1
EXHIBIT 10.18
PURCHASE AND SALE AGREEMENT
BY AND AMONG
TRANSCOASTAL MARINE SERVICES, INC.,
HBH, INC.,
AND
THE SUCCESSION
OF
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EFFECTIVE AS OF AUGUST 20, 1997
2
TABLE OF CONTENTS
PAGE
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ARTICLE 1
PURCHASE AND SALE OF COMPANY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Basic Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Stock Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Real Estate Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Deliveries at the Closing and the IPO Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Registration Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2
CONSIDERATION ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Adjustments to Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Long-Term Debt Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Representations and Warranties by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) Ownership of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Representations and Warranties of Sellers and the Company . . . . . . . . . . . . . . . . . . . . . . 6
(a) Organization and Qualification, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Qualification of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(i) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(j) Permits and Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(k) Title to Properties; Absence of Liens and Encumbrances, etc. . . . . . . . . . . . . . . . 13
(l) Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(m) Patent, Trademark, etc. Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(n) List of Properties, Contracts and Other Data . . . . . . . . . . . . . . . . . . . . . . . 15
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(o) Use of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(p) Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(q) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(r) Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(s) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(t) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(u) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(v) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(w) Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(x) Powers of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(y) Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.3 Representations and Warranties by the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Organization and Qualification, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Subsidiaries, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(d) Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(e) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(h) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 4
ADDITIONAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Access to Information by Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3 Amendment to Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.5 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.6 Release of Sellers' Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.7 Sellers' Release of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.8 Confidential Information Memorandum; Registration Statement. . . . . . . . . . . . . . . . . . . . . 31
(a) Company to Provide Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(c) Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.9 Satisfaction of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.10 Certain Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Mutual Consent for Section 338(h)(10) Election. . . . . . . . . . . . . . . . . . . . . . 32
(b) S Corporation Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Tax Periods Ending on or before the Closing Date. . . . . . . . . . . . . . . . . . . . . 32
(d) Cooperation on Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(e) Tax Sharing Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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4.11 ▇▇▇▇▇▇ Matter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.12 Change of Financial Institutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 5
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.1 Conditions Precedent to the Obligations of the Buyer. . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Legal Actions or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(d) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(e) Executive Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(f) Shareholder Lock-up Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(g) Completion of Buyer's IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(h) Lender Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(i) Audit of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(j) Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(k) Opinion of Counsel for the Company and Sellers . . . . . . . . . . . . . . . . . . . . . . 35
(l) Resignations of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(m) All Proceedings to be Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(n) Delivery of Certificates Representing Company Common Stock . . . . . . . . . . . . . . . . 36
5.2 Conditions Precedent to the Obligations of Sellers and the Company. . . . . . . . . . . . . . . . . 36
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 36
(b) Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(d) Release from Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(e) Executive Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(f) Lender Approval; Performance Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(g) All Proceedings to be Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(h) Opinion of Counsel for The Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(i) Legal Actions or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(j) Payment of the Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 6
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(c) Termination by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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ARTICLE 7
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Indemnification by Sellers. Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.3 Indemnification by Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 8
STOCK TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.1 Compliance with Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.2 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 9
FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.2 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 10
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1 Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Execution in Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.4 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.5 Amendments, Supplements, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.7 Choice of Forum; Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.8 Binding Effect, Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.9 Assignability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.10 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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EXHIBITS:
EXHIBIT 1.3 - REAL ESTATE PURCHASE AGREEMENT
EXHIBIT 1.4 - EMPLOYMENT AGREEMENT
EXHIBIT 1.7 - REGISTRATION RIGHTS AGREEMENT
EXHIBIT 1.8 - EXCLUDED ASSETS
EXHIBIT 5.1 - OPINION OF COUNSEL FOR THE COMPANY AND SELLERS
EXHIBIT 5.2 - OPINION OF COUNSEL FOR THE BUYER
SCHEDULES:
Schedule 1.1 - Description of Real Estate and Option Real Estate
SELLERS DISCLOSURE SCHEDULE
Schedule 3.1(b) - Approvals
Schedule 3.1(c) - Conflicts
Schedule 3.1(d) - Holders of Company Common Stock
COMPANY DISCLOSURE SCHEDULE
Schedule 3.2(a) - Jurisdictions Where Qualified
Schedule 3.2(c) - Subsidiaries
Schedule 3.2(e) - Approvals
Schedule 3.2(f) - Conflicts
Schedule 3.2(g) - Company Financial Statements
Schedule 3.2(h) - Changes and Events since December 31, 1996
Schedule 3.2(h-1) - Permitted Exceptions
Schedule 3.2(j) - Permits and Legal Compliance
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Schedule 3.2(m) - Intellectual Property
Schedule 3.2(n)(2) - Real Estate Leased by the Company
Schedule 3.2(n)(3) - Other Contracts and Commitments of the Company
Schedule 3.2(q) - Litigation, Actions and Proceedings
Schedule 3.2(r) - Employment Agreements, Benefit Plans, and Compensation
Schedule 3.2(s) - Pledged Accounts Receivable
Schedule 3.2(t) - Insurance Coverage; Self Insurance
Schedule 3.2(u) - Company Benefit Plan
Schedule 3.2(v) - Tax Audits; Basis in Assets; NOLs; Qualified S Subsidiary
BUYER DISCLOSURE SCHEDULE
Schedule 3.3(a) - Jurisdictions Where Qualified
Schedule 3.3(f) - ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") made effective as
of August 20, 1997, by and among TRANSCOASTAL MARINE SERVICES, INC., a Delaware
corporation ("Buyer"), HBH, INC., a Louisiana corporation (the "Company"), and
the SUCCESSION OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, sole shareholder of the Company
("Sellers").
WHEREAS, the Sellers in the aggregate own all of the outstanding
capital stock of the Company (the "Company Shares") and Sellers own certain
real property necessary or desirable for operation of the Company; and
WHEREAS, this Agreement contemplates a transaction in which the Buyer
will purchase from the Sellers, and the Sellers will sell to the Buyer, all of
the outstanding capital stock of the Company in return for cash and shares of
the Buyer's common stock, par value $.001 per share ("TCMS Common Stock"); and
WHEREAS, in connection with Buyer's acquisition of the Company Shares,
Sellers desire to sell to Buyer, and Buyer desires to purchase, and Sellers
desire to sell, certain of Sellers' real estate under certain terms and
conditions.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
ARTICLE 1
PURCHASE AND SALE OF COMPANY SHARES
1.1 BASIC TRANSACTION. On and subject to the terms and conditions
of this Agreement, the Buyer agrees to purchase from each of the Sellers, and
each of the Sellers agrees to sell and convey to the Buyer, at the Closing (as
defined below), (a) all of the Company Shares for the consideration specified
below in this Article 1, and (b) certain real property located in ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Louisiana, described in Schedule 1.1, together with all improvements
located thereon and all rights and appurtenances thereto (the "Real Estate").
1.2 STOCK PURCHASE. On the date of closing of Buyer's "IPO"
(defined below) (the "IPO Closing Date"), in consideration for delivery of the
Company Shares and for the other covenants and agreements contained herein and
the other documents to be delivered pursuant hereto (other than pursuant to the
Real Estate Purchase Agreement), Buyer agrees to pay and deliver to the Sellers
the following consideration totaling $32 million (collectively, the "Purchase
Price") payable as follows: (i) $23 million in cash; plus (ii) the number of
validly issued, fully paid and nonassessable shares of TCMS Common Stock
resulting from dividing $9.0 million by the IPO Price (as defined below) and
rounding down to the nearest whole number (the "TCMS Shares"). The IPO Closing
Date shall occur not later than the earlier to occur of 75 days after the
receipt by Buyer of comments from the U.S. Securities and Exchange Commission
("SEC") with respect to Buyer's initial filing of its
HBH, Inc. Purchase and Sale Agreement/Page 1
9
registration statement on Form S-1 or December 31, 1997. The Purchase Price
shall be adjusted after the IPO Closing Date pursuant to Article 2 of this
Agreement. The term "IPO" means the Buyer's first underwritten public offering
of the Buyer's common stock other than any offering pursuant to any
registration statement (i) relating to any capital stock of the Buyer or
options, warrants or other rights to acquire any such capital stock issued or
to be issued primarily to directors, officers or employees of the Buyer, or any
of its subsidiaries (ii) relating to any employee benefit plan or interest
therein, (iii) relating principally to any preferred stock or debt securities
of the Buyer, or (iv) filed pursuant to Rule 145 under the Securities Act of
1933, as amended, or any successor or similar provisions.
1.3 REAL ESTATE PURCHASE. On the IPO Closing Date, the Buyer
agrees to pay and deliver to the Sellers $1,350,000 in cash (the "Real Estate
Purchase Price") in consideration for (i) purchase and sale of the Real Estate
and (ii) an option to acquire, for an exercise price of $1,200,000 in cash,
certain other real property located in ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Louisiana described on
Schedule 1.1 (the "Option Real Estate"). Buyer's acquisition of the Real Estate
and Buyer's purchase option with respect to the Option Real Estate shall be
subject to all terms and conditions of that certain Real Estate Purchase
Agreement between Sellers and Buyer in the form attached as Exhibit 1.3 (the
"Real Estate Purchase Agreement") to be executed concurrently herewith.
1.4 EMPLOYMENT AGREEMENT. At the Closing, the Company and H.
▇▇▇▇▇▇ ▇▇▇▇▇▇ II shall execute and deliver an Executive Employment Agreement in
the form attached as Exhibit 1.4 (the "Executive Employment Agreement"),
providing for the employment of ▇▇. ▇▇▇▇▇▇ as an executive of the Company for
an initial term of three years.
1.5 THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Chamberlain,
Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, in Houston, Texas, commencing at 9:00 a.m.
local time not later than the fourth business day prior to the IPO Closing Date
or such other date as the Buyer and the Sellers may mutually determine (the
"Closing Date"). The actions taken at the Closing will not include payment of
the Purchase Price, the delivery to Buyer of certificates representing the
Company Shares, or the delivery to Sellers of certificates representing the
TCMS Shares. Instead, the share certificates, duly endorsed for transfer, shall
be delivered into escrow with a mutually agreeable escrow agent (the "Document
Escrow") to be released and delivered pursuant to this Agreement on the IPO
Closing Date. During the period from the Closing until the IPO Closing Date,
this Agreement may be terminated by the parties only pursuant to Section
6.1(b).
1.6 DELIVERIES AT THE CLOSING AND ON THE IPO CLOSING DATE. At the
Closing, (i) Sellers will deliver the various certificates, instruments, and
documents referred to in Section 5.1 below into the Document Escrow, (ii) Buyer
will deliver the various certificates, instruments, and documents referred to
in Section 5.2 below into the Document Escrow (other than the Purchase Price)
(iii) each of the Sellers will deliver into the Document Escrow a certificate
or certificates, duly endorsed in blank or accompanied by stock powers duly
endorsed to Buyer, and in the form for transfer to Buyer, and, if required by
Buyer, with signatures guaranteed by an eligible guarantor institution pursuant
to any medallion signature guarantee program, representing all of the Company
Shares owned by such Seller free and clear of any pledge, lien, claim,
encumbrance, or interest of any third party,
HBH, Inc. Purchase and Sale Agreement/Page 2
10
(iv) if required by the Real Estate Purchase Agreement, Sellers shall execute
and deliver into the Document Escrow an act of sale effecting transfer of
immovable property and the other certificates, instruments and documents
provided for in the Real Estate Purchase Agreement, as required to convey or
lease the Real Estate to Buyer pursuant to terms of the Real Estate Purchase
Agreement, and (v) at the Closing or on the next business day, Buyer will
deliver into the Document Escrow a certificate representing the TCMS Shares. On
the IPO Closing Date, (A) Buyer will deliver the cash portion of the Purchase
Price to Sellers pursuant to Section 1.2 above, (B) the various certificates,
instruments and documents held in the Document Escrow which are to be delivered
to Buyer pursuant to this Agreement including the Company Shares, shall be
released and delivered to Buyer, and (C) the various certificates, instruments
and documents held in the Document Escrow to be delivered to Sellers pursuant
to this Agreement, including the TCMS Shares, shall be released and delivered
to Sellers, and (D) if required by the Real Estate Purchase Agreement, the Real
Estate Purchase Price to Sellers as specified in Section 1.2 above.
1.7 REGISTRATION RIGHTS AGREEMENT. Sellers shall execute and
deliver a Registration Rights Agreement in the form attached as Exhibit 1.7
hereto. Provisions of the Registration Rights Agreement shall be no less
favorable to the Sellers than provisions of any other agreement of the Buyer
providing registration rights to the owners of any other corporation or
business entity to be acquired by Buyer prior to or in connection with the IPO.
Buyer shall not grant to any other person registration rights that are senior
to the registration rights granted to Sellers.
1.8 EXCLUDED ASSETS. Buyer and Seller agree that prior to the
Closing Date, Sellers and the Company shall cause ownership and/or possession
of those assets identified on Exhibit 1.8 attached hereto (the "Excluded
Assets") to be transferred to Sellers or others. These distributions shall be
in addition to any other distributions permitted pursuant to this Agreement.
ARTICLE 2
CONSIDERATION ADJUSTMENTS
2.1 ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price payable to
Seller under this Agreement is subject to the adjustments described in this
Section 2.1:
(a) Long-Term Debt Adjustment. The Purchase Price shall
be reduced by the amount, if any, of Long- Term Debt of the Company on the IPO
Closing Date that is in excess of (i) $6.0 million, if the IPO Closing Date
occurs on or before September 30, 1997, or (ii) $6.5 million, if the IPO
Closing Date occurs after September 30, 1997. "Long- Term Debt" means all
long-term liabilities (including current maturities of such Long-Term Debt and
prepayment penalties as of the IPO Closing Date) of the Company owed to persons
other than Sellers and their affiliates as of the IPO Closing Date, including
deferred taxes and capitalized lease obligations, determined in accordance with
GAAP; provided that amounts outstanding pursuant to the Company's line of
credit with Banc One, N.A., and the Company's line of credit with Diversified
Group, Inc. shall be deemed current liabilities and not Long-Term Debt.
HBH, Inc. Purchase and Sale Agreement/Page 3
11
(b) Capital Expenditure Adjustment. The Purchase Price
shall be reduced by the amount, if any, by which the aggregate amount of the
Company's capital expenditures during the period from January 1, 1997 through
the IPO Closing Date, together with all of the Company's commitments for
capital expenditures on the IPO Closing Date, determined as of such date in
accordance with GAAP, exceeds (i) $870,000, if the IPO Closing Date occurs on
or before September 30, 1997, and (ii) $1,370,000, if the IPO Closing Date
occurs after September 30, 1997. "GAAP" means U.S. generally accepted
accounting principles consistently applied.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES BY SELLERS. Sellers each
represent and warrant to Buyer that the statements contained in this Section
3.1 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date and the IPO Closing Date (as though
made then and as though such dates were substituted for the date of this
Agreement throughout this Section 3.1) except as set forth in the disclosure
schedule delivered by the Sellers to the Buyer on the date hereof and initialed
by the parties hereto (the "Sellers Disclosure Schedule"). The Sellers
Disclosure Schedule will be arranged in sections and paragraphs corresponding
to the lettered and numbered sections and paragraphs contained in this Section
3.1.
(a) Qualification. Each Seller has the legal power and
authority to own its properties and assets and carry on its business
and affairs as currently conducted.
(b) Authority Relative to Agreement. Each Seller has the
full right, power, and legal authority to execute and deliver this
Agreement. Provided that court approval is received in the succession
of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ with respect to the transactions contemplated by
this Agreement prior to Closing (the "▇▇▇▇▇▇ Court Approval"), each
Seller has the full right, power, and legal authority to perform this
Agreement and to consummate the transactions contemplated on the part
of the Company hereby. No proceeding on the part of any Seller, and,
except for those approvals described in Schedule 3.1(b), no notice,
consent, authorization, order or approval of, filing or registration
with, any governmental commission, board or other regulatory body or
any bank, bonding company, lender, surety, customer, supplier, or any
other person whatsoever is required for or in connection with the
execution and delivery of this Agreement. No proceeding on the part of
any Seller, and, except for those approvals described in Schedule
3.1(b) and ▇▇▇▇▇▇ Court Approval, no notice, consent, authorization,
order or approval of, filing or registration with, any governmental
commission, board or other regulatory body or any bank, bonding
company, lender, surety, customer, supplier, or any other person
whatsoever is required for or in connection with the performance of
this Agreement and the consummation by Sellers of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by each Seller and is a valid and binding agreement of such
Seller, enforceable against such Seller in accordance with its terms.
HBH, Inc. Purchase and Sale Agreement/Page 4
12
(c) Non-Contravention. Except as provided on Schedule
3.1(c), the execution, delivery and performance of this Agreement by
Sellers do not, and the consummation by Sellers of the transactions
contemplated hereby will not (provided that the ▇▇▇▇▇▇ Court Approval
is received prior to Closing), conflict with, or 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 the loss of a material benefit
under, or result in the creation or imposition of any material lien,
charge, pledge, security interest or other encumbrance upon any of the
property or assets of Sellers or the Company pursuant to any provision
of, any mortgage, lien, lease, agreement, license, instrument, law,
ordinance, regulation, order, arbitration award, judgment or decree to
which any Seller or the Company is a party or by which any of their
respective assets are bound. Except as provided on Schedule 3.1(c),
the execution, delivery and (assuming ▇▇▇▇▇▇ Court Approval prior to
Closing) performance of this Agreement by Sellers do not and the
consummation by Sellers of the transactions contemplated hereby will
not violate or conflict with any other restriction of any kind or
character to which any Seller or the Company is subject or by which
any of their respective assets may be bound.
(d) Ownership of Company Common Stock. Each Seller holds
of record and owns beneficially the number of Company Shares set forth
next to his name in Schedule 3.1(d) of the Sellers Disclosure
Schedule. Collectively, the Sellers are, and as of the Closing Date
and the IPO Closing Date will be, the sole and exclusive lawful owners
of all of the outstanding shares of Company Common Stock free and
clear of all liens, claims, encumbrances and rights of others of any
nature whatsoever, with full power to vote all such shares on any
matter that may properly come before shareholders of the Company, and
each Seller may exercise such voting power on any matter without
violation of the rights of any person. There are no rights, warrants
or options outstanding with respect to such capital stock, and Sellers
have no obligation to deliver capital stock of the Company or any of
its Subsidiaries to any person as of the date hereof, at any time on
or prior to the IPO Closing Date, thereafter or as a result thereof or
in connection therewith except as provided in this Agreement.
(e) Restricted Securities.
(1) Sellers acknowledge that the shares of TCMS
Common Stock which Sellers will acquire pursuant to this
Agreement have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and are being
acquired for each Seller's own account for investment and not
with a view to the distribution thereof. The TCMS Common Stock
acquired pursuant to this Agreement will be subject to the
stock transfer restrictions described in Article 8 below.
(2) Each Seller has the knowledge and experience
in financial and business matters to enable it to evaluate the
merits and risks of approving this Agreement and the
transactions contemplated herein and acquiring shares of TCMS
Common Stock.
HBH, Inc. Purchase and Sale Agreement/Page 5
13
(3) Each Seller is able to bear the economic
risks of its investment in the TCMS Common Stock, including
the risk of a complete loss of the value of TCMS Common Stock.
(4) Each Seller has been represented by legal
counsel in this transaction and such Seller and its
representatives, including such counsel, have been given the
opportunity to ask questions of, and receive answers from, the
officers of the Buyer concerning the terms of the transactions
contemplated by this Agreement and the affairs and the
business and financial condition of the Buyer.
(5) Each Seller has received a confidential
private placement memorandum concerning the Buyer and an
investment in shares of TCMS Common Stock, and each Seller and
its representatives have been given such access to all
documents, books and additional information concerning Buyer
which they have requested regarding Buyer.
(6) Each Seller has conducted such investigations
by itself and through its representatives in making a decision
to approve this Agreement and the transactions contemplated
herein as it has deemed necessary and advisable.
(7) Each Seller acknowledges and agrees that the
TCMS Common Stock issued to such Seller may not be disposed of
except in accordance with the requirements of the Securities
Act and any applicable state securities laws.
3.2 REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY.
Sellers and the Company, jointly and severally, represent and warrant to Buyer
that the statements contained in this Section 3.2 are correct and complete as
of the date of this Agreement and will be correct and complete as of the
Closing Date and the IPO Closing Date (as though made then and as though the
such dates were substituted for the date of this Agreement throughout this
Section 3.2), except as otherwise set forth in the disclosure schedule
delivered by the Sellers and the Company to Buyer on the date hereof and
initialed by the parties hereto (the "Company Disclosure Schedule"). The
Company Disclosure Schedule will be arranged in sections and paragraphs
corresponding to the lettered and numbered sections and paragraphs contained in
this Section 3.2.
(a) Organization and Qualification, etc. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Louisiana, has the full right, power
and legal authority and all licenses, permits, titles and
authorizations necessary to own all of its properties and assets and
to carry on its business as it is now being conducted, and is duly
qualified to do business and is in good standing in each jurisdiction
as set forth in Schedule 3.2(a) of the Company Disclosure Schedule
where, to the reasonable belief of Sellers and the Company, such
qualification is appropriate. The copies of the Company's Articles of
Incorporation and Bylaws, as amended to date, which have been
delivered to Buyer are complete and correct, and such instruments, as
so amended, are in full force and effect at the date hereof. The
Company is qualified to transact business as a foreign corporation and
is in good standing in all jurisdictions in which it is engaged in
HBH, Inc. Purchase and Sale Agreement/Page 6
14
business and in which its properties or assets are located, which
foreign jurisdictions are listed in Schedule 3.2(a).
(b) Capital Stock. The entire authorized capital stock of
the Company consists of 3,000 shares of Company Common Stock, no par
value, of which as of the date hereof 882 shares of Company Common
Stock are validly issued and outstanding, fully paid and
nonassessable, all of which are held of record and beneficially by
Seller. No shares of the capital stock of the Company have been issued
in violation of the preemptive rights of any past or present
shareholder. No shares of the capital stock of the Company are in the
treasury of the Company. There are no outstanding subscriptions,
shares of capital stock, calls, warrants, options, contracts,
commitments, or demands relating to the capital stock of the Company
or other agreements of any character under which the Company or Buyer
would be obligated to issue or purchase shares of its capital stock.
There is no voting agreement, voting trust, proxy, or other agreement
or understanding with respect to the voting of the capital stock of
the Company. The Company has no commitments to issue or sell any
securities or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire from the
Company, any shares of its capital stock and no securities or
obligations evidencing any such rights are outstanding.
(c) Subsidiaries. With respect to each corporation, firm,
partnership or other business entity in which the Company holds an
interest, Schedule 3.2(c) of the Company Disclosure Schedule sets
forth the name, the interest of the Company, and the capitalization of
such entity (each such entity in which the Company owns or controls
more than 50% of the voting securities, directly or indirectly, or in
which the Company acts as manager or general partner is hereinafter a
"Subsidiary"). Except as described on Schedule 3.2(c) of the Company
Disclosure Schedule neither the Company nor any Subsidiary owns or has
any right or obligation to acquire any class of securities (including,
without limitation, debt securities) issued by any person or company
and neither the Company nor any Subsidiary is a party to or bound to
any partnership, joint venture or similar arrangement with any person
for the conduct of any business.
(d) Qualification of Subsidiaries. Each Subsidiary is
duly organized, validly existing and in good standing under the laws
of its state of organization, with the corporate or organizational
power to own its property and carry on its business as it is now being
conducted. All of the issued and outstanding shares of capital stock
of each Subsidiary have been duly authorized and are validly issued,
fully paid, and nonassessable, and were not issued in violation of the
preemptive rights of any past or present shareholder. The Company and
its Subsidiaries hold of record and own beneficially all of the
outstanding shares or other interests in each Subsidiary of the
Company held by them free and clear of any restrictions on transfer
(other than restrictions under the Securities Act and state securities
laws), taxes, security interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. There are no
outstanding or authorized options, warrants, purchase rights,
conversion rights, exchange rights, or other contracts or commitments
that could require any of the Company and its Subsidiaries to sell,
transfer, or otherwise dispose of any capital stock of any of its
Subsidiaries or that could require any Subsidiary to issue, sell, or
HBH, Inc. Purchase and Sale Agreement/Page 7
15
otherwise cause to become outstanding any of its own capital stock.
There are no outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to any Subsidiary. There
are no voting trusts, proxies, or other agreements or understandings
with respect to the voting of any capital stock of any Subsidiary.
None of the Company and its Subsidiaries controls directly or
indirectly or has any direct or indirect equity participation in any
corporation, partnership, trust, or other business association which
is not a Subsidiary of the Company.
(e) Authority Relative to Agreement. The Company has the
full right, power, and legal authority to execute and deliver this
Agreement. Provided that ▇▇▇▇▇▇ Court Approval is received prior to
Closing, the Company has the full right, power, and legal authority to
perform this Agreement and to consummate the transactions contemplated
on the part of the Company hereby. The execution and delivery by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated on its part hereby have been duly authorized
by its Board of Directors and the Sellers in their capacity as all
holders of the capital stock of the Company. No proceeding on the part
of the Company, and, except for those approvals described in Schedule
3.2(e), no notice, consent, authorization, order or approval of,
filing or registration with, any governmental commission, board or
other regulatory body, or any bank, bonding company, lender, surety,
customer, supplier, or any other person whatsoever is required for or
in connection with the execution and delivery of this Agreement. No
proceeding on the part of the Company, and, except for those approvals
described in Schedule 3.2(e) and ▇▇▇▇▇▇ Court Approval, no notice,
consent, authorization, order or approval of, filing or registration
with, any governmental commission, board or other regulatory body or
any bank, bonding company, lender, surety, customer, supplier, or any
other person whatsoever is required for or in connection with the
performance of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(f) Non-Contravention. Except as provided on Schedule
3.2(f), the execution, delivery, and performance of this Agreement by
the Company do not and the consummation by the Company of the
transactions contemplated hereby will not (provided that the ▇▇▇▇▇▇
Court Approval is received prior to Closing), (1) violate any
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
government agency, or court to which the Company or any of its assets
is subject or (2) violate any provision of the Articles of
Incorporation or Bylaws of the Company or any Subsidiary, or (3)
violate or result in, with the giving of notice or the lapse of time
or both, the violation of any provision of, or result in the
acceleration of or entitle any party to accelerate (whether after the
giving of notice or lapse of time or both) any obligation under, or
result in the creation or imposition of any lien, charge, pledge,
security interest or other encumbrance upon any of the property of the
Company or any Subsidiary pursuant to any provision of any mortgage,
lien, lease, contract, agreement, license, or instrument to which the
Company or any Subsidiary is a party or by which any of their
respective assets are bound. Except as provided on Schedule 3.2(f),
the execution, delivery and (assuming ▇▇▇▇▇▇ Court Approval prior to
Closing) performance of this Agreement by the Company
HBH, Inc. Purchase and Sale Agreement/Page 8
16
do not and will not violate or conflict with any other restriction of
any kind or character to which the Company or any Subsidiary is
subject or by which any of their respective assets may be bound, and
the same do not and will not constitute an event permitting
termination of any such mortgage, lien, lease, agreement, license or
instrument to which the Company or any Subsidiary is a party or by
which any of their respective assets are bound, except as such
enforcement is subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting
creditors' rights.
(g) Financial Information. Sellers have previously
furnished Buyer with true and complete copies of the audited balance
sheets of the Company and its Subsidiaries as of December 31, 1996 and
December 31, 1995, and the related audited statements of income,
retained earnings and cash flows for each of the three years ended
December 31, 1996 audited by Deloitte & Touche, the independent
accountants of the Company, together with the unqualified audit report
of such accountants with respect to such financial statements. Such
financial statements have been prepared in conformity with GAAP
consistently applied and present fairly, in all material respects, and
accurately, in all material respects, the financial position and
results of operations of the Company and its consolidated Subsidiaries
as of and for the respective periods then ended. Sellers have also
previously furnished the Buyer with a correct and complete copy of the
unaudited balance sheets of the Company as of the last day of the
fiscal quarters ended March 31, 1997 and June 30, 1997, and the
related quarterly unaudited statements of cash flows and retained
earnings of the Company with respect to each of the fiscal quarters
ended March 31, 1997 and June 30, 1997, certified by the chief
executive officer and the chief accounting officer of the Company
(including such certificates, the "Unaudited Quarterly Financial
Statements"). To the best knowledge of Management of the Company, such
financial statements have been prepared in conformity with GAAP, in
all material respects, consistently applied (except for the absence of
footnote disclosure) and to the best knowledge of the Company present
fairly, in all material respects, and accurately, in all material
respects, the financial position and results of operations of the
Company as of and for the subject periods. Sellers have also
previously furnished the Buyer with a correct and complete copy of the
unaudited monthly balance sheets of the Company as of the last day of
each month from January through June 1997, and the related monthly
unaudited statement of income and retained earnings of the Company
with respect to each month from January through June 1997 certified by
the chief executive officer and the chief accounting officer of the
Company (including such certificates, the "Unaudited Monthly Financial
Statements"). To the best knowledge of management of the Company, such
financial statements have been prepared in conformity with GAAP, in
all material respects, consistently applied (except for (i) the
classified balance sheets, (ii) the absence of footnote disclosure,
(iii) absence of the statement of cash flows and the statement of
retained earnings and (iv) the reclassification of interest expense on
the income statement) and to the best knowledge of the Company present
fairly, in all material respects, and accurately, in all material
respects, the financial position and results of operations of the
Company as of and for the subject periods, except for normal recurring
year-end adjustments. The Company and its Subsidiaries do not have any
material liabilities or obligations of a type which should be included
in or reflected as such in financial statements prepared in accordance
with GAAP, whether related to tax or non-tax matters, accrued or
contingent, due or not yet due,
HBH, Inc. Purchase and Sale Agreement/Page 9
17
liquidated, or unliquidated, or otherwise, except as and to the extent
disclosed or reflected in such financial statements or in Schedule
3.2(i). Collectively, the financial statements described in this
Section 3.2(g) are the "Company Financial Statements."
(h) Absence of Certain Changes or Events. Since December
31, 1996, and except to the extent described in Schedule 3.2(h) of the
Company Disclosure Schedule:
(1) none of the Company and its Subsidiaries has
sold, leased, transferred, or assigned any of its assets,
tangible or intangible, other than for a fair consideration in
the ordinary course of business;
(2) none of the Company and its Subsidiaries has
entered into any agreement, contract, lease, permit or license
(or series of related agreements, contracts, leases, permits
and licenses) involving more than $100,000 outside the
ordinary course of business;
(3) no party (including any of the Company and its
Subsidiaries) has breached, accelerated, terminated, modified,
or canceled any agreement, contract, lease, permit or license
(or series of related agreements, contracts, leases, permits
and licenses) involving more than $50,000 to which any of the
Company and its Subsidiaries is a party or by which any of
them is bound ("Company Contracts");
(4) none of the Company and its Subsidiaries has
imposed any lien, encumbrance or security interest upon any of
its assets, tangible or intangible (other than the Permitted
Exceptions, as defined below);
(5) none of the Company and its Subsidiaries has made
any capital expenditure (or series of related capital
expenditures) either involving more than $50,000 or outside
the ordinary course of business;
(6) none of the Company and its Subsidiaries has made
any capital investment in, any loan to, or any acquisition of
the securities of any other corporation, partnership, limited
liability company or other person (or series of related
capital investments, loans, and acquisitions) either involving
more than $50,000 or outside the ordinary course of business;
(7) none of the Company and its Subsidiaries has
issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation either involving more
than $50,000 singly or $100,000 in the aggregate;
(8) none of the Company and its Subsidiaries has
delayed or postponed the payment of accounts payable and other
liabilities outside the ordinary course of business;
HBH, Inc. Purchase and Sale Agreement/Page 10
18
(9) none of the Company and its Subsidiaries has
canceled, compromised, satisfied, settled, waived, or released
any right or claim (or series of related rights and claims)
outside the ordinary course of business;
(10) none of the Company and its Subsidiaries has
granted any license or sublicense of any rights under or with
respect to any Intellectual Property (as hereinafter defined);
(11) there has been no change made or authorized in
the Articles of Incorporation or bylaws of any of the Company
and its Subsidiaries except as required to adopt the usual and
customary corporate indemnities for certain directors and
officers of the Company consistent with corporate governance
provisions of similar corporations;
(12) none of the Company and its Subsidiaries has
issued, sold, or otherwise disposed of any of its capital
stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
(13) none of the Company and its Subsidiaries has
declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired
any of its capital stock except for dividends and
distributions to shareholders which in the aggregate do not
exceed 42% of the Company's pre-tax net income during 1997
through the earlier of December 31, 1997 or the IPO Closing
Date;
(14) none of the Company and its Subsidiaries has
experienced any damage, destruction, or loss to its property
in excess of $50,000 which is not covered by insurance;
(15) none of the Company and its Subsidiaries has
made any loan to, or entered into any other transaction with,
any of its directors, officers, and employees outside the
ordinary course of business;
(16) none of the Company and its Subsidiaries has
entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(17) none of the Company and its Subsidiaries has
granted any increase in compensation to any of its employees
in excess of prevailing market rates, or to any of its
directors, officers, consultants or agents in excess of five
percent of such person's base compensation or any
discretionary bonuses to officers and employees in the
aggregate amount of $50,000 plus up to 10% of the pre-tax net
income of the Company during 1997 through, at Seller's option,
September 30, 1997, October 31, 1997 or the IPO Closing Date;
HBH, Inc. Purchase and Sale Agreement/Page 11
19
(18) none of the Company and its Subsidiaries has
adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract,
or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect
to any other employee benefit plan);
(19) except for the indemnification of certain
officers and directors pursuant to provisions of the Company's
Articles of Incorporation and Bylaws as permitted under
Louisiana law pursuant to amendment of same, none of the
Company and its Subsidiaries has made any other change in
employment terms for any of its directors, officers, and
employees outside the ordinary course of business;
(20) none of the Company and its Subsidiaries has
made or pledged to make any charitable or other capital
contribution outside the ordinary course of business;
(21) outside of the ordinary course of business
involving the Company or any of its Subsidiaries, there has
not been any other material: (i) occurrence; (ii) event; (iii)
incident; (iv) action; (v) failure to act; or (vi)
transaction;
(22) there has not been any material adverse change
in the business, financial condition, operation, results of
operation, or future prospects of the Company and its
Subsidiaries;
(23) there has not been any work interruptions, labor
grievances or claims filed, proposed law or regulation (the
existence of which is known, or under the normal course of
business should be known, to the Company) or any event or
condition of any character materially adversely affecting the
business of future prospects of the Company or its
Subsidiaries which do not affect the industry of the Company
as a whole; and
(24) there has not been any merger or consolidation
or agreement to merge or consolidate with or into any other
corporations (except the transactions contemplated by this
Agreement).
"Permitted Exceptions" shall mean (i) Inchoate Liens,
mechanic's, materialman's, warehouseman's and carrier's liens and
purchase money security interests arising in the ordinary course of
business, a correct and complete list of which is set forth on
Schedule 3.2(h-1) of the Company Disclosure Schedule; (ii) liens for
taxes and assessments not yet payable; (iii) liens for taxes,
assessments and charges and other claims, the validity of which the
Company or Sellers are contesting in good faith, a correct and
complete list of which is set forth on Schedule 3.2(h-1); and (iv)
imperfections of title, liens, security interests, claims and other
charges and encumbrances the existence of which does not adversely
affect the operation, value, use or enjoyment of such asset or
property. For purposes of this Agreement, "Inchoate Liens" means liens
arising under contracts customary in industry of the Company and liens
with respect to vessels which, in each case, relate to obligations of
the Company (or obligations of the vessel) which are not yet due or
which will be paid or
HBH, Inc. Purchase and Sale Agreement/Page 12
20
performed, as applicable, in the ordinary course of business, and
which are not currently in default.
(i) Undisclosed Liabilities. To the best knowledge of
Sellers and the Company, the Company and its Subsidiaries have no
material liabilities (and there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against the Company or its Subsidiaries giving rise
to any such liability), except for (i) liabilities set forth on the
face of the Company Financial Statements (rather than in any notes
thereto), (ii) liabilities set forth and described on Schedule 3.2(i),
and (iii) liabilities which have arisen after June 30, 1997 in the
ordinary course of business (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of
law).
(j) Permits and Legal Compliance. The Company and its
Subsidiaries have all permits, licenses, orders, qualifications, and
approvals of all governmental and regulatory authorities material to
the conduct of their business, a correct and complete list of which is
set forth in Schedule 3.2(j) of the Company Disclosure Schedule. All
such permits, licenses, orders and approvals are in full force and
effect, and no suspension or cancellation of any of them is pending or
threatened. None of such permits, licenses, orders or approvals, and
no application for any of such permits, licenses, orders or approvals,
will be adversely affected by the consummation of the transactions
contemplated by this Agreement. To the best knowledge of Sellers and
the Company, the Company and its Subsidiaries have complied with all
applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and, to the best knowledge of Sellers and the
Company, no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced
against the Company or its Subsidiaries alleging any failure so to
comply.
(k) Title to Properties; Absence of Liens and
Encumbrances, etc. The Company and its Subsidiaries have good and
marketable title to all of the real, tangible personal and mixed
properties and assets owned by it and used in its business (other than
any intangible properties and assets described in Sections 3.2(l),
3.2(m) and 3.2(n), which sections contain the Company's and Sellers'
representations and warranties with respect to such intangible
properties and assets), free and clear of any liens, charges, pledges,
mortgages, conditional sales contracts, security interests or other
encumbrances (other than Permitted Exceptions), except as reflected in
the Company Financial Statements or disclosed on Schedule 3.2(h-1). A
correct and complete list of all material properties and assets of the
Company and its Subsidiaries (other than properties and assets
described in Sections 3.2(l), 3.2(m) and 3.2(n), and other than
properties with a zero basis) as of April 30, 1997 is set forth on the
Company's fixed asset list attached as Schedule 3.2(k).
(l) Software. The Company and each of its Subsidiaries
own all operating and applications computer programs and data bases
("Software") or have the right to use such Software under valid leases
or license agreements therefor, or such Software has been made
HBH, Inc. Purchase and Sale Agreement/Page 13
21
available to the Company by an affiliate of the Company that has the
right to use such Software under valid leases or license agreements.
Such Software constitutes all the Software which is necessary to
operate the business of the Company and its Subsidiaries as currently
conducted. None of the Software used by or available to the Company or
its Subsidiaries, and no use thereof, infringes upon or violates any
patent, copyright, trade secret or other proprietary right of anyone
else, and no claim with respect to any such infringement or violation
is threatened. Sellers, the Company and certain affiliates will enter
into a transition agreement with the Buyer at Closing regarding the
Company's ownership and/or use at Closing of certain Software used by
the Company and the continued use by the Company, for a period of not
less than six months following Closing, of certain Software currently
used by the Company which has been made available to the Company by
its affiliates.
(m) Patent, Trademark, etc. Claims. The Company or its
Subsidiaries is the owner or licensee of all patents, patent licenses,
trademarks/servicemarks/trade names, trademark/servicemark/trade name
registrations, copyrights, and copyright registrations or any other
intellectual property ("Intellectual Property") used by or necessary
to the operation of the Company's business as presently conducted and
listed in Schedule 3.2(m) of the Company Disclosure Schedule. Each
item of Intellectual Property owned or used by the Company or its
Subsidiaries immediately prior to the Closing will be owned or
available for use by the Company or its Subsidiaries on the same terms
and conditions immediately after the IPO Closing Date. Each of the
Company and its Subsidiaries owns or has the right to use all such
Intellectual Property and has taken all necessary action to maintain
and protect each item of Intellectual Property that it owns or uses.
Each of the Company and its Subsidiaries has not infringed, and is not
now infringing, on any trade name, trademark, service ▇▇▇▇, or
copyright belonging to any other person, firm or corporation and has
not received any notice of such infringement. Neither the Company nor
any Subsidiary is a party to any license, sublicense, agreement or
arrangement, pursuant to which the Company or its Subsidiaries uses
Intellectual Property except as shown in Schedule 3.2(m). With respect
to each such license, sublicense, agreement or arrangement disclosed:
(1) the license, sublicense, agreement or
arrangement covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(2) the license, sublicense, agreement or
arrangement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the Closing;
(3) no party to such license, sublicense,
agreement or arrangement is in breach or default, and no event
has occurred which with notice or lapse of time would
constitute a breach or default or permit termination,
modification or acceleration thereunder; and
(4) no party to the license, sublicense,
agreement or arrangement has repudiated any provision thereof.
HBH, Inc. Purchase and Sale Agreement/Page 14
22
Each of the Company and its Subsidiaries owns, or holds adequate
licenses or other rights to use its trade names in the business as now
conducted by it, and that does not, and will not, conflict with,
infringe on, or otherwise violate any rights of others. Sellers have
delivered to Buyer correct and complete copies of all such licenses,
sublicenses agreements and arrangements (as amended to date) disclosed
on Schedule 3.2(m).
(n) List of Properties, Contracts and Other Data. The
Company and its Subsidiaries own, lease or subcontract for all
property and tangible assets necessary for the conduct of their
business as presently conducted. To the best knowledge of Sellers and
the Company, except as reflected in such Schedule 3.2(n) of the
Company Disclosure Schedule, all of the material property of the
Company and its Subsidiaries is in existence and is in operable
condition and in conformity in all material respects with all
building, zoning, OSHA, Coast Guard, safety, or other applicable
ordinances, regulations, or laws (except for immaterial
non-conformities to such provisions). Except as to the representation
regarding operability above, Sellers and the Company make no warranty
whatsoever whether expressed or implied as to the condition of the
Company's material property, and with respect to such properties Buyer
expressly waives all implied warranties of seaworthiness, where
applicable, or fitness for intended purposes, whether arising under
contract, tort or under the law of redhibition. Schedule 3.2(n) of the
Company Disclosure Schedule contains a list setting forth with respect
to the Company and its Subsidiaries as of the date hereof the
following:
(1) The Company does not own any real or
immovable property.
(2) Schedule 3.2(n)(2) of the Company Disclosure
Schedule lists and describes briefly all real property leased
or subleased by or to the Company or any of its Subsidiaries
(whether as lessor or as lessee). The Sellers have delivered
to the Buyer correct and complete copies of the leases and
subleases listed in Schedule 3.2(n)(2) (as amended to date).
With respect to each lease and sublease listed in Schedule
3.2(n)(2):
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and
effect on identical terms following the consummation
of the transactions contemplated hereby;
(iii) no party to the lease or sublease is in breach
or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or
default or permit termination, modification, or
acceleration thereunder;
(iv) no party to the lease or sublease has repudiated
any provision thereof;
(v) except as described on Schedule 3.2(n)(2), there
are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
HBH, Inc. Purchase and Sale Agreement/Page 15
23
(vi) with respect to each sublease, the
representations and warranties set forth in
subsections (i) through (v) above are correct and
complete with respect to the underlying lease;
(vii) none of the Company and its Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in
trust, or encumbered any interest in the leasehold or
subleasehold;
(viii) to the best knowledge of Sellers and the
Company, all facilities leased or subleased
thereunder have received all approvals of
governmental authorities (including licenses and
permits) required in connection with the operation
thereof and have been operated and maintained in
accordance with applicable laws, rules, and
regulations;
(ix) all facilities leased or subleased thereunder
are supplied with utilities and other services
necessary for the operation of said facilities; and
(3) Schedule 3.2(n)(3) of the Company Disclosure
Schedule lists and describes briefly all contracts and
commitments (including, without limitation, mortgages,
indentures and loan agreements) to which the Company or any
Subsidiary is a party, or to which it or any of its assets or
properties are subject and which are not specifically referred
to elsewhere in Section 3.2, provided that there need not be
listed in the Company Disclosure Schedule (unless required
pursuant to the preceding subsections of this Section 3.2(n))
any contract or commitment incurred in the ordinary course of
business which requires payments to or by the Company and its
Subsidiaries during its remaining life of less than $250,000
or which is terminable by the Company or any Subsidiary within
thirty days without payment of a premium or penalty; and
Correct and complete copies of all documents and descriptions
complete in all material respects of all oral agreements or
commitments (if any) referred to in this Section 3.2(n) have been
provided to, or made available to, Buyer or its counsel. None of the
Company, the Sellers and the Subsidiaries has been notified of any
claim that any contract listed in Schedule 3.2(n)(3) of the Company
Disclosure Schedule is not valid and enforceable in accordance with
its terms for the periods stated therein, or that there is under any
such contract any existing material default or event of default or
event which with notice or lapse of time or both would constitute such
a default.
(o) Use of Real Property. None of the Sellers, the
Company and the Subsidiaries has received notice of violation of any
applicable zoning or building regulation, ordinance or other law,
order, regulation or requirement relating to the operations of the
Company or its Subsidiaries, or any notice of default under any
material lease, contract, commitment, license or permit, relating to
the use and operation of the owned or leased real property listed in
the Company Disclosure Schedules and there is no such violation or
default. None of the Sellers, the Company and the Subsidiaries has
received notice that any plant, facility or other
HBH, Inc. Purchase and Sale Agreement/Page 16
24
building which is owned or covered by a lease set forth in the Company
Disclosure Schedule does not substantially conform in all material
respects with all applicable ordinances, codes, regulations and
requirements, and none of the Sellers, the Company and the
Subsidiaries has received notice that any law or regulation presently
in effect or condition precludes or restricts continuation of the
present use of such properties.
(p) Environmental Laws. To the best knowledge of Sellers
and the Company, the Company and its Subsidiaries, including, without
limitation, their businesses, facilities, property, vessels, and
equipment of the Company and its Subsidiaries have been and are
currently in compliance, in all material respects, with all applicable
federal, state, and local laws, rules, and regulations of all
authorities, including without limitation, applicable Environmental
Laws (as hereinafter defined), and, to the best knowledge of Sellers
and the Company, the Company and its Subsidiaries have all permits,
certificates, and licenses required to operate their businesses,
facilities, property, vessels, and equipment, including, without
limitation, any relating to the generation, processing, treatment,
discharge, storage, transport, disposal, or other management of
chemicals and other hazardous materials, of waste materials of any
kind, and those relating to the protection of environmentally
sensitive areas. To the best knowledge of Sellers and the Company,
there is no material adverse effect on any of the facilities,
properties, vessels or equipment of the Companies, or with respect to
function, use, or value of any such assets, resulting from any
hazardous or toxic substance, or any pollutant or contaminant, or as a
result of exposure to petroleum or any by-product thereof.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, and the Occupational Safety and Health Act of
1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or
protection of the environment, public health and safety including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes in ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
(q) Litigation. Except as provided on Schedule 3.2(q) of
the Company Disclosure Schedule, there are no actions, suits, audits,
investigations, unfair labor practices charges, complaints, claims,
grievances or proceedings with respect to the Company or any
Subsidiary pending against the Company or any Subsidiary at law or in
equity, or before or by any federal, state, municipal, foreign or
other governmental department, commission, board, bureau, agency or
instrumentality, nor are there any such actions, suits, audits,
investigations, unfair labor practices charges, complaints, claims,
grievances or proceedings with respect to the Company (or any
Subsidiary) or threatened against the Company or any Subsidiary.
HBH, Inc. Purchase and Sale Agreement/Page 17
25
(r) Labor and Employment Matters.
(1) Schedule 3.2(r) of the Company Disclosure
Schedule sets forth all collective bargaining agreements,
employment and consulting agreements (other than consulting
agreements terminable by the Company or any Subsidiary within
60 days without payment of a premium or a penalty), executive
compensation plans, bonus plans, deferred compensation
agreements, employee pension plans or retirement plans,
employee profit sharing plans, employee stock purchase and
stock option plans, group life insurance, hospitalization
insurance or other plans or arrangements providing for
benefits to employees of the Company or any Subsidiary;
(2) To the best knowledge of the Sellers and the
Company, there are no controversies between the Company (or
any Subsidiary) and any employees or any unresolved labor
union grievances or unfair labor practice or labor arbitration
proceedings pending or threatened, related to the Company (or
any Subsidiary) and there are not any organizational efforts
presently being made or threatened in an organized fashion
involving any of the employees of the Company or any
Subsidiary, except as disclosed on Schedule 3.2(r).
(3) None of the Sellers, the Company and the
Subsidiaries has received notice of any claim that it has not
complied with any laws relating to the employment of labor,
including any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and
similar taxes, equal employment opportunity, employment
discrimination and employment safety, or that it is liable for
any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing in any case which is
unresolved as of the date hereof, except as disclosed on
Schedule 3.2(r).
(4) Schedule 3.2(r) of the Company Disclosure
Schedule sets forth the current pay rates of all employees of
the Company and its Subsidiaries (by position or by
department) as of a recent date.
(s) Accounts Receivable. The accounts receivable
reflected on the balance sheet of the Company as of December 31, 1996,
and all accounts receivable arising between December 31, 1996 and the
date hereof, arose from bona fide transactions in the ordinary course
of business; the services involved have been provided to the account
obligor and other than any accounts receivable which are the subject
of disputes and for which there are reasonably adequate reserves on
the Company's Financial Statements, no further services are required
to be provided in order to complete the sales and to entitle the
Company or its assignees to collect the accounts receivable in full.
No such account has been assigned or pledged to any other person, firm
or corporation except as set forth on Schedule 3.2(s).
(t) Insurance. Schedule 3.2(t) of the Company Disclosure
Schedule sets forth the following information with respect to each
insurance policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and
HBH, Inc. Purchase and Sale Agreement/Page 18
26
surety arrangements) to which the Company and its Subsidiaries have
been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past five years (except as to
insurance policies owned by third party vendors, contractors and
clients of the Company which have contractually named the Company or
its Subsidiaries as insured or provided other benefits of coverage as
a result of contractual liability coverage, which policies need not be
listed on Schedule 3.2(t) but shall be made available for inspection
by Buyer's representatives):
(1) the name, address, and telephone number of
the agent;
(2) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(3) the policy number and the period of coverage;
(4) the scope (including an indication of whether
the coverage was on a claims made, occurrence, or other basis)
and amount (including a description of how deductibles and
ceilings are calculated and operate) of coverage; and
(5) a description of any retroactive or "swing"
premium adjustments or other loss-sharing arrangements.
To the best knowledge of Sellers and the Company, with respect to each
such insurance policy owned by the Company or any of its Subsidiaries:
(A) to the best knowledge of Sellers and the Company, the policy is
legal, valid, binding, enforceable, and in full force and effect with
respect to the periods and risks which such policy purports to insure;
(B) the policy will continue to be legal, valid, binding, enforceable,
and in full force and effect in accordance with its terms on the same
terms following the consummation of the transactions contemplated
hereby; (C) neither the Company nor any of its Subsidiaries nor any
other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and the
Company has received no notice of default, and no termination,
modification, or acceleration has occurred, under the policy; and (D)
no party to the policy has repudiated any provision thereof. The
Company and each of its Subsidiaries has been covered during the past
five years by insurance in scope and amount customary and reasonable
for the businesses in which it has engaged during the aforementioned
period. Schedule 3.2(t) of the Company Disclosure Schedule describes
any self-insurance arrangements affecting the Company and its
Subsidiaries. "Self insurance arrangements" means any arrangement by
which the Company or its Subsidiaries has assumed risks in scope and
amount customarily insured by businesses in the Company's industry and
geographic region.
(u) Employee Benefits.
HBH, Inc. Purchase and Sale Agreement/Page 19
27
(1) The Company and its Subsidiaries have complied
and currently is in compliance, both as to form and operation,
in all material respects with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Internal Revenue Codes of 1954 and/or 1986,
as amended, respectively (for purposes of this Section 3.2(u)
only, the "Code"), with respect to each "employee benefit
plan" as defined under Section 3(3) of ERISA. Each employee
benefit plan of the Company and its Subsidiaries ("Plan") is
described in Schedule 3.2(u) of the Company Disclosure
Schedule, and a copy of each Plan is attached thereto.
(2) Except as described on Schedule 3.2(u), the
Company and its Subsidiaries have never maintained, adopted or
established, contributed or been required to contribute to, or
otherwise participated or been required to participate in, a
"multiemployer plan" (as defined in Section 3(37) of ERISA).
No amount is due as owing from the Company or any Subsidiary
on account of a "multiemployer plan" (as defined in Section
3(37) of ERISA) or on account of any withdrawal therefrom.
(3) The Company and its Subsidiaries have not
incurred any liability with respect to a Plan including,
without limitation, under ERISA (including, without
limitation, Title I or Title IV of ERISA, other than liability
for premiums due to the Pension Benefit Guaranty Corporation
("PBGC")), the Code or other applicable law, which has not
been satisfied in full, and no event has occurred, and there
exists no condition or set of circumstances which could result
in the imposition of any liability with respect to a Plan,
including, without limitation, under ERISA (including, without
limitation, Title I or Title IV of ERISA), the Code or other
applicable law with respect to the Plan.
(4) The Company and its Subsidiaries have no
outstanding commitments to provide or to cause to be provided
any severance or other post-employment benefit, salary
continuation, termination, disability, death, retirement,
health or medical benefit or similar benefit to any person
(including, without limitation, any former or current
employee) that has not been reflected in the Company Financial
Statements or is not included in any Plan or required by
ERISA, COBRA or other labor law, disclosed in Schedule 3.2(u)
of the Company Disclosure Schedule to this Agreement.
(v) Tax Matters.
(1) All federal, state, local and foreign tax returns
required to be filed by the Company and its Subsidiaries prior
to the date hereof have been filed on a timely basis with the
appropriate governmental authorities in all jurisdictions in
which such tax returns are required to be filed, and all such
returns are correct and complete. Sellers have delivered to
Buyer correct and complete copies of all federal income tax
returns, examination reports, and statements of deficiencies
asserted against or agreed to by the Company or any Subsidiary
since January 1, 1992. Neither the Company nor its
Subsidiaries are currently the subject of any audit,
examination or any similar
HBH, Inc. Purchase and Sale Agreement/Page 20
28
investigation by any governmental authority. Schedule 3.2(v)
of the Company Disclosure Schedule sets forth all audits,
examinations or similar investigations of the Company and its
Subsidiaries by any governmental authority since January 1,
1992.
(2) All federal, state, local and foreign income,
franchise, sales, use, property, and all other taxes, fees,
assessments, or other governmental charges (including
withholding taxes), and all interest and penalties thereon
(all of the foregoing collectively, "Taxes") due from or
properly accruable by the Company and its Subsidiaries have
been fully and timely paid or, in the cases of Taxes for which
payment is not yet required, properly and fully accrued for on
the Company Financial Statements or in Schedule 3.2(v) of the
Company Disclosure Schedule with respect to all taxable
periods ending on or prior to the date hereof and interim
periods through the date hereof.
(3) Neither the Company nor its Subsidiaries has
filed a consent under Section 341(f) of the Code concerning
collapsible corporations. Neither the Company nor any of its
Subsidiaries is a party to any agreement, contract or
arrangement that would, by reason of the consummation of any
of the transactions contemplated by this Agreement,
individually or in the aggregate, result in the payment of any
"excess parachute payment" within the meaning of Section 280G
of the Code. None of the assets of the Company or any
Subsidiary is required to be treated as being owned by any
other person pursuant to the "safe harbor" leasing provisions
of Section 168 of the Internal Revenue Code of 1954, as in
effect prior to the repeal of said leasing provisions.
(4) None of the Company and its Subsidiaries is a
party to any Tax allocation or sharing agreement. None of the
Company and its Subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal income tax
return (other than a group the common parent of which was the
Company) or (B) has any liability for the taxes of any person
(other than any of the Company and its Subsidiaries) under
Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor,
by contract, or otherwise.
(5) Schedule 3.2(v) of the Company Disclosure
Schedule sets forth the following information with respect to
each of the Company and its Subsidiaries (or, in the case of
clause (B) below, with respect to each of the Subsidiaries) as
of the most recent practicable date: (A) the tax basis of the
Company or Subsidiary in its assets as shown on the tax return
of the Company; (B) the amount of any net operating loss, net
capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to
the Company or Subsidiary; and (C) the amount of any deferred
gain or loss allocable to the Company or Subsidiary arising
out of any Deferred Intercompany Transaction (as defined in
Treas. Reg. Section 1.1502-13).
HBH, Inc. Purchase and Sale Agreement/Page 21
29
(6) The Company has not waived any statute of
limitations, or agreed to any extension of time with respect
to an assessment or deficiency, with respect to any Taxes.
(7) The Company has been a validly electing S
corporation within the meaning of Sections 1361 and 1362 of
the Internal Revenue Code of 1986, as amended (the "Code"), at
all times since November 1, 1984.
(w) Fees. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by Sellers
and the Company directly with the Buyer, without the intervention of
any other person on behalf of Sellers or the Company in such manner as
to give rise to any valid claim by any other person against Sellers or
the Company for a finder's fee, brokerage commissions, or similar
payment; provided, however, Sellers shall pay consulting and financial
advisory fees to certain employees of the Company and its affiliates
with respect to the consummation of the transaction for which fees and
expenses Sellers will be solely liable.
(x) Powers of Attorney. There are no outstanding powers
of attorney executed on behalf of the Company.
(y) Investment Company. Each of the Company or its
Subsidiaries is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company, a subsidiary
company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
3.3 REPRESENTATIONS AND WARRANTIES BY THE BUYER. The Buyer
represents and warrants to the Sellers and the Company that the statements
contained in this Section 3.3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date and the IPO
Closing Date (as though made then and as though such dates were substituted for
the date of this Agreement throughout this Section 3.3), except as set forth in
the disclosure schedule delivered by the Buyer to the Sellers and the Company
on the date hereof and initialed by the parties hereto (the "Buyer Disclosure
Schedule"). The Buyer Disclosure Schedule will be arranged in sections and
paragraphs corresponding to the lettered and numbered sections and paragraphs
contained in this Section 3.3.
(a) Organization and Qualification, etc. The Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has corporate power and
authority to own all of its properties and assets and to carry on its
business as it is now being conducted, and is duly qualified to do
business and is in good standing in each jurisdiction as set forth in
Schedule 3.3(a) of the Buyer Disclosure Schedule where, to the
reasonable belief of Buyer, such qualification is appropriate. The
copies of the Buyer's Articles of Incorporation and Bylaws, as amended
to date, which have been delivered
HBH, Inc. Purchase and Sale Agreement/Page 22
30
to Sellers are complete and correct, and such instruments, as so
amended, are in full force and effect at the date hereof.
(b) Capital Stock. The entire authorized capital stock of
Buyer consists of 25,000,000 shares of capital which is divided into
(1) 3,000,000 shares of restricted common stock having a par value of
$.001 per share, (2) 20,000,000 shares of common stock having a par
value of $.001 per share (i.e., TCMS Common Stock), and (3) 2,000,000
shares of preferred stock having a par value of $.001 per share.
(c) Subsidiaries, etc. Buyer does not own of record or
beneficially, directly or indirectly, (1) any shares of outstanding
capital stock or securities convertible into capital stock of any
other corporation or (2) any participating interest in any
partnership, joint venture or other non-corporate business enterprise.
(d) Authority Relative to Agreement. Buyer has the
corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated on the part
of Buyer hereby. The execution and delivery by Buyer of this
Agreement and the consummation by Buyer of the transactions
contemplated on its part hereby have been duly authorized by its Board
of Directors. No other corporate proceedings on the part of Buyer are
necessary to authorize the execution and delivery of this Agreement by
Buyer. Except for corporate action related to the IPO, no other
corporate proceedings on the part of Buyer are necessary to authorize
the performance of this Agreement by Buyer or the consummation by
Buyer of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Buyer and is enforceable against Buyer
in accordance with its terms.
(e) Non-Contravention. The execution, delivery and
performance of this Agreement by Buyer do not and the consummation by
Buyer of the transactions contemplated hereby will not (1) violate any
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling change, or other restriction of any government,
government agency, or court to which Buyer is subject to, or (2)
violate any provision of the Articles of Incorporation or Bylaws of
Buyer, or (3) violate or result in, with the giving of notice or the
lapse of time or both, the violation of any provision of, or result in
the acceleration of or entitle any party to accelerate (whether after
the giving of notice or lapse of time or both) any obligation under,
or result in the creation or imposition of any lien, charge, pledge,
security interest or other encumbrance upon any of the property of
Buyer pursuant to any provision of any mortgage, lien, lease,
agreement, contract, license, or instrument to which Buyer is a party
or by which any of its assets is bound. The execution, delivery and
performance of this Agreement by Buyer do not and will not violate or
conflict with any other restriction of any kind or character to which
Buyer is subject or by which any of its assets may be bound, and the
same does not and will not constitute an event permitting termination
of any such mortgage, lien, lease, agreement, license or instrument to
which Buyer is a party or by which any of its assets is bound, except
as such enforcement is subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws relating to or
affecting creditors' rights.
HBH, Inc. Purchase and Sale Agreement/Page 23
31
(f) Approvals. Except for the declaration of
effectiveness of the registration statement filed in connection with
Buyer's IPO by the SEC pursuant to the Securities Act, and the
consents and approvals required pursuant to state securities laws with
respect to the IPO, and except as set forth in Schedule 3.3(f) of the
Buyer Disclosure Schedule, no consent, authorization, order or
approval of, or filing or registration with, any governmental
commission, board or other regulatory body or any other person is
required for the execution and delivery of this Agreement and the
consummation by Buyer of the transactions contemplated hereby.
(g) Litigation. There are no actions, claims, proceedings
or governmental investigations pending against Buyer or any of its
assets or properties at law or in equity, before or by any federal,
state, or municipal court, agency or other governmental entity, or by
any other person, which, individually or in the aggregate, could
reasonably be expected (1) to have a material adverse effect on the
financial condition or results of operations of Buyer or (2) to
prevent the consummation of the transactions contemplated hereby.
(h) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by
Buyer directly with Sellers and the Company, without the intervention
of any person on behalf of Buyer in such manner as to give rise to any
valid claim by any person against Buyer for a finder's fee, brokerage
commission, or similar payment.
(i) Disclosure. The confidential private placement
memorandum including amendments and supplements thereto ("Memorandum")
previously delivered to Sellers contains no misstatement of material
fact, nor omits to state any material fact required to make statements
contained therein not misleading. As disclosed in the Memorandum, and
as of the execution date of this Agreement, certain contracts and
agreements required in connection with the IPO are in negotiation or
remain to be negotiated, and approval of the SEC and certain other
government agencies is required to consummate the proposed
transactions. Aside from such contingencies, Buyer knows of no reason
why the transactions described in the Memorandum will not go forward.
ARTICLE 4
ADDITIONAL COVENANTS AND AGREEMENTS
4.1 CONDUCT OF BUSINESS. During the period from the date hereof to
the IPO Closing Date, except as otherwise contemplated by this Agreement,
Sellers shall cause the Company to, and the Company shall use its reasonable
efforts to conduct its operations according to its ordinary and usual course of
business, subject to the foregoing, to preserve substantially intact its
business organization, keep available the services of its officers and
employees, and maintain its present relationships with licensors, suppliers,
distributors, customers and others having significant business relationships
with it. Representatives of the Company will confer with representatives of
Buyer to
HBH, Inc. Purchase and Sale Agreement/Page 24
32
keep it informed with respect to the general status of the on-going operations
of the business of the Company. Without limiting the generality of the
foregoing, Sellers will cause the Company to:
(a) carry on the business in substantially the same manner as
heretofore carried on and not introduce any material new method of
management, operation or accounting, nor provide discounted services
outside the ordinary course of business;
(b) in the ordinary course of business, maintain its material
properties, facilities, equipment and other assets, including those
held under leases, in good working order, condition and repair,
ordinary wear and tear excepted;
(c) perform all of its obligations under all debt and lease
instruments and other agreements relating to or affecting its
business, assets, properties, equipment and rights, and pay all
vendors, suppliers, and other third parties (including mechanics and
materialmen) in the ordinary course of business, except those
contested in good faith, and pay in full all payroll obligations when
due;
(d) maintain its present debt and lease instruments (unless
same are otherwise mature) and refrain from entering into new or
amended debt or lease instruments other than short term and operating
leases with respect to equipment entered into in the ordinary course
of business, except as provided in paragraph (e) below without prior
written consent of Buyer;
(e) not incur any indebtedness or any encumbrance of any of
its properties or assets, other than indebtedness with respect to (1)
ordinary trade accounts payable, (2) indebtedness under existing lines
of credit with Banc One, N.A., (3) indebtedness under existing lines
of credit from Diversified Group, Inc., a Louisiana corporation, and
(4) Long-Term Debt permitted under Section 5.1(j), and encumbrances
related to indebtedness described in clauses (2), (3) and (4) above
and purchase money security interests incurred in the ordinary course
of business; provided that such indebtedness does not incur interest
in excess of market rates and such indebtedness contains no prepayment
penalty in excess of the three percent of the outstanding principal
amount.
(f) keep in full force and effect its present insurance
policies or other comparable insurance coverage;
(g) use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its
relationship with suppliers, customers and others having business
relations with the Company;
(h) except as otherwise permitted by this Agreement, refrain
from effecting any change in the certificate of incorporation, bylaws
or capital structure of the Company and refrain from entering into or
agreeing to enter into any merger or consolidation by the Company with
or into, and refrain from acquiring all or substantially all of the
assets, capital
HBH, Inc. Purchase and Sale Agreement/Page 25
33
stock or business of, any person, corporation, partnership,
association or other business organization or division of any thereof;
(i) refrain from incurring any expenditures outside the
normal course of business, except with prior written notification to
Buyer, and refrain from incurring capital expenditures, including
commitments for capital expenditures as of such date, in the aggregate
in excess of (i) $870,000 if the IPO Closing Date occurs on or before
September 30, 1997, and (ii) $1,370,000, if the IPO Closing Date
occurs after September 30, 1997;
(j) refrain from starting or acquiring any new businesses
without the prior written consent of Buyer;
(k) except as required by market conditions, maintain its
present salaries and commission levels for all officers, directors,
employees or agents, refrain from entering into an employment
agreement except in the ordinary course of business, and refrain from
entering into any collective bargaining agreement; and
(l) refrain from declaring or paying any fees, commissions or
loans outside the ordinary course of business, and refrain from
declaring or paying any bonuses except discretionary bonuses to
officers and employees to the extent that the aggregate amount of all
such discretionary bonuses paid or declared during 1997 do not exceed,
in the aggregate, the sum of 10% of the Company's pre-tax net income
during 1997 through, at Seller's option, September 30, 1997, October
31, 1997 or the IPO Closing Date, plus $50,000; and
(m) refrain from declaring or paying any dividends or
Subchapter "S" distributions to any shareholders (including Sellers),
directors, management, sales agents, employees or other personnel,
except for dividends and distributions to shareholders paid or
declared in 1997 which in the aggregate do not exceed 42% of the
Company's pre-tax net income during 1997 through the earlier of
December 31, 1997 or the IPO Closing Date.
(n) promptly notify Buyer of the receipt by it or the
Company of any notice or claim, written or oral, of (a) default or
breach by the Company under, or of any termination (other than at the
end of the stated term thereof) or cancellation, or threat of
termination (other than at end of the stated term thereof) of
cancellation, of any Company Contract, (b) any loss of, damage to or
disposition of, any of the properties, assets or the products of the
Company of a value of $50,000 or more, singly or in the aggregate
(other than the sale or use of inventories or equipment in the
ordinary course of business), (c) any claim or litigation threatened
or instituted, or any other material adverse event or occurrence
involving or affecting the Company or any of its assets, properties,
operations, businesses or employees, and (d) any proposal made by any
third party received by the Company or of which any Seller obtains
knowledge in respect of any sale or other disposition, direct or
indirect, of the assets (other than the sale or use of inventories in
the ordinary course of business), businesses or outstanding capital
stock or other ownership or voting interests of the Company;
HBH, Inc. Purchase and Sale Agreement/Page 26
34
(o) comply with and cause to be complied with all
applicable laws, rules, regulations and orders of all federal, state
and local governments or governmental agencies affecting or relating
to the Company or its assets, properties, operations, businesses or
employees except where the failure to comply will not have a material
adverse effect on the Company;
(p) except in the ordinary course of business or as
otherwise permitted by this Agreement, refrain from any sale,
disposition or distribution of any of its properties or assets and
refrain from entering into any agreement or commitment with respect to
any such sale, disposition or distribution (other than the sale or
disposition of inventories or equipment in the ordinary course of
business);
(q) refrain from any purchase or redemption of any
capital stock or other voting interest of the Company and refrain from
issuing any capital stock or other voting interest;
(r) refrain from making any change in any accounting
principle, classification, policy or practice;
(s) manage working capital in the ordinary course
consistent with past practice and refrain from introducing any new
method of management or operation, and except for any action in the
ordinary course of business consistent with past practices, refrain
from providing any discounted services or products, discounting any
receivables or taking any action to accelerate payment of any
receivable prior to its due date;
(t) except as otherwise permitted by this Agreement,
refrain from entering into any contract, lease, undertaking,
commitment, mortgage, indenture, note, security agreement, license or
other agreement:
(i) containing provisions calling for
the sale or purchase of raw materials, product or
service at prices that vary from the market prices of
such raw materials, products or services generally
prevailing in customary third-party markets;
(ii) which include "take or pay", "meet
or release", "most favored nations" (without Buyer's
consent, not to be unreasonably withheld) or similar
pricing or delivery arrangements;
(iii) with any officer, director,
shareholder or affiliate of the Company, other than
usual and customary indemnities consistent with
corporate governance practices of similar companies;
(iv) requiring the Company to indemnify
or hold harmless any other person or entity, except
in the ordinary course of business;
HBH, Inc. Purchase and Sale Agreement/Page 27
35
(v) evidencing any warranty obligation
of the Company with respect to goods, services or
products sold or leased by it (other than warranties
given in the normal course of business containing
substantially the same terms as those presently in
effect); or
(vi) imposing on the Company any
confidentiality, non-disclosure or non-compete
obligation, except in the ordinary course of
business.
4.2 ACCESS TO INFORMATION BY BUYER. Until the IPO Closing Date or
termination of this Agreement, Sellers will furnish to Buyer, with the
Unaudited Monthly Financial Statements for each month following June 1997
promptly as available, but in no event more than 25 days following the end of
such month. Buyer may prior to the Closing have access to the business and
properties of the Company and information concerning its financial and legal
condition as Buyer deems necessary or advisable in connection with the
consummation of the transactions contemplated hereby, provided that such access
shall not interfere with normal operations of the Company. Sellers and the
Company agree to permit Buyer and its authorized representatives, or cause them
to be permitted to have, after the date hereof and until the Closing Date, full
access to the premises, books and records of the Company during normal business
hours, and the officers of the Company will furnish Buyer with such financial
and operating data and other information with respect to the Business and
properties of the Company as Buyer shall from time to time reasonably request.
No investigation by Buyer heretofore or hereafter made shall affect the
representations and warranties of Sellers and the Company, and each such
representation and warranty shall survive any such investigation.
4.3 AMENDMENT TO SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until Closing to
supplement or amend promptly the Disclosure Schedules with respect to any
matter that would have been or would be required to be set forth or described
in the Disclosure Schedules in order to not materially breach any
representation or warranty of such party contained herein; provided that no
amendment or supplement to a Disclosure Schedule that constitutes or reflects
(either alone or together with all other such changes to the Disclosure
Schedule), in the aggregate, a material and adverse change to the net assets,
business, properties, financial condition, results of operations, cash flow,
business or prospects of the Company as compared with the condition of the
Company as of December 31, 1996 (a "Company Material Adverse Change") may be
made unless Buyer consents to such amendment or supplement, and no amendment or
supplement to a Disclosure Schedule that constitutes or reflects (together with
all other changes of such party to the Disclosure Schedule) in the aggregate, a
material and adverse change to Buyer's net assets, business, properties,
financial condition, results of operations, cash flow, business or prospects as
compared with the condition of Buyer as of the date hereof (a "Buyer Material
Adverse Change") may be made unless the Company consents to such amendment or
supplement. For all purposes of this Agreement, including without limitation
for purposes of determining whether the conditions set forth in Section 5.1 and
Section 5.2 have been fulfilled, the Disclosure Schedules hereto shall be
deemed to be the Disclosure Schedules as amended or supplemented pursuant to
this Section. In the event that the Company or Sellers seek to amend or
supplement a Disclosure Schedule pursuant to this Section 4.3 and the consent
of Buyer is required pursuant to this Section and Buyer does not consent to
such amendment or supplement, or in the
HBH, Inc. Purchase and Sale Agreement/Page 28
36
event that Buyer seeks to amend or supplement a Disclosure Schedule pursuant to
this Section 4.3 and the Consent of the Company is required pursuant to this
Section and the Company does not consent, the party whose consent would be
required may elect to terminate this Agreement, in which case this Agreement
shall be deemed terminated by mutual written consent as set forth in Section
6.1 hereof. In the event that Buyer must amend its representations contained
herein to state reasons known to Buyer which could reasonably be expected to
prevent the transactions described in the Memorandum from going forward (other
than such reasons caused by Sellers or the Company), such amendment shall be
deemed a Buyer Material Adverse Change.
4.4 CONFIDENTIALITY. The provisions of this Section 4.4 shall
supersede and replace all prior agreements and understandings of the parties
with respect to the subject matter hereof.
(a) Confidential Information. Until the closing of the
transactions contemplated herein, all Confidential Information, as
hereinafter defined, acquired by Buyer with respect to Sellers or the
Company, or by Sellers or the Company with respect to Buyer, shall be
(i) maintained in strict confidence, (ii) used only for the purpose of
and in connection with evaluating the transactions contemplated
herein, and (iii) disclosed only to employees and duly authorized
agents and representatives who have been informed of the obligations
of the parties under this Agreement with respect to such Confidential
Information, who have a need to know the information in connection
with consummating the transactions contemplated herein, and who agree
to keep such information confidential. Buyer, Sellers and the Company
shall be responsible for any breach of this Section by any of their
respective representatives and each agrees to take all reasonable
measures to restrain its representatives from prohibited or
unauthorized disclosure of the Confidential Information. For the
purpose of this Agreement, the term "Confidential Information" shall
mean all information acquired by any party from another party hereto
or its representatives pursuant to Section 4.2 hereof or otherwise
with respect to the business or operations of such other party, other
than (A) information generally available to the public which has not
become available as a result of disclosure in violation of this
Section and (B) information which becomes available on a
nonconfidential basis from a source other than a party to this
Agreement or its representatives, provided that such source is not
known by the party to this Agreement receiving such information to be
bound by a confidentiality agreement or other obligation of secrecy to
another party to this Agreement or its representatives. If the
transactions contemplated herein are not consummated, all Confidential
Information in written or printed or other tangible form (whether
copies or originals) shall be returned to the party of origin, all
documents, memoranda, notes and other writings whatsoever prepared by
any party or its representatives based on Confidential Information
shall be destroyed, and Buyer, Seller, the Company and the respective
officers and representatives of each of them will not disclose or
utilize the Confidential Information for a period of two years
following the effective date of this Agreement.
(b) Public Announcements. No press release, public
announcement, confirmation or other information regarding this
Agreement or the contents hereof shall be made by Buyer, Sellers or
the Company without the prior consultation of the Buyer, Sellers and
the Company, except as may be necessary in the opinion of counsel to
any party to meet the
HBH, Inc. Purchase and Sale Agreement/Page 29
37
requirements of any applicable law or regulations, the determination
of any court, or the requirements of any stock exchange on which the
securities of such party may be listed. Notwithstanding the foregoing,
the Company may make appropriate disclosures of the general nature of
the transaction contemplated hereby to its employees, vendors and
customers to protect the Company's goodwill and to facilitate the
consummation of the transactions contemplated hereby, and Buyer may
disclose pertinent information regarding the transaction contemplated
hereby to its existing and prospective investors, lenders or
investment bankers or financial advisors for the purposes of obtaining
financing (including the contemplated IPO). Buyer may also make
appropriate disclosures of the general nature of the transaction
contemplated hereby and the identity, nature and scope of the
Company's operations to prospective acquisition candidates in its
efforts to attract additional acquisitions for Buyer. Subject to
prior review, revision and approval by the Company of disclosure with
respect to matters relating to the Company, Buyer may also make
appropriate disclosure as required in connection with any registration
statement or confidential information memorandum prepared by Buyer.
Buyer and the Company shall jointly approve the contents of any press
releases, written employee presentations, or other materials of
potentially wide distribution that disclose or refer to the
transaction contemplated hereby, provided Buyer shall not unreasonably
withhold such consent.
4.5 EXCLUSIVITY. After the signing of this Agreement until
December 31, 1997, Sellers shall not (i) solicit, initiate, or encourage the
submission of any proposal of offer from any person or entity relating to the
acquisition of any capital stock or other voting securities, or any substantial
portion of the assets of the Company (including any acquisition structured as a
merger, consolidation, or share exchange) or (ii) participate in any
negotiations or discussions regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any person or entity in favor of such acquisition structured as a
merger, consolidation, or share exchange. Sellers will (and shall cause the
Company to) notify Buyer if any person or entity make any proposal, offer,
inquiry, or contact with respect to any of the foregoing.
4.6 RELEASE OF SELLERS' GUARANTEES. At or prior to the IPO Closing
Date, Buyer will use its best efforts to obtain the release of Sellers and
their respective affiliates, heirs, successors and assigns from any and all
personal guarantees previously given by Sellers to secure the Company's
Long-Term Debt obligations and performance bonds. In the event that Buyer is
unable to obtain such releases from the Company's lenders, Buyer shall cause
the Company to pay off or otherwise retire all of the Company's Long-Term Debt
secured by the personal guarantee of Sellers, up to a maximum of (i) $6.5
million, if the IPO Closing Date occurs on or before September 30, 1997, and
(ii) $7.0 million if the IPO Closing Date occurs after September 30, 1997.
Buyer shall obtain the release of the guaranties of Diversified Group, Inc. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (and the Succession of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇) with respect to the
Company's line of credit with Banc One, N.A.
4.7 SELLERS' RELEASE OF CLAIMS. Effective as of the IPO Closing
Date, the Sellers do hereby (i) release, acquit and forever discharge each of
the Companies and each of their respective subsidiaries that are listed on the
Disclosure Schedules (all of such subsidiaries of the Companies being referred
to collectively as the "Company Subsidiaries") from any and all liabilities,
obligations, indebtedness, claims, demands, actions or causes of action arising
from or relating to any event,
HBH, Inc. Purchase and Sale Agreement/Page 30
38
occurrence, act, omission or condition occurring or existing on or prior to
Closing, including, without limitation, any claim for indemnity or contribution
from the Companies or the Company Subsidiaries in connection with the
obligations or liabilities of the Sellers hereunder, except for indemnification
to which a Seller may be entitled as an officer, director, employee or agent of
a Company, and salary and benefits payable to a Seller as an employee in the
ordinary course of business; (ii) waive all breaches, defaults or violations of
each agreement, if any, applicable to the Company Shares or the Real Estate and
agree that any and all such agreements are terminated as of the Closing Date
and (iii) waive any and all preemptive or other rights to acquire any shares of
capital stock of the Company and release any and all claims arising in
connection with any prior default, violation or failure to comply with or
satisfy any such preemptive or other rights.
4.8 CONFIDENTIAL INFORMATION MEMORANDUM; REGISTRATION STATEMENT.
(a) Company to Provide Information. Sellers and the
Company shall cooperate with Buyer to promptly provide such
information as reasonably requested by Buyer to (i) prepare a
confidential information memorandum (the "CIM"), pursuant to Rule 506
of Regulation D promulgated by the SEC under the Securities Act, for
dissemination to Buyer's acquisition candidates and their
shareholders, and (ii) prepare and file with the SEC the registration
statement on Form S-1 (or other appropriate Form) to be filed by Buyer
under the Securities Act in connection with its IPO (including the
prospectus constituting a part thereof, the "Registration Statement").
Buyer shall obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions
contemplated by this Agreement, the CIM and the Registration
Statement, and Sellers and the Company shall furnish all information
concerning themselves as may be reasonably requested in connection
with any such action.
(b) Accuracy of Information. Buyer, Sellers and the
Company each represent and warrant that none of the information or
documents supplied or to be supplied by it specifically for inclusion
in the CIM or the Registration Statement, by exhibit or otherwise,
will, at the time that such party has authorized dissemination of the
CIM, and at the time the Registration Statement and each amendment and
supplement thereto, if any, become effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Sellers and the Company, respectively,
shall agree with Buyer as to the information and documents supplied by
them for inclusion in the Registration Statement and each shall
indicate such information and documents in a letter (the "Information
Letter") to be delivered (i) prior to the filing of the Registration
Statement with the SEC, and (ii) prior to filing any amendment to the
Registration Statement with the SEC (other than any prospectus filed
with the SEC pursuant to Rule 424(b)). Sellers and the Company shall
be entitled to review the CIM, the Registration Statement and each
amendment thereto, if any, prior to delivery of the Information
Letter. Sellers and the Company shall immediately notify Buyer in the
event of any development or occurrence that would cause matters
referenced in the Information Letter to be inaccurate, incomplete or
misleading in any material respect.
HBH, Inc. Purchase and Sale Agreement/Page 31
39
(c) Further Information. Sellers and the Company,
respectively, shall use their best efforts to promptly upon request,
furnish Buyer with all information concerning itself and such other
matters as may be reasonably requested by Buyer in connection with the
preparation of the CIM, the Registration Statement and each amendment
or supplement thereto, or any other statement, filing, notice or
application made by or on behalf of each such party to any
governmental entity in connection with the transactions contemplated
by this Agreement.
4.9 SATISFACTION OF CONDITIONS. The Company and the Sellers shall
(i) use their reasonable efforts to obtain, as soon as possible, all
governmental approvals required to be obtained by the Company and make, as soon
as possible, all filings with any governmental authority required on the part
of the Company to consummate the transactions contemplated hereby, (ii) use
their reasonable efforts to obtain, as soon as possible, all other consents to
and approvals required to be obtained by the Company to consummate the
transactions contemplated hereby, and (iii) otherwise use their reasonable
efforts to satisfy the conditions set forth in Article 5 of the Agreement to
the extent that such satisfaction is within their control; provided, however,
that this Section 4.9 shall not be construed to limit the rights of Sellers to
terminate this Agreement as provided in Article 6 of the Agreement. Buyer
agrees that, if any event or circumstances develops such that the CIM
previously delivered to Sellers no longer contains no misstatement of material
fact, nor omits to state any material fact required to make statements
contained therein not misleading, Buyer shall promptly notify Sellers and the
Company of such event or circumstance and, as soon as practicable, Buyer shall
supplement the CIM as required to remedy such deficiency. Buyer shall provide
its reasonable efforts to obtain all governmental approvals and to satisfy all
contingencies required to consummate the IPO and all of the transactions
anticipated hereby. In the event that Buyer shall become aware of any event or
circumstance which, in Buyer's reasonable judgment, renders consummation of the
IPO and all of the transactions anticipated hereby unlikely, Buyer shall
promptly notify Sellers and the Company of such event or circumstance.
4.10 CERTAIN TAX MATTERS.
(a) Mutual Consent for Section 338(h)(10) Election. The
Buyer and Sellers shall cooperate fully and work together towards
determining whether an election will be made under Section 338(h)(10)
of the Code (and any corresponding election under state, local, and
foreign tax law) with respect to the purchase and sale of the stock of
the Company pursuant to this Agreement. Any such election (a "Section
338(h)(10) Election") shall be made only pursuant to the mutual
consent of the Buyer and Sellers. In the event of said mutual consent
regarding the election of Section 338(h)(10), the Buyer and Sellers
shall cooperate fully to ensure that all returns, documents,
statements, and other forms that are required to be submitted to any
federal, state, county or other local taxing authority in connection
with a Section 338(h)(10) Election are submitted in compliance with
applicable filing deadlines.
(b) S Corporation Status. Through the Closing Date,
Company and Sellers will not revoke Company's election to be taxed as
an S corporation within the meaning of Sections 1361 and 1362 of the
Code. Company and Sellers will not take or allow any action, other
than the sale of Company's stock pursuant to this Agreement, that
would result in the
HBH, Inc. Purchase and Sale Agreement/Page 32
40
termination of Company's status as a validly electing S corporation
within the meaning of Sections 1361 and 1362 of the Code.
(c) Tax Periods Ending on or before the Closing Date.
Buyer shall prepare or cause to be prepared and file or cause to be
filed all returns, declarations, reports, claims for refund, or
information returns or statements related to Taxes, including any
schedules, attachments, or amendments thereto ("Tax Returns") for the
Company for all periods ending on or prior to the IPO Closing Date
which are filed after the IPO Closing Date. Buyer shall permit Sellers
to review and comment on each such Tax Return described in the
preceding sentence prior to filing and shall make such revisions to
such Tax Returns as are reasonably requested by Sellers. To the extent
permitted by applicable law, Sellers shall include any income, gain,
loss, deduction or other tax items for such periods on their Tax
Returns in a manner consistent with the Schedule K-1s furnished by
Company to the Sellers for such periods using the interim closing of
the books method. Sellers shall reimburse Buyer for any Taxes of the
Company with respect to such periods within fifteen (15) days after
payment by Buyer or the Company and its Subsidiaries of such Taxes to
the extent such Taxes are not reflected in the reserve for Taxes
(other than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the face of
the Company Financial Statements.
(d) Cooperation on Tax Matters.
(i) Buyer, Company and Sellers shall cooperate
fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section
and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other
party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to
provide additional information and explanation of any material
provided hereunder. Company and Sellers agree: (A) to retain all books
and records with respect to Tax matters pertinent to Company relating
to any taxable period beginning before the IPO Closing Date until the
expiration of the statute of limitations (and, to the extent notified
by Buyer or Sellers, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into
with any taxing authority; and (B) to give the other party reasonable
written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Company or
Sellers, as the case may be, shall allow the other party to take
possession of such books and records.
(ii) Buyer and Sellers further agree, upon
request, to use their best efforts to obtain any certificate or other
document from any governmental authority or any other person as may be
necessary to mitigate, reduce or eliminate any Taxes that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(e) Tax Sharing Agreements. All tax sharing agreements or
similar agreements with respect to or involving Company, if any, shall
be terminated as of the IPO Closing Date
HBH, Inc. Purchase and Sale Agreement/Page 33
41
and, after the IPO Closing Date, Company shall not be bound thereby or
have any liability thereunder.
4.11 ▇▇▇▇▇▇ MATTER. Buyer agrees with Sellers and the Company that
Buyer will not challenge the Company's accounting treatment of the Company's
dispute and settlement with ▇▇▇▇▇▇ Industries, Inc. ("▇▇▇▇▇▇") v. HBH, Inc.
on the docket of the 24th Judicial District Court for the Parish of Jefferson,
State of Louisiana, regarding a contract dispute with ▇▇▇▇▇▇ over delivery of
the BH 400 pipeline barge, and that Buyer will not assert a breach of
representation or warranty against Sellers or the Company based on such
accounting treatment.
4.12 CHANGE OF FINANCIAL INSTITUTIONS. Sellers at their discretion
shall be permitted to change the Company's banking relationships so long as all
terms and conditions of all debt instruments and security agreements of the
Company with any new financial institution shall be on an equal or more
favorable basis to the Company than the debt instruments of the Company being
replaced. The name of such new financial institution shall be deemed
substituted and replaced for "Banc One, N.A." throughout this Agreement.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. The
obligations of the Buyer under this Agreement are subject to the satisfaction
in all material respects of each of the following conditions, unless waived by
the Buyer:
(a) Accuracy of Representations and Warranties. Except
for such changes as are permitted pursuant to Section 4.3 of this
Agreement, the representations and warranties of Sellers and the
Company contained in this Agreement, in the Company Disclosure
Schedule of this Agreement or in any closing certificate or document
delivered to Buyer pursuant hereto shall be correct and complete at
and as of the Closing Date and the IPO Closing Date as though made at
and as of such dates, other than such representations and warranties
as are specifically made as of another date, and Sellers and the
Company shall each have delivered to Buyer a certificate to that
effect.
(b) Performance of Covenants. Sellers and the Company
shall have performed and complied with all covenants of this Agreement
to be performed or complied with by them at or prior to the Closing
Date and the IPO Closing Date (except where the failure to so perform
or comply would not have a material adverse effect on Buyer or prevent
Sellers or Buyer from consummating the transactions contemplated
hereby), and Sellers and the Company shall each have delivered to
Buyer a certificate to that effect.
(c) Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted after the date hereof against
Sellers or the Company, or against Buyer arising by reason of the
acquisition of the Company pursuant to this Agreement, which is not
adequately covered by insurance or which is reasonably likely (1) to
restrain, prohibit or
HBH, Inc. Purchase and Sale Agreement/Page 34
42
invalidate the consummation of the transactions contemplated by this
Agreement, (2) to have a Company Material Adverse Change on the
Company or (3) to have a Company Material Adverse Change on the
results of operations or financial condition of Buyer and its
subsidiaries, taken as a whole, after giving effect to the
consummation of the transactions contemplated by this Agreement; and
Sellers and the Company shall each have delivered to Buyer a
certificate to that effect.
(d) Approvals. The Company and Sellers shall have
procured all of the consents, approvals and waivers specified in
Sections 3.1(b) and 3.2(e), and Sellers and the Company shall each
have delivered to Buyer a certificate to that effect.
(e) Executive Employment Agreement. H. ▇▇▇▇▇▇ ▇▇▇▇▇▇ II
shall execute and deliver the Executive Employment Agreement with the
Company substantially in the form attached as Exhibit 1.4 hereto.
(f) Shareholder Lock-up Agreements. Sellers, H. ▇▇▇▇▇▇
▇▇▇▇▇▇ II and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ each shall have executed and
delivered any lock-up agreement reasonably requested by the managing
underwriter of Buyer's IPO which restricts the sale or other
disposition of TCMS Common Stock for a reasonable and customary period
following the effectiveness of the Registration Statement; provided
that the terms and conditions of such agreement are no more onerous
than those required of any of the shareholders of the other acquired
companies at time of the IPO.
(g) Completion of Buyer's IPO. Buyer's initial public
offering of common stock, as described in the Registration Statement,
shall have successfully closed.
(h) Lender Approval. (i) Sellers and Buyer shall have
obtained the consent or approval of Sellers' lending institution with
respect to the assumption or prepayment of up to $6,500,000 of the
Company's Long-Term Debt by Buyer (provided that this amount shall be
$7,000,000 if the IPO Closing Date should occur subsequent to
September 30, 1997), and the release of Sellers, concurrently with the
IPO Closing Date, and (ii) Buyer shall have secured a commitment for
approximately $25 million in senior indebtedness.
(i) Audit of the Company. Buyer shall have received the
results of an audit of the Company's financial statements for the
three years ended December 31, 1996 by the certified public accounting
firm regularly engaged by Buyer or such other independent public
accountant as agreed by the parties.
(j) Long-Term Debt. The Company's Long-Term Debt
(including current maturities of said Long-Term Debt and prepayment
penalties as of the IPO Closing Date) as of the IPO Closing Date shall
not exceed (i) $6,500,000, if the IPO Closing Date occurs on or before
September 30, 1997, or (ii) $7,000,000, if the IPO Closing Date occurs
after September 30, 1997. The Company shall have been released from
all of its obligations as a surety or guarantor with respect to the
indebtedness of third parties, including without limitation, all
guaranties and other obligations of the Company with respect to the
HBH, Inc. Purchase and Sale Agreement/Page 35
43
indebtedness of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (and the Succession of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇) and the indebtedness of Diversified Group, Inc. The Company
shall pay the indebtedness owed to the Succession of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
at or prior to Closing.
(k) Opinion of Counsel for the Company and Sellers. Buyer
shall have received the favorable opinion of Lugenbuhl, Burke,
Wheaton, Peck, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ dated the Closing Date, substantially
in the form and to the effect set forth in Exhibit 5.1 hereto.
(l) Resignations of Directors and Officers. Sellers will
deliver to Buyer (i) the resignations of all the Sellers who are
officers and directors of the Company; (ii) a complete and general
release of all claims by the Sellers against the Company except for
claims by Sellers as provided under Section 4.7; (iii) on or before
the IPO Closing Date evidence of the resignation from or final removal
from office of all officers and directors of the Company; and (iv) the
corporate records and books of Company, including the minute book, the
stock transfer books, and the corporate seal of the Company.
(m) All Proceedings to be Satisfactory. All actions to be
taken by Sellers and the Company in connection with the consummation
of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby shall be satisfactory in form and
substance to Buyer and its counsel.
(n) Delivery of Certificates Representing Company Common
Stock. Sellers shall deliver Certificates representing all of the
Company Common Stock, with signatures guaranteed by an eligible
guarantor institution, if requested by Buyer, against payment of the
Purchase Price.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS AND THE
COMPANY. The obligations of Sellers and the Company under this Agreement are
subject to the satisfaction in all material respects of each of the following
conditions, unless waived by Sellers:
(a) Accuracy of Representations and Warranties. Except
for such changes as are permitted pursuant to Section 4.3 of this
Agreement, the representations and warranties of Buyer contained in
this Agreement or in any closing certificate or document delivered to
Sellers or the Company pursuant hereto shall be correct and complete
on and as of the Closing Date and the IPO Closing Date as though made
at and as of that date other than such representations and warranties
as are specifically made as of such dates, and Buyer shall have
delivered to Sellers and the Company a certificate to that effect.
(b) Performance of Covenants. Buyer shall have performed
and complied with all covenants of this Agreement to be performed or
complied with by it at the Closing Date and the IPO Closing Date
(except where the failure to so perform or comply would not have a
material adverse effect on Sellers and the Company or prevent it from
consummating the transactions contemplated hereby), and Buyer shall
have delivered to Sellers and the Company a certificate to such
effect.
HBH, Inc. Purchase and Sale Agreement/Page 36
44
(c) Approvals. Buyer shall have procured all of the
consents, approvals and waivers specified in Section 3.3(f), and Buyer
shall deliver to Sellers and the Company a certificate to that effect.
(d) Release from Guarantee. Buyer shall have caused the
release of Sellers and Diversified Group, Inc. from any and all
personal guarantees of the Company's indebtedness and performance
bonds in accordance with Section 4.6 above effective as of the IPO
Closing Date.
(e) Executive Employment Agreement. The Company shall
execute and deliver the Executive Employment Agreement with H. ▇▇▇▇▇▇
▇▇▇▇▇▇ II in the form attached as Exhibit 1.4.
(f) Lender Approval; Performance Bonds. Buyer shall have
obtained the consent of Company's lenders with respect to the
assumption or prepayment of up to $6,500,000 of the Company's
Long-Term Debt by Buyer (provided that this amount shall be $7,000,000
if the IPO Closing Date should occur subsequent to September 30,
1997), and the release of Sellers and their respective affiliates,
heirs, successors and assigns with respect to such indebtedness and
with respect to the Company's performance bonds concurrently with the
IPO Closing Date. Buyer shall have obtained the release of the
guaranties of Diversified Group or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (and the
Succession of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇) of the Company's line of credit with
Banc One, N.A.
(g) All Proceedings to be Satisfactory. Sellers and their
counsel shall have received Buyer's Memorandum describing Buyer and
the TCMS Common Stock to be delivered as a part of the Purchase Price
together with all such counterpart originals or certified or other
copies of all documents relating to Buyer incident to the transactions
contemplated hereby as Sellers or said counsel may reasonably request.
(h) Opinion of Counsel for The Buyer. Sellers and the
Company shall have received the favorable opinion of Chamberlain,
Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for Buyer, dated the
Closing Date, substantially in the form and to the effect set forth in
Exhibit 5.2 hereto.
(i) Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted that is reasonably likely to
restrain, prohibit, violate or otherwise affect the consummation of
the transactions contemplated hereby.
(j) Payment of the Purchase Price. Buyer shall deliver
payment of the Purchase Price to Seller, including the shares of TCMS
Common Stock provided for herein, against delivery of the share
certificates representing all of the Company Common Stock.
HBH, Inc. Purchase and Sale Agreement/Page 37
45
ARTICLE 6
TERMINATION
6.1 TERMINATION OF AGREEMENT. The parties may terminate this
Agreement only as provided below.
(a) Prior to Closing. The parties may terminate this
Agreement at any time prior to the Closing only as provided
below:
(1) Mutual Consent. Buyer and Sellers may
terminate this Agreement by mutual written consent at any time
prior to the Closing;
(2) Termination by Buyer. Buyer may terminate
this Agreement by giving written notice to the Sellers at any
time prior to the Closing (i) in the event Sellers or the
Company has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect,
the Buyer has notified Sellers of the breach, and the breach
has continued without cure until the earlier of 20 days after
the notice of such breach or the Closing Date, whichever is
earlier, or (ii) if the IPO Closing Date shall not have
occurred on or before the earlier of 75 days after receipt by
Buyer of comments from the SEC with respect to Buyer's initial
filing of its registration statement on Form S-1 or December
31, 1997, by reason of the failure of any condition precedent
under Section 5.1 hereof (unless the failure results primarily
from the Buyer itself breaching any representation, warranty,
or covenant contained in this Agreement); and
(3) Termination by Sellers. Sellers may terminate
this Agreement by giving written notice to the Buyer at any
time prior to the Closing: (i) in the event the Buyer has
breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Sellers
have notified the Buyer of the breach, and the breach has
continued without cure until the earlier of 20 days after the
notice of such breach or the Closing Date, whichever is
earlier; or (ii) if the IPO Closing Date shall not have
occurred on or before the earlier of 75 days after receipt by
Buyer of comments from the SEC with respect to Buyer's initial
filing of its registration statement on Form S-1 or December
31, 1997, by reason of the failure of any condition precedent
under Section 5.2 hereof (unless the failure results primarily
from Sellers breaching any representation, warranty, or
covenant contained in this Agreement); or (iii) in the event
that the acquisition agreements between Buyer and any of
▇▇▇▇▇▇▇ Construction Company, Laine Construction Company, ▇▇▇▇
Corporation, EnviroSystems, Inc., CSI Hydrostatic Testers,
Inc., ▇▇▇▇▇▇▇ Mooring & Marine, Inc., or the Red Fox Companies
of New Iberia, Inc. (the "Founding Companies") terminates
prior to the IPO Closing Date.
HBH, Inc. Purchase and Sale Agreement/Page 38
46
(b) After the Closing Date. This agreement may be
terminated after the Closing only as follows:
(1) Termination of Underwriting Agreement. Prior
to the successful completion of the IPO, upon termination of
the agreement between Buyer and certain investment banking
firms (the "Underwriting Agreement") under which such firms
agree to purchase shares of TCMS Common Stock from Buyer on a
firm commitment basis for resale to the public initially at
the IPO Price, Buyer or Sellers may each terminate this
Agreement by providing written notice to the other.
(2) Automatic Termination. This Agreement shall
terminate automatically and without action on the part of any
party hereto if the IPO is not consummated within 10 business
days after the Closing.
6.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 6.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto, except
that (1) Section 4.4, Section 10.1, Section 10.6, Section 10.7, Section 10.8
and Section 10.10 hereof shall survive such termination and (2) nothing herein
shall relieve any party from liability for any willful breach of any other
provision hereof.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the parties contained in this Agreement
(except for Section 3.2(v)) shall survive the IPO Closing Date, regardless of
any investigation made by or on behalf of any party, and shall expire and
terminate on the last day of the 18th month after the IPO Closing Date. The
representations and warranties contained in Section 3.2(v) hereof shall not
terminate until the expiration of the applicable statute of limitations
(including any extension thereof) for any claim by a taxing authority for any
taxes, penalties or interest. The representations and warranties contained in
Section 3.2(p) shall not survive the IPO Closing Date.
7.2 INDEMNIFICATION BY SELLERS. Sellers hereby agree to indemnify
and hold harmless the Company and Buyer in respect of any losses, claims,
damages, liabilities or related expenses (including, but not limited to, all
reasonable attorneys' fees) which the Company or the Buyer incurs in excess of
$500,000 in the aggregate as a result of the breach of any of the
representations, warranties and covenants made by Sellers in or pursuant to
this Agreement; provided that Sellers' indemnification obligations under this
Agreement shall not exceed $5,000,000 (the "Indemnification Cap"). Except as
provided above, the indemnification obligations of Sellers under this Section
7.2 shall survive the IPO Closing Date and will terminate at the time specified
in Section 7.1, except with respect to any indemnity claim or claims pending on
the date of such termination. The indemnification obligations of Sellers under
this Section 7.2 shall survive the IPO Closing Date and will terminate at the
time specified in Section 7.1, except with respect to any indemnity claim or
claims pending on the date of such termination.
HBH, Inc. Purchase and Sale Agreement/Page 39
47
7.3 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold
harmless Sellers in respect of any losses, claims, damages, liabilities or
related expenses (including, but not limited to all reasonable attorneys' fees)
which Sellers incur in excess of $500,000 in the aggregate as a result of the
breach of any of the representations, warranties and covenants made by Buyer in
or pursuant to this Agreement; provided that Buyer's indemnification
obligations under this Agreement shall not exceed the Indemnification Cap. The
indemnification obligations of Buyer under this Section 7.3 shall survive the
IPO Closing Date and will terminate at the time specified in Section 7.1,
except with respect to any indemnity claim or claims pending on the date of
such termination.
7.4 NOTICE. Promptly after any party hereto (the "Indemnified
Party") has received notice or has knowledge of the occurrence of any event
which the Indemnified Party asserts is an indemnifiable event or after the
commencement of any action, claim or proceeding commenced against the
Indemnified Party by a third party that might result in any claim for indemnity
pursuant to this Agreement (a "Third Party Claim"), the Indemnified Party shall
notify the party obligated to provide indemnification hereunder (the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Promptly after receipt by an Indemnifying Party of any
such notice, the Indemnifying Party shall, within twenty days of receipt of
such notice, either: (i) acknowledge the debt, liability or obligation for
which indemnity is sought as a valid claim and forthwith pay the Indemnified
Party an amount sufficient to discharged such debt, liability or obligation;
(ii) in the event of a Third Party Claim which is not acknowledged by the
Indemnifying Party to be owing, notify the Indemnified Party of the defense
thereto and thereupon promptly assume and diligently contest such Third Party
Claim with counsel satisfactory to the Indemnified Party; or (iii) with respect
to a claim other than a Third Party Claim, in the event of a claim by the
Indemnified Party for indemnity hereunder which is challenged by the
Indemnifying Party, notify the Indemnified Party of such challenge.
ARTICLE 8
STOCK TRANSFER RESTRICTIONS
8.1 COMPLIANCE WITH SECURITIES LAWS. Sellers acknowledge and agree
with Buyer that the shares of TCMS Common Stock issued pursuant to this
Agreement (the "Restricted Shares") to Sellers shall not be transferable except
upon the conditions specified in this Article 8, which conditions are intended,
among other things, to ensure compliance with the provisions of the Securities
Act and any applicable state securities laws in respect of the transfer of such
Restricted Shares. Sellers acknowledge and agree that the certificates
representing the Restricted Shares will contain a restrictive legend to the
effect that transfer of such shares is prohibited unless the shares are
registered under the Securities Act and applicable state securities laws, or in
the event the event that such transfer is, in the opinion of counsel to Buyer,
exempt from the registration provisions of the Securities Act and applicable
state securities laws.
8.2 RESTRICTIONS ON TRANSFER. Prior to any transfer or attempted
transfer of Restricted Shares other than the sale of such shares pursuant to
registration under the Securities Act, Sellers agree to give written notice to
Buyer of its intention to effect such transfer. The notice shall describe the
manner and circumstances of the proposed transfer in detail and shall contain
an undertaking to
HBH, Inc. Purchase and Sale Agreement/Page 40
48
furnish such other information as may be required to enable Buyer's counsel to
render the opinions referred to below, and shall give the identity and address
of the Seller's counsel. Buyer shall submit a copy of the notice to its
counsel, and the following provisions shall apply:
(a) If, in the opinion of the Buyer's counsel, the
proposed transfer may be effected without registration of the Restricted Shares
under the Securities Act, Buyer shall, as promptly as practicable, so notify
Sellers who will then be entitled to transfer the TCMS Common Stock in
accordance with the terms of the notice delivered by Sellers to Buyer.
(b) If, in the opinion of the Buyer's counsel, the
proposed transfer of the TCMS Common Stock may not be effected without
registration under the Securities Act, Buyer shall, as promptly as practicable,
so notify Sellers, and Sellers shall not be allowed to effect the proposed
transfer except pursuant to an offering registered under the Securities Act.
(c) Each Seller understands and agrees that except as
provided in the Registration Rights Agreement, Buyer is not obligated to
furnish a registration statement under the Act or any state securities laws
covering the Restricted Shares nor is Buyer under any obligation to aid Sellers
in obtaining any exemption from any such registration requirements. Each Seller
also acknowledges that except as provided in the Registration Rights Agreement,
he shall be responsible for compliance with all conditions of transfer of the
Restricted Shares imposed by any administrator of any state and for reasonable
expenses incurred by Buyer for legal or accounting services in connection with
reviewing such proposed transfer and issuing opinions in connection therewith.
(d) Each Seller understands and agrees that transfer of
the Restricted Shares may be effected only on the books of Buyer, and that stop
transfer instructions will be issued to the transfer agent of TCMS Common Stock
in accordance with the legend on any certificate representing the Restricted
Shares. The transfer agent will not remove the legend from any certificate
representing the Restricted Shares without either registration of the
Restricted Shares under the Securities Act and applicable state securities laws
or an opinion of the Buyer's counsel (i) stating that the transfer of the
Restricted Shares is exempt from such registration requirements and authorizing
removal of the stop transfer instructions or (ii) authorizing removal of the
restrictive legend.
ARTICLE 9
FURTHER ASSURANCES
9.1 FURTHER ASSURANCES. At any time and from time to time on and
after the Closing Date (a) at the request of Buyer, Sellers shall deliver to
Buyer any records, documents and data possessed by Sellers and not previously
delivered to Buyer to which Buyer is entitled and execute and deliver or cause
to be executed and delivered all such deeds, assignments, consents, documents
and further instruments of transfer and conveyance, and take or cause to be
taken all such other actions, as Buyer may reasonably deem necessary or
desirable in order to fully and effectively vest in Buyer, or to confirm its
title to and possession of, the Company Shares or to assist Buyer in exercising
rights with respect thereto which Buyer is entitled to exercise pursuant to the
terms of this Agreement; and (b) Buyer shall execute and deliver or cause to be
executed and delivered such
HBH, Inc. Purchase and Sale Agreement/Page 41
49
further instruments and take or cause to be taken such further actions as
Sellers may reasonably deem necessary or desirable to carry out the terms and
provisions of this Agreement.
9.2 BOOKS AND RECORDS.
(a) Buyer agrees that it shall preserve and keep all
books and records relating to the Company in Buyer's possession until
six months following the expiration of the statute of limitations
(including extensions thereof) applicable to the tax returns filed by
or with respect to the Company for taxable periods ending prior to or
on the IPO Closing Date to which such books or records are relevant.
After such time, before Buyer shall dispose of any of such books and
records, at least 90 calendar days' prior written notice to such
effect shall be given by Buyer to Sellers, and Sellers shall be given
an opportunity, at its sole cost and expense, to remove all or any
part of such books and records as Sellers may select, and Sellers may
retain copies thereof. Duly authorized representatives of Sellers
shall, upon reasonable notice, have access to such books and records
during normal business hours to examine, inspect and copy such books
and records, and Buyer and its representatives will provide reasonable
assistance and cooperation to Sellers with respect to inspection of
such books and records.
(b) In any instance in which any Seller or Buyer, as the
case may be, is required to prepare or file (or cause to be filed) tax
returns which cover a period that includes the IPO Closing Date or to
respond to an audit by the Internal Revenue Service or other
governmental agency with respect to a period prior to the IPO Closing
Date, each Seller or Buyer, as the case may be, will furnish all
information and records reasonably available to it and reasonably
requested of him, her or it and necessary or appropriate for use in
preparing such returns or responding to such audit.
ARTICLE 10
MISCELLANEOUS
10.1 EXPENSES, ETC. Except as may otherwise be agreed in writing by
the parties, whether or not the transactions contemplated by this Agreement are
consummated, none of the parties hereto shall have any obligation to pay any of
the fees and expenses of the other parties incident to the negotiation,
preparation and execution of this Agreement, including the fees and expenses of
counsel, accountants and other experts. Each of the Sellers, the Company and
Buyer will indemnify the other parties, and hold them harmless from and against
any claims for finders' fees or brokerage commissions in relation to or in
connection with such transactions as a result of any agreement or understanding
between such indemnifying party and any third party. Sellers shall pay and be
responsible for any stock transfer Taxes arising from the sale of the Company
Shares hereunder. Buyers shall pay and be responsible for any stock transfer
taxes arising from the sale of shares of TCMS Common Stock hereunder.
HBH, Inc. Purchase and Sale Agreement/Page 42
50
10.2 EXECUTION IN COUNTERPARTS. For the convenience of the parties,
this Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
10.3 NOTICES. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered or mailed by
registered or certified mail postage prepaid, or sent by telex, telecopier,
facsimile transmission or telegraph as follows:
If to Sellers, to: With a copy to:
▇▇. ▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Lugenbuhl, Burke, Wheaton, Peck,
c/o The Diversified Group, Inc. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to:
Mr. ▇▇▇▇▇ ▇▇▇▇▇▇
c/o The Diversified Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer, to: With a copy to:
TransCoastal Marine Services, Inc. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
3535 Briarpark, Suite 210 Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇
Attention: Mr. G. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto. Any notice or other
communication pursuant to this Agreement shall be deemed to have been duly
given or made and to have become effective upon the earliest of (a) when
delivered in hand to the party to which directed, or (b) if sent by first-class
mail postage prepaid, certified mail, return receipt requested, or by telex,
telecopier, facsimile transmission or telegraph and properly addressed as set
forth above, at the time when received by the addressee or (c) with respect to
delivery by certified mail, return receipt requested, when delivery thereof,
properly addressed as set forth above, is attempted by the U.S. Postal Service.
HBH, Inc. Purchase and Sale Agreement/Page 43
51
10.4 WAIVERS. Any party hereto (as to itself, but not as to other
parties without their consent) may, by written notice to the other parties
hereto, (a) extend the time for the performance of any of the obligations or
other actions of the other parties under this Agreement; (b) waive any
inaccuracies in the representations or warranties of another party contained in
this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance with any of the conditions or covenants of another party
contained in this Agreement; or (d) waive performance of any of the obligations
of another party under this Agreement. Except as otherwise provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representation, warranty, covenant or agreement contained in this
Agreement. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed a waiver of any subsequent breach.
10.5 AMENDMENTS, SUPPLEMENTS, ETC. At any time this Agreement may
be amended or supplemented by such additional agreements, articles or
certificates, as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of the Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants,
terms or conditions hereof or to effect or facilitate any governmental approval
or acceptance of this Agreement or to effect or facilitate the filing or
recording of this Agreement or the consummation of any of the transactions
contemplated hereby. Any such instrument must be in writing and signed by all
parties.
10.6 ENTIRE AGREEMENT. This Agreement, its Exhibits and Disclosure
Schedules and the documents executed on the Closing Date and the IPO Closing
Date in connection herewith, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral and written, between the parties
hereto with respect to the subject matter hereof. No representation, warranty,
promise, inducement or statement of intention has been made by any party hereto
which is not embodied in this Agreement or such other documents, and no party
hereto shall be bound by, or be liable for, any alleged representation,
warranty, promise, inducement or statement of intention not embodied herein or
therein.
10.7 CHOICE OF FORUM; CONSENT TO JURISDICTION. This Agreement shall
be governed by and construed in accordance with the laws of the State of Texas.
Any suit, action or proceeding arising with respect to the validity,
construction, enforcement or interpretation of this Agreement, and all issues
relating in any matter hereto, shall be brought in the United States District
Court for the Eastern District of Louisiana, or in the event that federal
jurisdiction does not pertain, in the state courts of the State of Louisiana in
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇. Each of the parties hereto hereby submits and consents to the
jurisdiction of such courts for the purpose of any such suit, action or
proceeding and hereby irrevocably waives (a) any objection which any of them
may now or hereafter have to the laying of venue in such courts, and (b) any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
10.8 BINDING EFFECT, BENEFITS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Notwithstanding anything contained in this Agreement to
the contrary, nothing in this Agreement, expressed or
HBH, Inc. Purchase and Sale Agreement/Page 44
52
implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
10.9 ASSIGNABILITY. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto without the prior
written consent of the other parties hereto.
10.10 INVALID PROVISIONS. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, rule
or regulation, such provision shall be fully severable and this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof. The remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed effective as of the date first above written.
BUYER:
TRANSCOASTAL MARINE SERVICES, INC.
BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
CHIEF EXECUTIVE OFFICER
SELLERS:
THE SUCCESSION OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, THE DULY AUTHORIZED
EXECUTRIX IN THE SUCCESSION OF ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
THE COMPANY:
HBH, INC., A LOUISIANA CORPORATION
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Title: President
----------------------------------
HBH, Inc. Purchase and Sale Agreement/Page 45
