STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of
November 27, 1996 by, between and among Gulf Island
Fabrication, Inc., a Louisiana corporation (hereinafter referred
to as "Purchaser"), and ▇. ▇. ▇▇▇▇▇▇▇▇▇ and ▇. ▇. ▇▇▇▇▇▇▇▇, the
holders of all of the outstanding shares of capital stock (the
"Sellers") of Dolphin Steel Sales, Inc. (the "Corporation" or the
"Company"). E. M ▇▇▇▇▇▇▇▇▇ and ▇. ▇. ▇▇▇▇▇▇▇▇ are also referred
to herein variously as the "Officers" or "Sellers'
Representatives".
W I T N E S S E T H :
WHEREAS, Sellers desire to sell and the Purchaser desire to
purchase all of the outstanding shares (the "Shares") of common
stock of the Corporation for the consideration and on the terms
and conditions set forth herein; and,
WHEREAS, Purchaser and certain of the Sellers desire to
enter into certain non-competition agreements (the "Non-
Competition Agreements") as provided in Section 4.01.
NOW, THEREFORE, the parties hereto hereby agree as follows:
I.
PURCHASE AND SALE OF ASSETS
1.01 Purchase and Sale.
At the closing of the transaction contemplated hereby
(the "Closing"), upon the terms and subject to the conditions
contained in this Agreement, Purchaser shall purchase from
Sellers and Sellers shall sell the Shares consisting of 1,000
shares of common stock, no par value per share, free and clear of
any and all liens, mortgages, encumbrances and security
interests.
1.02 Stock Purchase Price.
(a) The initial purchase price for the Shares
("Initial Purchase Price") shall be Seven Hundred Seventy-Five
Thousand, One Hundred Sixty-Three ($775,163) Dollars which shall
be allocated among the Sellers in proportion to the Shares sold
by each of them to Purchaser.
(b)(1) The Initial Purchase Price shall be adjusted to
the final purchase price ("Final Purchase Price") by increasing
the Initial Purchase Price by the increase in the Net Book Value,
as hereinafter defined, or by decreasing the Initial Purchase
Price by the decrease in the Net Book Value of the Corporation
between September 30, 1996 and the Closing as reflected on the
Closing Balance Sheet (as hereinafter defined). However, the
Final Purchase Price shall not be less than $775,163.
(2) The term "Net Book Value" means the excess of (1)
the book value of all of the Corporation's assets over (2) the
book amounts of all the Corporation's current and long-term fixed
liabilities and accrued expenses, including all unpaid ad valorem
taxes prorated to the date of the Closing, whether or not any of
the Corporation's assets are then subject to a lien therefor as
of the Closing. All determinations of book value and book
amounts shall be made in accordance with the accounting
principles, methods and conventions employed in the preparation
of the Corporation's September 30, 1996 balance sheet, a copy of
which is attached as part of Schedule 1.02(b)(2) (hereinafter
"Interim Financial Statements"), but with all intercompany
payables, receivables and equity interests eliminated as among
Dolphin Services, Inc., Dolphin Steel Sales, Inc. and Dolphin
Sales & Rentals, Inc. as though they were members of a
consolidated group. Net Book Value at September 30, 1996 was
$775,163.
(3) The term "Closing Balance Sheet" means for
purposes of this Section 1.02(b) the balance sheet of the
Corporation as of December 31, 1996 unless such date precedes the
Closing by more than five (5) business days, in which case as of
the date of the Closing ("Closing Date"), prepared in accordance
with the same accounting principles, methods and conventions
employed in the preparation of the Corporation's Interim
Financial Statements. The Closing Balance Sheet shall be
prepared by a certified public accountant or certified public
accounting firm designated by Purchaser and shall be presented to
Sellers and Purchaser within forty-five (45) days following the
Closing. In the event either Sellers or Purchaser disagree with
any of the figures shown on the Closing Balance Sheet, they or it
shall notify the other parties hereto, within ten (10) days after
their receipt of the Closing Balance Sheet, and shall furnish the
reasons why that party is in disagreement. If the parties have
not resolved their disagreements with respect to the Closing
Balance Sheet within twenty (20) days after said notice, Sellers
and Purchaser shall submit the handling of any disputed items to
an independent nationally recognized accounting firm (other than
Price, Waterhouse & Co.) selected by Purchaser and Sellers. If
Purchaser and Sellers are unable to agree upon such a nationally
recognized independent accounting firm within ten (10) days after
expiration of said twenty (20) day period, such an independent
nationally recognized accounting firm ("Arbitrator") shall be
selected in accordance with the rules of the American Arbitration
Association. The Arbitrator shall submit the correct Closing
Balance Sheet to Purchaser and Sellers and shall certify the
increase or decrease in Net Book Value between the date of the
Interim Financial Statements and the close of business on the
Closing Date.
1.03 Closing. The closing (the "Closing") shall take place
at the offices of Messrs. Jones, Walker, Waechter, Poitevent,
Carrere and ▇▇▇▇▇▇▇, Baton Rouge, Louisiana, on a mutually
agreeable date (the "Closing Date"), not later than ten (10) days
following satisfaction of all conditions to Closing set forth in
Article IX, but after January 1, 1997. Assuming the conditions
set forth in Article IX shall have been satisfied, the Closing
shall be deemed effective as of the close of business of the
Corporation on the date of the Closing. At the Closing:
(a) Purchaser shall deliver to Sellers by wire
transfer or certified funds cash in an amount equal to Seven
Hundred Twenty-Five Thousand, One Hundred Sixty-Three ($725,163)
Dollars, allocated among Sellers in proportion to their ownership
of the remaining outstanding shares of capital stock of the
Corporation, and shall deliver to Whitney National Bank Fifty
Thousand and No/100 ($50,000.00) Dollars to be held pursuant to
the escrow agreement (the "Escrow Agreement") in the form
attached hereto as Schedule 1.03(a), which shall also be executed
at or prior to the Closing.
(b) Sellers shall deliver to Purchaser certificates
representing in the aggregate One Thousand (1,000) shares of
capital stock of the Corporation with stock powers attached
executed in blank, with signature guaranteed, free and clear of
any and all liens, mortgages, security interests and
encumbrances.
(c) All officers and directors of the Corporation
shall tender their resignations from such positions, said tender
to occur simultaneously with the act of delivery of funds
described in Section 1.03(a).
1.04 Post-Closing. Within ten (10) days following the date
on which the Closing Balance Sheet has been agreed upon by the
parties or otherwise determined to be accurate, if the Net Book
Value of the Corporation as reflected on the Closing Balance
Sheet is more than or less than the Net Book Value as reflected
on the September 30, 1996 balance sheet of the Corporation,
attached as part of Schedule 1.02(b)(2), Purchaser shall pay to
or receive from, respectively, Sellers (in proportion to their
present ownership of the Shares) cash (by wire transfer or bank
cashier's check) equal to the difference. Failure by any Seller
to make a payment required pursuant to this Section 1.04 shall
constitute a breach of a covenant for which the remedies provided
in Section 10.02 are applicable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
For purposes of this Agreement the business (the "Business")
of the Company is the onshore and offshore oil and gas production
platform construction and maintenance business which consists of:
outfitting and interconnect piping, painting and maintenance of
onshore and offshore oil and gas production platforms; and the
construction (including interconnect piping and pile driving) of
shallow water and land platforms and pipeline installation. The
phrase "in the ordinary course" means in the course of performing
any one or more of those enumerated activities. Sellers herewith
represent and warrant to Purchaser as of the date hereof and as
of the Closing Date (unless another date is expressly set forth
below) that:
2.01 Corporate Existence and Power. The Corporation is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Louisiana, and the
Corporation has all corporate powers and all material
governmental licenses, permits, authorizations, consents and
approvals required to carry on the Business as now conducted.
Subject to the provisions of the following sentence, the
Corporation is duly qualified to conduct business as a foreign
corporation and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature
of its activities make such qualification necessary. Sellers
have heretofore delivered to Purchaser true and complete copies
of the Corporation's Articles of Incorporation and By-Laws as
currently in effect.
2.02 Governmental Authorization. The execution, delivery
and performance by Sellers of this Agreement and the consummation
by Sellers of the transactions contemplated hereby require no
action by or in respect of, or filing with, any governmental
body, agency, official or authority.
2.03 Non-Contravention. The execution, delivery and
performance by Sellers of this Agreement and the consummation by
Sellers of the transactions contemplated hereby do not and will
not (i) contravene or conflict with the Articles of Incorporation
or bylaws of the Corporation (other than any provision which may
be waived by the Corporation and/or Sellers), (ii) contravene or
conflict with or constitute a violation of any provision of law,
regulation, judgment, injunction, order or decree binding upon or
applicable to Sellers or the Corporation, or (iii) except as
disclosed in Schedule 2.03, require any consent, approval or
other action by any person or constitute a default under any
obligation of Sellers or the Corporation under any provision of
any contract or other instrument binding upon Sellers or the
Corporation other than contracts and obligations which may be
cancelled unilaterally upon notice to Sellers or the Corporation.
2.04 Subsidiaries. The Corporation does not own more than
fifty (50%) percent of all outstanding shares of capital stock
of, other ownership interests in, or other securities of any
corporation or other entity.
2.05 Financial Statements. The balance sheet of the
Corporation for the year ended December 31, 1995 (such date
referred to herein as the "Balance Sheet Date" and such balance
sheet the "Balance Sheet") and the related statements of income
for the year ended December 31, 1995 (collectively, the
"Financial Statements") have been previously delivered to
Purchaser and are attached as Schedule 2.05. In all material
respects, the Financial Statements fairly present the financial
position of the Corporation as of the date thereof and its
results of operations for the period then ended.
2.06 Absence of Certain Changes. Since the Balance Sheet
Date to the date hereof, the Corporation has conducted the
Business in the ordinary course consistent with past practice
and, except as set forth in Schedule 2.06 or otherwise
contemplated hereby, there has not been:
(a) Any event, occurrence, development or state of
circumstances or facts which has had or could reasonably be
expected to have a material adverse effect on the Corporation,
except to the extent the effect is reflected in the Interim
Financial Statements;
(b) Any incurrence, assumption or guarantee of any
indebtedness for borrowed money or any material obligation or
liability, except in the ordinary course of the Business
consistent with past practice and except as reflected on the
Interim Financial Statements;
(c) Any creation or other incurrence of any Lien (as
defined in Section 2.08) on any asset of the Corporation, except
in the ordinary course of the Business consistent with past
practice and except as reflected in the Interim Financial
Statements;
(d) Any making of any loan, advance or capital
contributions to or investment in any person, except as reflected
in the Interim Financial Statements;
(e) Any amendment of any material term of any
outstanding security of Seller;
(f) Any material damage, destruction or other casualty
loss affecting any of the assets of the Corporation, except those
covered by insurance and except as reflected in the Interim
Financial Statements;
(g) Any transaction or commitment made, or any
contract or agreement entered into, by the Corporation relating
to its assets or the Business or any relinquishment of any
contract or other right, in either case, material to the
Corporation, other than transactions and commitments (including
acquisitions and dispositions of steel and equipment) in the
ordinary course of the Business consistent with past practice and
except as reflected in the Interim Financial Statements;
(h) Any declaration or payment of any dividend or
other distribution by the Corporation or any repurchase,
redemption or other acquisition for value of any security or
other interest in the Corporation or any commitment to do any of
the foregoing;
(i) Any general or specific increase in the salary or
other compensation (including, without limitation, bonuses,
profit sharing or deferred compensation) payable or to become
payable to any employees of the Corporation, except in the
ordinary course of the Business consistent with past practice;
(j) Any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the
Corporation or any lockouts, strikes, slowdowns, work stoppages
or threats thereof by or with respect to any employees of the
Corporation; or
(k) Any agreement entered into to do any of the
foregoing.
2.07 Properties.
(a) The Corporation has good and marketable title to,
or in the case of leased property valid leasehold interests in,
all property and assets (whether real or personal, tangible or
intangible) reflected on the Balance Sheet or acquired after the
Balance Sheet Date, except for properties and assets sold since
the Balance Sheet Date in the ordinary course of business
consistent with past practice. None of such properties or assets
is subject to any liens, mortgages, security interests or other
encumbrances (herein "Liens") except:
(i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being
contested in good faith (and for which
adequate accruals or reserves have been
established on the Balance Sheet);
(iii) Liens disclosed in Schedule 2.07(a) or which
will be discharged at the Closing;
(iv) Liens which do not materially detract from
the value of such property or assets as now
used, or materially interfere with any
present or intended use of such property or
assets; or
(v) Liens in favor of vendors and lessors
incurred in the ordinary course of business.
Clauses (i), (ii), (iii) (iv) and (v) are, collectively, referred
to herein as "Permitted Liens".
(b) To the knowledge of Sellers and except as
reflected on the Interim Financial Statements, there are no
developments affecting any of such properties or assets pending
or threatened which could materially detract from the value of
such property or assets, materially interfere with any present or
intended use of any such property or assets or materially
adversely affect the marketability of such properties or assets.
(c) All such leases of real and personal property with
respect to which the Corporation is a lessee are as of the date
hereof and will be on the Closing Date valid, binding and
enforceable in accordance with their respective terms and there
does not exist under any such lease any material default or any
event which with notice or lapse of time or both would constitute
a material default.
(d) Schedule 2.07(d) identifies all real and personal
property used or held for use in connection with the Business as
of the date hereof (the "Property") and contains an accurate
balance sheet showing the adjusted tax basis of all of the
Corporation's assets for United States income tax purposes at
September 30, 1996. The plants, buildings, structures, tools,
steel inventory and equipment reflected on the Balance Sheet or
acquired after the Balance Sheet Date through the date hereof
have no material defects, are in good operating condition and
repair and have been reasonably maintained consistent with
standards generally followed in the industry (giving due account
to the age and length of use of same, ordinary wear and tear
excepted), are suitable for their present uses and, in the case
of plants, buildings and other structures (including without
limitation, the roofs thereof), are structurally sound, except as
set forth on Schedule 2.07(d). Such plants, buildings and
structures currently have access to (1) public roads or valid
easements over private streets or private property for such
ingress to and egress from all such plants, buildings and
structures and (2) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire
protection, drainage and other public utilities, as is necessary
for the conduct of the Business. None of the material structures
on the immovable or real property of the Corporation encroaches
upon real property of another person, and no structure of any
other person substantially encroaches upon any immovable or real
property of the Corporation. All items of equipment listed on
Schedule 2.07(d) are in the possession and control of the
Corporation and will be in the Corporation's possession and
control on the Closing Date and are in good operating condition
and are adequately performing the tasks which they are designed
to perform.
2.08 Sufficiency of and Title to the Purchased Assets.
(a) The assets (the "Assets") disclosed on the Balance
Sheet and in Schedule 2.07(d) constitute as of the date thereof
and hereof, respectively, all of the assets or property used or
held for use in the Business and are adequate to conduct the
Business as presently conducted.
(b) Upon consummation of the transactions contemplated
hereby, the Corporation will have good and marketable title in
and to each of the Assets, free and clear of all Liens, except
for Permitted Liens.
2.09 No Undisclosed Material Liabilities. Except as
disclosed on Schedule 2.09, as of the Closing there will be no
liabilities of the Corporation of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in
such a liability, other than:
(i) Liabilities disclosed or provided for in the
Interim Financial Statements;
(ii) Liabilities for which adequate insurance is
available; and,
(iii) Liabilities incurred in the ordinary course
of the Business, including tax liabilities
and liabilities for personal injuries and
property damage, which in the aggregate are
not material to the Business taken as a
whole.
2.10 Litigation. Except as set forth in Schedule 2.10, as
of the date hereof there is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or to the
knowledge of Sellers threatened against or affecting, Sellers,
the Corporation or any of their or its properties before any
court or arbitrator or any governmental body, agency, official or
authority, which, individually or in the aggregate, if determined
or resolved adversely to Sellers or the Corporation in accordance
with the plaintiff's demands, would reasonably be expected to
have a material adverse effect on Sellers or the Corporation or
which in any manner challenges or seeks to prevent, enjoin, alter
or materially delay the transactions contemplated by this
Agreement.
2.11 Material Contracts.
(a) Except as disclosed in Schedule 2.11(a) and
elsewhere in this Agreement, as of the date hereof the
Corporation is not a party to or subject to:
(i) Any lease of real or immovable property;
(ii) Any lease that is material to the Corporation
of personal or movable property as lessee;
(iii) Any contract for the purchase of materials,
supplies, goods, services, equipment or other
assets, other than in the ordinary course of
the Business;
(iv) Any sales, distribution or other similar
agreement providing for the sale by the
Corporation of materials, supplies, goods,
services, equipment or other assets, other
than to customers in the ordinary course of
the Business;
(v) Any lease of any item of tangible personal or
movable property or real or immovable
property as lessor other than to customers in
the ordinary course of the Business;
(vi) Any partnership, joint venture or other
similar contract, arrangement or agreement;
(vii) Any contract relating to indebtedness for
borrowed money (whether incurred, assumed,
guaranteed or secured by any asset);
(viii) Any license, franchise or similar agreement;
(ix) Any agency, dealer, sales representative or
other similar agreement;
(x) Any contract or commitment that substantially
limits the freedom of the Corporation to
compete in any line of business or with any
person or in any area or to own, operate,
sell, transfer, pledge or otherwise dispose
of or encumber any asset or which would so
limit the freedom of the Corporation after
the Closing;
(xi) Any consulting agreement;
(xii) Any contract relating to any guaranty or
indemnity issued by the Corporation;
(xiii) Any agreement relating to the acquisition or
disposition of any part of the Business; or
(xiv) Any other contract or commitment not made in
the ordinary course of the Business
consistent with past practice.
(b) Each contract disclosed in any schedule to this
Agreement or required to be disclosed pursuant to Section 2.11(a)
is a valid and binding agreement of the Corporation, and, to the
knowledge of Sellers, as of the date hereof is in full force and
effect, and neither the Corporation nor, to the knowledge of
Sellers, any other party thereto is in default or breach in any
material respect under the terms of any such Contract, nor, to
the knowledge of Sellers, has any event or circumstance occurred
that, with notice or lapse of time or both, would constitute any
such default or breach.
2.12 Licenses and Permits. Schedule 2.12 correctly
describes each material governmental license, permit,
authorization, consent or approval affecting, or relating in any
way to, the Corporation and its business, together with the name
of the governmental agency or entity issuing such license or
permit (the "Permits"). Except as set forth on Schedule 2.12,
such Permits are valid and in full force and effect and will not
be terminated or impaired or become terminable as a result of the
transactions contemplated hereby.
2.13 Ability to Conduct the Business. Except as set forth
in Schedule 2.13, as of the date hereof there is no contract, nor
any judgment, order, writ, injunction or decree that by its terms
prevents or would reasonably be expected to prevent the use by
the Corporation of the Assets or the conduct by the Corporation
of the Business after the Closing Date.
2.14 Material Suppliers. Schedule 2.14 lists the five
largest (in dollar value) suppliers of inventory to the
Corporation during each of the last two completed fiscal years
and through December 31, 1995. To the knowledge of Sellers,
since the Balance Sheet Date there has not been any adverse
change in the business relationship of the Corporation with any
such supplier or with any supplier that is otherwise material to
the Business or with any supplier as a result of the transactions
contemplated hereby, except as disclosed on Schedule 2.14.
2.15 Insurance Coverage. Sellers have furnished or provided
access to Purchaser to true and complete copies of, all insurance
policies currently in effect covering the assets, the Business
and the employees of the Corporation. Except as disclosed on
Schedule 2.15, as of the date hereof there is no claim by the
Corporation pending under any of such policies as to which
coverage has been questioned, denied or disputed by the
underwriters of such policies. All premiums payable under all
such policies have been paid and the Corporation is otherwise in
full compliance with the terms and conditions of all such
policies.
2.16 Compliance with Laws; No Defaults.
(a) As of the date hereof, the Corporation is not in
violation of, has not since December 31, 1995 violated, and to
Sellers' knowledge is not under investigation with respect to or
has not been threatened to be charged with or given notice of any
violation of, any law, rules, ordinances or regulations,
judgments, injunctions, orders or decrees binding upon or
applicable to the Corporation, except for any violations set
forth in Schedule 2.16(a) which would not, individually or in the
aggregate, if finally determined adversely, result in a material
adverse effect on the business of the Corporation.
(b) As of the date hereof, the Corporation is not in
default under, and no condition exists that with notice or lapse
of time or both would constitute a default under any contract or
other instrument binding upon the Corporation or affecting or
relating to its business or any license, authorization, permit,
consent or approval held by the Corporation or affecting or
relating to the Business, except as otherwise disclosed in this
Agreement or in Schedules attached hereto.
2.17 Inventories. The inventories set forth in the Balance
Sheet were properly stated therein at cost determined in
accordance with generally accepted accounting principles applied
on a consistent basis. Since the Balance Sheet Date, the
inventories related to the Business have been maintained in the
ordinary course of business. Except as set forth in Schedule
2.17, all such inventory is owned free and clear of all Liens,
except Permitted Liens. All of the inventory recorded on the
Balance Sheet consists of, and all inventory related to the
Business on the Closing Date will consist of, items of a quality
usable or saleable in the normal course of the Business
consistent with past practices and are and will be in quantities
sufficient for the normal operation of the Business in accordance
with past practice.
2.18 Receivables. All accounts, notes and other receivables
(other than receivables collected since December 31, 1995)
reflected on the Balance Sheet are, and all accounts, notes and
other receivables arising out of or otherwise relating to the
Corporation's business as of the Closing will be, valid, binding
and enforceable, subject to applicable laws governing bankruptcy,
moratorium or creditors' rights generally which may prevent their
enforcement. The dollar amount shown for all such accounts on
the Interim Financial Statements, less the allowance for doubtful
accounts shown thereon, is collectible in full. All accounts,
notes and other receivables arising out of or otherwise relating
to the Business at the Balance Sheet Date have been included in
the Balance Sheet, and all accounts, notes and other receivables
arising out of or otherwise relating to the Business at the
Closing Date will be reflected on the Corporation's financial
books and records.
2.19 Intellectual Property.
(a) Schedule 2.19(a) sets forth as of December 31,
1995 a list of all intellectual property rights (herein
"Intellectual Property Rights") used or held for use or otherwise
necessary in connection with the conduct of the Business,
specifying as to each, as applicable: (i) the nature of such
Intellectual Property Right; (ii) the owner of such Intellectual
Property Right and if Seller is not the owner, the rights held by
the Corporation; (iii) the jurisdictions by or in which such
Intellectual Property Right is recognized, issued or registered
or in which an application for such issuance or registration has
been filed, including the respective registration or application
numbers; and (iv) material licenses, sublicenses and other
agreements as to which the Corporation is a party and pursuant to
which any person is authorized to use such Intellectual Property
Right, including the identity of all parties thereto, a
description of the nature and subject matter thereof, the
applicable royalty and the term thereof.
(b) (i) Except as set forth in Schedule 2.19(b), the
Corporation has not since January 1, 1996 been sued or charged in
writing with or been a defendant in any claim, suit, action or
proceeding relating to its business that has not been finally
terminated prior to the date hereof and that involves a claim of
infringement by the Corporation of any intellectual property
rights of any other person, and (ii) the Corporation has no
knowledge of any basis for any such claim of infringement, and no
knowledge of any continuing infringement by any other person of
any intellectual property rights used or held for use or
otherwise necessary in connection with the conduct of the
Business. No such intellectual property right is subject to any
outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by the Corporation or restricting the
licensing thereof by the Corporation to any Person. The
Corporation has not entered into any agreement to indemnify any
other person against any charge of infringement of any
intellectual property rights.
(c) As used herein, the term "Intellectual Property
Right" means any trade name, trademark, service name, service
▇▇▇▇, copyright, invention, patent, trade secret, know-how
(including any registrations or applications for registration of
any of the foregoing) or any other similar type of proprietary
intellectual property right.
2.20 Employees. Schedule 2.20 identifies all of the
Corporation's officers and key employees as of December 31, 1995.
None of such key employees has indicated to the Corporation that
he or she intends to resign or retire as a result of the
transactions contemplated by this Agreement, except that ▇. ▇.
▇▇▇▇▇▇▇▇▇ and ▇. ▇. ▇▇▇▇▇▇▇▇ shall retire from the Corporation's
employee on the Closing Date.
2.21 Fees. There is no investment banker, broker, financial
advisor, finder or other intermediary which has been retained by
or is authorized to act on behalf of Sellers who might be
entitled to any fee or commission from Purchaser upon
consummation of the transactions contemplated by this Agreement.
2.22 Environmental Matters.
(a) The following defined terms, as used herein, have
the following meanings:
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
"Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions,
whether now or hereafter in effect, relating to human health, the
environment or to emissions, discharges or releases of
pollutants, contaminants, hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any and all
liabilities of, or relating to, Seller (including any entity
which is, in whole or in part, a predecessor of Seller), whether
vested or unvested, contingent or fixed, actual or potential,
known or unknown, which (i) arise under or relate to matters
covered by Environmental Laws (including without limitation any
matters disclosed or required to be disclosed in Schedule 2.22
hereto) and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date.
"Environmental Permits" means all permits, licenses,
authorizations, certificates and approvals of governmental
authorities relating to or required by Environmental Laws and
necessary or proper for the business of Seller as currently
conducted.
"Hazardous Substance" means any toxic, radioactive,
caustic or otherwise hazardous substance, including petroleum,
its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the
foregoing characteristics, including, without limitation, any
substance regulated under Environmental Laws.
"Regulated Activity" means any generation, treatment,
storage, recycling, transportation or disposal of any Hazardous
Substance.
"Release" means any discharge, emission or release
including a Release as defined in CERCLA at 42 U.S.C. 9601 (22).
The term "Released" has a corresponding meaning.
(b) Except as disclosed on Schedule 2.22 as of the
date hereof:
(i) No notice, notification, demand, request for
information, citation, summons, complaint or
order has been issued, no complaint has been
filed, no penalty has been assessed and, to
Seller's knowledge, no investigation or
review is pending or threatened by any
governmental entity or other person with
respect to any (a) alleged violation by the
Corporation of any Environmental Law or
liability thereunder, (b) alleged failure by
the Corporation to have any Environmental
Permit, (c) Regulated Activity, or (d)
Release of Hazardous Substances;
(ii) Other than generation in compliance with all
applicable Environmental Laws, (a) the
Corporation has not engaged in any Regulated
Activity and (b) no Regulated Activity has
occurred at or on any property now or
previously owned, leased or operated by the
Corporation;
(iii) No polychlorinated biphenyls, radioactive
material, urea formaldehyde, lead, asbestos,
asbestos-containing material or underground
storage tank (active or abandoned) is or has
been present at any property now or
previously owned, leased or operated by the
Corporation;
(iv) No Hazardous Substance has been Released (and
no notification of such Release has been
filed or made) or is present (whether or not
in a reportable or threshold planning
quantity) at, on or under any property now or
previously owned, leased or operated by the
Corporation;
(v) No property now or previously owned, leased
or operated by the Corporation or any
property to which the Corporation has,
directly or indirectly, transported or
arranged for the transportation of any
Hazardous Substances is listed or, to
Seller's knowledge, proposed for listing, on
the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar federal, state or
foreign list of sites requiring investigation
or clean-up;
(vi) There are no liens under Environmental Laws
on any of the real property or other assets
owned, leased or operated by the Corporation,
no governmental actions have been taken or
are in process which could subject any of
such properties or assets to such liens and
the Corporation would not be required to
place any notice or restriction relating to
Hazardous Substances at any property owned by
it in any deed to such property;
(vii) There are no Environmental Permits that are
nontransferable or require consent,
notification or other action to remain in
full force and effect following the
consummation of the transactions contemplated
hereby; and
(viii) All Perchloroethylene and each other chemical
substance used by the Corporation in
connection with the business has been
disposed of in accordance with all applicable
laws, rules, regulations and pronouncements
of the United States, all applicable states
and all applicable boards, agencies,
departments and other divisions thereof.
(c) There has been no environmental investigation,
study, audit, test, review or other analysis conducted of which
the Corporation or Sellers has knowledge in relation to the
current or prior business of the Corporation or any property or
facility now or previously owned or leased by the Corporation
which has not been delivered to Purchaser at least five days
prior to the date hereof.
(d) For purposes of this Section 2.22, the term
"Corporation" shall include any entity which is, in whole or in
part, a predecessor of the Corporation.
2.23 Labor Matters. As of the date hereof, the Corporation
is in compliance with all currently applicable laws respecting
employment and employment practices (including terms and
conditions of employment, wages and hours) and is not engaged in
any unfair labor practice, the failure to comply with which or
engagement in which, as the case may be, would reasonably be
expected to have a material adverse effect on the Business. As
of the date hereof there is no unfair labor practice complaint
pending or, to the knowledge of Sellers, threatened against the
Corporation before the National Labor Relations Board or before
any other state or local board, agency or tribunal.
2.24 The Shares. (a) There are presently outstanding and
at the Closing there will be outstanding a total of One Thousand
(1,000) shares of no par value voting common stock of the
Corporation (the "Shares"). No other class of common, preferred
or other type of shares of stock is presently outstanding.
(b) The issuance of all of the Shares has been duly
authorized by all required action by the Corporation and all of
the Shares are fully paid and non-assessable.
(c) The Shares are registered in the names of the
persons and in the amounts set forth in Schedule 2.24(c). All of
the Shares registered in the names of the above persons may be
conveyed by them without the consent of an person, other than
Consents of the Corporation and the other Sellers which are
waivable by them at or prior to the Closing Date.
(d) None of the Shares is subject to any lien,
mortgage, pledge, security interest or other encumbrance and each
Seller has good and marketable title to all Shares registered in
his name.
2.25 Binding Agreement. This Agreement constitutes a valid
and binding obligation of Sellers.
2.26 Other Information. None of the documents or
information delivered to Purchaser in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers that:
3.01 Organization and Existence. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Louisiana.
3.02 Corporate Authorization. The execution, delivery and
performance by Purchaser of this Agreement and the consummation
by Purchaser of the transactions contemplated hereby or thereby
are within the powers of Purchaser and have been duly authorized
by all necessary action on the part of Purchaser. This Agreement
constitutes a valid and binding agreement of Purchaser.
3.03 Governmental Authorization. The execution, delivery
and performance by Purchaser of this Agreement requires no action
by or in respect of, or filing with, any governmental body,
agency, official or authority.
3.04 Non-Contravention. The execution, delivery and
performance by Purchaser of this Agreement does not and will not
(i) contravene or conflict with the Articles of Incorporation or
By-Laws of Purchaser or (ii) assuming compliance with the matters
referred to in Section 3.03, contravene or conflict with any
provision of any law, regulation, judgment, injunction, order or
decree binding upon Purchaser.
3.05 Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to
act on behalf of Purchaser who might be entitled to any fee or
commission from Sellers upon consummation of the transactions
contemplated by this Agreement.
3.06 Financing. Purchaser will have on the Closing Date
sufficient funds available to purchase the Shares, provided all
conditions set forth in Article IX are satisfied.
3.07 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Purchaser
threatened against or affecting, Purchaser before any court or
arbitrator or any governmental body, agency or official which in
any matter challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
ARTICLE IV
COVENANTS OF SELLERS
4.01 Conduct of the Business. From the date hereof until
the Closing Date, Sellers shall cause the Corporation to conduct
the Business in the ordinary course consistent with past practice
and cause the Corporation to exert its best efforts to preserve
intact its business organization and relationships with third
parties and to keep available the services of its present
officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, Sellers
shall not cause the Corporation to and the Corporation shall not:
(i) Merge or consolidate with any other person or
acquire a material amount of assets of any
other person, other than steel, tools and
equipment purchased in the ordinary course of
the Business;
(ii) Declare and/or pay any dividend or make any
other distribution or transfer of cash or
other assets to its shareholders in their
capacities as such;
(iii) Sell, lease, license or otherwise dispose of
any assets except (a) pursuant to existing
contracts or commitments and (b) in the
ordinary course of the Business consistent
with past practices; or
(iv) Agree or commit to do any of the foregoing.
Sellers shall not permit the Corporation to (a) take or agree or
commit to take any action that would make any representation and
warranty of Sellers hereunder inaccurate in any respect at, or as
of any time prior to, the Closing Date or (b) omit or agree to
commit or omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect
at any such time.
4.02 "S" Election. Sellers and their spouses shall execute
and cause the Corporation to execute Internal Revenue Service
forms 2553 so as to elect the provisions of Subchapter S of the
United States Internal Revenue Code, sections 1361, et seq.,
effective January 1, 1997 and shall deliver fully completed forms
2553 with all of their signatures to Purchaser on or before the
earlier of the Closing Date or January 15, 1997.
4.03 Access to Information. Sellers (i) will give
Purchaser, its counsel, financial advisors, auditors and other
authorized representatives reasonable access to the offices,
properties, books and records of the Corporation and will allow
Purchaser or its representatives access to conduct all reasonable
environmental tests and inspections, (ii) will furnish to
Purchaser, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and
other information relating to the Corporation as such persons may
reasonably request and (iii) will instruct its employees, counsel
and financial advisors to cooperate with Purchaser in its
investigation of the Corporation; provided, however, Purchaser
shall utilize the minimum number of personnel as will not
interfere with the conduct of the Corporation's business and
shall utilize them only at the times the Corporation is open for
business. No investigation by Purchaser or other information
received by Purchaser shall operate as a waiver or otherwise
affect any representation, warranty or agreement given or made by
Sellers hereunder.
4.04 Life Insurance Policies. Prior to the Closing, each
seller shall purchase all policies of life insurance on his life
owned by the Corporation for cash in the amount of the cash
surrender values of these policies.
4.05 Notices of Certain Events. Sellers shall promptly
notify Purchaser of:
(i) Any notice or other communication from any
person alleging that the consent of such
person is or may be required in connection
with the transactions contemplated by this
Agreement;
(ii) Any notice or other communication from any
governmental or regulatory agency or
authority in connection with the transactions
contemplated by this Agreement;
(iii) Any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge,
threatened against, relating to or involving
or otherwise affecting the Corporation or the
Business that, if pending on the date of this
Agreement, would have been required to have
been disclosed pursuant to Section 2.10 or
that relate to the consummation of the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser agrees that:
5.01 Confidentiality. Prior to the Closing Date and for a
period of one (1) year after any termination of this Agreement,
Purchaser will hold, and will use its best efforts to cause its
respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by
other requirements of law, all confidential documents and
information (including, without limitation, confidential
commercial information and information with respect to customers
and proprietary systems, technologies or processes) concerning
the Business or which the Corporation or Sellers furnished to
Purchaser in connection with the transactions contemplated by
this Agreement, except to the extent that such information can be
shown to have been (i) previously known on a non-confidential
basis by Purchaser, (ii) in the public domain through no fault of
Purchaser or (iii) later lawfully acquired by Purchaser from
sources other than the Corporation or Sellers; provided, that
Purchaser may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors
and agents in connection with the transactions contemplated by
this Agreement so long as such persons are informed by Purchaser
of the confidential nature of such information and are directed
by Purchaser to treat such information confidentially. This
obligation shall be satisfied if Purchaser exercises the same
reasonable and customary care, in light of the industry and its
past practices, with respect to such information as it would take
to preserve the confidentiality of its own confidential
information. If this Agreement is terminated, Purchaser will,
and will use its best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents
to, destroy or deliver to Sellers, upon request, all documents
and other materials, and all copies thereof, obtained by
Purchaser or on their behalf from Sellers or the Corporation in
connection with this Agreement that are subject to such
confidence. Purchaser agrees that it will retain all documents
and other materials obtained by Purchaser from Sellers or the
Corporation in connection with this Agreement and the
transactions contemplated hereby for a reasonable and customary
period of time and will not destroy any material documents during
such period without first providing Seller with the opportunity
of making copies thereof.
5.02 Access. On and after the Closing Date, Purchaser will
afford promptly to Sellers through their representatives, ▇. ▇.
▇▇▇▇▇▇▇▇▇ and/or ▇. ▇. ▇▇▇▇▇▇▇▇ ("Sellers' Representatives"),
reasonable access to the Corporation's properties, books,
records, employees and auditors to the extent necessary to permit
Sellers to determine any matter relating to their rights and
obligations hereunder and Sellers' federal and state income and
other tax liabilities with respect to any period ending on or
before the Closing Date and shall maintain them for a period of
five (5) years following the Closing or for such longer period as
any audit (private, tax or other governmental) of those documents
is continuing; provided that any such access by Sellers shall not
unreasonably interfere with the conduct of the Business of the
Corporation or Purchaser. Sellers will hold, and will use their
best efforts to cause their officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning Purchaser or
the Business provided to them pursuant to this Section 5.02.
5.03 No Election Under Section 338. (a) Purchaser shall
not cause nor shall the Corporation make or file any election
under any provision of Section 338, including Section 338(h)(10),
of the United States Internal Revenue Code (the "Code") with
respect to the transactions contemplated by this Agreement.
(b) Purchaser shall take no action nor permit any
action or course of conduct to be taken by it or by the
Corporation, or permit the filing of any Section 338 election
with respect to any other stock acquisition by Purchaser of any
other corporation, if such filing would have the same effect as
if a formal election under any provision of Section 338,
including Section 338(h)(10), of the Code had been filed with
respect to the transaction contemplated hereby.
ARTICLE VI
COVENANTS OF SELLERS AND PURCHASER
Sellers and Purchaser hereto agree that:
6.01 Consulting Agreements. At the Closing, ▇. ▇.
▇▇▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇▇▇ and the Company shall execute the
Consulting Agreements in the forms attached hereto as Schedule
6.01.
6.02 Best Efforts; Further Assurances. Subject to the terms
and conditions of this Agreement, each of Sellers and Purchaser
will use their and its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things
necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
Sellers and Purchaser each agree to execute and deliver such
other documents, certificates, agreements and other writings and
to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions
contemplated by this Agreement, but without expanding the
obligations and responsibilities of any party hereunder.
6.03 Certain Filings. Sellers and Purchaser shall cooperate
with one another (a) in determining whether any action by or in
respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to
any material contracts, in connection with the consummation of
the transactions contemplated by this Agreement, and (b) in
taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely
to obtain any such actions, consents, approvals or waivers.
6.04 Public Announcements. The parties agree to consult
with each other before issuing any press release or making any
public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be required
by applicable law, will not issue any such press release or make
any such public statement prior to such consultation.
ARTICLE VII
TAX MATTERS
7.01 Tax Definitions. The following terms, as used herein,
have the following meanings:
"Code" means the Internal Revenue Code of 1986, as
amended.
"Post-Closing Tax Period" means any tax period ending
after the Closing Date, except that with respect to a tax period
that commences before but ends after the Closing Date, the
portion of such period after the close of business on the Closing
Date.
"Pre-Closing Tax Period" means any tax period ending on
or before the close of business on the Closing Date and with
respect to a tax period that commences before but ends after the
Closing Date, the portion of such period up to the close of
business on the Closing Date.
"Tax" means (i) any net income, alternative or add-on
minimum, gross income, gross receipts, sales, use, ad valorem,
franchise, capital, paid-up capital, profits, greenmail, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the
imposition of any such tax (a "Taxing Authority") and (ii) any
liability to any person (including any applicable Taxing
Authority) in respect of any tax included in Clause (i) above by
reason of any indemnity, transferee liability, contractual or
legal obligation.
7.02 Tax Matters. Sellers hereby represent and warrant to
Purchaser as of the date hereof and as of the Closing Date that,
except as provided in Schedule 7.02, the Corporation has paid or
will timely pay all material taxes payable by the Corporation and
attributable to any Pre-Closing Tax Period which are required to
be paid on or prior to the Closing Date, the non-payment of which
would result in a lien on the Shares on or after the Closing
Date, would otherwise materially adversely affect the Business
after the Closing Date or would result in Purchaser becoming
liable therefor, except for taxes caused by an actual or deemed
election under Section 338 of the Code, which is Purchaser's
responsibility pursuant to Section 5.03. Sellers herewith
represent that the only Taxes which will be owed by the
Corporation as of the Closing Date are those which arise or have
arisen or have been incurred in the ordinary course of the
Corporation's Business. The Corporation has filed all required
income, franchise, sales, ad valorem, employment and other tax
returns and paid the total amount of Taxes due by it. The
provision for the corporate income and franchise tax liability of
the Corporation for all periods through the Closing Date as shown
on the Closing Balance Sheet will be adequate relative to the
Corporation's actual liability therefor as finally determined.
Sellers represent that the Corporation is not prohibited by any
law, rule or regulation from electing the provisions of
Subchapter S of the Code, sections 1361, et seq., commencing
January 1, 1997.
7.03 Tax Cooperation: Allocation of Taxes.
(a) Purchaser and Sellers agree to furnish or cause to
be furnished to each other, upon request, as promptly as
practicable, such information and assistance relating to the
Corporation, the non-compete covenant described in Section 4.01
and the Business as is reasonably necessary for the filing of all
tax returns, and making of any election related to taxes, the
preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating
to any tax return. Sellers and Purchaser shall cooperate with
each other in the conduct of any audit or other proceeding
related to taxes involving the Business and each shall execute
and deliver such powers of attorney and other documents as are
reasonably necessary to carry out the intent of this Paragraph
(a) of Section 7.03.
(b) Any transfer, documentary, sales, use or other
taxes arising in connection with the transactions contemplated by
this Agreement and any recording or filing fees with respect
thereto (each, a "Transfer Tax") shall be the responsibility of
Purchaser. (c) Each of Sellers and Purchaser shall execute all
required elections pursuant to section 1377(a)(2) of the Code to
terminate the Corporation's taxable year commencing January 1,
1997 and ending as of the close of business on the Closing Date
(as defined in Section 1.03 entitled "Closing"), and allocate all
of the Corporation's income or loss for that period to Sellers
and the Corporation's income or loss for the remainder of
calendar year 1997 to Purchaser.
ARTICLE VIII
EMPLOYEE BENEFITS
8.01 Employee Benefits Definitions. The following terms, as
used herein, shall have the following meanings:
"Benefit Arrangement" means any employment, severance
or similar contract, or any other contract, plan, policy or
arrangement (whether or not written) providing for compensation,
bonus, profit-sharing, stock option or other stock related rights
or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits,
workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life
insurance benefits) that (i) is not an Employee Plan, (ii) is
entered into, maintained, administered or contributed to, as the
case may be, by Seller and (iii) covers any employee or former
employee of the Corporation.
"Employee Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA, (ii) is maintained, administered or
contributed to by the Corporation and (iii) covers an employee or
former employee of the Corporation.
"ERISA Affiliate" of any entity means any other entity
which, together with such entity, would be treated as a single
employer under Section 414 of the Code.
"Multi-Employer Plan" means each Employee Plan that is
a multi-employer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Title IV Plan" means an Employee Plan, other than any
Multi-Employer Plan, subject to Title IV of ERISA.
8.02 Employee Matters. The Sellers hereby represent and
warrant to Purchaser as of the date hereof:
(a) Schedule 8.02(a) lists each Employee Plan.
Sellers have provided or allow Purchaser access to as a true and
complete copy of each such Plan (and, if applicable, related
trust documents) and all amendments thereto and written
interpretations thereof together with (i) the three most recent
annual reports prepared in connection with each such Employee
Plan (Form 5500 including, if applicable, Schedule B thereto) and
(ii) the most recent actuarial report, if any, prepared in
connection with each Employee Plan. Schedule 8.02(a) identifies
each person who is a participant or who is eligible to
participate in each Employee Plan who is not an active employee
of Seller. The term "active employee" shall mean any person who,
on the Closing Date, is actively employed by the Corporation or
who is on short-term disability leave, authorized leave of
absence, military service or lay-off with recall rights as of the
Closing Date.
(b) Schedule 8.02(b) sets forth all Benefit
Arrangements presently in place for all employees of the
Corporation.
(c) As of the date hereof, there is no litigation,
administrative or arbitration proceeding or other dispute pending
or threatened that involves any Employee Plan or Benefit
Arrangement which could reasonably be expected to result in a
liability to the Corporation or Purchaser.
(d) No Employee Plan is (i) a Multi-Employer Plan,
(ii) a Title IV Plan or (iii) is maintained in connection with
any trust described in Section 501(c)(9) of the Code. No
"prohibited transaction", as defined in Section 406 of ERISA or
Section 4975 of the Code, has occurred that could result in a
liability to the Corporation, Purchaser or any of its Affiliates.
As used herein the term "Affiliate" means any individual, group
of individuals, corporation, partnership or other entity
controlled by, controlling or under common control with the
person or entity with respect to which that term is used.
Neither the Corporation nor any of its current or former
Affiliates (while an Affiliate) has within the last five (5)
years engaged in or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Section
4069 of ERISA. Neither the Corporation nor any of its current or
former Affiliates has ever maintained or become obligated to
contribute to any employee benefit plan (i) that is subject to
Title IV of ERISA, (ii) to which Section 412 of the Code applies,
or (iii) that is a multi-employer plan under Title IV of ERISA.
The Corporation has not incurred, and does not reasonably expect
to incur, (a) any liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial
withdrawal from, any plan covered or previously covered by Title
V of ERISA or (b) any liability under Section 4971 of the Code
that in either case could become a liability of the Corporation
or any of its Affiliates after the Closing Date.
(e) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and no event has occurred since such adoption that would
adversely affect such qualification and each trust created in
connection with each such Employee Plan forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Sellers
have furnished to Purchaser copies of the most recent Internal
Revenue Service determination letters with respect to each such
Plan. Each Employee Plan has been maintained in compliance with
its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations including but
not limited to ERISA and the Code.
(f) Seller has furnished to Purchaser copies or
descriptions of each Benefit Arrangement. Each Benefit
Arrangement has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to
such Benefit Arrangement. Schedule 8.02(f) identifies each
individual eligible to receive a benefit under a Benefit
Arrangement who is not an active employee, as defined in Section
8.02(a), of the Corporation.
(g) The Corporation has no current or projected
liability in respect of post-retirement or post-employment
welfare benefits for retired, current or former employees, except
as required to avoid excise tax under Section 4980B of the Code.
(h) Except as disclosed in writing to Purchaser prior
to the date hereof, there has been no amendment to, written
interpretation of or announcement (whether written or not
written) by the Corporation or any of its Affiliates relating to,
or change in employee participation or coverage under, any
Employee Plan or Benefit Arrangement which would increase
materially the expense of maintaining such Employee Plan or
Benefit Arrangement above the level of the expense incurred in
respect thereof in connection with the Corporation's Employees
for the most recently completed fiscal year.
(i) No employee of the Corporation will become
entitled to any bonus, retirement, severance, job security or
similar benefit or enhanced such benefit (including acceleration
of an award, vesting or exercise of an incentive award) or any
fee or payment of any kind solely as a result of any of the
transactions contemplated hereby.
(j) There is no contract, plan or arrangement (written
or otherwise) covering any employee or former employee of the
Corporation or any of its Affiliates that, individually or
collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of
the Code.
(k) No tax under Section 4980B of the Code has been
incurred in respect of any Employee Plan that is a group health
plan, as defined in Section 5000(b)(1) of the Code.
ARTICLE IX
CONDITIONS TO CLOSING
9.01 Conditions to the Obligations of Each Party. The
obligations of Purchaser and Sellers to consummate the Closing
are subject to the satisfaction, or waiver by both parties, of
the following conditions:
(a) No provision of any applicable law or regulation
and no judgment, injunction, order or decree shall (i) prohibit
the consummation of the Closing or (ii) restrain, prohibit or
otherwise interfere with the effective operation or enjoyment by
Purchaser of the Shares.
(b) All actions by or in respect of or filings with
any governmental body, agency, official or authority required to
permit the consummation of the Closing, and all material third
party consents necessary in connection with the consummation of
the Closing, shall have been obtained.
(c) All waivers of applicable rights of first refusal
by the Corporation and the Sellers have been obtained to permit
consummation of the transactions contemplated herein.
9.02 Conditions to Obligations of Purchaser. The obligation
of Purchaser to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Sellers shall have performed in all material
respects all of their obligations hereunder required to be
performed by them at or prior to the Closing Date (including
their obligations set forth in Section 4.02), (ii) the
representations and warranties of Sellers contained in this
Agreement and in any certificate or other writing delivered by
Sellers pursuant thereto, disregarding all qualifications and
exceptions contained therein relating to materiality, shall be
true at and as of the respective dates applicable to each of them
as set forth herein, and (iii) Purchaser shall have received a
certificate signed by the President of the Corporation to the
foregoing effects.
(b) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any person before any court, arbitrator or
governmental body, agency or official nor shall they be pending.
(c) Purchaser shall have received all documents it may
reasonably request relating to the existence of and good standing
of the Corporation.
(d) The Corporation shall have been issued an owner's
title insurance policy with respect to all real or immovable
property in a form and only with such exceptions as are
reasonably acceptable to Purchaser. The cost of the owner's
title insurance policy shall be borne equally between Sellers and
Purchaser.
(e) Nothing has come to Purchaser's attention which
would indicate that any of the representations and warranties of
Sellers are untrue in any material respect or that Sellers have
failed to perform any of their covenants contained herein.
9.03 Conditions to Obligations of Sellers. The obligation
of Sellers to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Purchaser shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Closing Date and (ii) the
representations and warranties of Purchaser contained in this
Agreement and in any certificate or other writing delivered by
Purchaser pursuant hereto shall be true in all material respects
at and as of the Closing Date, as if made at and as of such date.
(b) Sellers shall have received all documents they may
reasonably request relating to the existence of Purchaser and the
authority of Purchaser to execute and consummate this Agreement,
all in form and substance reasonably satisfactory to Seller.
ARTICLE X
SURVIVAL; INDEMNIFICATION
10.01 Survival. The covenants, agreements, representations
and warranties of the parties hereto contained in this Agreement
or in any certificate or other writing delivered pursuant hereto
or in connection herewith shall survive the Closing.
10.02 Indemnification.
(a) Sellers ("Indemnifying Party" or "Indemnifying
Parties") jointly, severally and in solido hereby indemnify
Purchaser and all of Purchaser's officers, directors, employees
and shareholders (hereinafter "Indemnified Parties") against and
agree to defend and hold them harmless from and against any and
all damage, loss, liability and expense, including, without
limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit
or proceeding (collectively, "Loss") incurred or suffered by any
of the Indemnified Parties arising out of any willful
misrepresentation or breach of warranty, covenant or agreement
made or to be performed by Sellers pursuant to this Agreement,
including all of those made by Sellers in Articles I, II, IV, VI,
VII and VIII hereof. Sellers shall have no obligation with
respect to any loss, claim, demand, suit or action against the
Corporation or Purchaser notice of which is given to Sellers'
Representatives after December 31, 1998 as to all claims,
demands, suits or actions other than for the payment of any Tax
and after December 31, 2000 as to all claims, demands, suits or
actions for the payment of any Tax.
(b) Purchaser hereby agrees to defend and indemnify
Sellers against and to hold Sellers harmless from any and all
Loss incurred or suffered by Sellers arising out of any failure
to perform, misrepresentation or breach of any warranty, covenant
or agreement made or to be performed by Purchaser pursuant to
this Agreement. Purchaser shall have no obligation with respect
to any loss, claim, demand, suit or action against Sellers notice
of which is given to Purchaser (by Sellers or any other person or
governmental agency) after December 31, 1998.
(c) Except as otherwise provided in Section 10.03
hereof in respect of matters relating to Taxes, the following
provisions shall apply:
(i) Promptly after receipt by an Indemnified
Party of notice of the commencement of any action or proceeding
involving a claim in respect of which indemnification is being
sought, such Indemnified Party will, if a claim for
indemnification hereunder is to be made against the Indemnifying
Party, give written notice to the Indemnifying Parties (through
Sellers' Representatives) of the commencement of such action or
proceeding, the basis for such claim for indemnification and such
other information relating thereto as the Indemnifying Party may
reasonably request; provided, however, that failure to so notify
the Indemnifying Parties or to provide such information shall not
relieve such Indemnifying Parties from any liability which they
may have with respect to such claim, except to the extent that
they are actually materially prejudiced by such failure to give
notice.
(ii) In case any such action is brought against
an Indemnified Party, the Indemnified Party shall assume and
control the defense of such action with counsel selected by the
Indemnified Party. It is understood that the Indemnifying
Parties shall not, in connection with any action or related
actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such
jurisdiction to act as counsel for all Indemnified Parties,
unless in any such Indemnified Party's reasonable judgment (i) a
conflict of interest between such Indemnified Party and any other
Indemnified Party may exist in respect of such claim or (ii) such
Indemnified Party has available to it reasonable defenses which
are different from or additional to those available to other
Indemnified Parties. The Indemnifying Parties shall not be
liable for any settlement of any proceeding effected without
their written consent (given by Sellers' Representatives), but if
settled with such consent or if there shall be a final judgment
for the plaintiff, the Indemnifying Parties agree to indemnify
the Indemnified Party and hold the Indemnified Party harmless
from and against any Losses by reason of such settlement or
judgment (it being understood that if the Sellers are the
Indemnifying Party such indemnification obligation shall be joint
and several). The Indemnifying Parties shall not, without the
consent of the Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as
an unconditional term the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect
to such claim or litigation. Any dispute as to whether any
Indemnified Party is entitled to indemnification in connection
with any action or proceeding under Section 10.02(c), the defense
or settlement of such action or proceeding, or any other rights
or obligations of the parties hereto in connection with such
action or proceeding shall be submitted to arbitration in
accordance with Section 12.06 of this Agreement.
(iii) In the event that an Indemnified Party
shall claim a right to payment pursuant to this Agreement with
respect to which there has been no action or proceeding involving
such claim, such Indemnified Party shall send written notice of
such claim to the Indemnifying Parties. Such notice shall
specify the basis for such claim in reasonable detail. As
promptly as possible after the Indemnified Party has given such
notice, such Indemnified Party and the Indemnifying Parties
(acting through Sellers' Representatives) shall establish the
merits and amount of Losses, if any, to which the Indemnified
Party is entitled. If the parties do not agree with respect to
these matters within 30 days after the giving of such notice,
either party may submit the matter to arbitration in accordance
with Section 12.06 of this Agreement. In such arbitration, if
the arbitrator determines that a breach of a representation,
warranty, covenant or agreement in this Agreement by the
Indemnifying Parties occurred and that such breach caused Losses
to an Indemnified Party, the arbitrator will determine the amount
of any such Losses. Within ten business days after the final
determination of the merits of such claim and amount of such
Losses, each Indemnifying Party shall, subject to the limitations
set forth herein, deliver to the Indemnified Party an amount of
cash in immediately available funds sufficient to satisfy such
Losses or the portion of such Losses for which such Indemnifying
Party is obligated to provide indemnity hereunder.
(iv) If any Seller fails to timely deliver cash
in the amount of any Losses payable by such Seller under the
terms of this Agreement, Purchaser may withdraw from funds held
in the Escrow Account (as defined below) an amount of cash equal
to the amount of Losses which has not been paid by that Seller.
(d) Wherever this Agreement requires actions or
decisions of the Indemnifying Parties, those actions or decisions
shall be taken by either or both of Sellers' Representatives
acting on behalf of all Indemnifying Parties.
10.03 Covenants Regarding Tax Matters.
(a) Taxes attributable to the taxable period of the
Corporation beginning before and ending after the Closing Date
shall be allocated (i) to the Sellers for the period up to and
including the Closing Date to the extent such Taxes exceed the
reserve therefor on the Closing Balance Sheet and (ii) to
Purchaser for the period up to and including the Closing Date to
the extent such Taxes do not exceed the reserve therefor on the
Closing Date Balance Sheet and for the period subsequent to the
Closing Date. For purposes of this Section 10.03(a), Taxes for
the period up to and including the Closing Date and for the
period subsequent to the Closing Date shall be determined on the
basis of an interim closing of the books as of the Closing Date.
(b) The Sellers may not file any amended returns or
refund claims in respect of any taxable period of the Corporation
ending on or prior to the Closing Date.
(c) The Sellers shall cooperate fully with Purchaser
and make available to Purchaser in a timely fashion such Tax data
and other information as may be reasonably required for the
preparation by Purchaser of any returns of the Corporation
required to be prepared and filed by Purchaser hereunder. The
Sellers and Purchaser shall make available to the other, as
reasonably requested, all information, records or documents in
their possession relating to Tax liabilities of the Corporation
for all taxable periods of the Corporation ending on, prior to or
including the Closing Date and shall preserve all such
information, records and documents until the expiration of any
applicable Tax statute of limitations or extensions thereof or,
if a proceeding has been instituted for which the information,
records or documents is required, until there is a final
determination with respect to such proceeding.
(d)(i) Purchaser shall promptly notify the Sellers'
Representatives upon receipt by Purchaser or the Corporation of
written notice of any Tax audits or of proposed assessments
against the Corporation for taxable periods of the Corporation
ending on or prior to the Closing Date; provided, however, that
the failure of Purchaser to give Sellers' Representatives prompt
notice as required herein shall not relieve the Sellers of any of
their obligations hereunder, except to the extent that the
Sellers are actually and materially prejudiced thereby.
Purchaser shall have the right to represent the interests of the
Corporation in any such Tax audit or administrative or court
proceeding and to employ counsel of its choice; provided,
however, that Purchaser may not agree to a settlement or
compromise thereof without the prior written consent of Sellers'
Representatives, which consent may be withheld solely in the
event that Sellers' Representatives have been advised in writing
by counsel reasonably acceptable to Purchaser that it is more
likely than not that the issue under audit (or the proposed
assessment) would be decided favorably to the Corporation and
that written advice has been furnished to Purchaser. The Sellers
agree that they will cooperate fully with Purchaser and its
counsel in the defense against or compromise of any claim in any
said audit or proceeding.
(ii) The Sellers shall promptly notify Purchaser
upon receipt by the Sellers of written notice of any Tax audit or
proposed assessment or other proposed change or adjustment which
may affect the Corporation or its Tax attributes. The Sellers
shall keep Purchaser duly informed of the progress thereof and,
if the results of such Tax audit or proceeding may have an
adverse effect on the Corporation, Purchaser or its affiliates
for any taxable period including or ending after the Closing
Date, then the Sellers may not agree to a settlement or
compromise thereof without Purchaser's consent.
(e) Within ten (10) days after notice by Purchaser to
Sellers' Representatives of the total amount of additional taxes,
penalties and interest owed by the Corporation for periods prior
to the Closing, Sellers shall remit to Purchaser the entire
amount thereof less the future tax benefit attributable to the
increase in future depreciation deductions as a result of the
adjustment which caused those additional taxes. The future tax
benefit shall be deemed equal to forty (40%) percent of the total
additional depreciation which the Corporation would thereby be
able to deduct in future years provided the amount of this
reduction shall not exceed the amount of additional taxes (apart
from penalties and interest) then owed by the Corporation. If
any Seller fails to remit his entire proportionate share of the
amount due, Purchaser may withdraw said amount from the Escrow
Account, to the extent thereof, and if the Escrow Account is
insufficient, any one or more of the other Sellers shall pay
Purchaser the shortfall upon ten (10) days written notice.
(f) The Sellers and Purchaser agree to treat any
indemnity payment made pursuant to this Agreement as an
adjustment to the Purchase Price for federal, state, local and
foreign income tax purposes. If, notwithstanding such treatment
by the parties, any indemnity payment is determined to be taxable
to Purchaser or the Corporation by any taxing authority, the
Sellers shall indemnify Purchaser and its Affiliates for any
Taxes payable by reason of the receipt of such indemnity payment
(including any payments under this Section 10.03(f)).
ARTICLE XI
TERMINATION
11.01 Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of Sellers'
Representatives and Purchaser;
(ii) By Purchaser if the Closing shall not have
been consummated on or before January 15,
1997 unless extended by mutual agreement of
Sellers' Representatives and Purchaser;
(iii) By either Sellers' Representatives or
Purchaser if there shall be any law or
regulation that makes the consummation of the
transactions contemplated hereby illegal or
otherwise prohibited or if consummation of
the transactions contemplated hereby would
violate any nonappealable final order, decree
or judgment of any court or governmental body
having competent jurisdiction; or,
(iv) By Purchaser if anything has come to its
attention that any of Sellers'
representations or warranties are untrue in
any respect or Purchaser has discovered any
contamination or any Hazardous Substance on
the premises of the Corporation or any
violations of any Environmental Laws by the
Corporation which have not been remedied as
of the date of the discovery.
The party desiring to terminate this Agreement pursuant to
Clauses (ii), (iii) or (iv) shall give notice of such termination
to the other party.
11.02 Effect of Termination. If this Agreement is
terminated as permitted by Section 11.01, such termination shall
be without liability of any party (or of any shareholder,
director, officer, employee, agent, consultant or representative
of such party) to the other parties to this Agreement; provided
that if such termination shall result from the willful failure of
any party to fulfill a condition to the performance of the
obligations of another party or to perform a covenant of this
Agreement or from a willful breach by any party to this
Agreement, such party shall be fully liable for any and all
Losses incurred or suffered by any other party as a result of
such failure or breach. The provisions of Sections 5.01 and
12.03 shall survive any termination hereof pursuant to Section
11.01.
ARTICLE XII
MISCELLANEOUS
12.01 Notices. All notices, requests and other
communications to either party hereunder shall be in writing
(including facsimile, telecopy or similar writing) and shall be
deemed given when delivered:
If to Purchaser, to: Gulf Island Fabrication, Inc.
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
With a Copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Four United Plaza, 5th Floor
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to Sellers or to
Indemnifying Parties,
to Sellers'
Representatives: ▇. ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a Copy to: ▇. ▇. ▇▇▇▇▇▇▇, Esq.
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Each of the above persons may change their address or facsimile
number by notice to the other persons in the manner set forth
above.
12.02 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Purchaser and Seller,
or in the case of a waiver, by the party against whom the waiver
is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the existence of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12.03 Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense.
12.04 Successors and Assigns. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns;
provided that neither party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder.
12.05 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Louisiana
without regard to the conflicts of law rules of such state.
12.06 Jurisdiction and Forum: Arbitration. Any controversy
arising under, out of, in connection with, or relating to, this
Agreement, and any amendment hereof, or the breach hereof or
thereof, shall be determined and settled by arbitration in New
Orleans, Louisiana by an arbitrator or arbitrators mutually
agreed upon by Purchaser and the Sellers' Representatives or, if
Purchaser and Sellers' Representatives shall fail or be unable to
so agree within ten Business Days after the written request
therefor by Purchaser or the Representatives to the other, such
arbitrator or arbitrators as may be selected in accordance with
the rules of the American Arbitration Association. Any award
rendered therein shall specify the findings of fact of the
arbitrator or arbitrators and the reasons for such award, with
reference to and reliance on relevant law. Any such award shall
be final and binding on each and all of the parties thereto and
their personal representatives, and judgment may be entered
thereon in any court having jurisdiction thereof.
12.07 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received as a
counterpart hereof signed by the other party hereto.
12.08 Entire Agreement. This Agreement and any other
agreements referred to herein constitute the entire agreement
between the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect thereto.
No representation, inducement, promise, understanding, condition
or warranty not set forth herein has been made or relied upon by
either party hereto.
12.09 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
12.10 Severability. In the event any one or more of the
provisions of this Agreement shall be or become illegal or
unenforceable in any respect, the validity, legality, operation
and enforceability of the remaining provisions of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers effective as of the day and year first above written but
executed on the dates set forth below.
WITNESSES: GULF ISLAND FABRICATION, Purchaser
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date Executed: November 25,1996
------------------------- -------------
SELLERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
------------------------- -----------------------------------
▇. ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date Executed: November 25, 1996
------------------------- ------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
------------------------- -----------------------------------
▇. ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date Executed: November 25, 1996
------------------------- ------------
All schedules have been intentionally omitted. A copy of any omitted
schedule will be furnished supplementally to the Commission upon request.