an employee plan maintained in
connection with a trust described in Section 501(c)(9) of the
Code.
(k) Except as set forth on Schedule 2.14, Southport
has not entered into any agreement or taken any action causing
any employee, former employee or director of Southport or its
Subsidiary to become entitled to any bonus, retirement,
severance, job security or similar benefit or any enhanced
benefit solely as a result of the transactions contemplated
hereby or the subsequent sale of all or part of Southport's
assets.
(l) With respect to each Company Benefit Plan that
is a "group health plan" within the meaning of Section 607 of
ERISA and that is subject to Section 4980B of the Code,
Southport complies in all respects with the continuation
coverage and health insurance portability requirements of the
Code and ERISA.
2.15 Compliance with Applicable Laws; Permits. Southport
and its Subsidiary comply in all material respects with all
Applicable Laws (including, without limitation, all
Environmental Laws (as defined in Section 2.21) and all laws,
rules and regulations enforced or promulgated by the U.S.
Immigration and Naturalization Service), and Schedule 2.15
identifies, to the knowledge of each Shareholder and Southport,
all violations of any Applicable Laws. Neither Southport nor
its Subsidiary has received any written communication during
the past three years from a Governmental Entity that alleges
that Southport or its Subsidiary does not comply in any
material respect with any Applicable Law. Neither Southport
nor its Subsidiary has received any written notice, nor does
Southport or its Subsidiary have knowledge that any
investigation or review by any Governmental Entity with respect
to Southport, its Subsidiary, or any asset thereof is pending
or threatened or that any such investigation or review is
contemplated. Except as set forth in Schedule 2.15, Southport
and its Subsidiary has received or been issued, as appropriate,
every license, permit, authorization, consent and approval
(collectively, "Permits") required by any foreign, United
States, state or local Governmental Entity for the present or
currently contemplated operation of the Business, except where
the failure to have received or been issued any Permit would
not, individually or in the aggregate, have or be reasonably
likely to have, a Material Adverse Effect. Except as disclosed
in Schedule 2.15, all Permits are valid and in full force and
effect, and no Proceeding is pending or, to the knowledge of
any Shareholder or Southport, has been threatened to modify,
suspend, revoke or otherwise limit any Permit, and no
administrative or governmental actions have been taken or, to
the knowledge of any Shareholder or Southport threatened in
connection with the expiration or renewal of any Permit.
2.16 Certain Contracts.
(a) Except as set forth in Schedule 2.16, neither
Southport nor its Subsidiary is a party to or bound by any
contract, lease, license, indenture, agreement, commitment or
other legally binding arrangement, whether oral or written
(each, a "Contract", and, collectively, "Contracts"), that is:
(i) an employment agreement or employment
contract;
(ii) a collective bargaining agreement or other
Contract with any labor organization, union or
association;
(iii) a covenant not to compete or other
covenant by Southport or its Subsidiary restricting the
operations, development or marketing of Southport or its
Subsidiary;
(iv) a lease or a sublease, or similar Contract
with any person under which (A) Southport or its
Subsidiary is lessee, sublessee or holds or uses, any
vessel, machinery, equipment, vehicle or other tangible
personal property owned by any other person or (B)
Southport or its Subsidiary is a lessor, sublessor, or
makes available for use by any person, any vessel or
tangible personal property owned or leased by Southport or
its Subsidiary, that in any such case has an aggregate
future liability or receivable, as the case may be, in
excess of $5,000;
(v) a lease, sublease or similar Contract with
any person under which (A) Southport or its Subsidiary is
lessee or sublessee of, or holds or uses, and real
property owned by any person or (B) Southport or its
Subsidiary is a lessor or sublessor of, or makes available
for use by any person, any real property owned or leased
by Southport or its Subsidiary;
(vi) (A) a continuing Contract for the future
purchase of materials, supplies or equipment, (B) a
management, service, agency, consulting or other similar
Contract or (C) an advertising agreement or arrangement,
in any such case that has an aggregate future liability to
any person in excess of $10,000;
(vii) a license, option or other Contract
relating in whole or in part to Intellectual Property
(including any license or other contract under which
Southport or its Subsidiary is licensee or licensor of
any Intellectual Property (as defined in Section 2.20));
(viii) a Contract establishing a Lien upon any
asset of Southport or its Subsidiary;
(ix) a confidentiality agreement;
(x) a Contract (including a purchase order)
involving payment by Southport or its Subsidiary of more
than $10,000 or extending for a term more than 180 days
from the date of this Agreement (unless terminable without
payment or penalty upon no more than 30 days' notice);
(xi) a Contract (including a sales order)
involving the obligation of Southport or its Subsidiary to
perform services for payment of more than $10,000 or
extending for a term more than 30 days from the date of
this Agreement (unless terminable without payment or
penalty upon no more than 30 days' notice);
(xii) a Contract for the sale of any asset of
Southport or its Subsidiary or the grant of any
preferential rights to purchase any asset of Southport or
its Subsidiary or requiring the consent of any person to
the transfer thereof;
(xiii) a Contract with any Governmental Entity;
(xiv) a Contract for any joint venture,
partnership or similar arrangement;
(xv) a Contract with or obligating Southport or
its Subsidiary to any director, officer or affiliate of
Southport, its Subsidiary or any Shareholders;
(xvi) a Contract providing for the services of
any sales representative, franchisee or similar
representative;
(xvii) a Contract other than as set forth above
to which Southport or its Subsidiary is a party or by
which it or any of its assets is bound or subject that was
not made in the ordinary course of business involving the
payment or receipt over the life of such Contract in
excess of $10,000 by Southport or its Subsidiary.
(b) Except as set forth in Schedule 2.16,
(i) all Contracts listed in Schedule 2.16 are
valid, binding and in full force and effect and are
enforceable by Southport or its Subsidiary in accordance
with their respective terms;
(ii) Southport and its Subsidiary has performed
all obligations required to be performed by them to date
under the Contracts, and none is (with or without the
lapse of time or the giving of notice, or both) in breach
or default thereunder and, to the knowledge of Southport
and each Shareholder, no other party to any Contract is
(with or without the lapse of time or the giving of
notice, or both) in breach or default thereunder;
(iii) neither Southport nor its Subsidiary has
received any notice of the intention of any party to
terminate any Contract nor has Southport or its Subsidiary
knowledge of the intention of any party to terminate any
Contract;
(iv) neither Southport nor its Subsidiary is a
party to any Contract for the employment of any person
that is not terminable on 30 days' notice or that requires
the payment of severance benefits; and
(v) with the exception of Contracts involving an
aggregate obligation on or benefit to the Southport or its
Subsidiary of less than $10,000, all Contracts of
Southport or its Subsidiary (including Southport's long-
term sublease of land in Harvey, Louisiana and leases for
equipment, and all Contracts with Customers) are fully
assignable by Southport or its Subsidiary, as applicable,
without the consent of the other parties thereto.
(c) Complete and correct copies of all Contracts
listed in Schedule 2.16, together with all modifications and
amendments thereto, have been made available, or by the Closing
Date will have been made available, to Purchaser.
(d) Schedule 2.16 sets forth each Contract with
respect to which the consent of the other party or parties
thereto must be obtained by virtue of the execution and
delivery of this Agreement or the consummation of the Merger to
avoid the invalidity of the transfer of such Contract, the
termination thereof, a breach, violation or default thereunder
or any other change or modification to the terms thereof.
17.d Undisclosed Liabilities. Except as set forth on
Schedule 2.17, neither Southport nor its Subsidiary has any
liability whether fixed, contingent, or otherwise except as (a)
is reflected or reserved against on the Interim Balance Sheet;
or (b) has been incurred since September 30, 1997 in the
ordinary course of business consistent with past practice and
does not exceed $15,000 in the aggregate for all such
liabilities.
2.18 Title to Property.
(a) Neither Southport nor its Subsidiary owns any
real property. Each of Southport and its Subsidiary has good
and valid title to, or a valid leasehold interest in or license
or other right to use, all of the properties and assets, real
and personal, tangible or intangible, that are and have been
used in connection with their businesses, and all other
properties and assets reflected on the Interim Balance Sheet or
acquired after such date (excluding only those properties and
assets that have been disposed of in the ordinary course of
business after such date), in each case free and clear of all
Liens, except: (a) such as are set forth on Schedule 2.18; and
(b) Liens arising under original purchase price conditional
sales contracts and equipment leases with third parties entered
into in the ordinary course of business and liens for Taxes
that are not due and payable or that may thereafter be paid
without penalty; and (c) other imperfections of title or
encumbrances, if any, that do not, individually or in the
aggregate, (i) secure an obligation or claim (whether direct or
contingent) in excess of $5,000 or (ii) materially impair the
continued use and operation of the assets to which they relate
in the conduct of the Business as presently conducted (the
liens described in clauses (a), (b) and (c) above are referred
to collectively as "Permitted Liens" and individually as a
"Permitted Lien"). No Shareholder owns either directly or
indirectly (except through such Shareholders' interest in
Southport) any property used in the business of Southport and
its Subsidiary.
(b) Schedule 2.18 sets forth a complete and accurate
schedule of all leased property as to which either Southport or
its Subsidiary is a lessor or lessee or sublessor or sublessee,
and sets forth for each such property, the address, the
approximate size of the property, the names of the lessor and
lessee, a description of the use of the property, the term of
the lease, and the periodic lease payment. With respect to
each lease listed on Schedule 2.18: (i) such lease is in full
force and effect in accordance with its terms; (ii) all rents
and other monetary amounts that have become due and payable
thereunder have been paid; (iii) there exists no default (or an
event which, with notice or lapse of time, or both, would
constitute a default) under such lease; and (iv) the
Acquisition will not constitute a default or a cause for
termination or modification of such lease.
(c) Westport Properties, Inc. ("Westport"), all of
the capital stock of which is owned by the Shareholders, holds
an option to purchase property owned by E & H Investments, Inc.
which property is used by Southport as lessee pursuant to the
terms of a lease identified on Schedule 2.18 (the "Option").
The Option is in full force and effect in accordance with its
terms and there exists no default (or an event which, with
notice or lapse of time, or both, would constitute a default)
thereunder. The Acquisition will not constitute a default or
cause for termination or modification of the Option. Westport
owns a title insurance policy with respect to the property
subject to the Option (the "Option Property Title Insurance"),
a copy of which policy is included in Schedule 2.18. The
Shareholders acknowledge that Purchaser may, but will not be
obligated to, exercise the Option.
(d) None of the Shareholders, Southport or its
Subsidiary has a legal obligation, absolute or contingent to
any other person to sell or otherwise dispose of, or to refrain
from selling or otherwise disposing of, any substantial part of
its assets except pursuant to this Agreement; or to sell or
dispose of any of its assets except in the ordinary course of
business consistent with past practices.
(e) Southport and its Subsidiary have previously
delivered to Purchaser true, correct and complete copies of the
Option and of all leases on Schedule 2.18, including all
amendments thereto, and such leases have not been further
amended or modified.
2.19 Insurance. The material insurance policies
maintained by Southport and its Subsidiary, together with their
respective policy limits and deductibles, are listed on
Schedule 2.19. All such policies will be in effect on the
Closing Date. The business of Southport and its Subsidiary has
been conducted in a manner so as to conform in all material
respects to all applicable provisions of such insurance
policies. All premiums due, for which invoices have been
received, have been currently paid or provided for and none of
the policies contains retroactive premium adjustment
provisions. Neither Southport nor its Subsidiary is otherwise
in default with respect to any such policy. Neither Southport
nor its Subsidiary has failed to give any notice or present any
claim under any such policy in a due and timely manner. There
are no outstanding unpaid claims or matters which could
reasonably be anticipated to become claims under any such
policy other than any pending claims or matters listed on
Schedule 2.19. Neither Southport nor its Subsidiary has
received notice of cancellation or non-renewal of any insurance
policy or any notice that coverage has been or may be denied
with respect to any outstanding claim by or against Southport
or its Subsidiary (other than routine reservation of rights
notices by insurers in circumstances under which neither
Southport nor any Shareholder has any reason to believe that
the insurer reserving its rights will actually subsequently
dispute coverage).
2.20 Intellectual Property. Schedule 2.20 sets forth:
(a) all patents or patent applications owned by Southport or
its Subsidiary; (b) all licenses and other rights granted to
Southport or its Subsidiary relating to any patent or patent
application owned by any other person; (c) all trademarks,
service marks, copyrights, software or trade names owned by
Southport or its Subsidiary; and (d) all licenses and other
rights granted to Southport or its Subsidiary to use any such
trademark, service ▇▇▇▇, copyright, software or trade name
owned by any other person, whether registered or unregistered
(collectively, the "Intellectual Property"). Except as set
forth on Schedule 2.20, all of the Intellectual Property listed
on Schedule 2.20 pursuant to clauses (a) and (c) above, if any,
has been registered (to the extent capable of registration),
duly issued and is owned by Southport or its Subsidiary, and
Southport or its Subsidiary has the exclusive rights to use all
such patents, patent applications, trademarks, service marks,
copyrights, software and trade names in its business and
operations. Southport or its Subsidiary owns or is licensed
under valid licenses for all patents, patent applications,
copyrights, trademarks, trade names, service marks, software,
know-how, trade secrets and other proprietary rights necessary
to conduct their Business, and the operations of Southport and
its Subsidiary, as currently conducted and as conducted since
such entity's incorporation, to the best of each Shareholder's
and Southport's knowledge, do not and have not infringed any
patent, copyright, trademarks, trade name, service ▇▇▇▇,
software, know-how, trade secret or other proprietary right of
any other person. Neither Southport nor its Subsidiary is
required to pay any royalty, license fee or similar type of
compensation in connection with the conduct of its Business as
it is now or heretofore has been conducted. To the knowledge
of any Shareholder and Southport, there is no person that is
infringing any patent, trademark, service ▇▇▇▇, copyright,
software or trade name owned or used by Southport or its
Subsidiary.
2.21 Environmental Matters. Except as described in
Schedule 2.21:
(a) (i) The activities, operations and business
carried out at or on the Sites or on Navigable Waters by
Southport or its Subsidiary, are, and have been at all times,
in compliance with all Environmental Laws; (ii) Hazardous
Substances have not been Released on, at, under or about the
Sites or in Navigable Waters or transported to or from the
Sites; and (iii) neither Southport nor its Subsidiary is
required by any Governmental Entity to take any action to
remedy any condition caused by or in any way connected with the
presence, Release, Threat of Release, use, handling,
manufacturing, generation, production, storage, treatment,
processing, transportation or disposal of Hazardous Substances,
as such capitalized terms are defined in this Section 2.21.
(b) There are no pending litigation or proceedings
or, to the knowledge of the Shareholders, threatened litigation
or proceedings before any Governmental Entity in which any
person alleges the violation of, or any liability under, any
Environmental Law or the Release or Threat of Release of
Hazardous Substances on, at, under or from any of the Sites or
in Navigable Waters, nor has Southport or its Subsidiary: (i)
received any notice of or obtained any actual or constructive
knowledge that any third party, Governmental Entity or any
employee or agent thereof, has determined that there exists any
violation of any Environmental Law or the Release or Threat of
Release of Hazardous Substances on, at, under or from the Sites
or in Navigable Waters; (ii) received any notice under the
citizen suit provision of any Environmental Law; or (iii)
received any request for inspection or request for information,
notice, demand, administrative inquiry or any formal or
informal complaint or claim with respect to or in connection
with any Environmental Law.
(c) No Lien has been imposed on any of the Sites by
any Governmental Entity in connection with Environmental Laws.
(d) Southport and its Subsidiary has received or
been issued, as appropriate, every Permit required by any
Governmental Entity for the present or currently contemplated
operation of the Business of Southport and its Subsidiary,
except where the failure to have received or been issued any
Permit would not individually have, or be reasonably likely to
have, a Material Adverse Effect. Except as disclosed in
Schedule 2.21, all Permits are valid in full force and effect,
and no proceeding is pending or, to the knowledge of Southport
of its Subsidiary, has been threatened to modify, suspend,
revoke or otherwise limit any of the Permits, and no
administrative or governmental actions have been taken or, to
the knowledge of Southport and its Subsidiary, has been
threatened to modify, suspend, revoke or otherwise limit any of
the Permits, and no administrative or governmental actions have
been taken, or to the knowledge of Southport and its
Subsidiary, threatened in connection with the expiration or
renewal of any of the Permits. Except as set forth in Schedule
2.21, the Business of Southport and its Subsidiary is and at
all times has been conducted in compliance with all Permits and
all applicable laws, statutes, ordinances, orders, rules,
regulations and requirements of any Governmental Entity, except
for any non-compliance that would not individually have, or be
reasonably likely to have, a Material Adverse Effect.
(e) No storage tanks presently exist on, at, under
or about any Sites or previously existed on, at, under or about
any Sites.
(f) Schedule 2.21 identifies all locations to which
Hazardous Substances have been sent by Southport or its
Subsidiary for storage, treatment, or disposal that are also
identified in any publicly available document as a candidate
for cleanup or remediation.
(g) Schedule 2.21 specifies the Sites used for
(i) the storage, maintenance or repair of vehicle or (ii) the
storage or distribution of Hazardous Substances.
For purposes of this Agreement, "Environment" means soil,
surface waters, ground waters, land, stream sediments, surface
or subsurface strata, ambient air, and any environmental
medium.
For purposes of this Agreement, "Environmental Laws" means
(a) any Applicable Law or bylaw regulating or referring to the
Environment or to Natural Resource Damages; and (b) any
presently or previously enforced Applicable Law or bylaw of any
Governmental Entity that asserts or may assert jurisdiction
over Southport or its Subsidiary or the Sites, or the
operations or activities at the Sites or in Navigable Waters,
that regulates or refers to the presence, Release, Threat of
Release, use, handling, manufacturing, generation, production,
storage, treatment, processing, transportation or disposal of
any Hazardous Substances.
For purposes of this Agreement, "Hazardous Substances"
means: (a) any pollutant, toxic substance, contaminant,
chemical, hazardous waste, hazardous material, petroleum
product, oil, radioactive material; (b) any substance, gas
material or chemical that is or may be defined as or included
in the definition of "hazardous substances," "toxic
substances," "hazardous materials," "hazardous wastes," or
words of similar import under any Environmental Law; (c) radon
gas, asbestos in any form that could or does become friable,
urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls in excess of federal, state or local
safety guidelines, whichever are more stringent; and (d) any
other chemical, material, gas, or substance, the exposure or
Release of which is or may be prohibited, limited or regulated
by any Governmental Entity that asserts or may assert
jurisdiction over Southport or its Subsidiary, the Sites, or
the operations or activities at the Sites or in Navigable
Waters.
For purposes of this Agreement, "Natural Resource Damages"
has the meaning provided in CERCLA (42 U.S.C. 9601 et seq.) and
OPA (33 U.S.C. 2701 et seq.).
For purposes of this Agreement, "Navigable Waters" has the
meaning provided under the Clean Water Act and OPA (33 U.S.C.
2701 et seq.).
For purposes of this Agreement, "Release" means any
releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching,
disposing, or dumping into the Environment.
For purposes of this Agreement, "Sites" mean all locations
owned or used by Southport or its Subsidiary at any time prior
to the Closing Date.
For purposes of this Agreement, "Threat of Release" means
a substantial likelihood of a Release that requires action to
prevent or mitigate damage to the Environment that may result
from such Release.
2.22 Employee and Labor Matters.
(a) Except as set forth on Schedule 2.22(a): (i)
there is not any, and during the past twelve months there has
not been any, labor strike, work stoppage or lockout pending,
or, to the knowledge of any Shareholder or Southport or its
Subsidiary, threatened against Southport or its Subsidiary;
(ii) no employees of Southport are currently represented by a
union; (iii) to the knowledge of any Shareholder or Southport
or its Subsidiary, no union organizational campaign is in
progress with respect to the employees of Southport or its
Subsidiary and no question concerning representation exists
respecting such employees; (iv) neither Southport nor its
Subsidiary is engaged in any unfair labor practice or action
that could reasonably be expected to constitute an unfair labor
practice; (v) there are not, to the knowledge of any
Shareholder or Southport or its Subsidiary, any unfair labor
practice charges or complaints against Southport or its
Subsidiary, threatened or pending before the National Labor
Relations Board; (vi) there are no pending, or to the knowledge
of any Shareholder or Southport or its Subsidiary, threatened
union grievances against Southport or its Subsidiary; (vii)
there are not, to the knowledge of any Shareholder or Southport
or its Subsidiary, any pending or threatened charges against
Southport or its Subsidiary or any current employee of
Southport or its Subsidiary before the Equal Employment
Opportunity Commission or any state or local agency responsible
for the prevention of unlawful employment practices or unlawful
discrimination practices or discrimination on the basis of
disability; (viii) Southport and its Subsidiary are, to the
knowledge of any Shareholder and Southport and its Subsidiary,
in compliance with the regulations under the Occupational
Safety and Health Act (OSHA); and (ix) neither Southport nor
its Subsidiary has received written or oral notice during the
past twelve months of the intent of any Governmental Entity
responsible for the enforcement of labor or employment laws to
conduct an investigation of and, to the knowledge of any
Shareholder, Southport and its Subsidiary, no such
investigation is in progress. Schedule 2.22(a) contains a
complete and accurate list of all labor arbitration and unfair
labor practice charges, if any, between Southport or its
Subsidiary and the employees or either of them, that occurred
at any time since January 1, 1994.
(b) Schedule 2.22(b) sets forth the names and
salaries (including previously awarded and projected bonuses
and other incentive compensation) of all salaried employees of
Southport and its Subsidiary as of the date hereof.
2.23 Condition of Assets. The machinery and equipment
necessary for the conduct of Southport's business and the
business of its Subsidiary, together with all leased real
property and improvements thereon, are in good operating
condition and in a state of reasonable maintenance and repair,
ordinary wear and tear excepted.
2.24 Absence of Changes. Except as set forth on Schedule
2.24, since September 30, 1997, Southport and its Subsidiary
have conducted their respective businesses only in the ordinary
course, consistent with past practice. Without limiting the
generality of the foregoing, neither Southport nor its
Subsidiary has since September 30, 1997:
(a) experienced any Material Adverse Effect in its
business, properties, prospects, assets, liabilities or
condition (financial or otherwise) or its relationships with
its principal customers, suppliers or distributors, or suffered
any material casualty loss (whether or not insured);
(b) made any change in its accounts receivable or
accounts payable practices;
(c) incurred or guaranteed any material obligation
or liability (including, without limitation, incurred any
indebtedness), except for current liabilities incurred in the
ordinary course of business;
(d) sold, assigned, transferred, mortgaged, pledged,
leased, licensed or otherwise disposed of (other than sales of
goods manufactured by Southport in the ordinary course of
business) or subjected to any Lien (except a Permitted Lien)
any material asset;
(e) other than in the ordinary course of business
and consistent with past practice, entered into any employment
contract, or any compensation arrangement or employee benefit
plan, or changed or committed to change (including, without
limitation, any change pursuant to any bonus, pension, profit-
sharing or other plan, commitment, policy or arrangement) the
compensation payable or to become payable to any of its
officers, directors, employees or agents, or made any pension,
retirement, profit-sharing, bonus or other employee welfare or
benefit payment or contribution;
(f) declared, paid or made, or set aside for payment
or making, any dividend or other distribution in respect of
Southport Common Stock, or directly or indirectly redeemed,
purchased or otherwise acquired any of its capital stock or
other securities or subdivided or in any way reclassified or
changed any of the terms or provisions of any shares of its
capital stock;
(g) paid, loaned or advanced any amount to or in
respect of, or sold, transferred or leased any property or
assets to, or received any loan or advance of any amount from,
or entered into any transaction, agreement or arrangement with
or for the benefit of any Shareholder or any affiliate,
associate or family member of a Shareholder, or any of the
officers or directors of Southport or its Subsidiary or any
affiliate or associate of such officers or directors;
(h) canceled any material debts or claims, or waived
any rights of material value or incurred or guaranteed any
material obligation or liability of any kind, except for
current liabilities incurred in the ordinary course of
business;
(i) changed its Tax or financial accounting methods,
principles or practices (including, without limitation, any
changes in depreciation or amortization policies or rates or
any changes in any assumptions underlying any method of
calculating reserves);
(j) made any capital expenditure, except capital
expenditures in accordance with the written capital budget
previously provided to Purchaser;
(k) entered into, modified, terminated, amended,
renewed, renegotiated, released, disposed of, permitted to
lapse or expanded in any respect, or waived any of its rights
under, any material Contract;
(l) disposed of or permitted to lapse any material
item of Intellectual Property;
(m) agreed, whether or not in writing, to take any
action, or fail to take any action, that if taken or not taken
after the date of this Agreement would constitute a breach
under this Section 2.24;
(n) received any notice of any pending or threatened
condemnation or expropriation of property owned or used by
Southport or its Subsidiary; or
(o) learned any facts that adversely affect the
Business or that are reasonably likely in the future to
adversely affect the Business.
2.25 Accounts Receivable and Accounts Payable.
Southport's and its Subsidiary's accounts receivable (and other
receivables) and accounts payable have arisen or will arise, as
the case may be, from bona fide transactions and represent
amounts due or payable with respect to actual, arm's length
transactions entered into in the ordinary course of business
and consistent with past practice (including, without
limitation, credit practices) and have been calculated in
accordance with GAAP consistently applied. No such account
receivable (or other receivable) has been or will have been
assigned or pledged to any individual, partnership, joint
venture, firm, corporation, association, trust or other entity
or any government or political subdivision or any agency,
department or instrumentality thereof. Except for accounts
receivable in an aggregate amount not in excess of any reserve
for bad debt therefor expressly reflected on the Interim
Balance Sheet and any reserves after such date on the books of
Southport and its Subsidiary in the ordinary course of business
consistent with past practices for receivables accrued on the
Interim Balance Sheet, all receivables of Southport and its
Subsidiary are or will be collectible in accordance with their
terms. Schedule 2.25 sets forth an itemized list of all
accounts receivable of Southport and its Subsidiary as of
October 31, 1997, for any amount in excess of $5,000 together
with the aging of such accounts receivable and a notation of
which such accounts receivable are estimated to be wholly or
partially uncollectible.
2.26 Inventory. All inventory of Southport and its
Subsidiary reflected on the Interim Balance Sheet: (i) is
merchantable, or is suitable and usable in the ordinary course
of business; (ii) is not obsolete or slow-moving; (iii) is not
held by Southport or its Subsidiary on consignment and is not
in the possession of persons other than Southport or its
Subsidiary; and (iv) is maintained on a FIFO basis and valued
at the lower of cost or market in accordance with GAAP
consistently applied.
2.27 Books and Records. The books and records of
Southport and its Subsidiary are complete and correct and
accurately reflect in accordance with GAAP all transactions in
which Southport and its Subsidiary have engaged, and there are
no off-balance sheet transactions or matters for which entry
has not been properly made in such books and records.
2.28 Bank Accounts and Powers of Attorney. Schedule 2.28
sets forth a listing of all persons holding powers of attorney
granted by Southport or its Subsidiary and of all bank accounts
and lock boxes in which Southport or its Subsidiary has
deposited funds or property, together with the names of the
persons authorized to sign on or enter them, as the case may
be.
2.29 Questionable Payments. Neither Southport nor its
Subsidiary nor any of their directors, officers, agents or
employees, nor any other person associated with or acting on
behalf of Southport or its Subsidiary, has directly or
indirectly: (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback or other payment to any
person, private or public, regardless of form, 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
either Southport or its Subsidiary; or (iv) in violation of any
applicable law (including, without limitation, the Foreign
Corrupt Practices Act); (b) received any bribe, payoff or
kickback from any person regardless of form, whether in money,
property or services to award business; or (c) established or
maintained any fund or asset that has not been recorded in the
books and records of either Southport or its Subsidiary.
2.30 Affiliate Transactions. Schedule 2.30 sets forth a
list of all Contracts and transactions between Southport or its
Subsidiary, on the one hand, and any director or officer of any
Southport, director or officer of its Subsidiary, any
Shareholder or any affiliate, associate or immediate family
member of any such director, officer or Shareholder, or any
entity in which any such director, officer or Shareholder of
any affiliate, associate or immediate family member of any such
director, officer or Shareholder has a direct or indirect
interest, on the other hand.
2.31 Zoning. The current operation of the businesses of
Southport and its Subsidiary is a permitted use under
applicable zoning regulations and there is no existing or, to
the knowledge of Southport and its Subsidiary, pending or
threatened, requirement for any special exception, variance of
other conditional approval to permit such businesses to
continue to operate and to expand to any locations at which
other businesses are currently operated.
2.32 No Misrepresentations or Omissions. The warranties,
representations and covenants made in this Agreement by or on
behalf of each Shareholder and Southport do not contain any
untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in the context in which they were made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to the
Shareholders, as follows:
3.1 Corporate Organization. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Louisiana and has the corporate power and
authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to
own, lease or otherwise hold all of its properties and assets
and to carry on its business as it is now being conducted.
3.2 Authority; Execution and Delivery; Enforceability.
Purchaser has the corporate power and authority to execute and
deliver this Agreement and to consummate the Acquisition and
the other transactions contemplated hereby. The execution and
delivery by Purchaser of this Agreement and the consummation by
Purchaser of the Acquisition and the other transactions
contemplated hereby have been duly authorized by all necessary
corporate action. Purchaser has duly executed and delivered
this Agreement, and this Agreement constitutes the legal, valid
and binding obligation of Purchaser, enforceable against it in
accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and by
general principles of equity.
3.3 No Conflicts; Consents. The execution and delivery
by Purchaser of this Agreement do not, and the consummation of
the Acquisition and the other transactions contemplated hereby
and compliance with the terms hereof will not result in any
violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of
Purchaser's assets under, any provision of (a) the articles or
certificate of incorporation of Purchaser, or (b) any Judgment
or Applicable Law applicable to Purchaser or its properties or
assets. No consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or
made by or with respect to Purchaser in connection with the
execution, delivery and performance of this Agreement or the
consummation of the Acquisition or the other transactions
contemplated hereby.
ARTICLE IV
COVENANTS
4.1 Covenants of Seller Relating to Conduct of
Southport's Business.
(a) Except as otherwise expressly permitted by the
terms of this Agreement, from the date hereof to the Closing,
the Shareholders shall cause Southport and its Subsidiary to
conduct their respective businesses in the ordinary course in
substantially the same manner as presently conducted and shall
make all reasonable efforts consistent with past practices to
preserve their relationships with customers, suppliers and
others with whom they deal. Except as otherwise expressly
permitted by the terms of this Agreement, the Shareholders
shall cause each of Southport and its Subsidiary not to do any
of the following without the prior written consent of
Purchaser:
(i) change or amend its articles of
incorporation or bylaws;
(ii) authorize for issuance, issue or sell any
shares of its capital stock or other securities, acquire
directly or indirectly, by redemption or otherwise, any
such capital stock, reclassify or split-up any such
capital stock, or grant or enter into any options,
warrants, calls or commitments of any kind with respect
thereto;
(iii) pay, declare or set aside any dividend or
make any other distribution (whether in cash, stock or
property or any combination thereof) in respect of any of
its capital stock;
(iv) adopt or amend any Company Benefit Plan (or
any plan that would be a Company Benefit Plan if adopted)
except as required by Applicable Law;
(v) enter into, adopt, extend, renew or amend
any collective bargaining agreement or other Contract with
any labor organization, union or association, except as
required by Applicable Law;
(vi) grant to any director, executive officer or
employee any increase in compensation or benefits, except
under existing agreements and except, in the case of any
non-executive employee, other than a Shareholder, in the
ordinary course of business consistent with past practice;
(vii) permit, allow or suffer any asset of
Southport or its Subsidiary to become subjected to any
Lien of any nature other than Permitted Liens;
(viii) cancel any material indebtedness
(individually or in the aggregate) owed to Southport or
its Subsidiary or waive any claims or rights of
substantial value;
(ix) dismiss or replace its independent auditor
or make any change in any method of accounting or
accounting practice or policy other than those required by
GAAP;
(x) acquire any assets that are material,
individually or in the aggregate, to Southport except in
the ordinary course of business;
(xi) make any capital commitments that in the
aggregate are in excess of $5,000 and not set forth in the
written capital budget of Southport previously supplied to
Purchaser (the "Capital Budget");
(xii) fail to make any capital expenditure
required in the Capital Budget or to conduct ordinary
maintenance activities;
(xiii) sell, lease or otherwise dispose of any
assets of the Business that in the aggregate are valued in
excess of $5,000, other than in the ordinary course;
(xiv) terminate (except for cause) or hire any
executive officer of Southport or of its Subsidiary; or
(xv) agree, whether in writing or otherwise, to
do any of the foregoing.
(b) Affirmative Covenants. Until the Closing, the
Shareholders shall cause Southport and its Subsidiary to:
(i) maintain the assets of Southport and its
Subsidiary in the ordinary course of business in good
operating order and condition, reasonable wear and tear
excepted;
(ii) maintain in force all insurance policies
and cause the assets and business of Southport and its
Subsidiary to continue to be insured against all risks for
which such assets and businesses are currently insured;
(iii) upon any damage, destruction or loss to
any asset of Southport or its Subsidiary, as promptly as
possible, provide Purchaser with written notice thereof
and, after consultation with Purchaser, either (A) apply
any and all insurance proceeds received with respect
thereto to the prompt repair, replacement and restoration
thereof to the condition of such asset before such event
or, if required, to such other (better) condition as may
be required by Applicable Law or (B) retain any and all
insurance proceeds received with respect thereto; and
(iv) maintain its level and quality of supplies,
fuel and spare parts in the ordinary course in a manner
consistent with its practices in place as of September 30,
1997.
4.2 Access to Information. (a) The Shareholders shall
cause Southport and its Subsidiary to afford Purchaser and its
accountants, counsel and other representatives reasonable
access during normal business hours during the period prior to
the Closing to all properties, books, contracts, commitments,
Tax Returns and records of Southport and its Subsidiary and,
during such period, shall furnish promptly to Purchaser any
information concerning Southport and its Subsidiary that
Purchaser may reasonably request (including, if requested by
Purchaser, opinion letters from legal counsel to Southport and
its Subsidiary as to the likely dollar exposure, if any, of
Southport or its Subsidiary to particular personal injury
claims which are currently pending or threatened).
(b) Without limiting paragraph (a) above, but
subject to it, Purchaser shall have the right to perform any
environmental, health and safety assessments of the leased
property of Southport and its Subsidiary that Purchaser, in its
sole discretion, deems advisable. Without limiting the
foregoing, Purchaser and its representatives shall have the
right to enter the leased real property of Southport and its
Subsidiary to conduct Phase I environmental assessments,
asbestos surveys and similar investigations, studies necessary
to develop one or more scopes of work for Phase II
investigations (including sampling of environmental media,
building materials and the work place environment) and Phase II
investigations (including but not limited to, borings, samples
of soil and groundwater and the installation or monitoring
▇▇▇▇▇). Purchaser shall perform all such environmental, health
and safety assessments at its sole expense. Purchaser and its
representatives shall enter the real property only during
business hours, after reasonable notice has been given to
Southport. Purchaser, the Shareholders and Southport agree
that they will cooperate with one another to facilitate the
performance of Purchaser's assessments and to avoid, to the
extent reasonably possible, any disruption of Southport's and
its Subsidiary's operations.
4.3 Confidentiality. The terms and conditions of this
Agreement are to be held in strict confidence, and no
disclosure shall be made with respect hereto, publicly or
privately, other than as agreed by Purchaser, as necessary by
Purchaser or the Shareholders to their respective advisors in
connection with the performance of the obligations incurred
hereunder or as required by applicable law. No public release
or announcement concerning the transactions contemplated hereby
shall be issued by either Party without the prior consent of
the other, except that Purchaser may make such disclosure as is
reasonably appropriate to comply with its obligations under
applicable federal securities laws.
4.4 Reasonable Efforts.
(a) On the terms and subject to the conditions of
this Agreement, each Party shall use its commercially
reasonable best efforts to cause the Closing to occur,
including taking all reasonable actions necessary to comply
promptly with all legal requirements that may be imposed on its
or any of its affiliates with respect to the Closing.
(b) Each Party shall use its commercially reasonable
best efforts (at its own expense) to obtain, and to cooperate
in obtaining, all consents from third parties necessary or
appropriate to consummate the Acquisition; provided, however,
that the Parties shall not be required to pay or commit to pay
any amount to (or incur any obligation in favor of) any person
from whom any such consent may be required (other than nominal
filing or application fees).
4.5 Expenses. (a) The Shareholders shall and Southport
shall not bear any costs and expenses (except those set forth
in Schedule 2.6) incurred by the Shareholders in connection
with this Agreement and the transactions contemplated hereby,
including, the fees of legal counsel, brokers and finders, and
accountants. Purchaser shall bear all costs and expenses
incurred by Purchaser in connection with this Agreement and the
transactions contemplated hereby, including the fees of its
legal counsel, brokers and finders, and accountants.
4.6 Employees and Employment Agreements. The
Shareholders shall cause Southport to enter into employment
agreements with each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇ and with such other employees of
Southport and its Subsidiary as Purchasers and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. may mutually agree. Such agreements shall be
substantially in the form attached as Exhibit 4.6 hereto.
4.7 Updating Information. Until the Closing, the
Shareholders shall cause Southport to provide to Purchaser, as
soon as practicable after they are available, daily, weekly and
monthly management books and financial reports of Southport and
the Subsidiary, prepared in accordance with past practice, and
all other documents requested in the document request list
previously delivered by Purchaser to the Shareholders.
4.8 Schedules; Advice of Changes.
(a) The Parties acknowledge that this Agreement is
being executed in advance of the attachment of some or all of
the schedules provided for herein. As promptly as possible
after execution of this Agreement, and in no event more than 10
days from the date hereof, the Shareholders will supply such
schedules whereupon they will be deemed to have been delivered
on the date hereof.
(b) The Shareholders shall as promptly as possible
advise Purchaser of any change or event having a Material
Adverse Effect on Southport or its Subsidiary, as applicable,
or that any Shareholder believes would or would be reasonably
likely to cause or constitute a material breach of any
representations, warranties or covenants of any Shareholder
contained herein. From time to time prior to the Closing Date
(and on the date prior to the Closing Date), the Shareholders
will promptly supplement or amend the schedules delivered
pursuant to subsection 4.8(a) of this Agreement to reflect any
matter that, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or
described in such schedules or that is necessary to correct any
information in such schedules that has been rendered inaccurate
thereby. No supplement or amendment to such schedules shall
have any effect for the purpose of determining satisfaction of
the requirements of Section 5.2(a), with such satisfaction to
be determined, unless Purchaser otherwise consents, based on
the schedules in the form delivered on the date hereof.
4.9 Covenant Not to Compete.
(a) For and in consideration of the benefits derived
by the Shareholders pursuant to this Agreement, each
Shareholder, other than those who enter into employment
agreements pursuant to Section 4.6, agrees that, with respect
to each State of the United States or other jurisdiction, or
specified portions thereof, in which he, she, or Southport or
its Subsidiary regularly: (A) makes contact with customers of
Southport or its Subsidiary; (B) conducts the business of
Southport or its Subsidiary; or (C) supervises the activities
of other employees of Southport or its Subsidiary, in locations
identified in Schedule 4.9 attached hereto and forming a part
of this Agreement, and in which Southport or its Subsidiary
engaged in Business on the Closing Date or the Date of
Termination (collectively, the "Subject Areas"), the
Shareholder will, for a period of two years following the
Closing Date, restrict his or her activities as follows:
(i) The Shareholder will not, directly or
indirectly, for himself or others, own, manage, operate,
control, be employed in an executive, managerial or supervisory
capacity by, or otherwise engage or participate in or allow his
or her skill, knowledge, experience or reputation to be used in
connection with, the ownership, management, operation or
control of, any company or other business enterprise engaged in
the Business within any of the Subject Areas, provided,
however, that no provision hereof shall prohibit ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ from providing consulting
services to oil and gas exploration, production and engineering
companies (but not companies engaged in the construction or
fabrication of oil and gas drilling or production platforms or
the components thereof) with respect to the design of living
quarters;
(ii) The Shareholder will not call upon any
customer of Southport or its Subsidiary for the purpose of
soliciting, diverting or enticing away the business of such
person or entity, or otherwise disrupting any previously
established relationship existing between such person or entity
and Southport or its Subsidiary;
(iii) The Shareholder will not solicit, induce,
influence or attempt to influence any supplier, lessor,
licensor, potential acquiree or any other person who has a
business relationship with Southport or its Subsidiary, or who
on the Date of Termination is engaged in discussions or
negotiations to enter into a business relationship with
Southport or its Subsidiary, to discontinue or reduce the
extent of such relationship with Southport or its Subsidiary;
(iv) The Shareholder will not make contact with
any of the employees of Southport or its Subsidiary with whom
he had contact during the course of his or her relationship
with Southport for the purpose of soliciting such employee for
hire, whether as an employee or independent contractor, or
otherwise disrupting such employee's relationship with
Southport or its Subsidiary; and
(v) The Shareholder will not hire, on behalf of
himself or any company engaged in the Business with which the
Shareholder is associated, any employee of Southport or its
Subsidiary as an employee or independent contractor, whether or
not such engagement is solicited by the Shareholder.
(b) Each such Shareholder agrees that from time to
time he or she will, upon Southport's request, promptly execute
any supplement, amendment, restatement or other modification of
Schedule 4.9 as may be necessary or appropriate to correctly
reflect the jurisdictions which, at the time of such
modification, should be covered by Schedule 4.9 and this
Section 4.9. All references to Schedule 4.9 in this Agreement
shall be deemed to refer to Schedule 4.9 as so supplemented,
amended, restated or otherwise modified from time to time.
(c) Each such Shareholder will not after the Closing
Date retain, make use of or disclose to any person any customer
lists prepared in connection with or used by Southport and its
Subsidiary.
(d) Upon any actual or threatened breach or
violation of any of the provisions of this Section 4.9,
Purchaser shall be entitled to injunctive relief in any court
of competent jurisdiction at any location at which the
breaching party is domiciled or engaged in business. Nothing
herein, however, shall be construed as prohibiting Purchaser
from pursuing any other remedies of law or at equity available
to it for such breach or violation or threatened breach or
violation. Should a court of competent jurisdiction declare
any of the covenants set forth in Section 4.9 unenforceable due
to an unreasonable geographic restriction or otherwise, the
Parties intend for such court to modify or limit such covenant
according to the severability provisions set forth in Section
8.8.
4.10 Acquisition Proposals. Unless this Agreement is
terminated pursuant to Section 6.1, Southport and the
Shareholders shall not, and shall each cause its respective
affiliates, directors, officers, trustees, employees,
shareholders, representatives and agents not to: (a) solicit,
initiate, encourage (including by furnishing any information),
discuss, negotiate or assist in any manner any other proposals,
bids or offers from any person (other than Purchaser or its
affiliates) relating to a possible acquisition of any of the
stock, assets of business of Southport or its Subsidiary, in
whole or in part (other than the sale of inventory in the
ordinary course and consistent with past practice) whether by
asset purchase, stock purchase, merger or otherwise and whether
such action is taken directly or indirectly; or (b) enter into
or consummate any agreement or understanding with respect to
any matter involving to such an acquisition prospect. If any
Shareholders receives any such proposal, bid or offer or any
information with respect thereto, such Shareholder will notify
Purchaser thereof and provide Purchaser with all information
such Shareholder has with respect thereto.
4.11 No Inconsistent Arrangements by the Shareholders.
Each of the Shareholders hereby covenants and agrees that,
except as contemplated by this Agreement, he shall not: (i)
transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of such Shareholder's Shares, or any
interest therein; (ii) enter into any contract, option or other
agreement or understanding with respect to any transfer of any
or all of such Shareholder's Shares or any interest therein;
(iii) grant any proxy, power-of-attorney or other authorization
in or with respect to such Shareholder's Shares, except for any
such grant to other Shareholders in connection with a Southport
shareholder meeting and which exercise of such power is in all
respects in compliance with the terms of this Agreement; or
(iv) take any other action that would in any way restrict,
limit or interfere with the performance of its obligations
hereunder.
4.12 Exercise of Option by Westport. If the Option has
not been assigned by Westport as contemplated by Section
5.2(h), the Shareholders shall, if so requested by Purchaser,
cause Westport to exercise the Option in accordance with its
terms and shall sell the property subject to the Option to
Purchaser or its designee on such terms and Purchaser or its
designee shall purchase such property on such terms.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligation To Consummate
the Closing. The respective obligation of each Party to
consummate the Closing shall be subject to the satisfaction at
or prior to the Closing Time of the following conditions:
(a) Approvals. All regulatory approvals or
notifications required to consummate the transactions
contemplated hereby, and to permit Purchaser to conduct the
business of Southport and its Subsidiary as heretofore
conducted, shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect
thereof shall have expired (all such approvals and the
expiration of all such waiting periods described in this
section being referred to herein as the "Requisite Regulatory
Approvals").
(b) No Injunctions or Restraints; Illegality. No
order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
(an "Injunction") preventing the consummation of the
Acquisition of the other transactions contemplated by this
Agreement shall be in effect; provided, however, that neither
Party to this Agreement may elect to terminate this Agreement
until such order, injunction or decree is final and non-
appealable, except pursuant to Section 6.1(b). No statute,
rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental
Entity that prohibits, restricts or makes illegal consummation
of the Acquisition.
5.2 Conditions to Obligation of Purchaser. The
obligation of Purchaser to effect the Acquisition is also
subject to the satisfaction or waiver by Purchaser at or prior
to the Closing Date of the following conditions:
(a) Representations and Warranties. The
representations and warranties contained in Articles II hereof
shall be true and correct in each case at and as of the Closing
Date as though such representations and warranties were made at
and as of such time, except for these representations and
warranties, if any, that are expressly made as of a specified
earlier date.
(b) Covenants. The Shareholders shall have
performed and complied with all agreements and conditions on
their part required by this Agreement to be performed or
complied with prior to or at the Closing Date.
(c) Officer's Certificate. Purchaser shall have
received a certificate from the Shareholders' Representative,
dated the Closing Date, certifying to the fulfillment of the
conditions specified in Sections 5.2(a) and 5.2(b).
(d) Opinion of Counsel. Purchaser shall have
received an opinion of counsel for the Shareholders, dated the
Closing Date, in customary form and reasonably satisfactory as
to substance to Purchaser.
(e) Consents. All necessary consents to the
transactions contemplated hereby, in form and substance
acceptable to Purchaser, shall have been obtained.
(f) Resignations and Releases. The Shareholders
shall have caused to be executed and delivered to Purchaser (i)
the resignations of [▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇] as directors and officers of Southport and its
Subsidiary and (ii) releases by each Shareholder of all claims
against Southport and its Subsidiary, in form reasonably
satisfactory to Purchaser and its counsel.
(g) Purchaser's Due Diligence. Purchaser shall have
completed its due diligence investigation of Southport and the
Subsidiary and shall be satisfied with the results thereof.
(h) Assignment of Option. The Option shall have
been assigned to Southport, Purchaser or Purchaser's designee
and shall be exercisable by such assignee in accordance with
its terms, which terms shall be satisfactory to Purchaser.
5.3 Conditions to Obligation of Shareholders. The
obligation of the Shareholders to effect the Acquisition is
also subject to the satisfaction or waiver by the Shareholders
at or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The
representations and warranties contained in Article II hereof
shall be true and correct in all material respects in each case
at and as of the Closing Date as though such representations
and warranties were made at and as of such time, except for
those representations and warranties, if any, that are
expressly made as of a specified earlier date.
(b) Covenants. Purchaser shall have performed and
complied in all material respects with all agreements and
conditions on its part required by this Agreement to be
performed or complied with prior to or at the Closing Date.
(c) Officer's Certificate. Shareholder's
Representative shall have received a certificate of an
executive officer of Purchaser, dated the Closing Date,
certifying to the fulfillment of the conditions specified in
Sections 5.3(a) and 5.3(b).
(d) Opinion of Counsel. The Shareholders shall have
received an opinion of counsel for Purchaser, dated the Closing
Date, in customary form and reasonably satisfactory as to
substance to Shareholders.
(e) Release of Guaranty. Whitney National Bank
shall have released the obligations of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
under the guaranty provided by him of Southport's obligations
under its credit facility with such bank.
ARTICLE VI
TERMINATION AND AMENDMENT
6.1 Termination. Notwithstanding anything to the
contrary in this Agreement, this Agreement may be terminated
and the Acquisition and the other transactions contemplated by
this Agreement abandoned at any time prior to the Closing Date:
(a) by mutual consent of the Shareholders and
Purchaser in a written instrument;
(b) by either Purchaser or the Shareholders if the
Acquisition shall not have been consummated on or before
January 31, 1998;
(c) by either Purchaser or the Shareholders
(provided the terminating party is not then in material breach
of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material breach of
any of the representations, warranties, covenants or other
agreements set forth in this Agreement on the part of the other
Party that (i) is not cured within ten days following written
notice to the Party in breach, or (ii) cannot be cured prior to
the Closing.
6.2 Effect of Termination. In the event of termination
of this Agreement by either Purchaser or the Shareholders as
provided in Section 6.1, this Agreement shall be void and have
no effect except that no Party shall be relieved or released
from any liabilities or damages arising out of its willful
breach of any provision of this Agreement.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
7.1 Survival of Representations, Warranties and
Covenants. The representations and warranties of the Parties
shall survive the Closing.
7.2 Indemnification by the Shareholders. Each of the
Shareholders, does hereby agree to indemnify, defend and hold
harmless Southport, the Subsidiary, Purchaser, its
stockholders, subsidiaries, affiliates, any director, officer,
employee, or agent of any of them, and their respective heirs,
executors, administrators, successors and assigns (each of the
foregoing, an "Indemnified Party"), from and against any and
all losses, claims, demands, damages, awards, liabilities,
suits, penalties, forfeitures, costs or expenses (including
attorneys', consultants and other professional fees and fees
and disbursements) including those incurred in enforcing this
Agreement (collectively, "Losses") incurred by any Indemnified
Party arising out of or by virtue of or resulting from:
(a) any inaccuracy or breach of any warranty or
representation of the Shareholders contained in any provision
of Section 2.1, Section 2.2, Section 2.3, Section 2.4, Section
2.5, Section 2.6, Section 2.7 (a), Section 2.8, Section 2.9 or
Section 2.13 of this Agreement or contained in any certificate
or schedule delivered by or on behalf of Shareholders
hereunder, to the extent that such certificate or schedule
relates to any such provision; or
(b) any inaccuracy or breach, of which any
Shareholder has knowledge on the date hereof or on the Closing
Date, of any warranty or representation of the Shareholders
contained in any provision of this Agreement (other than those
provisions identified in subsection 7.2(a)) or contained in any
certificate or schedule delivered by or on behalf of
Shareholders hereunder, to the extent that such certificate or
schedule relates to any such provision.
7.3 Purchaser's Right of Set-Off; Limitation on
Indemnification. Upon written notice to Shareholders
disclosing its justification therefor, Purchaser may set-off
the amount of any Losses against any amounts otherwise payable
or potentially payable and not theretofore paid to Shareholders
under subsection 1.3 hereof, which set-off, if any, shall be
applied against the Shareholders on a pro-rata basis. No
Shareholder shall have any obligation to pay indemnification to
the Indemnified Parties for breach of any representation or
warranty under this Article VII in excess of the amount payable
or potentially payable and not theretofore paid to such
Shareholder under subsection 1.3 hereof.
7.4 Procedures.
(a) In order for an Indemnified Party to be entitled
to any indemnification provided for under this Agreement in
respect of, arising out of, or involving a claim made by any
person against the Indemnified Party (a "Third Party Claim"),
such Indemnified Party must notify Shareholder's Representative
in writing of the Third Party Claim (which notice shall
identify the representation or warranty breached or made
inaccurate by virtue of such Third Party Claim) promptly
following receipt by such Indemnified Party of written notice
of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification
provided hereunder except to the extent that the Shareholders
shall have been actually and materially prejudiced as a result
of such failure. Thereafter, the Indemnified Party shall
deliver to the Shareholders' Representative copies of all
notices and documents (including court papers) received by the
Indemnified Party relating to the Third Party Claim.
(b) If a Third Party Claim is made against an
Indemnified Party, the Shareholders shall be entitled to
participate in the defense thereof and, if they so choose, to
assume the defense thereof with counsel selected by them, but
only to the extent that all Shareholders so agree. Should the
Shareholders so elect to assume the defense of a Third Party
Claim, Shareholders shall pay all Losses resulting from such
Third Party Claim and all expenses associated with such defense
and such payments shall not reduce the amounts available to the
Indemnified Parties to be off-set against Losses. If the
Shareholders assume such defense, the Indemnified Party shall
have the right to participate in the defense thereof and to
employ counsel, at its own expense, separate from the counsel
employed by the Shareholders; it being understood that the
Shareholders shall control such defense. The fees and expenses
of counsel employed by the Indemnified Party for any period
during which the Shareholders have not assumed the defense
thereof shall constitute Losses of such Indemnified Party
hereunder. If the Shareholders choose to defend or prosecute a
Third Party Claim, all the Indemnified Parties shall cooperate
in the defense or, prosecution thereof. Such cooperation shall
include the retention and (upon Shareholders Representative's
request) the provision to the Shareholders' Representative of
records and information that are reasonably relevant to such
Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. Whether or not
the Shareholders assume the defense of a Third Party Claim, the
Indemnified Party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim
without the Shareholders' prior written consent (which consent
shall not be unreasonably delayed or withheld). If the
Shareholders assume the defense of a Third Party Claim, the
Indemnified Party shall agree to any settlement, compromise or
discharge of a Third Party Claim that the Shareholders'
Representative may recommend and that by its terms obligates
the Shareholders to pay the full amount of the liability in
connection with such Third Party Claim, that releases the
Shareholders completely in connection with such Third Party
Claim and that would not otherwise adversely affect the
Indemnified Party. Notwithstanding the foregoing, the
Shareholders shall not be entitled to assume the defense of any
Third Party Claim if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than
money damages against the Indemnified Party that the
Shareholders reasonably determine, after conferring with their
outside counsel, cannot be separated from any related claim for
money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that
for money damages, the Shareholders shall be entitled to assume
the defense of the portion relating to money damages. Should
the Shareholders not elect to assume the defense of a Third
Party Claim, Purchaser may set-off the amount of any Third
Party Claim plus the amount of defense costs reasonably
expected to be incurred in connection therewith against any
amounts otherwise payable or potentially payable and not
therefore paid to Shareholders under subsection 1.3 hereof. In
the event that such Third Party Claim is finally disposed of
for an amount less than the amount set-off, the balance will be
restored to the amount payable or potentially payable to
Shareholders under subsection 1.3 and, if any portion thereof
would pursuant to subsection 1.3 have been paid to Shareholders
at an earlier date but for the set-off, such portion shall be
paid to Shareholders together with interest thereon at the
Purchaser Borrowing Rate from such date to the date actually
paid.
(c) In the event any Indemnified Party should have a
claim against the Shareholders under this Agreement that does
not involve a Third Party Claim being asserted against or
sought to be collected from such Indemnified Party, the
Indemnified Party shall deliver notice of such claim with
reasonable promptness to Shareholders' Representative. Such
notice shall identify the representation or warranty breached
or made inaccurate by virtue of such claim. The failure by any
Indemnified Party so to notify the Shareholders' Representative
shall not relieve any Shareholder from any liability that it
may have to such Indemnified Party under this Agreement, except
to the extent that the Shareholders demonstrate that they have
been materially prejudiced by such failure.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Assignment. This Agreement and the rights and
obligations hereunder shall be assignable or transferable by
Purchaser (including by operation of law in connection with a
merger or sale of substantially all the assets of Purchaser)
without the prior written consent of the Shareholders. This
Agreement, and the rights and obligations of the Shareholders
hereunder, shall not be assignable by any Shareholder without
the prior written consent of Purchaser, except by operation of
law upon the Shareholder's death.
8.2 Third Party Beneficiaries. The Parties acknowledge
that the rights and benefits of Purchaser hereunder (including
all rights under Article VII) shall automatically and
immediately transfer, without further notice or action, to any
purchaser from Purchaser (or its designee or assignee) of all
or substantially all of the stock or assets of Southport and
its Subsidiary following the consummation of the Acquisition.
8.3 Notices. All notices or other communications
required or permitted to be given hereunder shall be in writing
and shall be delivered by hand or sent by facsimile or sent,
postage prepaid, by registered, certified or express mail or
reputable overnight courier service and shall be deemed given
when so delivered by hand or facsimile, or if mailed, three
days after mailing (one business day in the case of express
mail or overnight courier service), as follows:
(a) if to Purchaser, to:
Gulf Island Fabrication, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
with a copy to:
Jones, Walker, Waechter, Poitevent, Carrere &
▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(b) if to Shareholders, to Shareholders' Representative:
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, LLP
30th Floor Texaco Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
8.4 Interpretation.
(a) The headings contained in this Agreement, in any
exhibit or schedule hereto and in the table of contents to this
Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
All exhibits and schedules annexed hereto or referred to herein
are hereby incorporated in and made a part of this Agreement as
if set forth in full herein. Any capitalized terms used in any
schedule or exhibit but not otherwise defined therein, shall
have the meaning assigned to such term in this Agreement. When
a reference is made in this Agreement to an article or a
section, exhibit or schedule, such reference shall be to an
article or section of, or an exhibit or schedule to, this
Agreement unless otherwise indicated.
(b) For all purposes hereof:
"affiliate" of any person means another person that
directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is
under common control with, such first person;
"including" means including, without limitation; and
"person" means any individual, firm, corporation,
partnership, limited liability company, trust, joint
venture, Governmental Entity or other entity.
(c) The following terms are defined in this
Agreement in the sections set forth below:
Term Section
---- -------
Acquisition Preamble
affiliate 8.4(b)
Agreement Preamble
Applicable Law 2.4
Arbitrator 1.3(b)
Business 2.4
Capital Budget 4.1(a)
Closing 1.2
Closing Balance Sheet 1.3(b)
Closing Date 1.2
Adjusted Closing Date
Shareholders' Equity 1.3(b)
Code 2.13(d)
Company Benefit Plans 2.14(a)
Company Pension Plans 2.14(a)
Consents 2.5
Contract or Contracts 2.16(a)
Deferred Purchase Price 1.3(a)
Defined Benefit Plan 2.14(j)
Early Payment Amount 1.3(c)
Environment 2.21(g)
Environmental Laws 2.21(g)
ERISA 2.14(a)
ERISA Affiliate 2.14(a)
GAAP 2.10
Governmental Entity 2.4
Hazardous Substances 2.21(g)
including 8.4(b)
Indemnified Party 7.2
Initial Purchase Price 1.3(a)
Injunction 5.1(b)
Intellectual Property 2.20
Interim Balance Sheet 2.10
Interim Financial Statements 2.10
IRS 2.14(b)
Judgment 2.4
knowledge 8.4(b)
Lien or Liens 1.1
Losses 7.2
Material Adverse Effect 2.7(b)
Natural Resources Damages 2.21(g)
Navigable Waters 2.21(g)
Net After-Tax Income 1.3(c)
Option 2.18(c)
Option Property Title Insurance 2.18(c)
Party or Parties Preamble
PBGC 2.14(b)
Permits 2.15
Permitted Lien or Permitted Liens 2.18(a)
person 8.4(b)
Proceedings 2.12
Purchase Price 1.3(a)
Purchaser Preamble
Purchaser Borrowing Rate 1.3(c)
Related Agreements 2.2
Release 2.21(g)
Requisite Regulatory Approvals 5.1(a)
Returns 2.13(a)
SG&A 1.3(c)
Shares 1.1
Shareholder or Shareholders Preamble
Shareholders' Representative 8.9
Sites 2.21(g)
Southport Preamble
Southport Common Stock Preamble
Southport Financial Statement 2.10
Subject Areas 4.9(a)
Subsidiary 2.9(b)
Tax or Taxes 2.13(h)
Third Party Claim 7.5(a)
Threat of Release 2.21(g)
Transaction Expenses 2.6
Westport 2.18(c)
Year-end Financial Statements 2.10
8.5 Counterparts; Signatures. This Agreement may be
executed in counterparts, all of which shall be considered one
and the same agreement and shall become effective when
counterparts have been signed by each of the Parties and
delivered to the other, it being understood that both Parties
need not sign the same counterpart. Telecopied signatures
shall be deemed to have the authenticity and validity of
original signatures.
8.6 Entire Agreement. This Agreement (including the
documents, schedules, exhibits and Related Agreements referred
to herein) contain the entire agreement and understanding
between the Parties with respect to the subject matter hereof
and supersede all prior agreements and understandings relating
to such subject matter. Neither Party shall be liable or bound
to the other in any manner by any representations, warranties
or covenants relating to such subject matter except as
specifically set forth herein.
8.7 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of
Louisiana, without regard to any applicable conflicts of law
principles thereof.
8.8 Severability. Wherever possible, the terms of this
Agreement shall be construed and interpreted so as to be valid
and effective under Applicable Law. If any term or provision
of this Agreement, any Related Agreement, any Schedule attached
hereto or the application thereof to any person or
circumstance, shall at any time or to any extent be deemed
invalid, illegal and unenforceable in any respect as written,
the Shareholders and Purchaser intend for any court construing
this Agreement to modify or limit such provision temporally,
spatially or otherwise so as to render it valid and enforceable
to the fullest extent allowed by law. Any such provision that
is not susceptible of such reformation shall be ignored so as
not to affect any other term or provision hereof, and the
remainder of this Agreement, Related Agreement or Schedule, or
the application of such term or provision to persons or
circumstances other than those that are deemed to be invalid,
illegal or unenforceable, shall not be affected thereby and
such term and provision shall be valid and enforced to the
fullest extent permitted by law.
8.9 Shareholders' Representative. The Shareholders
hereby irrevocably appoint ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., a
Shareholder, to serve as representative of all of the
Shareholders from and after the date of this Agreement (the
"Shareholders' Representative"). EACH SHAREHOLDER HEREBY
AUTHORIZES THE SHAREHOLDERS' REPRESENTATIVE TO ACT AS ATTORNEY-
IN-FACT ON BEHALF OF SUCH SHAREHOLDER WITH RESPECT TO ANY ACT
REQUIRED OR PERMITTED TO BE TAKEN BY SUCH SHAREHOLDER HEREUNDER
(INCLUDING, WITHOUT LIMITATION, TO SPECIFY THE MANNER OF MAKING
PAYMENT TO SUCH SHAREHOLDER HEREUNDER OR TO RECEIVE ANY FUNDS
TO BE PAID BY OR ON BEHALF OF BUYER TO SUCH SHAREHOLDERS
HEREUNDER). WITH RESPECT TO ANY DISPUTE THAT MAY ARISE
HEREUNDER OR UNDER ANY RELATED AGREEMENT, EACH SHAREHOLDER
AGREES THAT HE OR SHE MAY ACT ONLY THROUGH THE SHAREHOLDERS'
REPRESENTATIVE. Any Party hereto shall be entitled to rely,
and shall be fully protected in relying, upon all actions taken
by the Shareholders' Representative. The Shareholders'
Representative may not be changed without the consent of
Purchaser, except as provided in the next sentence. In the
event of the death of the Shareholder' Representative, the
Shareholders shall promptly irrevocably appoint by a majority
vote of the Shareholders (based on stock ownership immediately
prior to the Closing) one of the remaining Shareholders (or
beneficial owners of Shareholders that are entities) who is a
natural person to act as the Shareholders' Representative.
8.10 Waiver. Either Party may waive in writing any
default by the other of any representation, warranty, or
covenant made for its benefit in this Agreement, but no such
waiver shall be deemed to constitute a waiver of any other or
further breach unless expressly provided for in writing, and no
waiver shall be deemed to have arisen from a course of conduct
not involving a written waiver.
8.11 Amendment. This Agreement may be amended by the
Parties hereto at any time but only by an instrument in writing
signed on behalf of each of the Parties.
8.12 Successors. This Agreement shall be binding upon, and
inure to the benefit of, the Parties and their respective
heirs, executors, successors, and assigns.
IN WITNESS WHEREOF, the Shareholders have executed and
Purchaser has caused this Agreement to be executed by one of
its officers thereunto duly authorized as of the date first
above written.
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇
___________________________________ ________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
___________________________________ ________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
___________________________________ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Attorney-in-Fact
GULF ISLAND FABRICATION, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President