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STOCK PURCHASE AGREEMENT
by and between
GULF ISLAND FABRICATION, INC.
and
XXXXXXX X. XXXXXX, XX., XXXXXXX X. XXXXXX, XX., XXXXXX X. XXXXXX
XXXXX X. XXXXXX, XXXXXXX X. XXXXXX, XXXX XXXXXXX,
XXXX XXXXXX AND XXXXXXX XXXXXX
Dated as of November 12, 1997
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TABLE OF CONTENTS
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Page
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ARTICLE I PURCHASE AND SALE OF SOUTHPORT COMMON STOCK........................ 1
1.1 Purchase and Sale................................................... 1
1.2 Closing............................................................. 1
1.3 Purchase Price...................................................... 1
1.4 Stock Certificates.................................................. 4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS.................... 4
2.1 Ownership of Southport Common Stock................................ 5
2.2 Authority of Shareholders.......................................... 5
2.3 Agreement Valid and Binding........................................ 5
2.4 No Conflicts....................................................... 5
2.5 Consents........................................................... 6
2.6 Brokers; Other Transaction Expenses................................ 6
2.7 Corporate Organization............................................. 6
2.8 Foreign Qualification.............................................. 7
2.9 Capitalization..................................................... 7
2.10 Financial Condition................................................ 7
2.11 Absence of Changes or Events....................................... 8
2.12 Legal Proceedings.................................................. 8
2.13 Tax Audits and Payment of Taxes.................................... 8
2.14 Benefit Plans...................................................... 10
2.15 Compliance with Applicable Laws; Permits........................... 12
2.16 Certain Contracts.................................................. 13
2.17 Undisclosed Liabilities............................................ 15
2.18 Title to Property.................................................. 16
2.19 Insurance.......................................................... 17
2.20 Intellectual Property.............................................. 17
2.21 Environmental Matters.............................................. 18
2.22 Employee and Labor Matters......................................... 20
2.23 Condition of Assets................................................ 20
2.24 Absence of Changes................................................. 21
2.25 Accounts Receivable and Accounts Payable........................... 22
2.26 Inventory.......................................................... 22
2.27 Books and Records.................................................. 23
2.28 Bank Accounts and Powers of Attorney............................... 23
2.29 Questionable Payments.............................................. 23
2.30 Affiliate Transactions............................................. 23
2.31 Zoning............................................................. 23
2.32 No Misrepresentations or Omissions................................. 23
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER...................... 24
3.1 Corporate Organization............................................. 24
3.2 Authority; Execution and Delivery; Enforceability.................. 24
3.3 No Conflicts; Consents............................................. 24
ARTICLE IV COVENANTS......................................................... 25
4.1 Covenants of Seller Relating to Conduct of Southport's Business.... 25
4.2 Access to Information.............................................. 26
4.3 Confidentiality.................................................... 27
4.4 Reasonable Efforts................................................. 27
4.5 Expenses........................................................... 27
4.6 Employees and Employment Agreements................................ 28
4.7 Updating Information............................................... 28
4.8 Schedules; Advice of Changes....................................... 28
4.9 Covenant Not to Compete............................................ 28
4.10 Acquisition Proposals.............................................. 29
4.11 No Inconsistent Arrangements by the Shareholders................... 30
4.12 Exercise of Option by Westport..................................... .31
ARTICLE V CONDITIONS PRECEDENT............................................... 31
5.1 Conditions to Each Party's Obligation To Consummate the Closing.... 31
5.2 Conditions to Obligation of Purchaser.............................. 31
5.3 Conditions to Obligation of Shareholders........................... 32
ARTICLE VI TERMINATION AND AMENDMENT.......................................... 33
6.1 Termination........................................................ 33
6.2 Effect of Termination.............................................. 33
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...... 33
7.1 Survival of Representations, Warranties and Covenants.............. 33
7.2 Indemnification by the Shareholders................................ 33
7.3 Purchaser's Right of Set-Off; Limitation on Indemnification........ 34
ARTICLE VIII GENERAL PROVISIONS............................................... 36
8.1 Assignment......................................................... 36
8.2 Third Party Beneficiaries.......................................... 36
8.3 Notices............................................................ 36
8.4 Interpretation..................................................... 37
8.5 Counterparts; Signatures........................................... 39
8.6 Entire Agreement................................................... 39
8.7 Governing Law...................................................... 40
8.8 Severability....................................................... 40
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8.9 Shareholders' Representative....................................... 40
8.10 Waiver............................................................. 40
8.11 Amendment.......................................................... 41
8.12 Successors......................................................... 41
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as of November 12,
1997, by and among Gulf Island Fabrication, Inc., a Louisiana corporation
("Purchaser"), and Xxxxxxx X. Xxxxxx, Xx., Xxxxxxx X. Xxxxxx, Xx., Xxxxxx X.
Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxx Xxxxxxx, Xxxx Xxxxxx and
Xxxxxxx Xxxxxx, the holders of all of the issued and outstanding shares of
common stock (each such person, a "Shareholder" and, collectively, the
"Shareholders") of Southport, Inc., a Louisiana corporation ("Southport"), sets
forth the terms and conditions pursuant to which Purchaser will acquire (the
"Acquisition") from the Shareholders all of the outstanding shares of common
stock of Southport ("Southport Common Stock"), par value $10.00 per share.
In consideration of the premises, mutual covenants and agreements of the
parties signatory hereto (each a "Party" and, collectively, the "Parties") and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SOUTHPORT COMMON STOCK
1.1 Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing (as defined in Section 1.2), each
Shareholder shall sell, transfer and convey to Purchaser, and Purchaser shall
purchase and acquire from each Shareholder, the number of shares of Southport
Common Stock (the "Shares") set forth opposite such Shareholder's name on
Schedule 1.1 free and clear of all liens, encroachments, easements,
encumbrances, claims, charges or restrictions of any kind whatsoever (each of
the foregoing, whether xxxxxx or inchoate, a "Lien" and, collectively, "Liens"),
for the Purchase Price specified in Section 1.3.
1.2 Closing. The closing of the purchase and sale of the Southport Common
Stock ("Closing") shall take place at the offices of Jones, Walker, Waechter,
Poitevent, Carrere & Xxxxxxx, L.L.P., 000 Xx. Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxxxxx, Xxxxxxxxx, at 10:00 a.m. local time on the third business day following
the satisfaction or waiver of all conditions to the obligations by the Parties
set forth in Article VI hereof, or at such other time and place as Purchaser and
Shareholders' Representative (as defined in Section 8.9) may agree. For
purposes of this Agreement, the "Closing Date" shall mean the date on which the
Closing is completed.
1.3 Purchase Price.
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(a) Upon the terms and subject to the conditions of this Agreement, in
consideration of the sale to Purchaser of the Southport Common Stock, Purchaser
shall pay to Shareholders (i) the sum of $6,000,000, subject to adjustment as
provided in subsection 1.3(b), (the "Initial Purchase Price") of which
$4,500,000 shall be payable in cash at the Closing, and (ii) such additional
cash amounts to which Shareholders shall be entitled by virtue of subsection
1.3(c) hereof (the "Deferred Purchase Price" and, collectively with the Initial
Purchase Price, the "Purchase Price").
(b) On or before the 60th day after the Closing Date, Purchaser shall
furnish to the Shareholders a balance sheet of Southport as of the Closing Date
(the "Closing Date Balance Sheet"), which shall be prepared by Purchaser in
accordance with generally accepted accounting principles applied on a basis
consistent with that of the Interim Balance Sheet. If total consolidated
shareholders' equity shown on the Closing Date Balance Sheet plus the
Transaction Expenses (as defined in Section 2.6) ("Adjusted Closing Date
Shareholders' Equity") equals or exceeds $1,528,877, there shall be no
adjustment to the Initial Purchase Price and Purchaser shall pay $1,500,000 in
cash to the Shareholders within ten days after the Closing Date Balance Sheet
has been delivered to the Shareholders. If the Adjusted Closing Date
Shareholders' Equity is less than $1,528,877, within ten days of the delivery of
the Closing Date Balance Sheet to the Shareholders, Shareholders may notify
Purchaser of their disagreement with the determination of the Adjusted Closing
Date Shareholders' Equity as shown on the Closing Date Balance Sheet and of the
reasons for such disagreement. If the Shareholders do not so notify Purchaser,
the Adjusted Closing Date Shareholders' Equity shall be as determined by
Purchaser. If the Shareholders do so notify Purchaser and if the Parties have
not resolved any such disagreement within twenty days after the giving of such
notice, Shareholders and Purchaser shall select and submit the determination of
the Adjusted Closing Date Shareholders' Equity to a nationally recognized
accounting firm (the "Arbitrator"). If Purchaser and the Shareholders are
unable to agree upon and select the Arbitrator within ten days after the
expiration of such twenty-day period, the Arbitrator shall be selected in
accordance with the rules of the American Arbitration Association. The Parties
shall cause the Arbitrator to submit its determination of the Adjusted Closing
Date Shareholders' Equity as promptly as reasonably practicable. Such
determination by the Arbitrator shall be binding upon the Parties. If the
Adjusted Closing Date Shareholders' Equity, as determined in accordance with
this subsection 1.3(b), is less than $1,528,877, the Initial Purchase Price
shall be reduced by the amount of the shortfall and, within fifteen days of such
determination, (i) Purchaser shall pay to the Shareholders the excess, if any,
of $1,500,000 over such shortfall or (ii) the Shareholders shall deliver to the
Purchaser any amount by which such shortfall exceeds $1,500,000. Interest at
the Purchaser Borrowing Rate (as hereinafter defined) shall be payable on any
amounts payable under this subsection 1.3 (b) from the Closing Date until paid.
(c) (i) Purchaser shall pay to Shareholders amounts, in cash, equal
to (A) the lesser of (1) one-half of Net After-Tax Income (as hereinafter
defined) for the year ending December 31, 1998 and (2) $1,250,000; (B) the
amount by which the lesser of (1) one-half of Net After-Tax Income for the two
years ending December 31, 1999 and (2) $2,500,000 exceeds the amount payable to
Shareholders pursuant to subsection 1.3(c)(i)(A); (C) the amount by which the
lesser of (1) one-half of Net After-Tax Income for the three years ending
December 31, 2000 and (2) $3,750,000 exceeds the aggregate amount payable to
Shareholders pursuant to subsections 1.3(c)(i)(A) and (B); and (D) the amount by
which the lesser of (1) one-half of Net After-Tax Income for the four years
ending December 31, 2001 and (2) $5,000,000 exceeds the aggregate amounts
payable to Shareholders pursuant to subsections 1.3(c)(i)(A), (B) and (C). Any
payment required to be made by Purchaser to the Shareholders pursuant to
subsection 1.3(c) shall be paid not later than 90 days after the end of the year
to which such payment relates.
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(ii) "Net After-Tax Income" shall mean the consolidated net after-tax
income or loss of Southport and the Subsidiary (as hereinafter defined),
prepared in accordance with generally accepted accounting principles by the
independent public accounting firm generally engaged by Purchaser as its
auditor, taking into account intercompany charges and calculated as if Southport
were the common parent corporation of Southport and the Subsidiary and not a
member of the consolidated group of which Purchaser if the common parent,
adjusted to exclude amortization of good will, if any, resulting from the
Acquisition and to exclude interest, if any, payable on debt incurred by
Southport and the Subsidiary or by Purchaser in connection with the Acquisition,
other than interest payable by Southport or the Subsidiary (A) on debt in
existence on the Closing Date, (B) on debt incurred to fund capital expenditures
(including the acquisition of real property pursuant to the Option (as defined
in subsection 2.18(c), if it occurs) of Southport after the Closing Date
(provided, however, that for purposes of calculating Net After-Tax Income, the
interest payable on any debt incurred to acquire real property pursuant to the
Option may not exceed the amount of rent paid by Southport with respect to such
property on the date hereof), or (C) on any other debt incurred to fund
operations of Southport after the Closing Date, whether third-party debt or
intercompany debt; provided, that the interest rate on such intercompany debt
does not exceed the interest rate required to be paid by Purchaser under its
credit agreement with First National Bank of Commerce and Whitney National Bank
or any successor agreement (the "Purchaser Borrowing Rate"); and provided,
further, that sales, general and administrative expenses of Southport and the
Subsidiary ("SG&A") may be included in the calculation of SG&A for any year only
to the extent that it does not exceed the greater of (i) SG&A for the year ended
December 31, 1997, or (ii) such amount as would cause the ratio of SG&A to
revenue of Southport and the Subsidiary for such year to exceed such ratio for
the year ended December 31, 1997.
(iii) The Shareholders acknowledge and agree that, notwithstanding the
provisions of subsections 1.3(b) and 1.3(c), Purchaser may combine clerical,
administrative, financial, insurance and other operations of Southport and the
Subsidiary with those of Purchaser, may cause Southport and the Subsidiary to
incur intercompany charges with respect thereto and may otherwise control the
operations of Southport and the Subsidiary notwithstanding that such actions may
affect the amount of Southport's Net After-Tax Income within the limits set
forth in subsection 1.3(c)(ii).
(iv) (A) At any time after Closing Purchaser may, in lieu of any
payments otherwise required to be made under subsection 1.3(c)(i), pay to the
Shareholders an amount (the "Early Payment Amount") equal to the maximum amount
of such remaining payments, discounted to the present value of such remaining
payments at the time the Early Payment Amount is paid, on the basis of a
discount rate equal to 9%.
(B) Purchaser shall not sell, transfer or otherwise dispose of a
majority of the shares of voting capital stock of Southport or cause or permit
Southport to sell shares of voting capital stock after which sale Purchaser
shall own less than a majority of the outstanding shares of such capital stock
or cause or permit Southport to merge into or with, or consolidate with, or
sell, lease, transfer or otherwise dispose of all or substantially all of its
assets to, or effect a share exchange with, any corporation, partnership or
other business entity or person, or voluntarily
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liquidate or dissolve unless, in connection with any such transaction, Purchaser
shall pay to the Shareholders the Early Payment Amount; provided, however, that
this subsection 1.3(c)(iv)(B) shall not apply to any transaction as a result of
which Purchaser remains the owner, directly or indirectly, of a majority of the
outstanding shares of voting capital stock of Southport.
(C) If the employment of Xxxxxxx X. Xxxxxx, Xx. under the
Employment Agreement between him and Southport provided for in Section 4.6 is
terminated by Southport for reasons other than Cause, as defined therein, or by
Xxxxxxx X. Xxxxxx, Xx. for Good Reason, as defined therein, Purchaser shall pay
to the Shareholders the Early Payment Amount within 10 days of the date of such
termination as such date is determined under such Employment Agreement.
(d) Each Shareholder agrees that if, at any time after the Closing
during which he or she is otherwise entitled to receive any payment by the
Purchaser under subsection 1.3, such Shareholder engages in any of the
activities prohibited to any Shareholder by subsection 4.9(a) or 4.9(c), such
Shareholder shall forever forfeit his or her right to receive any such payment
and Purchaser shall be forever relieved from making any such payment to such
Shareholder. The Shareholders and Purchaser acknowledge and agree that this
subsection 1.3(d) sets forth conditions upon the payment of a portion of the
Purchase Price hereunder and does not restrain any Shareholder from engaging in
any activity that is competitive with the business of Southport or in any other
activity.
(e) Purchaser shall pay all payments under this subsection 1.3 by wire
transfer to an account and bank specified in writing (including account and
routing numbers) by Shareholders' Representative on or prior to the date such
payment is due. All such payments shall be allocated among Shareholders as
their interests appear in Schedule 1.1, Shareholders acknowledging and agreeing
that Purchaser shall have no responsibility for payment to any individual
Shareholder beyond its obligation to transfer funds to the account so specified.
The Shareholders, in proportion to their respective interests as shown on
Schedule 1.1, shall pay any amounts due to Purchaser under this subsection 1.3
by wire transfer to an account and bank specified in writing (including account
and routing numbers) by Purchaser on or prior to date such payment is due.
1.4 Stock Certificates. At the Closing, each Shareholder shall deliver to
Purchaser certificates representing the Shares that are duly endorsed or with
duly executed stock powers attached and in proper form for transfer to
Purchaser.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder warrants and represents to Purchaser, as an
inducement to Purchaser, as follows:
2.1 Ownership of Southport Common Stock. The Shareholders as a group
own and have an unqualified right to, and at the Closing shall transfer to
Purchaser, good, valid and marketable title to, all of the Southport Common
Stock, free and clear of all Liens. The Southport Common Stock represents all
equity interests owned by each such Shareholder in Southport.
2.2 Authority of Shareholders. Each Shareholder has full power,
authority and legal capacity to execute, deliver, and perform this Agreement and
all other agreements and documents contemplated by this Agreement to be executed
and delivered by such Shareholder in connection with the transactions
contemplated hereby (all such other agreements and documents are referred to as
the "Related Agreements").
2.3 Agreement Valid and Binding. This Agreement has been, and each
of the Related Agreements will be, duly executed and delivered by each
Shareholder and this Agreement is, and each of the Related Agreements will be,
when duly executed and delivered, the legal, valid and binding obligations of
each Shareholder, enforceable against each Shareholder in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity. Neither the execution and delivery by such
Shareholder of this Agreement or of any of the Related Agreements to which such
Shareholder is a party, nor the consummation by such Shareholder of the
transactions contemplated hereby or thereby, nor the compliance by such
Shareholder with or fulfillment by such Shareholder of the terms and provisions
hereof or thereof will (i) with or without the giving of notice or lapse of time
or both, conflict with or result in a breach or violation of, or default under,
or permit the acceleration of any obligation under any provision of any
agreement, indenture, mortgage, lien, lease or other instrument or restriction
of any kind to which such Shareholder is a party or by which such Shareholder is
otherwise bound or affected, or (ii) violate any judgment, order, writ,
injunction, decree, statute, rule or regulation applicable to such Shareholder,
except in the case of the preceding clauses, for those conflicts, breaches,
violations, defaults or accelerations that would not, individually or in the
aggregate, have, or be reasonably likely to have, a material adverse effect on
the ability of such Shareholder to perform his or her obligations under this
Agreement or any of the Related Agreements or to consummate the transactions
contemplated by this Agreement or by any of the Related Agreements.
2.4 No Conflicts. The execution and delivery by each Shareholder of
this Agreement does not, and the execution by each Shareholder of the Related
Agreements and the consummation of the Acquisition and the other transactions
contemplated hereby and compliance with the terms hereof and thereof will not,
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any
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obligation or to loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any person under, or result
in the creation of any mortgages, liens, security interests, charges, easements,
leases, subleases, covenants, rights of way, options, claims or Liens upon any
assets of Southport or its Subsidiary under any provision of: (i) the articles
or certificate of incorporation or bylaws of Southport or its Subsidiary; (ii)
any mortgage, loan agreement, contract or other agreement to which Southport or
its Subsidiary is a party; or (iii) any judgment, order or decree ("Judgment")
or statute, law (including common law) ordinance, rule or regulation
("Applicable Law") applicable to Southport or its Subsidiary, or any of their
properties or assets except, in the case of clause (iii), for those that, in the
aggregate, would not have a Material Adverse Effect. Except as set forth on
Schedule 2.4, no consent of, or registration, declaration or filing with any
Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity") or
any private third party is required to be obtained or made by or with respect to
Southport or its Subsidiary in connection with (A) the execution, delivery and
performance of this Agreement or the consummation of the Acquisition or the
other transactions contemplated hereby or by the Related Agreements or (B) the
conduct by Purchaser after the Closing Date of the business of designing,
manufacturing and marketing living quarters for offshore drilling and production
platforms (the "Business").
2.5 Consents. Except as set forth on Schedule 2.5, no consent,
approval, waiver, order or authorization of, or registration, declaration or
filing with or notice to, any Governmental Entity (as defined in Section 2.4) or
third party is required in connection with the execution and delivery of this
Agreement or any of the Related Agreements by such Shareholder or the
consummation by such Shareholder of the transactions contemplated hereby or
thereby. All consents, approvals, waivers, orders, authorizations,
registrations, declarations, filings and notices ("Consents") set forth in
Schedule 2.5 include a description of the Consent required to be obtained, given
or made.
2.6 Brokers; Other Transaction Expenses. Except as set forth on
Schedule 2.6, (i) no Shareholder and neither Southport nor the Subsidiary has
taken any action that could give rise to any claim against Purchaser, Southport
or the Subsidiary for any broker's, finder's or similar fee in connection with
the transactions contemplated by this Agreement or any Related Agreement, and
(ii) neither Southport nor the Subsidiary has incurred any such broker's or
finder's fee or expense or any legal, accounting or other similar expense in
connection with this Agreement or the transactions contemplated hereby that are
not reflected in the Interim Financial Statements. (All such fees and expenses
of brokers, finders, lawyers and accountants and other similar fees and expenses
incurred by Southport or the Subsidiary in connection with such transactions, to
the extent that they exceed $40,000 and are not reflected in the Interim
Financial Statements, are referred to herein as the "Transaction Expenses").
2.7 Corporate Organization.
(a) Each of Southport and the Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Louisiana (in the case of Southport) and Barbados (in the case of the
Subsidiary) and has the corporate power and authority necessary to
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enable it to own, lease or otherwise hold all of its properties and assets and
to carry on its business as it is now being conducted.
(b) Each of Southport and the Subsidiary possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to enable
it to own, lease or otherwise hold all of its properties and assets and to carry
on its business as it is now being conducted, except for governmental
franchises, licenses, permits, authorizations and approvals the absence of
which, individually or in the aggregate, would not have or be reasonably likely
to have a material adverse effect on the operations, assets or financial
position of Southport and the Subsidiary, taken as a whole, or on the ability of
Shareholders to perform their obligations under this Agreement or any of the
Related Agreements ("Material Adverse Effect").
2.8 Foreign Qualification. Schedule 2.8 sets forth the states and
other jurisdictions in which Southport and the Subsidiary are qualified to do
business as a foreign corporation and each state and other jurisdiction in which
either corporation is doing business. Each of Southport and its Subsidiary is
duly licensed or qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which its ownership or leasing of property
or the conduct of its business requires such qualification, except for
jurisdictions in which the failure to become so qualified or to be in good
standing would not have a Material Adverse Effect.
2.9 Capitalization.
(a) The authorized capital stock of Southport consists of 30,000
shares of Common Stock, $10 par value per share. As of the date of this
Agreement, there are 10,350 shares of Southport Common Stock issued and
outstanding and no shares of Southport Common Stock held in Southport's
treasury. The Shares held by the Shareholders constitute, in the aggregate, all
of the issued and outstanding shares of Southport Common Stock. All of the
issued and outstanding shares of Southport Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. Southport does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Southport Common
Stock or any other equity security of Southport or any securities representing
the right to purchase or otherwise receive any shares of Southport Common Stock
or any other equity security of Southport.
(b) Southport International, a wholly owned subsidiary of Southport,
is Southport's only direct or indirect subsidiary (the "Subsidiary").
(c) Except for the Subsidiary, Southport does not own, directly or
indirectly, an equity interest in any other business entity. Southport owns
directly all of the issued and outstanding shares of the capital stock of the
Subsidiary, free and clear of all Liens, and all of such shares are duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. The Subsidiary does not have, nor is it bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of
7
any character calling for the purchase or issuance of any shares of capital
stock or any other equity security or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of the Subsidiary.
2.10 Financial Condition. Southport has delivered to Purchaser its
audited consolidated balance sheets of Southport and its Subsidiary as of, and
the audited consolidated statements of operations and cash flows of Southport
and its Subsidiary for the fiscal year ended December 31, 1996, together with
the notes thereto and the opinions of Southport's independent auditors
(collectively, the "Year-end Financial Statements"). The Year-end Financial
Statements are true, correct and complete in all material respects, are in
accordance with the books and records of Southport and its Subsidiary, have been
prepared in conformity with generally accepted accounting principles as in
effect from time to time ("GAAP"), consistently applied, and on that basis
fairly present the financial condition, results of operations and cash flows of
Southport and its Subsidiary for the periods presented. Additionally, Southport
has delivered to Purchaser its unaudited monthly financial statements of
Southport and its Subsidiary for the nine months ended September 30, 1997 (the
"Interim Financial Statements" and, collectively with the Year-end Financial
Statements, the "Southport Financial Statements"). Such monthly financial
statements are in accordance with the books and records of Southport and its
Subsidiary, have been prepared in accordance with GAAP consistently applied, and
are true, correct and complete in all material respects except for adjustments
and accruals normally made at year end. Except as set forth in the balance
sheet included in the Interim Financial Statements (the "Interim Balance
Sheet"), Southport and its Subsidiary do not have any liabilities or obligations
of any kind or nature, whether fixed, contingent or otherwise, except for
liabilities and obligations incurred in the ordinary course of the business and
consistent with past practice. Copies of the Southport Financial Statements are
attached hereto as Schedule 2.10.
2.11 Absence of Changes or Events. Except as set forth on Schedule
2.11, since September 30, 1997, there has not occurred any change in the
condition (financial or other) of Southport or its Subsidiary that could have a
Material Adverse Effect on Southport or its Subsidiary, and none of the
Shareholders of Southport has any knowledge of any threat or intention by any
significant customer, supplier, or subcontractor of Southport or its Subsidiary
to modify materially its business relationship with Southport or its Subsidiary.
Since September 30, 1997, Southport and its Subsidiary have been operating in
the ordinary course and in substantially the same manner as previously operated
and all reasonable efforts have been made consistent with past practices to
preserve the relationships of Southport and its Subsidiary with customers,
suppliers and others with whom each deals. Since September 30, 1997, except as
set forth on Schedule 2.11, neither Southport nor its Subsidiary has taken any
action that, if taken after the date of this Agreement, would constitute a
breach of any of the covenants set forth in Article IV.
2.12 Legal Proceedings. Except as set forth on Schedule 2.12,
neither Southport nor its Subsidiary is a party to any, and there are no pending
or, to the knowledge of any Shareholder or Southport, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature ("Proceedings") against any
Shareholder or Southport or its Subsidiary, or challenging the validity or
propriety of the transactions contemplated
8
by this Agreement. There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon any Shareholder or Southport or its
Subsidiary or any of their respective assets or properties that has had, or
could reasonably be expected to have a Material Adverse Effect.
2.13 Tax Audits and Payment of Taxes. Except as set forth on
Schedule 2.13 or disclosed or recorded in the Southport Financial Statements:
(a) All federal, state, local and foreign returns (by or on behalf of
Southport and its Subsidiary) and reports of Southport and its Subsidiary
concerning Taxes (as defined in subsection 2.13 (h)) that are required by
Applicable Law to be filed with any taxing authority prior to the Closing Date
("Returns") have been or will be filed when due (including extensions). The
U.S. corporation income tax return (Form 1120) and all foreign and state
corporation franchise and income tax returns for the taxable years of Southport
and its Subsidiary through the taxable year ending on December 31, 1996 were or
will be filed on or before their respective due dates as extended. Neither
Southport nor its Subsidiary has at any time executed or filed with any taxing
authority any agreement extending the period for assessment or collection of any
Taxes to a period extending beyond the Closing Date. Each Shareholder and
Southport have no knowledge of any pending examination, audit, claim, asserted
deficiency or assessment for additional Taxes with respect to any Returns that
are open for examination under applicable statutes of limitation.
(b) All income Tax and state corporation franchise Tax Returns filed
by or on behalf of Southport and its Subsidiary have been prepared in accordance
with Southport's or its Subsidiary's, as applicable, books and records and are
correct and accurate in all material respects, and all Taxes shown on such
Returns have been paid when due. The provision for Taxes of Southport and its
Subsidiary reflected in the Southport Financial Statements for the fiscal year
ending December 31, 1997 is sufficient to provide (i) for all Taxes which, as of
the date of such statements, were due and unpaid, and (ii) for an appropriate
reserve or accrual for other Taxes of Southport and its Subsidiary that are
properly the subject of a reserve or an accrual under GAAP as of the date of
such financial statements.
(c) Southport has never been included in a group of corporations
filing a consolidated federal income tax return other than with its wholly-owned
Subsidiary. As of the Closing Date, neither Southport nor any its Subsidiary
will have any outstanding liabilities under any tax sharing agreement, and will
not be a party to any tax sharing agreement that will then be in effect.
(d) None of the property owned or leased by Southport or its
Subsidiary constitutes tax-exempt bond financed property or tax-exempt leased
property within the meaning of Section 168 of the Internal Revenue Code of 1986
("Code") and none of the property owned by Southport or its Subsidiary is
subject to a lease, safe harbor lease or other arrangement as a result of which
Southport or its Subsidiary is not treated as the owner of the property for
federal income tax purposes.
9
(e) Neither Southport nor its Subsidiary is obligated to make, or will
as a result of any event connected with the transactions contemplated in this
Agreement become obligated to make, any "excess parachute payment" as defined in
Section 280G of the Code (without regard to subsection (b)(4) thereof).
(f) Neither Southport nor its Subsidiary is or has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code. No Shareholder is a "foreign person" (as that term is defined in
Section 1445 of the Code) and each Shareholder will provide an affidavit to that
effect prior to or at the Closing in the form attached hereto as Schedule
3.8(f).
(g) There are no Liens for Taxes upon any property or assets of
Southport or its Subsidiary, except for Liens for Taxes not yet due and payable
and Liens for Taxes that are being contested in good faith and by appropriate
proceedings.
(h) "Tax" or "Taxes" means any and all taxes, charges, fees, duties,
levies and other assessments, including additions to tax, interest or penalties
related thereto, that may be imposed by any taxing authority upon or against
Southport or its Subsidiary, including without limitation federal, state, local
and foreign income taxes and any tax measured by income, franchise taxes,
alternative or add-on minimum taxes, gross receipts taxes, use, sales, value
added, personal or real property taxes, taxes imposed on capital, excise taxes,
employment and unemployment taxes and withheld taxes and interest or penalties
relating thereto pursuant to wage withholding, withholding pursuant to the
Federal Insurance Contributions Act or withholding with respect to certain
payments made to nonresident persons and payments in lieu of taxes.
2.14 Benefit Plans.
(a) Schedule 2.14 contains a list and brief description of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("Company Pension
Plans")), "employee welfare benefit plans" (as defined in Section 3(1) of
ERISA), bonus, incentive, stock option, stock purchase, life insurance
(including any individual life insurance policy as to which Southport or any
ERISA Affiliate (as defined below) is owner, beneficiary, or both of such
policy), health insurance (including any self-insured arrangement or other
health or wellness benefit) or other insurance coverage, deferred compensation
plans or arrangements, excess benefit plans, severance pay, holiday pay,
vacation pay, "cafeteria" or "flexible benefit" plans, fringe benefits,
perquisites, and other employee benefit plans, arrangements, agreements, trusts,
contracts, policies, or commitments, whether written or unwritten, funded or
unfunded (all the foregoing, including the Company Pension Plans, being herein
called "Company Benefit Plans") now or during the five years prior to the
Closing Date maintained, or contributed to, by Southport or by any ERISA
Affiliate for the benefit of any present or former employees, officers,
directors, or other persons. As used herein, "ERISA Affiliate" means the
Subsidiary of Southport and any trade or business (whether or not incorporated)
that is or was during the five years prior to the Closing Date part of the same
controlled group, or under common control
10
with, or part of an affiliated service group that includes Southport within the
meaning of Code Sections 414(b), (c), (m) or (o).
(b) Southport has delivered to Purchaser, or by the Closing will have
delivered to Purchaser, to the extent the following items exist, true, complete
and correct copies of: (i) each Company Benefit Plan (or, in the case of any
unwritten Company Benefit Plans, descriptions thereof) and all amendments
thereto; (ii) the three most recent annual reports on Form 5500 (including all
schedules and attachments thereto, and financial statements and accountant's
opinion, if applicable) filed with the Internal Revenue Service ("IRS") with
respect to each Company Benefit Plan, if any such report was required; (iii) the
three most recent actuarial valuations and Pension Benefit Guaranty Corporation
("PBGC") premium reports for each Company Pension Plan that is a defined benefit
plan; (iv) the most recent summary plan description for each Company Benefit
Plan for which such a summary plan description is required; (v) each trust
agreement, group annuity contract or other funding and financing arrangement
relating to any Company Benefit Plan, if any such arrangement was required or
maintained; (vi) the most recent determination letters received from and
applications pending with the IRS with respect to Company Benefit Plans; and
(vii) all prohibited transaction applications made and exemptions received from
the Department of Labor with respect to Company Benefit Plans.
(c) Except as disclosed in Schedule 2.14: (i) each Company Pension
Plan has received a favorable determination letter from the IRS stating that
such Company Pension Plan meets all the requirements of Section 401(a) of the
Code, and that any trust or trusts associated with such Company Pension Plan are
tax exempt under Section 501(a) of the Code; (ii) to the knowledge of each
Shareholder and Southport, there is no reason why the tax-qualified status of
any such Company Pension Plan should be revoked, whether retroactively or
prospectively, by the IRS and, to the knowledge of each Shareholder and
Southport, nothing has occurred since the date of any such determination letter
that could adversely affect any Company Pension Plan's qualification or any
trust's tax exempt status; (iii) all amendments to the Company Pension Plans
that are required to be made through the date hereof and the Closing Date under
Section 401(a) of the Code, and any other Applicable Law, subsequent to the
issuance of each such Company Pension Plan's IRS determination letter have been
made.
(d) Southport does not maintain and has never maintained or
contributed to or been required to contribute to, a multiemployer plan as
defined in Section 3(37) of ERISA and no Shareholder nor Southport has any
liability (contingent or otherwise) relating to the withdrawal or partial
withdrawal from a multiemployer plan. Further, there are no Company Benefit
Plans that promise or provide health, life or other benefits to retirees or
former employees of the Company or any ERISA Affiliate other than as required by
Section 602 of ERISA or Section 4980B of the Code.
(e) All Company Benefit Plans comply (and have been funded and
administered in form and in operation) in all material respects with their terms
and any related documents or agreements and with the requirements of all
statutes, orders or governmental rules and regulations currently in effect and
applicable to such plans or arrangements, including ERISA and the Code; no
Shareholder nor Southport has received any notice from any governmental agency
questioning or
11
challenging such compliance; and all contributions, payments, premiums and
reports required by such statutes, orders, and governmental rules and
regulations have been made.
(f) There is no litigation, administrative or arbitration proceeding
or other claim or dispute pending or, to any Shareholder's or Southport's
knowledge, threatened, that involves any Company Benefit Plan that could
reasonably be expected to have a Material Adverse Effect on Southport or any
adverse effect on any employees or directors of Southport or any fiduciary (as
defined in ERISA Section 3(21)) of any Company Benefit Plan, nor, to any
Shareholder's or Southport's knowledge, is there any reasonable basis for any
such claim, suit or proceeding.
(g) To the knowledge of each Shareholder and Southport all
contributions and payments made or accrued with respect to each Company Benefit
Plan are deductible in full for income Tax purposes under the Code; all
contributions, premiums or payments required to be made with respect to each
such Company Benefit Plan for any period ending on or before the Closing Date
have been paid on or before their due date(s) to each such Company Benefit Plan
or, if not yet due, accrued in accordance with past practices of the Company;
and all premiums or other payments due for all periods ending on or before the
Closing Date have been or will be paid with respect to each Company Benefit Plan
that is an "employee welfare benefit plan" except for claims for benefits
submitted in the ordinary course of administration of such "employee welfare
benefit plans."
(h) Neither the consummation of the transactions contemplated by this
Agreement nor the subsequent sale of all or part of Southport's assets will
accelerate or terminate, nor does there exist any basis for the acceleration or
termination of: (i) benefits payable to current or former employees of
Southport or an ERISA Affiliate under any Company Benefit Plan; (ii) a
participant's vesting credits or years of service under any Company Benefit
Plan; or (iii) accruals with respect to any other benefits or amounts reserved
under any such plan or arrangement. Only current and former employees
(excluding "leased employees" as defined in Code Section 414(n)(2)) of Southport
and its ERISA Affiliates participate in, and are entitled to receive benefits
from, the Company Benefit Plans.
(i) With respect to each Company Benefit Plan, to the knowledge of
each Shareholder and Southport, there has not occurred, and no person is
contractually bound to enter into, any nonexempt "prohibited transaction" within
the meaning of Section 4975 of the Code or Section 406 of ERISA.
(j) Southport and its Subsidiary have never had any Company Pension
Plan that is subject to Title IV of ERISA ("Defined Benefit Plan") or an
employee plan maintained in connection with a trust described in Section
501(c)(9) of the Code.
(k) Except as set forth on Schedule 2.14, Southport has not entered
into any agreement or taken any action causing any employee, former employee or
director of Southport or its Subsidiary to become entitled to any bonus,
retirement, severance, job security or similar benefit or any enhanced benefit
solely as a result of the transactions contemplated hereby or the subsequent
sale of all or part of Southport's assets.
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(l) With respect to each Company Benefit Plan that is a "group health
plan" within the meaning of Section 607 of ERISA and that is subject to Section
4980B of the Code, Southport complies in all respects with the continuation
coverage and health insurance portability requirements of the Code and ERISA.
2.15 Compliance with Applicable Laws; Permits. Southport and its
Subsidiary comply in all material respects with all Applicable Laws (including,
without limitation, all Environmental Laws (as defined in Section 2.21) and all
laws, rules and regulations enforced or promulgated by the U.S. Immigration and
Naturalization Service), and Schedule 2.15 identifies, to the knowledge of each
Shareholder and Southport, all violations of any Applicable Laws. Neither
Southport nor its Subsidiary has received any written communication during the
past three years from a Governmental Entity that alleges that Southport or its
Subsidiary does not comply in any material respect with any Applicable Law.
Neither Southport nor its Subsidiary has received any written notice, nor does
Southport or its Subsidiary have knowledge that any investigation or review by
any Governmental Entity with respect to Southport, its Subsidiary, or any asset
thereof is pending or threatened or that any such investigation or review is
contemplated. Except as set forth in Schedule 2.15, Southport and its
Subsidiary has received or been issued, as appropriate, every license, permit,
authorization, consent and approval (collectively, "Permits") required by any
foreign, United States, state or local Governmental Entity for the present or
currently contemplated operation of the Business, except where the failure to
have received or been issued any Permit would not, individually or in the
aggregate, have or be reasonably likely to have, a Material Adverse Effect.
Except as disclosed in Schedule 2.15, all Permits are valid and in full force
and effect, and no Proceeding is pending or, to the knowledge of any Shareholder
or Southport, has been threatened to modify, suspend, revoke or otherwise limit
any Permit, and no administrative or governmental actions have been taken or, to
the knowledge of any Shareholder or Southport threatened in connection with the
expiration or renewal of any Permit.
2.16 Certain Contracts.
(a) Except as set forth in Schedule 2.16, neither Southport nor its
Subsidiary is a party to or bound by any contract, lease, license, indenture,
agreement, commitment or other legally binding arrangement, whether oral or
written (each, a "Contract", and, collectively, "Contracts"), that is:
(i) an employment agreement or employment contract;
(ii) a collective bargaining agreement or other Contract with any
labor organization, union or association;
(iii) a covenant not to compete or other covenant by Southport
or its Subsidiary restricting the operations, development or marketing of
Southport or its Subsidiary;
13
(iv) a lease or a sublease, or similar Contract with any person
under which (A) Southport or its Subsidiary is lessee, sublessee or holds
or uses, any vessel, machinery, equipment, vehicle or other tangible
personal property owned by any other person or (B) Southport or its
Subsidiary is a lessor, sublessor, or makes available for use by any
person, any vessel or tangible personal property owned or leased by
Southport or its Subsidiary, that in any such case has an aggregate future
liability or receivable, as the case may be, in excess of $5,000;
(v) a lease, sublease or similar Contract with any person under
which (A) Southport or its Subsidiary is lessee or sublessee of, or holds
or uses, and real property owned by any person or (B) Southport or its
Subsidiary is a lessor or sublessor of, or makes available for use by any
person, any real property owned or leased by Southport or its Subsidiary;
(vi) (A) a continuing Contract for the future purchase of
materials, supplies or equipment, (B) a management, service, agency,
consulting or other similar Contract or (C) an advertising agreement or
arrangement, in any such case that has an aggregate future liability to any
person in excess of $10,000;
(vii) a license, option or other Contract relating in whole or
in part to Intellectual Property (including any license or other contract
under which Southport or its Subsidiary is licensee or licensor of any
Intellectual Property (as defined in Section 2.20));
(viii) a Contract establishing a Lien upon any asset of
Southport or its Subsidiary;
(ix) a confidentiality agreement;
(x) a Contract (including a purchase order) involving payment by
Southport or its Subsidiary of more than $10,000 or extending for a term
more than 180 days from the date of this Agreement (unless terminable
without payment or penalty upon no more than 30 days' notice);
(xi) a Contract (including a sales order) involving the
obligation of Southport or its Subsidiary to perform services for payment
of more than $10,000 or extending for a term more than 30 days from the
date of this Agreement (unless terminable without payment or penalty upon
no more than 30 days' notice);
(xii) a Contract for the sale of any asset of Southport or its
Subsidiary or the grant of any preferential rights to purchase any asset of
Southport or its Subsidiary or requiring the consent of any person to the
transfer thereof;
(xiii) a Contract with any Governmental Entity;
14
(xiv) a Contract for any joint venture, partnership or similar
arrangement;
(xv) a Contract with or obligating Southport or its Subsidiary to
any director, officer or affiliate of Southport, its Subsidiary or any
Shareholders;
(xvi) a Contract providing for the services of any sales
representative, franchisee or similar representative;
(xvii) a Contract other than as set forth above to which
Southport or its Subsidiary is a party or by which it or any of its assets
is bound or subject that was not made in the ordinary course of business
involving the payment or receipt over the life of such Contract in excess
of $10,000 by Southport or its Subsidiary.
(b) Except as set forth in Schedule 2.16,
(i) all Contracts listed in Schedule 2.16 are valid, binding and
in full force and effect and are enforceable by Southport or its Subsidiary
in accordance with their respective terms;
(ii) Southport and its Subsidiary has performed all obligations
required to be performed by them to date under the Contracts, and none is
(with or without the lapse of time or the giving of notice, or both) in
breach or default thereunder and, to the knowledge of Southport and each
Shareholder, no other party to any Contract is (with or without the lapse
of time or the giving of notice, or both) in breach or default thereunder;
(iii) neither Southport nor its Subsidiary has received any
notice of the intention of any party to terminate any Contract nor has
Southport or its Subsidiary knowledge of the intention of any party to
terminate any Contract;
(iv) neither Southport nor its Subsidiary is a party to any
Contract for the employment of any person that is not terminable on 30
days' notice or that requires the payment of severance benefits; and
(v) with the exception of Contracts involving an aggregate
obligation on or benefit to the Southport or its Subsidiary of less than
$10,000, all Contracts of Southport or its Subsidiary (including
Southport's long-term sublease of land in Harvey, Louisiana and leases for
equipment, and all Contracts with Customers) are fully assignable by
Southport or its Subsidiary, as applicable, without the consent of the
other parties thereto.
(c) Complete and correct copies of all Contracts listed in Schedule
2.16, together with all modifications and amendments thereto, have been made
available, or by the Closing Date will have been made available, to Xxxxxxxxx.
00
(x) Schedule 2.16 sets forth each Contract with respect to which the
consent of the other party or parties thereto must be obtained by virtue of the
execution and delivery of this Agreement or the consummation of the Merger to
avoid the invalidity of the transfer of such Contract, the termination thereof,
a breach, violation or default thereunder or any other change or modification to
the terms thereof.
2.17 Undisclosed Liabilities. Except as set forth on Schedule 2.17,
neither Southport nor its Subsidiary has any liability whether fixed,
contingent, or otherwise except as (a) is reflected or reserved against on the
Interim Balance Sheet; or (b) has been incurred since September 30, 1997 in the
ordinary course of business consistent with past practice and does not exceed
$15,000 in the aggregate for all such liabilities.
2.18 Title to Property.
(a) Neither Southport nor its Subsidiary owns any real property.
Each of Southport and its Subsidiary has good and valid title to, or a valid
leasehold interest in or license or other right to use, all of the properties
and assets, real and personal, tangible or intangible, that are and have been
used in connection with their businesses, and all other properties and assets
reflected on the Interim Balance Sheet or acquired after such date (excluding
only those properties and assets that have been disposed of in the ordinary
course of business after such date), in each case free and clear of all Liens,
except: (a) such as are set forth on Schedule 2.18; and (b) Liens arising under
original purchase price conditional sales contracts and equipment leases with
third parties entered into in the ordinary course of business and liens for
Taxes that are not due and payable or that may thereafter be paid without
penalty; and (c) other imperfections of title or encumbrances, if any, that do
not, individually or in the aggregate, (i) secure an obligation or claim
(whether direct or contingent) in excess of $5,000 or (ii) materially impair the
continued use and operation of the assets to which they relate in the conduct of
the Business as presently conducted (the liens described in clauses (a), (b) and
(c) above are referred to collectively as "Permitted Liens" and individually as
a "Permitted Lien"). No Shareholder owns either directly or indirectly (except
through such Shareholders' interest in Southport) any property used in the
business of Southport and its Subsidiary.
(b) Schedule 2.18 sets forth a complete and accurate schedule of all
leased property as to which either Southport or its Subsidiary is a lessor or
lessee or sublessor or sublessee, and sets forth for each such property, the
address, the approximate size of the property, the names of the lessor and
lessee, a description of the use of the property, the term of the lease, and the
periodic lease payment. With respect to each lease listed on Schedule 2.18: (i)
such lease is in full force and effect in accordance with its terms; (ii) all
rents and other monetary amounts that have become due and payable thereunder
have been paid; (iii) there exists no default (or an event which, with notice or
lapse of time, or both, would constitute a default) under such lease; and (iv)
the Acquisition will not constitute a default or a cause for termination or
modification of such lease.
(c) Westport Properties, Inc. ("Westport"), all of the capital stock
of which is owned by the Shareholders, holds an option to purchase property
owned by E & H Investments, Inc.
16
which property is used by Southport as lessee pursuant to the terms of a lease
identified on Schedule 2.18 (the "Option"). The Option is in full force and
effect in accordance with its terms and there exists no default (or an event
which, with notice or lapse of time, or both, would constitute a default)
thereunder. The Acquisition will not constitute a default or cause for
termination or modification of the Option. Westport owns a title insurance
policy with respect to the property subject to the Option (the "Option Property
Title Insurance"), a copy of which policy is included in Schedule 2.18. The
Shareholders acknowledge that Purchaser may, but will not be obligated to,
exercise the Option.
(d) None of the Shareholders, Southport or its Subsidiary has a legal
obligation, absolute or contingent to any other person to sell or otherwise
dispose of, or to refrain from selling or otherwise disposing of, any
substantial part of its assets except pursuant to this Agreement; or to sell or
dispose of any of its assets except in the ordinary course of business
consistent with past practices.
(e) Southport and its Subsidiary have previously delivered to
Purchaser true, correct and complete copies of the Option and of all leases on
Schedule 2.18, including all amendments thereto, and such leases have not been
further amended or modified.
2.19 Insurance. The material insurance policies maintained by
Southport and its Subsidiary, together with their respective policy limits and
deductibles, are listed on Schedule 2.19. All such policies will be in effect on
the Closing Date. The business of Southport and its Subsidiary has been
conducted in a manner so as to conform in all material respects to all
applicable provisions of such insurance policies. All premiums due, for which
invoices have been received, have been currently paid or provided for and none
of the policies contains retroactive premium adjustment provisions. Neither
Southport nor its Subsidiary is otherwise in default with respect to any such
policy. Neither Southport nor its Subsidiary has failed to give any notice or
present any claim under any such policy in a due and timely manner. There are
no outstanding unpaid claims or matters which could reasonably be anticipated to
become claims under any such policy other than any pending claims or matters
listed on Schedule 2.19. Neither Southport nor its Subsidiary has received
notice of cancellation or non-renewal of any insurance policy or any notice that
coverage has been or may be denied with respect to any outstanding claim by or
against Southport or its Subsidiary (other than routine reservation of rights
notices by insurers in circumstances under which neither Southport nor any
Shareholder has any reason to believe that the insurer reserving its rights will
actually subsequently dispute coverage).
2.20 Intellectual Property. Schedule 2.20 sets forth: (a) all
patents or patent applications owned by Southport or its Subsidiary; (b) all
licenses and other rights granted to Southport or its Subsidiary relating to any
patent or patent application owned by any other person; (c) all trademarks,
service marks, copyrights, software or trade names owned by Southport or its
Subsidiary; and (d) all licenses and other rights granted to Southport or its
Subsidiary to use any such trademark, service xxxx, copyright, software or trade
name owned by any other person, whether registered or unregistered
(collectively, the "Intellectual Property"). Except as set forth on Schedule
2.20, all of the Intellectual Property listed on Schedule 2.20 pursuant to
clauses (a) and (c) above, if any, has been registered (to the extent capable of
registration), duly issued and is owned by Southport or its
17
Subsidiary, and Southport or its Subsidiary has the exclusive rights to use all
such patents, patent applications, trademarks, service marks, copyrights,
software and trade names in its business and operations. Southport or its
Subsidiary owns or is licensed under valid licenses for all patents, patent
applications, copyrights, trademarks, trade names, service marks, software,
know-how, trade secrets and other proprietary rights necessary to conduct their
Business, and the operations of Southport and its Subsidiary, as currently
conducted and as conducted since such entity's incorporation, to the best of
each Shareholder's and Southport's knowledge, do not and have not infringed any
patent, copyright, trademarks, trade name, service xxxx, software, know-how,
trade secret or other proprietary right of any other person. Neither Southport
nor its Subsidiary is required to pay any royalty, license fee or similar type
of compensation in connection with the conduct of its Business as it is now or
heretofore has been conducted. To the knowledge of any Shareholder and
Southport, there is no person that is infringing any patent, trademark, service
xxxx, copyright, software or trade name owned or used by Southport or its
Subsidiary.
2.21 Environmental Matters. Except as described in Schedule 2.21:
(a) (i) The activities, operations and business carried out at or on
the Sites or on Navigable Waters by Southport or its Subsidiary, are, and have
been at all times, in compliance with all Environmental Laws; (ii) Hazardous
Substances have not been Released on, at, under or about the Sites or in
Navigable Waters or transported to or from the Sites; and (iii) neither
Southport nor its Subsidiary is required by any Governmental Entity to take any
action to remedy any condition caused by or in any way connected with the
presence, Release, Threat of Release, use, handling, manufacturing, generation,
production, storage, treatment, processing, transportation or disposal of
Hazardous Substances, as such capitalized terms are defined in this Section
2.21.
(b) There are no pending litigation or proceedings or, to the
knowledge of the Shareholders, threatened litigation or proceedings before any
Governmental Entity in which any person alleges the violation of, or any
liability under, any Environmental Law or the Release or Threat of Release of
Hazardous Substances on, at, under or from any of the Sites or in Navigable
Waters, nor has Southport or its Subsidiary: (i) received any notice of or
obtained any actual or constructive knowledge that any third party, Governmental
Entity or any employee or agent thereof, has determined that there exists any
violation of any Environmental Law or the Release or Threat of Release of
Hazardous Substances on, at, under or from the Sites or in Navigable Waters;
(ii) received any notice under the citizen suit provision of any Environmental
Law; or (iii) received any request for inspection or request for information,
notice, demand, administrative inquiry or any formal or informal complaint or
claim with respect to or in connection with any Environmental Law.
(c) No Lien has been imposed on any of the Sites by any Governmental
Entity in connection with Environmental Laws.
(d) Southport and its Subsidiary has received or been issued, as
appropriate, every Permit required by any Governmental Entity for the present or
currently contemplated operation of the Business of Southport and its
Subsidiary, except where the failure to have received or been issued any Permit
would not individually have, or be reasonably likely to have, a Material Adverse
18
Effect. Except as disclosed in Schedule 2.21, all Permits are valid in full
force and effect, and no proceeding is pending or, to the knowledge of Southport
of its Subsidiary, has been threatened to modify, suspend, revoke or otherwise
limit any of the Permits, and no administrative or governmental actions have
been taken or, to the knowledge of Southport and its Subsidiary, has been
threatened to modify, suspend, revoke or otherwise limit any of the Permits, and
no administrative or governmental actions have been taken, or to the knowledge
of Southport and its Subsidiary, threatened in connection with the expiration or
renewal of any of the Permits. Except as set forth in Schedule 2.21, the
Business of Southport and its Subsidiary is and at all times has been conducted
in compliance with all Permits and all applicable laws, statutes, ordinances,
orders, rules, regulations and requirements of any Governmental Entity, except
for any non-compliance that would not individually have, or be reasonably likely
to have, a Material Adverse Effect.
(e) No storage tanks presently exist on, at, under or about any Sites
or previously existed on, at, under or about any Sites.
(f) Schedule 2.21 identifies all locations to which Hazardous
Substances have been sent by Southport or its Subsidiary for storage, treatment,
or disposal that are also identified in any publicly available document as a
candidate for cleanup or remediation.
(g) Schedule 2.21 specifies the Sites used for (i) the storage,
maintenance or repair of vehicle or (ii) the storage or distribution of
Hazardous Substances.
For purposes of this Agreement, "Environment" means soil, surface waters,
ground waters, land, stream sediments, surface or subsurface strata, ambient
air, and any environmental medium.
For purposes of this Agreement, "Environmental Laws" means (a) any
Applicable Law or bylaw regulating or referring to the Environment or to Natural
Resource Damages; and (b) any presently or previously enforced Applicable Law or
bylaw of any Governmental Entity that asserts or may assert jurisdiction over
Southport or its Subsidiary or the Sites, or the operations or activities at the
Sites or in Navigable Waters, that regulates or refers to the presence, Release,
Threat of Release, use, handling, manufacturing, generation, production,
storage, treatment, processing, transportation or disposal of any Hazardous
Substances.
For purposes of this Agreement, "Hazardous Substances" means: (a) any
pollutant, toxic substance, contaminant, chemical, hazardous waste, hazardous
material, petroleum product, oil, radioactive material; (b) any substance, gas
material or chemical that is or may be defined as or included in the definition
of "hazardous substances," "toxic substances," "hazardous materials," "hazardous
wastes," or words of similar import under any Environmental Law; (c) radon gas,
asbestos in any form that could or does become friable, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls in excess of federal, state or
local safety guidelines, whichever are more stringent; and (d) any other
chemical, material, gas, or substance, the exposure or Release of which is or
may be prohibited, limited or regulated by any Governmental Entity that asserts
or may assert jurisdiction
19
over Southport or its Subsidiary, the Sites, or the operations or activities at
the Sites or in Navigable Waters.
For purposes of this Agreement, "Natural Resource Damages" has the meaning
provided in CERCLA (42 U.S.C. 9601 et seq.) and OPA (33 U.S.C. 2701 et seq.).
For purposes of this Agreement, "Navigable Waters" has the meaning provided
under the Clean Water Act and OPA (33 U.S.C. 2701 et seq.).
For purposes of this Agreement, "Release" means any releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing, or dumping into the Environment.
For purposes of this Agreement, "Sites" mean all locations owned or used by
Southport or its Subsidiary at any time prior to the Closing Date.
For purposes of this Agreement, "Threat of Release" means a substantial
likelihood of a Release that requires action to prevent or mitigate damage to
the Environment that may result from such Release.
2.22 Employee and Labor Matters.
(a) Except as set forth on Schedule 2.22(a): (i) there is not any,
and during the past twelve months there has not been any, labor strike, work
stoppage or lockout pending, or, to the knowledge of any Shareholder or
Southport or its Subsidiary, threatened against Southport or its Subsidiary;
(ii) no employees of Southport are currently represented by a union; (iii) to
the knowledge of any Shareholder or Southport or its Subsidiary, no union
organizational campaign is in progress with respect to the employees of
Southport or its Subsidiary and no question concerning representation exists
respecting such employees; (iv) neither Southport nor its Subsidiary is engaged
in any unfair labor practice or action that could reasonably be expected to
constitute an unfair labor practice; (v) there are not, to the knowledge of any
Shareholder or Southport or its Subsidiary, any unfair labor practice charges or
complaints against Southport or its Subsidiary, threatened or pending before the
National Labor Relations Board; (vi) there are no pending, or to the knowledge
of any Shareholder or Southport or its Subsidiary, threatened union grievances
against Southport or its Subsidiary; (vii) there are not, to the knowledge of
any Shareholder or Southport or its Subsidiary, any pending or threatened
charges against Southport or its Subsidiary or any current employee of Southport
or its Subsidiary before the Equal Employment Opportunity Commission or any
state or local agency responsible for the prevention of unlawful employment
practices or unlawful discrimination practices or discrimination on the basis of
disability; (viii) Southport and its Subsidiary are, to the knowledge of any
Shareholder and Southport and its Subsidiary, in compliance with the regulations
under the Occupational Safety and Health Act (OSHA); and (ix) neither Southport
nor its Subsidiary has received written or oral notice during the past twelve
months of the intent of any Governmental Entity responsible for the enforcement
of labor or employment laws to conduct an investigation of and, to the knowledge
of any Shareholder, Southport and its Subsidiary,
20
no such investigation is in progress. Schedule 2.22(a) contains a complete and
accurate list of all labor arbitration and unfair labor practice charges, if
any, between Southport or its Subsidiary and the employees or either of them,
that occurred at any time since January 1, 1994.
(b) Schedule 2.22(b) sets forth the names and salaries (including
previously awarded and projected bonuses and other incentive compensation) of
all salaried employees of Southport and its Subsidiary as of the date hereof.
2.23 Condition of Assets. The machinery and equipment necessary for
the conduct of Southport's business and the business of its Subsidiary, together
with all leased real property and improvements thereon, are in good operating
condition and in a state of reasonable maintenance and repair, ordinary wear and
tear excepted.
2.24 Absence of Changes. Except as set forth on Schedule 2.24, since
September 30, 1997, Southport and its Subsidiary have conducted their respective
businesses only in the ordinary course, consistent with past practice. Without
limiting the generality of the foregoing, neither Southport nor its Subsidiary
has since September 30, 1997:
(a) experienced any Material Adverse Effect in its business,
properties, prospects, assets, liabilities or condition (financial or otherwise)
or its relationships with its principal customers, suppliers or distributors, or
suffered any material casualty loss (whether or not insured);
(b) made any change in its accounts receivable or accounts payable
practices;
(c) incurred or guaranteed any material obligation or liability
(including, without limitation, incurred any indebtedness), except for current
liabilities incurred in the ordinary course of business;
(d) sold, assigned, transferred, mortgaged, pledged, leased, licensed
or otherwise disposed of (other than sales of goods manufactured by Southport in
the ordinary course of business) or subjected to any Lien (except a Permitted
Lien) any material asset;
(e) other than in the ordinary course of business and consistent with
past practice, entered into any employment contract, or any compensation
arrangement or employee benefit plan, or changed or committed to change
(including, without limitation, any change pursuant to any bonus, pension,
profit-sharing or other plan, commitment, policy or arrangement) the
compensation payable or to become payable to any of its officers, directors,
employees or agents, or made any pension, retirement, profit-sharing, bonus or
other employee welfare or benefit payment or contribution;
(f) declared, paid or made, or set aside for payment or making, any
dividend or other distribution in respect of Southport Common Stock, or directly
or indirectly redeemed, purchased or otherwise acquired any of its capital stock
or other securities or subdivided or in any way reclassified or changed any of
the terms or provisions of any shares of its capital stock;
21
(g) paid, loaned or advanced any amount to or in respect of, or sold,
transferred or leased any property or assets to, or received any loan or advance
of any amount from, or entered into any transaction, agreement or arrangement
with or for the benefit of any Shareholder or any affiliate, associate or family
member of a Shareholder, or any of the officers or directors of Southport or its
Subsidiary or any affiliate or associate of such officers or directors;
(h) canceled any material debts or claims, or waived any rights of
material value or incurred or guaranteed any material obligation or liability of
any kind, except for current liabilities incurred in the ordinary course of
business;
(i) changed its Tax or financial accounting methods, principles or
practices (including, without limitation, any changes in depreciation or
amortization policies or rates or any changes in any assumptions underlying any
method of calculating reserves);
(j) made any capital expenditure, except capital expenditures in
accordance with the written capital budget previously provided to Purchaser;
(k) entered into, modified, terminated, amended, renewed,
renegotiated, released, disposed of, permitted to lapse or expanded in any
respect, or waived any of its rights under, any material Contract;
(l) disposed of or permitted to lapse any material item of
Intellectual Property;
(m) agreed, whether or not in writing, to take any action, or fail to
take any action, that if taken or not taken after the date of this Agreement
would constitute a breach under this Section 2.24;
(n) received any notice of any pending or threatened condemnation or
expropriation of property owned or used by Southport or its Subsidiary; or
(o) learned any facts that adversely affect the Business or that are
reasonably likely in the future to adversely affect the Business.
2.25 Accounts Receivable and Accounts Payable. Southport's and its
Subsidiary's accounts receivable (and other receivables) and accounts payable
have arisen or will arise, as the case may be, from bona fide transactions and
represent amounts due or payable with respect to actual, arm's length
transactions entered into in the ordinary course of business and consistent with
past practice (including, without limitation, credit practices) and have been
calculated in accordance with GAAP consistently applied. No such account
receivable (or other receivable) has been or will have been assigned or pledged
to any individual, partnership, joint venture, firm, corporation, association,
trust or other entity or any government or political subdivision or any agency,
department or instrumentality thereof. Except for accounts receivable in an
aggregate amount not in excess of any reserve for bad debt therefor expressly
reflected on the Interim Balance Sheet and any reserves after such date on the
books of Southport and its Subsidiary in the ordinary course of
22
business consistent with past practices for receivables accrued on the Interim
Balance Sheet, all receivables of Southport and its Subsidiary are or will be
collectible in accordance with their terms. Schedule 2.25 sets forth an itemized
list of all accounts receivable of Southport and its Subsidiary as of October
31, 1997, for any amount in excess of $5,000 together with the aging of such
accounts receivable and a notation of which such accounts receivable are
estimated to be wholly or partially uncollectible.
2.26 Inventory. All inventory of Southport and its Subsidiary reflected on
the Interim Balance Sheet: (i) is merchantable, or is suitable and usable in the
ordinary course of business; (ii) is not obsolete or slow-moving; (iii) is not
held by Southport or its Subsidiary on consignment and is not in the possession
of persons other than Southport or its Subsidiary; and (iv) is maintained on a
FIFO basis and valued at the lower of cost or market in accordance with GAAP
consistently applied.
2.27 Books and Records. The books and records of Southport and its
Subsidiary are complete and correct and accurately reflect in accordance with
GAAP all transactions in which Southport and its Subsidiary have engaged, and
there are no off-balance sheet transactions or matters for which entry has not
been properly made in such books and records.
2.28 Bank Accounts and Powers of Attorney. Schedule 2.28 sets forth a
listing of all persons holding powers of attorney granted by Southport or its
Subsidiary and of all bank accounts and lock boxes in which Southport or its
Subsidiary has deposited funds or property, together with the names of the
persons authorized to sign on or enter them, as the case may be.
2.29 Questionable Payments. Neither Southport nor its Subsidiary nor any
of their directors, officers, agents or employees, nor any other person
associated with or acting on behalf of Southport or its Subsidiary, has directly
or indirectly: (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback or other payment to any person, private or public, regardless
of form, whether in money, property, or services; (i) to obtain favorable
treatment in securing business; (ii) to pay for favorable treatment for business
secured; (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of either Southport or its Subsidiary; or (iv) in
violation of any applicable law (including, without limitation, the Foreign
Corrupt Practices Act); (b) received any bribe, payoff or kickback from any
person regardless of form, whether in money, property or services to award
business; or (c) established or maintained any fund or asset that has not been
recorded in the books and records of either Southport or its Subsidiary.
2.30 Affiliate Transactions. Schedule 2.30 sets forth a list of all
Contracts and transactions between Southport or its Subsidiary, on the one hand,
and any director or officer of any Southport, director or officer of its
Subsidiary, any Shareholder or any affiliate, associate or immediate family
member of any such director, officer or Shareholder, or any entity in which any
such director, officer or Shareholder of any affiliate, associate or immediate
family member of any such director, officer or Shareholder has a direct or
indirect interest, on the other hand.
23
2.31 Zoning. The current operation of the businesses of Southport and its
Subsidiary is a permitted use under applicable zoning regulations and there is
no existing or, to the knowledge of Southport and its Subsidiary, pending or
threatened, requirement for any special exception, variance of other conditional
approval to permit such businesses to continue to operate and to expand to any
locations at which other businesses are currently operated.
2.32 No Misrepresentations or Omissions. The warranties, representations
and covenants made in this Agreement by or on behalf of each Shareholder and
Southport do not contain any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the context in which they were made, not misleading.
24
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to the Shareholders, as follows:
3.1 Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Louisiana and has the corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold all of its properties and
assets and to carry on its business as it is now being conducted.
3.2 Authority; Execution and Delivery; Enforceability. Purchaser has
the corporate power and authority to execute and deliver this Agreement and to
consummate the Acquisition and the other transactions contemplated hereby. The
execution and delivery by Purchaser of this Agreement and the consummation by
Purchaser of the Acquisition and the other transactions contemplated hereby have
been duly authorized by all necessary corporate action. Purchaser has duly
executed and delivered this Agreement, and this Agreement constitutes the legal,
valid and binding obligation of Purchaser, enforceable against it in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity.
3.3 No Conflicts; Consents. The execution and delivery by Purchaser
of this Agreement do not, and the consummation of the Acquisition and the other
transactions contemplated hereby and compliance with the terms hereof will not
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
person under, or result in the creation of any Lien upon any of Purchaser's
assets under, any provision of (a) the articles or certificate of incorporation
of Purchaser, or (b) any Judgment or Applicable Law applicable to Purchaser or
its properties or assets. No consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to Purchaser in connection with the execution, delivery and performance
of this Agreement or the consummation of the Acquisition or the other
transactions contemplated hereby.
25
ARTICLE IV
COVENANTS
4.1 Covenants of Seller Relating to Conduct of Southport's Business.
(a) Except as otherwise expressly permitted by the terms of this
Agreement, from the date hereof to the Closing, the Shareholders shall cause
Southport and its Subsidiary to conduct their respective businesses in the
ordinary course in substantially the same manner as presently conducted and
shall make all reasonable efforts consistent with past practices to preserve
their relationships with customers, suppliers and others with whom they deal.
Except as otherwise expressly permitted by the terms of this Agreement, the
Shareholders shall cause each of Southport and its Subsidiary not to do any of
the following without the prior written consent of Purchaser:
(i) change or amend its articles of incorporation or bylaws;
(ii) authorize for issuance, issue or sell any shares of its
capital stock or other securities, acquire directly or indirectly, by
redemption or otherwise, any such capital stock, reclassify or split-up any
such capital stock, or grant or enter into any options, warrants, calls or
commitments of any kind with respect thereto;
(iii) pay, declare or set aside any dividend or make any other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock;
(iv) adopt or amend any Company Benefit Plan (or any plan that
would be a Company Benefit Plan if adopted) except as required by
Applicable Law;
(v) enter into, adopt, extend, renew or amend any collective
bargaining agreement or other Contract with any labor organization, union
or association, except as required by Applicable Law;
(vi) grant to any director, executive officer or employee any
increase in compensation or benefits, except under existing agreements and
except, in the case of any non-executive employee, other than a
Shareholder, in the ordinary course of business consistent with past
practice;
(vii) permit, allow or suffer any asset of Southport or its
Subsidiary to become subjected to any Lien of any nature other than
Permitted Liens;
(viii) cancel any material indebtedness (individually or in the
aggregate) owed to Southport or its Subsidiary or waive any claims or
rights of substantial value;
26
(ix) dismiss or replace its independent auditor or make any
change in any method of accounting or accounting practice or policy other
than those required by GAAP;
(x) acquire any assets that are material, individually or in the
aggregate, to Southport except in the ordinary course of business;
(xi) make any capital commitments that in the aggregate are in
excess of $5,000 and not set forth in the written capital budget of
Southport previously supplied to Purchaser (the "Capital Budget");
(xii) fail to make any capital expenditure required in the
Capital Budget or to conduct ordinary maintenance activities;
(xiii) sell, lease or otherwise dispose of any assets of the
Business that in the aggregate are valued in excess of $5,000, other than
in the ordinary course;
(xiv) terminate (except for cause) or hire any executive officer
of Southport or of its Subsidiary; or
(xv) agree, whether in writing or otherwise, to do any of the
foregoing.
(b) Affirmative Covenants. Until the Closing, the Shareholders shall
cause Southport and its Subsidiary to:
(i) maintain the assets of Southport and its Subsidiary in the
ordinary course of business in good operating order and condition,
reasonable wear and tear excepted;
(ii) maintain in force all insurance policies and cause the assets and
business of Southport and its Subsidiary to continue to be insured against all
risks for which such assets and businesses are currently insured;
(iii) upon any damage, destruction or loss to any asset of
Southport or its Subsidiary, as promptly as possible, provide Purchaser
with written notice thereof and, after consultation with Purchaser, either
(A) apply any and all insurance proceeds received with respect thereto to
the prompt repair, replacement and restoration thereof to the condition of
such asset before such event or, if required, to such other (better)
condition as may be required by Applicable Law or (B) retain any and all
insurance proceeds received with respect thereto; and
(iv) maintain its level and quality of supplies, fuel and spare
parts in the ordinary course in a manner consistent with its practices in
place as of September 30, 1997.
4.2 Access to Information. (a) The Shareholders shall cause Southport
and its Subsidiary to afford Purchaser and its accountants, counsel and other
representatives reasonable
27
access during normal business hours during the period prior to the Closing to
all properties, books, contracts, commitments, Tax Returns and records of
Southport and its Subsidiary and, during such period, shall furnish promptly to
Purchaser any information concerning Southport and its Subsidiary that Purchaser
may reasonably request (including, if requested by Purchaser, opinion letters
from legal counsel to Southport and its Subsidiary as to the likely dollar
exposure, if any, of Southport or its Subsidiary to particular personal injury
claims which are currently pending or threatened).
(b) Without limiting paragraph (a) above, but subject to it, Purchaser
shall have the right to perform any environmental, health and safety assessments
of the leased property of Southport and its Subsidiary that Purchaser, in its
sole discretion, deems advisable. Without limiting the foregoing, Purchaser and
its representatives shall have the right to enter the leased real property of
Southport and its Subsidiary to conduct Phase I environmental assessments,
asbestos surveys and similar investigations, studies necessary to develop one or
more scopes of work for Phase II investigations (including sampling of
environmental media, building materials and the work place environment) and
Phase II investigations (including but not limited to, borings, samples of soil
and groundwater and the installation or monitoring xxxxx). Purchaser shall
perform all such environmental, health and safety assessments at its sole
expense. Purchaser and its representatives shall enter the real property only
during business hours, after reasonable notice has been given to Southport.
Purchaser, the Shareholders and Southport agree that they will cooperate with
one another to facilitate the performance of Purchaser's assessments and to
avoid, to the extent reasonably possible, any disruption of Southport's and its
Subsidiary's operations.
4.3 Confidentiality. The terms and conditions of this Agreement are to be
held in strict confidence, and no disclosure shall be made with respect hereto,
publicly or privately, other than as agreed by Purchaser, as necessary by
Purchaser or the Shareholders to their respective advisors in connection with
the performance of the obligations incurred hereunder or as required by
applicable law. No public release or announcement concerning the transactions
contemplated hereby shall be issued by either Party without the prior consent of
the other, except that Purchaser may make such disclosure as is reasonably
appropriate to comply with its obligations under applicable federal securities
laws.
4.4 Reasonable Efforts.
(a) On the terms and subject to the conditions of this Agreement, each
Party shall use its commercially reasonable best efforts to cause the Closing to
occur, including taking all reasonable actions necessary to comply promptly with
all legal requirements that may be imposed on its or any of its affiliates with
respect to the Closing.
(b) Each Party shall use its commercially reasonable best efforts (at
its own expense) to obtain, and to cooperate in obtaining, all consents from
third parties necessary or appropriate to consummate the Acquisition; provided,
however, that the Parties shall not be required to pay or commit to pay any
amount to (or incur any obligation in favor of) any person from whom any such
consent may be required (other than nominal filing or application fees).
28
4.5 Expenses. (a) The Shareholders shall and Southport shall not
bear any costs and expenses (except those set forth in Schedule 2.6) incurred by
the Shareholders in connection with this Agreement and the transactions
contemplated hereby, including, the fees of legal counsel, brokers and finders,
and accountants. Purchaser shall bear all costs and expenses incurred by
Purchaser in connection with this Agreement and the transactions contemplated
hereby, including the fees of its legal counsel, brokers and finders, and
accountants.
4.6 Employees and Employment Agreements. The Shareholders shall cause
Southport to enter into employment agreements with each of Xxxxxxx X. Xxxxxx,
Xx., Xxxxxxx X. Xxxxxx and Xxxxx X.X. Xxxxxx and with such other employees of
Southport and its Subsidiary as Purchasers and Xxxxxxx X. Xxxxxx, Xx. may
mutually agree. Such agreements shall be substantially in the form attached as
Exhibit 4.6 hereto.
4.7 Updating Information. Until the Closing, the Shareholders shall cause
Southport to provide to Purchaser, as soon as practicable after they are
available, daily, weekly and monthly management books and financial reports of
Southport and the Subsidiary, prepared in accordance with past practice, and all
other documents requested in the document request list previously delivered by
Purchaser to the Shareholders.
4.8 Schedules; Advice of Changes.
(a) The Parties acknowledge that this Agreement is being executed in
advance of the attachment of some or all of the schedules provided for herein.
As promptly as possible after execution of this Agreement, and in no event more
than 10 days from the date hereof, the Shareholders will supply such schedules
whereupon they will be deemed to have been delivered on the date hereof.
(b) The Shareholders shall as promptly as possible advise Purchaser of
any change or event having a Material Adverse Effect on Southport or its
Subsidiary, as applicable, or that any Shareholder believes would or would be
reasonably likely to cause or constitute a material breach of any
representations, warranties or covenants of any Shareholder contained herein.
From time to time prior to the Closing Date (and on the date prior to the
Closing Date), the Shareholders will promptly supplement or amend the schedules
delivered pursuant to subsection 4.8(a) of this Agreement to reflect any matter
that, if existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in such schedules or that is
necessary to correct any information in such schedules that has been rendered
inaccurate thereby. No supplement or amendment to such schedules shall have any
effect for the purpose of determining satisfaction of the requirements of
Section 5.2(a), with such satisfaction to be determined, unless Purchaser
otherwise consents, based on the schedules in the form delivered on the date
hereof.
4.9 Covenant Not to Compete.
(a) For and in consideration of the benefits derived by the
Shareholders pursuant to this Agreement, each Shareholder, other than those who
enter into employment agreements
29
pursuant to Section 4.6, agrees that, with respect to each State of the United
States or other jurisdiction, or specified portions thereof, in which he, she,
or Southport or its Subsidiary regularly: (A) makes contact with customers of
Southport or its Subsidiary; (B) conducts the business of Southport or its
Subsidiary; or (C) supervises the activities of other employees of Southport or
its Subsidiary, in locations identified in Schedule 4.9 attached hereto and
forming a part of this Agreement, and in which Southport or its Subsidiary
engaged in Business on the Closing Date or the Date of Termination
(collectively, the "Subject Areas"), the Shareholder will, for a period of two
years following the Closing Date, restrict his or her activities as follows:
(i) The Shareholder will not, directly or indirectly, for himself or
others, own, manage, operate, control, be employed in an executive, managerial
or supervisory capacity by, or otherwise engage or participate in or allow his
or her skill, knowledge, experience or reputation to be used in connection with,
the ownership, management, operation or control of, any company or other
business enterprise engaged in the Business within any of the Subject Areas,
provided, however, that no provision hereof shall prohibit Xxxxxxx X. Xxxxxx,
Xx. or Xxxxxx X. Xxxxxx from providing consulting services to oil and gas
exploration, production and engineering companies (but not companies engaged in
the construction or fabrication of oil and gas drilling or production platforms
or the components thereof) with respect to the design of living quarters;
(ii) The Shareholder will not call upon any customer of Southport or
its Subsidiary for the purpose of soliciting, diverting or enticing away the
business of such person or entity, or otherwise disrupting any previously
established relationship existing between such person or entity and Southport or
its Subsidiary;
(iii) The Shareholder will not solicit, induce, influence or attempt
to influence any supplier, lessor, licensor, potential acquiree or any other
person who has a business relationship with Southport or its Subsidiary, or who
on the Date of Termination is engaged in discussions or negotiations to enter
into a business relationship with Southport or its Subsidiary, to discontinue or
reduce the extent of such relationship with Southport or its Subsidiary;
(iv) The Shareholder will not make contact with any of the employees
of Southport or its Subsidiary with whom he had contact during the course of his
or her relationship with Southport for the purpose of soliciting such employee
for hire, whether as an employee or independent contractor, or otherwise
disrupting such employee's relationship with Southport or its Subsidiary; and
(v) The Shareholder will not hire, on behalf of himself or any company
engaged in the Business with which the Shareholder is associated, any employee
of Southport or its Subsidiary as an employee or independent contractor, whether
or not such engagement is solicited by the Shareholder.
(b) Each such Shareholder agrees that from time to time he or she
will, upon Southport's request, promptly execute any supplement, amendment,
restatement or other modification of Schedule 4.9 as may be necessary or
appropriate to correctly reflect the jurisdictions
30
which, at the time of such modification, should be covered by Schedule 4.9 and
this Section 4.9. All references to Schedule 4.9 in this Agreement shall be
deemed to refer to Schedule 4.9 as so supplemented, amended, restated or
otherwise modified from time to time.
(c) Each such Shareholder will not after the Closing Date retain,
make use of or disclose to any person any customer lists prepared in connection
with or used by Southport and its Subsidiary.
(d) Upon any actual or threatened breach or violation of any of the
provisions of this Section 4.9, Purchaser shall be entitled to injunctive relief
in any court of competent jurisdiction at any location at which the breaching
party is domiciled or engaged in business. Nothing herein, however, shall be
construed as prohibiting Purchaser from pursuing any other remedies of law or at
equity available to it for such breach or violation or threatened breach or
violation. Should a court of competent jurisdiction declare any of the
covenants set forth in Section 4.9 unenforceable due to an unreasonable
geographic restriction or otherwise, the Parties intend for such court to modify
or limit such covenant according to the severability provisions set forth in
Section 8.8.
4.10 Acquisition Proposals. Unless this Agreement is terminated pursuant
to Section 6.1, Southport and the Shareholders shall not, and shall each cause
its respective affiliates, directors, officers, trustees, employees,
shareholders, representatives and agents not to: (a) solicit, initiate,
encourage (including by furnishing any information), discuss, negotiate or
assist in any manner any other proposals, bids or offers from any person (other
than Purchaser or its affiliates) relating to a possible acquisition of any of
the stock, assets of business of Southport or its Subsidiary, in whole or in
part (other than the sale of inventory in the ordinary course and consistent
with past practice) whether by asset purchase, stock purchase, merger or
otherwise and whether such action is taken directly or indirectly; or (b) enter
into or consummate any agreement or understanding with respect to any matter
involving to such an acquisition prospect. If any Shareholders receives any such
proposal, bid or offer or any information with respect thereto, such Shareholder
will notify Purchaser thereof and provide Purchaser with all information such
Shareholder has with respect thereto.
4.11 No Inconsistent Arrangements by the Shareholders. Each of the
Shareholders hereby covenants and agrees that, except as contemplated by this
Agreement, he shall not: (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of such Shareholder's Shares, or any interest therein;
(ii) enter into any contract, option or other agreement or understanding with
respect to any transfer of any or all of such Shareholder's Shares or any
interest therein; (iii) grant any proxy, power-of-attorney or other
authorization in or with respect to such Shareholder's Shares, except for any
such grant to other Shareholders in connection with a Southport shareholder
meeting and which exercise of such power is in all respects in compliance with
the terms of this Agreement; or (iv) take any other action that would in any way
restrict, limit or interfere with the performance of its obligations hereunder.
4.12 Exercise of Option by Westport. If the Option has not been assigned
by Westport as contemplated by Section 5.2(h), the Shareholders shall, if so
requested by Purchaser, cause Westport to exercise the Option in accordance with
its terms and shall sell the property subject to the Option
31
to Purchaser or its designee on such terms and Purchaser or its designee shall
purchase such property on such terms.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligation To Consummate the Closing. The
respective obligation of each Party to consummate the Closing shall be subject
to the satisfaction at or prior to the Closing Time of the following conditions:
(a) Approvals. All regulatory approvals or notifications required to
consummate the transactions contemplated hereby, and to permit Purchaser to
conduct the business of Southport and its Subsidiary as heretofore conducted,
shall have been obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired (all such
approvals and the expiration of all such waiting periods described in this
section being referred to herein as the "Requisite Regulatory Approvals").
(b) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Acquisition of the other transactions contemplated by this Agreement shall be in
effect; provided, however, that neither Party to this Agreement may elect to
terminate this Agreement until such order, injunction or decree is final and
non-appealable, except pursuant to Section 6.1(b). No statute, rule,
regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity that prohibits, restricts or
makes illegal consummation of the Acquisition.
5.2 Conditions to Obligation of Purchaser. The obligation of Purchaser
to effect the Acquisition is also subject to the satisfaction or waiver by
Purchaser at or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties contained in Articles II hereof shall be true and correct in each
case at and as of the Closing Date as though such representations and warranties
were made at and as of such time, except for these representations and
warranties, if any, that are expressly made as of a specified earlier date.
(b) Covenants. The Shareholders shall have performed and complied
with all agreements and conditions on their part required by this Agreement to
be performed or complied with prior to or at the Closing Date.
(c) Officer's Certificate. Purchaser shall have received a
certificate from the Shareholders' Representative, dated the Closing Date,
certifying to the fulfillment of the conditions specified in Sections 5.2(a) and
5.2(b).
32
(d) Opinion of Counsel. Purchaser shall have received an opinion of
counsel for the Shareholders, dated the Closing Date, in customary form and
reasonably satisfactory as to substance to Purchaser.
(e) Consents. All necessary consents to the transactions contemplated
hereby, in form and substance acceptable to Purchaser, shall have been obtained.
(f) Resignations and Releases. The Shareholders shall have caused to
be executed and delivered to Purchaser (i) the resignations of [Xxxxxx X.
Xxxxxx, Xx. and Xxxxxx X. Xxxxxx] as directors and officers of Southport and its
Subsidiary and (ii) releases by each Shareholder of all claims against Southport
and its Subsidiary, in form reasonably satisfactory to Purchaser and its
counsel.
(g) Purchaser's Due Diligence. Purchaser shall have completed its due
diligence investigation of Southport and the Subsidiary and shall be satisfied
with the results thereof.
(h) Assignment of Option. The Option shall have been assigned to
Southport, Purchaser or Purchaser's designee and shall be exercisable by such
assignee in accordance with its terms, which terms shall be satisfactory to
Purchaser.
5.3 Conditions to Obligation of Shareholders. The obligation of the
Shareholders to effect the Acquisition is also subject to the satisfaction or
waiver by the Shareholders at or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties contained in Article II hereof shall be true and correct in all
material respects in each case at and as of the Closing Date as though such
representations and warranties were made at and as of such time, except for
those representations and warranties, if any, that are expressly made as of a
specified earlier date.
(b) Covenants. Purchaser shall have performed and complied in all
material respects with all agreements and conditions on its part required by
this Agreement to be performed or complied with prior to or at the Closing Date.
(c) Officer's Certificate. Shareholder's Representative shall have
received a certificate of an executive officer of Purchaser, dated the Closing
Date, certifying to the fulfillment of the conditions specified in Sections
5.3(a) and 5.3(b).
(d) Opinion of Counsel. The Shareholders shall have received an
opinion of counsel for Purchaser, dated the Closing Date, in customary form and
reasonably satisfactory as to substance to Shareholders.
(e) Release of Guaranty. Whitney National Bank shall have released
the obligations of Xxxxxxx X. Xxxxxx, Xx. under the guaranty provided by him of
Southport's obligations under its credit facility with such bank.
33
ARTICLE VI
TERMINATION AND AMENDMENT
6.1 Termination. Notwithstanding anything to the contrary in this
Agreement, this Agreement may be terminated and the Acquisition and the other
transactions contemplated by this Agreement abandoned at any time prior to the
Closing Date:
(a) by mutual consent of the Shareholders and Purchaser in a written
instrument;
(b) by either Purchaser or the Shareholders if the Acquisition shall
not have been consummated on or before January 31, 1998;
(c) by either Purchaser or the Shareholders (provided the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the representations, warranties, covenants or other agreements set
forth in this Agreement on the part of the other Party that (i) is not cured
within ten days following written notice to the Party in breach, or (ii) cannot
be cured prior to the Closing.
6.2 Effect of Termination. In the event of termination of this Agreement
by either Purchaser or the Shareholders as provided in Section 6.1, this
Agreement shall be void and have no effect except that no Party shall be
relieved or released from any liabilities or damages arising out of its willful
breach of any provision of this Agreement.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
7.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of the Parties shall survive the Closing.
7.2 Indemnification by the Shareholders. Each of the Shareholders, does
hereby agree to indemnify, defend and hold harmless Southport, the Subsidiary,
Purchaser, its stockholders, subsidiaries, affiliates, any director, officer,
employee, or agent of any of them, and their respective heirs, executors,
administrators, successors and assigns (each of the foregoing, an "Indemnified
Party"), from and against any and all losses, claims, demands, damages, awards,
liabilities, suits, penalties, forfeitures, costs or expenses (including
attorneys', consultants and other professional fees and fees and disbursements)
including those incurred in enforcing this Agreement (collectively, "Losses")
incurred by any Indemnified Party arising out of or by virtue of or resulting
from:
34
(a) any inaccuracy or breach of any warranty or representation of the
Shareholders contained in any provision of Section 2.1, Section 2.2, Section
2.3, Section 2.4, Section 2.5, Section 2.6, Section 2.7 (a), Section 2.8,
Section 2.9 or Section 2.13 of this Agreement or contained in any certificate or
schedule delivered by or on behalf of Shareholders hereunder, to the extent that
such certificate or schedule relates to any such provision; or
(b) any inaccuracy or breach, of which any Shareholder has knowledge
on the date hereof or on the Closing Date, of any warranty or representation of
the Shareholders contained in any provision of this Agreement (other than those
provisions identified in subsection 7.2(a)) or contained in any certificate or
schedule delivered by or on behalf of Shareholders hereunder, to the extent that
such certificate or schedule relates to any such provision.
7.3 Purchaser's Right of Set-Off; Limitation on Indemnification. Upon
written notice to Shareholders disclosing its justification therefor, Purchaser
may set-off the amount of any Losses against any amounts otherwise payable or
potentially payable and not theretofore paid to Shareholders under subsection
1.3 hereof, which set-off, if any, shall be applied against the Shareholders on
a pro-rata basis. No Shareholder shall have any obligation to pay
indemnification to the Indemnified Parties for breach of any representation or
warranty under this Article VII in excess of the amount payable or potentially
payable and not theretofore paid to such Shareholder under subsection 1.3
hereof.
7.4 Procedures.
(a) In order for an Indemnified Party to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of,
or involving a claim made by any person against the Indemnified Party (a "Third
Party Claim"), such Indemnified Party must notify Shareholder's Representative
in writing of the Third Party Claim (which notice shall identify the
representation or warranty breached or made inaccurate by virtue of such Third
Party Claim) promptly following receipt by such Indemnified Party of written
notice of the Third Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent that the Shareholders shall have been actually and materially
prejudiced as a result of such failure. Thereafter, the Indemnified Party shall
deliver to the Shareholders' Representative copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the Third
Party Claim.
(b) If a Third Party Claim is made against an Indemnified Party, the
Shareholders shall be entitled to participate in the defense thereof and, if
they so choose, to assume the defense thereof with counsel selected by them, but
only to the extent that all Shareholders so agree. Should the Shareholders so
elect to assume the defense of a Third Party Claim, Shareholders shall pay all
Losses resulting from such Third Party Claim and all expenses associated with
such defense and such payments shall not reduce the amounts available to the
Indemnified Parties to be off-set against Losses. If the Shareholders assume
such defense, the Indemnified Party shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Shareholders; it being understood that the Shareholders
shall control such
35
defense. The fees and expenses of counsel employed by the Indemnified Party for
any period during which the Shareholders have not assumed the defense thereof
shall constitute Losses of such Indemnified Party hereunder. If the
Shareholders choose to defend or prosecute a Third Party Claim, all the
Indemnified Parties shall cooperate in the defense or, prosecution thereof.
Such cooperation shall include the retention and (upon Shareholders
Representative's request) the provision to the Shareholders' Representative of
records and information that are reasonably relevant to such Third Party Claim,
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Whether or not the Shareholders assume the defense of a Third Party Claim, the
Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Shareholders' prior
written consent (which consent shall not be unreasonably delayed or withheld).
If the Shareholders assume the defense of a Third Party Claim, the Indemnified
Party shall agree to any settlement, compromise or discharge of a Third Party
Claim that the Shareholders' Representative may recommend and that by its terms
obligates the Shareholders to pay the full amount of the liability in
connection with such Third Party Claim, that releases the Shareholders
completely in connection with such Third Party Claim and that would not
otherwise adversely affect the Indemnified Party. Notwithstanding the
foregoing, the Shareholders shall not be entitled to assume the defense of any
Third Party Claim if the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages against the Indemnified
Party that the Shareholders reasonably determine, after conferring with their
outside counsel, cannot be separated from any related claim for money damages.
If such equitable relief or other relief portion of the Third Party Claim can be
so separated from that for money damages, the Shareholders shall be entitled to
assume the defense of the portion relating to money damages. Should the
Shareholders not elect to assume the defense of a Third Party Claim, Purchaser
may set-off the amount of any Third Party Claim plus the amount of defense costs
reasonably expected to be incurred in connection therewith against any amounts
otherwise payable or potentially payable and not therefore paid to Shareholders
under subsection 1.3 hereof. In the event that such Third Party Claim is
finally disposed of for an amount less than the amount set-off, the balance will
be restored to the amount payable or potentially payable to Shareholders under
subsection 1.3 and, if any portion thereof would pursuant to subsection 1.3 have
been paid to Shareholders at an earlier date but for the set-off, such portion
shall be paid to Shareholders together with interest thereon at the Purchaser
Borrowing Rate from such date to the date actually paid .
(c) In the event any Indemnified Party should have a claim against the
Shareholders under this Agreement that does not involve a Third Party Claim
being asserted against or sought to be collected from such Indemnified Party,
the Indemnified Party shall deliver notice of such claim with reasonable
promptness to Shareholders' Representative. Such notice shall identify the
representation or warranty breached or made inaccurate by virtue of such claim.
The failure by any Indemnified Party so to notify the Shareholders'
Representative shall not relieve any Shareholder from any liability that it may
have to such Indemnified Party under this Agreement, except to the extent that
the Shareholders demonstrate that they have been materially prejudiced by such
failure.
36
ARTICLE VIII
GENERAL PROVISIONS
8.1 Assignment. This Agreement and the rights and obligations hereunder
shall be assignable or transferable by Purchaser (including by operation of law
in connection with a merger or sale of substantially all the assets of
Purchaser) without the prior written consent of the Shareholders. This
Agreement, and the rights and obligations of the Shareholders hereunder, shall
not be assignable by any Shareholder without the prior written consent of
Purchaser, except by operation of law upon the Shareholder's death.
8.2 Third Party Beneficiaries. The Parties acknowledge that the rights
and benefits of Purchaser hereunder (including all rights under Article VII)
shall automatically and immediately transfer, without further notice or action,
to any purchaser from Purchaser (or its designee or assignee) of all or
substantially all of the stock or assets of Southport and its Subsidiary
following the consummation of the Acquisition.
8.3 Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
by facsimile or sent, postage prepaid, by registered, certified or express mail
or reputable overnight courier service and shall be deemed given when so
delivered by hand or facsimile, or if mailed, three days after mailing (one
business day in the case of express mail or overnight courier service), as
follows:
(a) if to Purchaser, to:
Gulf Island Fabrication, Inc.
000 Xxxxxxxx Xxxx
Xxxxx, Xxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxxxx, President
with a copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Xxxxxxx, L.L.P.
000 Xx. Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxxxxxx
37
(b) if to Shareholders, to Shareholders' Representative:
c/o Xxxxxxx X. Xxxxxx, Xx.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxx Xxxxxx, LLP
30th Floor Texaco Center
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxxxx Xxxxxx
8.4 Interpretation.
(a) The headings contained in this Agreement, in any exhibit or
schedule hereto and in the table of contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. All exhibits and schedules annexed hereto or referred to herein
are hereby incorporated in and made a part of this Agreement as if set forth in
full herein. Any capitalized terms used in any schedule or exhibit but not
otherwise defined therein, shall have the meaning assigned to such term in this
Agreement. When a reference is made in this Agreement to an article or a
section, exhibit or schedule, such reference shall be to an article or section
of, or an exhibit or schedule to, this Agreement unless otherwise indicated.
(b) For all purposes hereof:
"affiliate" of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person;
"including" means including, without limitation; and
"person" means any individual, firm, corporation, partnership, limited
liability company, trust, joint venture, Governmental Entity or other
entity.
(c) The following terms are defined in this Agreement in the sections
set forth below:
38
Term Section
---- -------
Acquisition Preamble
affiliate 8.4(b)
Agreement Preamble
Applicable Law 2.4
Arbitrator 1.3(b)
Business 2.4
Capital Budget 4.1(a)
Closing 1.2
Closing Balance Sheet 1.3(b)
Closing Date 1.2
Adjusted Closing Date Shareholders' Equity 1.3(b)
Code 2.13(d)
Company Benefit Plans 2.14(a)
Company Pension Plans 2.14(a)
Consents 2.5
Contract or Contracts 2.16(a)
Deferred Purchase Price 1.3(a)
Defined Benefit Plan 2.14(j)
Early Payment Amount 1.3(c)
Environment 2.21(g)
Environmental Laws 2.21(g)
ERISA 2.14(a)
ERISA Affiliate 2.14(a)
GAAP 2.10
Governmental Entity 2.4
Hazardous Substances 2.21(g)
including 8.4(b)
Indemnified Party 7.2
Initial Purchase Price 1.3(a)
Injunction 5.1(b)
Intellectual Property 2.20
Interim Balance Sheet 2.10
Interim Financial Statements 2.10
IRS 2.14(b)
Judgment 2.4
knowledge 8.4(b)
Lien or Liens 1.1
Losses 7.2
Material Adverse Effect 2.7(b)
Natural Resources Damages 2.21(g)
Navigable Waters 2.21(g)
Net After-Tax Income 1.3(c)
39
Option 2.18(c)
Option Property Title Insurance 2.18(c)
Party or Parties Preamble
PBGC 2.14(b)
Permits 2.15
Permitted Lien or Permitted Liens 2.18(a)
person 8.4(b)
Proceedings 2.12
Purchase Price 1.3(a)
Purchaser Preamble
Purchaser Borrowing Rate 1.3(c)
Related Agreements 2.2
Release 2.21(g)
Requisite Regulatory Approvals 5.1(a)
Returns 2.13(a)
SG&A 1.3(c)
Shares 1.1
Shareholder or Shareholders Preamble
Shareholders' Representative 8.9
Sites 2.21(g)
Southport Preamble
Southport Common Stock Preamble
Southport Financial Statement 2.10
Subject Areas 4.9(a)
Subsidiary 2.9(b)
Tax or Taxes 2.13(h)
Third Party Claim 7.5(a)
Threat of Release 2.21(g)
Transaction Expenses 2.6
Westport 2.18(c)
Year-end Financial Statements 2.10
8.5 Counterparts; Signatures. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the Parties
and delivered to the other, it being understood that both Parties need not sign
the same counterpart. Telecopied signatures shall be deemed to have the
authenticity and validity of original signatures.
8.6 Entire Agreement. This Agreement (including the documents, schedules,
exhibits and Related Agreements referred to herein) contain the entire agreement
and understanding between the Parties with respect to the subject matter hereof
and supersede all prior agreements and understandings relating to such subject
matter. Neither Party shall be liable or bound to the other in any manner by
any representations, warranties or covenants relating to such subject matter
except as specifically set forth herein.
40
8.7 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Louisiana, without regard to any
applicable conflicts of law principles thereof.
8.8 Severability. Wherever possible, the terms of this Agreement shall be
construed and interpreted so as to be valid and effective under Applicable Law.
If any term or provision of this Agreement, any Related Agreement, any Schedule
attached hereto or the application thereof to any person or circumstance, shall
at any time or to any extent be deemed invalid, illegal and unenforceable in any
respect as written, the Shareholders and Purchaser intend for any court
construing this Agreement to modify or limit such provision temporally,
spatially or otherwise so as to render it valid and enforceable to the fullest
extent allowed by law. Any such provision that is not susceptible of such
reformation shall be ignored so as not to affect any other term or provision
hereof, and the remainder of this Agreement, Related Agreement or Schedule, or
the application of such term or provision to persons or circumstances other than
those that are deemed to be invalid, illegal or unenforceable, shall not be
affected thereby and such term and provision shall be valid and enforced to the
fullest extent permitted by law.
8.9 Shareholders' Representative. The Shareholders hereby irrevocably
appoint Xxxxxxx X. Xxxxxx, Xx., a Shareholder, to serve as representative of
all of the Shareholders from and after the date of this Agreement (the
"Shareholders' Representative"). EACH SHAREHOLDER HEREBY AUTHORIZES THE
SHAREHOLDERS' REPRESENTATIVE TO ACT AS ATTORNEY-IN-FACT ON BEHALF OF SUCH
SHAREHOLDER WITH RESPECT TO ANY ACT REQUIRED OR PERMITTED TO BE TAKEN BY SUCH
SHAREHOLDER HEREUNDER (INCLUDING, WITHOUT LIMITATION, TO SPECIFY THE MANNER OF
MAKING PAYMENT TO SUCH SHAREHOLDER HEREUNDER OR TO RECEIVE ANY FUNDS TO BE PAID
BY OR ON BEHALF OF BUYER TO SUCH SHAREHOLDERS HEREUNDER). WITH RESPECT TO ANY
DISPUTE THAT MAY ARISE HEREUNDER OR UNDER ANY RELATED AGREEMENT, EACH
SHAREHOLDER AGREES THAT HE OR SHE MAY ACT ONLY THROUGH THE SHAREHOLDERS'
REPRESENTATIVE. Any Party hereto shall be entitled to rely, and shall be fully
protected in relying, upon all actions taken by the Shareholders'
Representative. The Shareholders' Representative may not be changed without the
consent of Purchaser, except as provided in the next sentence. In the event of
the death of the Shareholder' Representative, the Shareholders shall promptly
irrevocably appoint by a majority vote of the Shareholders (based on stock
ownership immediately prior to the Closing) one of the remaining Shareholders
(or beneficial owners of Shareholders that are entities) who is a natural person
to act as the Shareholders' Representative.
8.10 Waiver. Either Party may waive in writing any default by the
other of any representation, warranty, or covenant made for its benefit in this
Agreement, but no such waiver shall be deemed to constitute a waiver of any
other or further breach unless expressly provided for in writing, and no waiver
shall be deemed to have arisen from a course of conduct not involving a written
waiver.
41
8.11 Amendment. This Agreement may be amended by the Parties hereto at any
time but only by an instrument in writing signed on behalf of each of the
Parties.
8.12 Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Parties and their respective heirs, executors, successors, and
assigns.
IN WITNESS WHEREOF, the Shareholders have executed and Purchaser has caused
this Agreement to be executed by one of its officers thereunto duly authorized
as of the date first above written.
SHAREHOLDERS:
/s/ XXXXXXX X. XXXXXX, XX. /s/ XXXXXXX X. XXXXXX, XX.
-------------------------- --------------------------
Xxxxxxx X. Xxxxxx, Xx. Xxxxxxx X. Xxxxxx, Xx.
/s/ XXXXXX X. XXXXXX /s/ XXXXX X. X. XXXXXX
-------------------- ----------------------
Xxxxxx X. Xxxxxx Xxxxx X. X. Xxxxxx
/s/ XXXXXXX X. XXXXXX /s/ XXXX XXXXXXX
--------------------- ----------------
Xxxxxxx X. Xxxxxx Xxxx Xxxxxxx
/s/ XXXX XXXXXX Xxxxxxx Xxxxxxxxx Xxxxxx
---------------
Xxxx Xxxxxx
By: /s/ XXXXXXX X. XXXXXX, XX.
--------------------------
Xxxxxxx X. Xxxxxx, Xx.
Attorney-in-Fact
GULF ISLAND FABRICATION, INC.
By: /s/ XXXXX X. XXXXXXX
--------------------
Xxxxx X. Xxxxxxx, President
42
This Exhibit excludes the following schedules and appendices which the
Company will provide to the Commission upon request:
Exhibit 4.6 Employment Agreements with each of Xxxxxxx X. Xxxxxx, Xx.,
Xxxxxxx X. Xxxxxx and Xxxxx X. X. Xxxxxx.
43
