1
EXHIBIT 10.15
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TRANSCOASTAL MARINE SERVICES, INC.,
XXXX ACQUISITION CORP.,
XXXX CORPORATION
AND
THE HOLDERS OF THE
OUTSTANDING CAPITAL STOCK
OF
XXXX CORPORATION
2
TABLE OF CONTENTS
ARTICLE 1
PAGE
BASIC TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Preliminary Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Final Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) Failure to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Certificates of Merger and Termination; Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Delivery of Certificates of Merger and Termination . . . . . . . . . . . . . . . . . . . . . 3
(b) Filing Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Additional Acquisition Transactions; Initial Public Offering of Parent Common Stock . . . . . . . . . 4
1.6 Conversion of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Merger Sub Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Cancellation of the Company Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) IPO Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Delivery of Company Common Stock and Merger Consideration . . . . . . . . . . . . . . . . . . 6
(b) Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Indemnification of Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Payment in Full Satisfaction of All Rights . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Representations and Warranties by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Ownership of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Representations and Warranties of the Shareholders and the Company . . . . . . . . . . . . . . . . . 10
(a) Organization and Qualification, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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(c) Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Qualification of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(g) Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(h) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(i) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(j) Permits and Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(k) Title to Properties; Absence of Liens and Encumbrances, etc. . . . . . . . . . . . . . . . 17
(l) Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(m) Patent, Trademark, etc. Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(n) List of Properties, Contracts and Other Data . . . . . . . . . . . . . . . . . . . . . . . 19
(o) Use of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(p) Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(q) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(r) Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(s) Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(t) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(u) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(v) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(w) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(x) Powers of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(y) Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(z) Tax-Free Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3 Representations and Warranties by the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Organization and Qualification, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Subsidiaries, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(d) Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(e) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(f) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(h) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(i) Tax-Free Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(j) Registration Statement; PPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(k) No Undisclosed Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(l) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(m) Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(n) Parent Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(o) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(p) Other Acquisition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(q) Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.4 Representations and Warranties Concerning the Merger Sub. . . . . . . . . . . . . . . . . . . . . . 37
(a) Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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(c) Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 3
ADDITIONAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.2 Access to Information by Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.3 Access to Information by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.4 Amendment to Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(a) Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(b) Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.6 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.7 The Shareholders' Release of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.8 Real Estate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(a) Title Insurance Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(b) Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(c) Title Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(d) Phase I Environmental Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(e) Title and Environmental Objections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.9 PPM; Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(a) Company to Provide Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(b) Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(c) Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(d) Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.10 Tax-Free Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) No Acts Jeopardizing Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Two-Year Holding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.11 Satisfaction of Conditions by the Company and Shareholders . . . . . . . . . . . . . . . . . . . . . 48
3.12 Satisfaction of Conditions by Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.13 Amendment of Other Acquisition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.14 Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.15 Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.16 Corporate Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.17 Release of Shareholders and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.18 Release and Indemnification from Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.19 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.20 Nature of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.21 Indemnification of Directors and Officers of the Company . . . . . . . . . . . . . . . . . . . . . . 50
3.22 Parent's IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.23 Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.24 Principal Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.25 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.26 Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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ARTICLE 4
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.1 Conditions Precedent to the Obligations of the Parent . . . . . . . . . . . . . . . . . . . . . . . 51
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 52
(b) Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(c) Legal Actions or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(d) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(e) [Intentionally left blank] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(f) Policies of Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(g) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(h) The Registration Rights Agreements and Shareholders Lock-up Agreements 53
(i) Parent's IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(j) Lender Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(k) Audit of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(l) Opinion of Counsel for the Company and the Shareholders . . . . . . . . . . . . . . . . . . 53
(m) The Shareholders Release of the Company; Corporate Records . . . . . . . . . . . . . . . . 53
(n) All Proceedings to be Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.2 Conditions Precedent to the Obligations of the Shareholders and the Company. . . . . . . . . . . . . 53
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 54
(b) Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(c) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(d) Delivery of PPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(e) [Intentionally left blank] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(f) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(g) Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(h) All Proceedings to be Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(i) Opinion of Counsel for The Parent and the Merger Sub . . . . . . . . . . . . . . . . . . . 55
(j) Legal Actions or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(k) IPO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(l) Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(m) Simultaneous Closings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(n) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(o) Shareholder Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(p) Listing of Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(q) Reliance Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(r) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 5
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(a) Prior to the Preliminary Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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(b) After the Preliminary Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 6
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.2 Indemnification by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.3 Indemnification by Parent and Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . 58
6.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.5 Time of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.6 Limitations on Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.7 Effective Date; Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 7
STOCK TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.1 Compliance with Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.2 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 8
FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.1 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.2 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE 9
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.1 Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.2 Execution in Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.4 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.5 Amendments, Supplements, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.7 Choice of Forum; Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.8 Binding Effect, Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.9 Assignability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.10 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.11 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
v
7
EXHIBITS:
EXHIBIT 1.3(a)(1) - Advance Certificate of Merger
EXHIBIT 1.3(a)(2) - Certificate of Termination
EXHIBIT 1.5 - List of Other Companies
EXHIBIT 1.7 - Letter of Transmittal
EXHIBIT 1.8 - Registration Rights Agreement
EXHIBIT 3.1 - Conduct of Business
EXHIBIT 3.1(l) - Production Bonuses
EXHIBIT 3.1(m) - Assets
EXHIBIT 3.16 - Persons Receiving Corporate Indemnification
EXHIBIT 3.17 - Persons Receiving Releases
EXHIBIT 3.21 - Directors and Officers of the Company Receiving
Indemnification
EXHIBIT 4.1(g)(1) - List of Individuals with Employment Agreements
EXHIBIT 4.1(g)(2) - Form of Employment Agreement
EXHIBIT 4.1(l) - Form of Opinion From Xxxxxxx Xxxxxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxx & Casteix L.L.P.
EXHIBIT 4.2(i) - Opinion of Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx
EXHIBIT 9.11 - Shareholders and Other Representatives of the Company
SCHEDULES:
SHAREHOLDERS DISCLOSURE SCHEDULE
Schedule 2.1(b) - Approvals
Schedule 2.1(d) - Holders of Company Common Stock
vi
8
COMPANY DISCLOSURE SCHEDULE
Schedule 2.2(a) - Jurisdictions Where Qualified
Schedule 2.2(c) - Subsidiaries of the Company
Schedule 2.2(e) - Approvals
Schedule 2.2(h) - Changes and Events since December 31, 1996
Schedule 2.2(h)(1) - Permitted Exceptions
Schedule 2.2(j) - Permits and Legal Compliance
Schedule 2.2(k) - Properties and Assets of the Company
Schedule 2.2(l) - Software
Schedule 2.2(m) - Intellectual Property
Schedule 2.2(n) - List of Real Estate Owned by the Company
Schedule 2.2(n)(1) - Description of Real Estate Owned by the Company
Schedule 2.2(n)(2) - Real Estate Leased by the Company
Schedule 2.2(n)(3) - Contracts and Commitments of the Company
Schedule 2.2(q) - Litigation, Actions and Proceedings
Schedule 2.2(r) - Employment Agreements, Benefit Plans, and Compensation
Schedule 2.2(s) - Accounts Receivable of the Company
Schedule 2.2(t) - Insurance Coverage; Self Insurance
Schedule 2.2(u) - Company Benefit Plan
Schedule 2.2(v) - Tax Audits; Basis in Assets; NOLs
BUYER DISCLOSURE SCHEDULE
Schedule 2.3(a) - Jurisdictions Where Qualified
Schedule 2.3(c) - Subsidiaries of Parent
Schedule 2.3(f) - Approvals
vii
9
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") made on this 28th
day of August 1997 by and among TRANSCOASTAL MARINE SERVICES, INC., a Delaware
corporation (the XXXX ACQUISITION CORP., a Louisiana corporation (the "Merger
Sub"), XXXX CORPORATION, a Louisiana corporation (the "Company"), and the
undersigned holders of all of the outstanding capital stock of the Company (the
"Shareholders").
WHEREAS, the respective Boards of Directors of the Parent, Merger Sub
and the Company have each approved the merger of the Company with and into
Merger Sub (the "Merger") pursuant to this Agreement and the applicable
statutes of the State of Louisiana whereby each issued and outstanding share of
Common Stock, $10.00 par value per share, of the Company ("Company Common
Stock") will be converted into the right to receive certain shares of common
stock, $.001 par value per share, of the Parent ("Parent Common Stock"), all as
provided herein;
WHEREAS, the Merger has been approved, as required by applicable law,
by the Parent, acting as sole shareholder of Merger Sub, and by the
Shareholders, as the holders of all of the outstanding capital stock of the
Company;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization pursuant to Section 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE 1
BASIC TRANSACTION
1.1 MERGER. Subject to the terms and conditions of this Agreement
and in accordance with the Louisiana Business Corporation Law ("Applicable
Corporate Law"), at the Effective Time (as defined in Section 1.3(c)) the
Company shall be merged with and into the Merger Sub. Merger Sub, as the
surviving entity following the Merger, is sometimes referred to in this
Agreement as the "Surviving Corporation."
1.2 CLOSINGS.
(a) Preliminary Closing. A preliminary closing
("Preliminary Closing") of the transactions contemplated by this
Agreement shall take place at the offices of Chamberlain, Hrdlicka,
Xxxx Agreement and Plan of Merger//Page 1
10
White, Xxxxxxxx & Xxxxxx, in Houston, Texas, commencing at 9:00 a.m.
local time on such date ("Preliminary Closing Date") on which Parent
or the Shareholders shall have notified the other at least three
business days in advance, provided that the Preliminary Closing shall
occur simultaneously with the execution and delivery of the
underwriting agreement ("Underwriting Agreement") relating to the
purchase by the underwriters of shares of Parent Common Stock for
resale to the public in connection with the IPO (defined in Section
1.5). At the Preliminary Closing the following deliveries will be
made to the Exchange Agent (defined in Section 1.7) to be held by such
Agent in escrow pending disposition in accordance with Section 1.2(b)
below: (i) the Shareholders will deliver four multiple originals of
the various certificates, instruments, and documents referred to in
Section 4.1 below (except that only the original documents referred to
in Section 4.1(m)(ii) need be delivered), (ii) Parent will deliver
four multiple originals of the various certificates, instruments, and
documents referred to in Section 4.2 below, and (iii) Parent will make
the deliveries contemplated by Section 1.3(a). Each of such
certificates, instruments, and documents to be delivered in accordance
with clauses (i) and (ii) that are to be executed by the parties will
be fully executed, but dated in blank, except that the certificates to
be delivered in accordance with Section 4.1(a), 4.1(b), 4.2(a) and
4.2(b) shall be dated the Preliminary Closing Date.
(b) Final Closing. The closing ("Final Closing") of the
transactions contemplated by this Agreement shall take place at the
same place and hour as hereinabove provided for the Preliminary
Closing on such date ("Final Closing Date") as Parent shall determine
and of which Parent shall give Shareholders and the Exchange Agent at
least twenty-four hours' advance notice, provided that the Final
Closing shall occur contemporaneously with the closing of the IPO. At
the Final Closing Parent will deposit the Merger Consideration
(defined in Section 1.6(c)) with the Exchange Agent; will deliver, and
will cause the managing underwriter of the IPO to deliver, a
certificate to the Exchange Agent to the effect that the closing of
the IPO has occurred or is occurring simultaneously with the Final
Closing; and will deliver a certificate to the Exchange Agent to the
effect that the "final closings" under the Other Acquisition
Agreements are occurring simultaneously with the Final Closing. Upon
receipt of the Merger Consideration and the certificates referred to
above (the "Required Deliveries"), the Exchange Agent shall insert the
date of the Final Closing in all of the undated documents held by the
Exchange Agent in accordance with Section 1.2(a) and shall (A) deliver
two complete sets of multiple originals to the Shareholders, on the
one hand, and Parent, on the other hand, (B) take such action as may
be required by Section 1.3(b), and (C) destroy the Certificate of
Termination (defined in Section 1.3(a)); provided that the Exchange
Agent shall not make such deliveries or take such actions if the
Exchange Agent is aware of any injunction or order that would be
breached by the occurrence of the Final Closing.
(c) Other Actions. In addition to the actions to be
taken at the Preliminary Closing and Final Closing as described
herein, the parties shall take such other customary actions as may be
necessary to effectuate such closings.
(d) Failure to Close. If: (1) the Preliminary Closing
occurs but the Final Closing has not occurred by the earlier of (i)
five business days after the Preliminary Closing or (ii) 11:00
Xxxx Agreement and Plan of Merger//Page 2
11
a.m. Houston, Texas time on the effective date specified in the
Advance Certificate of Merger (defined in Section 1.3(a)), or (2) the
Required Deliveries are not made at the Final Closing, or (3) the
Underwriting Agreement or this Agreement is purported to be
terminated, then the Exchange Agent will not make the deliveries
contemplated by Section 1.2(b) but rather will destroy all of the
multiple originals which were delivered to such Agent in accordance
with Sections 1.2(a) and 1.3(a), except that the Exchange Agent will
deliver to the Shareholders the documents referred to in Section
4.1(m)(ii) and further except that if the Exchange Agent has by then
previously filed the Advance Certificate of Merger it shall promptly
(and in no event later than 11:30 a.m. Houston, Texas time on the
effective date specified in the Advance Certificate of Merger) date
(with the then current date) and file the Certificate of Termination
with the Louisiana Secretary of State. In that event this Agreement
will terminate, and such termination will be deemed a termination
under Section 5.1(a)(1).
1.3 CERTIFICATES OF MERGER AND TERMINATION; EFFECTIVE TIME
(a) Delivery of Certificates of Merger and Termination.
At the Preliminary Closing Parent will deliver to the Exchange Agent a
certificate of merger in the form of Exhibit 1.3(a)(1) (the "Advance
Certificate of Merger"), which specifies that the effective time of
the Merger is 12:00 noon Houston, Texas time on the Specified Date
(defined in Section 1.3(b)), and a certificate of termination in the
form of Exhibit 1.3(a)(2) (the "Certificate of Termination"). Each
instrument will be a fully executed original but will be undated, and
the date on which the Merger becomes effective will be left blank in
the Advance Certificate of Merger.
(b) Filing Certificate of Merger. Upon receiving a
request made by the managing underwriter or its counsel not sooner
than the second business day following the Preliminary Closing Date
that states that the underwriters have confirmed to their customers
sales of shares of Parent Common Stock in the IPO, that the closing of
the IPO is scheduled for a specified date (the "Specified Date") not
later than the fifth business day following the Preliminary Closing,
and that such underwriter has no reason to believe that such closing
will not occur, the Exchange Agent will, as promptly as possible, date
the Advance Certificate of Merger the then current date, fill in
therein the Specified Date as the effective date of the Merger, file
the Advance Certificate of Merger with the Louisiana Secretary of
State and promptly notify Parent and the Shareholders of the making of
such filing.
(c) Effective Time. The effective time of the Merger
("Effective Time") will be the time specified in the Advance
Certificate of Merger filed with the Louisiana Secretary of State.
1.4 EFFECTS OF THE MERGER.
(a) At the Effective Time, (i) the Company shall merge
with and into the Merger Sub and as a result thereof, the separate
existence of the Company shall cease; (ii) the Articles of
Incorporation of the Merger Sub, as in effect immediately prior to the
Effective Time, shall be the
Xxxx Agreement and Plan of Merger//Page 3
12
Articles of Incorporation of the Surviving Corporation, except that
the Articles of Incorporation of the Merger Sub shall be amended to
provide that the name of the Surviving Corporation shall be changed to
"Xxxxxxx Construction Company, Inc.," (iii) the Bylaws of the Merger
Sub as in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation, and (iv) the directors and
officers of the Merger Sub immediately prior to the Effective Time
shall become the directors and officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed, as the case may
be.
(b) At and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, immunities and
franchises, of a public as well as of a private nature, previously
belonging to the Company and Merger Sub; and all property (real,
personal and mixed), and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all and
every other interest of or belonging to or due to each of the Company
and Merger Sub shall be transferred to, and vested in, the Surviving
Corporation without further act or deed; and all such property, rights
and privileges, powers and franchises and all and every other interest
shall be thereafter the property of the Surviving Corporation as they
were of the Company and Merger Sub; and the title to any immovable
property, or interest therein, whether by deed or otherwise, shall not
revert or be in any way impaired by reason of the Merger. The
Surviving Corporation shall be responsible and liable for all the
liabilities and obligations of the Company and Merger Sub and any
claim existing, or action or proceeding pending, by or against the
Company or Merger Sub may be prosecuted against the Surviving
Corporation. Neither the rights of creditors nor any liens upon the
property of the Company or Merger Sub shall be impaired by the Merger,
and all debts, liabilities and duties of each of the Company and
Merger Sub shall attach to the Surviving Corporation, and may be
enforced against it to the same extent as if such debts, liabilities
and duties had been incurred or contracted by it, all in accordance
with provisions of the Applicable Corporate Law and the terms of this
Agreement.
1.5 ADDITIONAL ACQUISITION TRANSACTIONS; INITIAL PUBLIC OFFERING
OF PARENT COMMON STOCK. The Merger is part of a series of additional
transactions that relate to the Parent's intent to acquire the companies listed
on Exhibit 1.5 attached hereto (the "Other Companies") and to consummate an
initial public offering of the Parent Common Stock resulting in net proceeds to
the Parent of at least $45,000,000 on a firm underwriting basis (the "IPO").
The Parent will acquire the Other Companies from various parties (the "Other
Acquisitions") pursuant to separate acquisition agreements ("Other Acquisition
Agreements") to be executed prior to or concurrently with this Agreement.
1.6 CONVERSION OF STOCK. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or capital stock of the Merger Sub:
(a) Merger Sub Capital Stock. Each share of capital
stock of the Merger Sub issued and outstanding at the Effective Time,
shall remain outstanding and shall be unchanged after
Xxxx Agreement and Plan of Merger//Page 4
13
the Merger and shall thereafter constitute all of the issued and
outstanding capital stock of the Surviving Corporation.
(b) Cancellation of the Company Treasury Stock. All
shares of Company Common Stock that are owned by the Company as
treasury stock shall be canceled and retired and shall cease to exist
and no stock of the Parent or other consideration shall be delivered
in exchange therefor.
(c) Merger Consideration. Each share of the Company
Common Stock (other than shares to be canceled in accordance with
Section 1.6(b)), shall be converted at the Effective Time into the
right to receive the number of validly issued, fully paid and
nonassessable shares of Parent Common Stock resulting from dividing
$6,800 by the Share Price (as defined below). The total consideration
payable to the Shareholders with respect to all of their shares of
Company Common Stock is sometimes called the "Merger Consideration".
The aggregate amount of the Merger Consideration (valuing shares of
Parent Common Stock at the Share Price) is $5,100,000. The Merger
Consideration per share shall be adjusted as necessary so that the
aggregate Merger Consideration totals the foregoing amount. The
Shareholders shall also be entitled to cash in lieu of a fractional
share pursuant to Section 1.7(d) below. If between the date of this
Agreement and the Effective Time, the outstanding shares of Parent
Common Stock or Company Common Stock shall have been changed into a
different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization,
split-up, combination, or exchange of shares or the like, the
conversion formula in this Section 1.6(c) shall be correspondingly
adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split-up, combination or exchange
of shares. All such converted shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration
upon the surrender of such certificate in accordance with Section 1.7,
without interest.
(d) IPO Statement. At the Preliminary Closing and the
Final Closing, Parent shall deliver to the Shareholders and the
Exchange Agent a statement (the "IPO Statement") reporting (i) the
price per share paid or to be paid by the public for shares of Parent
Common Stock (the "IPO Price") in the IPO, and (ii) the lowest price
per share of the Parent Common Stock at which the Parent has agreed to
issue Parent Common Stock pursuant to any of the Other Acquisition
Agreements (the "Lowest Acquisition Price"). The lower of the IPO
Price and the Lowest Acquisition Price is referred to in this
Agreement as the "Share Price." The IPO Statement shall report the
quotient resulting from dividing $5,100,000 by the Share Price. Such
quotient shall represent the number of shares of Parent Common Stock
included in the Merger Consideration.
Xxxx Agreement and Plan of Merger//Page 5
14
1.7 EXCHANGE OF CERTIFICATES.
(a) Delivery of Company Common Stock and Merger
Consideration. Prior to the Preliminary Closing, the Parent will
deliver to each of the Shareholders a letter of transmittal, in
substantially the form attached hereto as Exhibit 1.7, to be used for
the purpose of surrendering all certificates representing Company
Common Stock in exchange for the right to receive the Merger
Consideration. As provided in Section 1.2(b), Parent shall at the
Final Closing deposit the Merger Consideration with an exchange agent
selected by Parent and reasonably acceptable to the Shareholders (the
"Exchange Agent"), and each Shareholder shall at or after the Final
Closing surrender for exchange certificates which prior to the
Effective Time represent shares of Company Common Stock, together with
a properly completed and executed letter of transmittal (with such
Shareholder's signature guaranteed by an eligible guarantor
institution pursuant to any medallion signature guarantee program), to
the Exchange Agent. At the time of such surrender of Company Common
Stock to the Exchange Agent, each Shareholder shall be entitled to
receive in exchange therefor the Merger Consideration. If such
surrender is made at or prior to the Final Closing, then the
Shareholder shall receive the Merger Consideration from the Exchange
Agent at the Final Closing. After the Effective Time and until the
outstanding certificates formerly representing shares of the Company
Common Stock are so surrendered, each outstanding certificate which,
prior to the Effective Time, represented the Company Common Stock
shall be deemed for all corporate purposes (except the payment of
dividends) to evidence ownership of the Merger Consideration into
which the shares of the Company Common Stock represented thereby prior
to such Effective Time shall have been converted.
(b) Payment of Dividends. Until certificates
representing shares of Company Common Stock have been surrendered, no
dividend payable to holders of record of the Parent Common Stock shall
be paid to the holders of such outstanding stock certificates of the
Company in respect thereof. Upon surrender of such outstanding
certificates, however, there shall be paid to the holders of the
certificates for the Parent Common Stock issued in exchange therefor
the amount of dividends, if any, which theretofore became payable with
respect to such full shares of the Parent Common Stock, but which have
not theretofore been paid on such stock. No interest shall be payable
with respect to the payment of any dividends unless the Parent shall
fail to make payment in accordance with this Section 1.7(b).
(c) Indemnification of Exchange Agent . If the Exchange
Agent becomes involved in any litigation, claim or controversy in
connection with its actions under this Agreement, the Parent shall
indemnify, defend and save Exchange Agent from all losses, costs,
damages, expenses and attorneys' fees suffered or incurred by Exchange
Agent as a result thereof, other than those caused by negligence or
misconduct.
(d) No Fractional Shares. Notwithstanding anything in
this Agreement to the contrary, no certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of certificates representing Company Common
Stock, and
Xxxx Agreement and Plan of Merger//Page 6
15
such fractional share interests will not entitle the owner thereof to
vote or to any rights of a stockholder of the Parent. In lieu of any
such fractional shares, each Shareholder who would otherwise be
entitled to a fraction of a share of Parent Common Stock, after
aggregating all fractional shares to which such Shareholder is
entitled under this Agreement and any Other Acquisition Agreements to
which they may be a party, shall be entitled to receive from the
Exchange Agent a cash payment equal to such remaining fraction
multiplied by the Share Price. The Parent shall make available to the
Exchange Agent at the Final Closing the amount of cash required to
make any cash payments in lieu of remaining fractional shares.
(e) Assignments. No assignment, transfer or other
disposition of record or beneficial ownership of any shares of Company
Common Stock may be made on or after the date hereof without Parent's
written consent, which consent will not be unreasonably withheld or
delayed.
(f) Payment in Full Satisfaction of All Rights. The
delivery of the Merger Consideration to the Shareholders with respect
to the Company Common Stock shall be deemed to be payment in full
satisfaction of all rights pertaining to the outstanding Company
Common Stock.
1.8 REGISTRATION RIGHTS AGREEMENT. Parent and each Shareholder
shall at the Preliminary Closing execute and deliver to the Exchange Agent a
Registration Rights Agreement in the form attached hereto as Exhibit 1.8.
Provisions of the Registration Rights Agreement shall be no less favorable to
the Shareholders than provisions of any other agreement of the Parent providing
registration rights to the shareholders of any Other Companies.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES BY THE SHAREHOLDERS. Each of
the Shareholders represents and warrants to the Parent and the Merger Sub that
the statements contained in this Section 2.1 are correct as to himself or
herself as of the date of this Agreement and will be correct as to himself or
herself as of the Preliminary Closing Date and the Final Closing Date (as
though made then), except as set forth in the disclosure schedule delivered by
the Shareholders to the Parent and the Merger Sub on the date hereof, as
supplemented or amended in accordance with Section 3.4 of this Agreement (such
schedule, as so supplemented or amended, the "Shareholders Disclosure
Schedule"). The Shareholders Disclosure Schedule is arranged in sections and
paragraphs corresponding to the lettered and numbered sections and paragraphs
contained in this Section 2.1. References in Section 2.1 to a numbered
schedule mean the section of the Shareholder Disclosure Schedule that
corresponds with that number; for example, references to "Schedule 2.1(b)" mean
section 2.1(b) of the Shareholder Disclosure Schedule. The Shareholder
Disclosure Schedule constitutes an exception to each warranty or representation
set forth herein, whether or not such warranty or representation specifically
refers to the Shareholder Disclosure Schedule; accordingly
Xxxx Agreement and Plan of Merger//Page 7
16
each warranty or representation set forth herein is deemed to be preceded by
the clause: "Except as set forth in the Shareholder Disclosure Schedule . . .".
(a) Qualification. Such Shareholder has the legal power
and authority to own his or her properties and assets.
(b) Authority Relative to Agreement. Such Shareholder
has the full right, power, and legal authority to execute and deliver
this Agreement. Such Shareholder has the full right, power, and legal
authority to perform this Agreement and to consummate the transactions
contemplated on his or her part hereby. No proceeding on the part of
such Shareholder, and, except for those approvals described in
Schedule 2.1(b), no notice, consent, authorization, order or approval
of, filing or registration with, any governmental commission, board or
other regulatory body or any bank, bonding company, lender, surety,
customer, supplier, or any other person whatsoever is required for or
in connection with the execution and delivery of this Agreement by
such Shareholder. No proceeding on the part of such Shareholder, and,
except for those approvals described in Schedule 2.1(b), no notice,
consent, authorization, order or approval of, filing or registration
with, any governmental commission, board or other regulatory body or
any bank, bonding company, lender, surety, customer, supplier, or any
other person whatsoever is required for or in connection with the
performance by such Shareholder of this Agreement and the consummation
by such Shareholder of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by such Shareholder and
is a valid and binding agreement of such Shareholder, enforceable
against such Shareholder in accordance with its terms, except as such
enforcement is subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting
creditors' rights.
(c) Non-Contravention. The execution, delivery and
performance of this Agreement by such Shareholder do not, and the
consummation by such Shareholder of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation, or acceleration of
any obligation or to the loss of a material benefit under, or result
in the creation or imposition of any material lien, charge, pledge,
security interest or other encumbrance upon any of the property or
assets of such Shareholder pursuant to any provision of, any mortgage,
lien, lease, agreement, license, instrument, law, ordinance,
regulation, order, arbitration award, judgment or decree to which such
Shareholder is a party or by which any of such Shareholder's assets
are bound. The execution, delivery and performance of this Agreement
by such Shareholder do not and the consummation by such Shareholder of
the transactions contemplated hereby will not violate or conflict with
any other restriction of any kind or character to which such
Shareholder is subject or by which any of such Shareholder's assets
may be bound.
Xxxx Agreement and Plan of Merger//Page 8
17
(d) Ownership of Company Common Stock. Such Shareholder
holds of record and owns beneficially the number of shares of Company
Common Stock set forth next to his or her name in Schedule 2.1(d).
Such Shareholder is, and as of the Final Closing Date will be (except
as permitted under Section 1.7(e)), the sole and exclusive lawful
owner of such shares of Company Common Stock free and clear of all
liens, claims, encumbrances and rights of others of any nature
whatsoever, with full power to vote all such shares on any matter that
may properly come before shareholders of the Company, and such
Shareholder may exercise such voting power on any matter without
violation of the rights of any person. There are no rights, warrants
or options outstanding with respect to such capital stock, and such
Shareholder has no obligation to deliver capital stock of the Company
or any of its Subsidiaries (as defined below) to any person as of the
date hereof, at any time on or prior to the Final Closing Date,
thereafter or as a result thereof or in connection therewith except as
provided in this Agreement.
(e) Restricted Securities.
(1) Such Shareholder acknowledges that the shares
of Parent Common Stock which such Shareholder shall acquire
pursuant to the Merger and this Agreement have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and are being acquired for such
Shareholder's own account for investment and not with a view
to the distribution thereof. The Parent Common Stock will be
subject to the stock transfer restrictions described in
Article 7 below.
(2) Such Shareholder has the knowledge and
experience in financial and business matters to enable him or
her to evaluate the merits and risks of approving this
Agreement and the transactions contemplated herein and
acquiring shares of Parent Common Stock.
(3) Such Shareholder is able to bear the economic
risks of his or her investment in the Parent Common Stock.
(4) Such Shareholder has been represented by
legal counsel in this transaction and such Shareholder and his
or her advisors, including such counsel, have been given the
opportunity to ask questions of, and receive answers from, the
officers of the Parent concerning the terms of the
transactions contemplated by this Agreement and the affairs
and the business and financial condition of the Parent.
(5) Such Shareholder has received a confidential
private placement memorandum concerning the Parent and an
investment in shares of Parent Common Stock (the "PPM"), and
such Shareholder and his or her advisors have been given
access to all documents, books and additional information
concerning Parent which they have requested regarding Parent.
Xxxx Agreement and Plan of Merger//Page 9
18
(6) Such Shareholder has made such inquiries by
himself or herself and through his or her advisors in making a
decision to approve this Agreement and the transactions
contemplated herein as such Shareholder has deemed necessary
and advisable.
(7) Such Shareholder acknowledges and agrees that
the Parent Common Stock issued to such Shareholder may not be
disposed of except in accordance with the requirements of the
Securities Act and any applicable state securities laws.
(8) None of the representations made by the
Shareholders in this Section 2.1(e) shall affect any of
Shareholders' rights under any other section of this
Agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND THE
COMPANY. The Shareholders and the Company represent and warrant to the Parent
and the Merger Sub that the statements contained in this Section 2.2 are correct
as of the date of this Agreement and will be correct as of the Preliminary
Closing Date and the Final Closing Date (as though made then), except as
otherwise set forth in the disclosure schedule delivered by the Shareholders
and the Company to the Parent and the Merger Sub on the date hereof, as
supplemented or amended in accordance with Section 3.4 of this Agreement (such
schedule, as so amended or supplemented, the "Company Disclosure Schedule").
The Company Disclosure Schedule is arranged in sections and paragraphs
corresponding to the lettered and numbered sections and paragraphs contained in
this Section 2.2. References in Section 2.2 to a numbered schedule mean the
section of the Company Disclosure Schedule that corresponds with that number;
for example, references to "Schedule 2.2(a)" mean Section 2.2(a) of the Company
Disclosure Schedule. The Company Disclosure Schedule constitutes an exception
to each warranty or representation set forth herein, whether or not such
warranty or representation specifically refers to the Company Disclosure
Schedule; accordingly each warranty or representation set forth herein is
deemed to be preceded by the clause: "Except as set forth in the Company
Disclosure Schedule . . .".
(a) Organization and Qualification, etc. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Louisiana, has the full right, power
and legal authority and, to the knowledge of the Shareholders and the
Company, all licenses, permits, titles and authorizations necessary
to own all of its properties and assets and to carry on its business
as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction as set forth in Schedule
2.2(a) where, to the reasonable belief of the Shareholders and the
Company, such qualification is appropriate. The copies of the
Company's Articles of Incorporation and Bylaws, as amended to date,
which have been delivered to Parent are complete and correct, and such
instruments, as so amended, are in full force and effect. The Company
is qualified to transact business as a foreign corporation and is in
good standing in all jurisdictions in
Xxxx Agreement and Plan of Merger//Page 10
19
which it is engaged in business and in which its properties or assets
are located, which foreign jurisdictions are listed in Schedule
2.2(a).
(b) Capital Stock. The entire authorized capital stock
of the Company consists of 5,000 shares of Company Common Stock of
which 750 shares of Company Common Stock are validly issued and
outstanding, fully paid and nonassessable, all of which are held of
record and beneficially by the Shareholders. No shares of the capital
stock of the Company have been issued in violation of the preemptive
rights of any past or present shareholder. No shares of the capital
stock of the Company are in the treasury of the Company. There are no
outstanding subscriptions, shares of capital stock, calls, warrants,
options, contracts, commitments, or demands relating to the capital
stock of the Company or other agreements of any character under which
the Company would be obligated to issue or purchase shares of its
capital stock. There is no voting agreement, voting trust, proxy, or
other agreement or understanding with respect to the voting of the
capital stock of the Company. The Company has no commitments to issue
or sell any securities or obligations convertible into or exchangeable
for, or giving any person any right to subscribe for or acquire from
the Company, any shares of its capital stock and no securities or
obligations evidencing any such rights are outstanding.
(c) Subsidiaries. With respect to each corporation,
firm, partnership or other business entity in which the Company holds
an interest, Schedule 2.2(c) sets forth the name, the interest of the
Company, and the capitalization of such entity (each such entity in
which the Company owns or controls more than 50% of the voting
securities, directly or indirectly, or in which the Company acts as
manager or general partner is hereinafter a "Subsidiary"). Except as
described on Schedule 2.2(c), neither the Company nor any Subsidiary
owns or has any right or obligation to acquire any class of securities
(including, without limitation, debt securities) issued by any person
or company and neither the Company nor any Subsidiary is a party to or
bound to any partnership, joint venture, voluntary association, or
other agreement with any person for the conduct of any business.
(d) Qualification of Subsidiaries. Each Subsidiary is
duly organized, validly existing and in good standing under the laws
of its state of organization, with the corporate or organizational
power to own its property and carry on its business as it is now being
conducted. All of the issued and outstanding shares of capital stock
of each Subsidiary have been duly authorized and are validly issued,
fully paid, and nonassessable, and were not issued in violation of the
preemptive rights of any past or present shareholder. The Company and
its Subsidiaries hold of record and own beneficially all of the
outstanding shares or other interests in each Subsidiary of the
Company held by them, free and clear of any restrictions on transfer
(other than restrictions under the Securities Act and state securities
laws), taxes, security interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. There are no
outstanding or authorized options, warrants, purchase rights,
conversion rights, exchange rights, or other contracts or commitments
that could
Xxxx Agreement and Plan of Merger//Page 11
20
require any of the Company and its Subsidiaries to sell, transfer, or
otherwise dispose of any capital stock of any of its Subsidiaries or
that could require any Subsidiary to issue, sell, or otherwise cause
to become outstanding any of its own capital stock. There are no
outstanding stock appreciation, phantom stock, profit participation,
or similar rights with respect to any Subsidiary. There are no voting
trusts, proxies, or other agreements or understandings with respect to
the voting of any capital stock of any Subsidiary. None of the
Company and its Subsidiaries controls directly or indirectly or has
any direct or indirect equity participation in any corporation,
partnership, trust, or other business association which is not a
Subsidiary of the Company.
(e) Authority Relative to Agreement. The Company has the
full right, power, and legal authority to execute and deliver this
Agreement. The Company has the full right, power, and legal authority
to perform this Agreement and to consummate the transactions
contemplated on the part of the Company hereby. The execution and
delivery by the Company of this Agreement and the consummation by the
Company of the transactions contemplated on its part hereby have been
duly authorized by its Board of Directors and the Shareholders in
their capacity as the holders of all of the capital stock of the
Company. To the knowledge of the Shareholders and the Company, no
proceeding on the part of the Company, and, except for those approvals
described in Schedule 2.2(e), no notice, consent, authorization, order
or approval of, filing or registration with, any governmental
commission, board or other regulatory body, or any bank, bonding
company, lender, surety, customer, supplier, or any other person
whatsoever is required for or in connection with the Company's
execution and delivery of this Agreement. This Agreement has been
duly executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement is subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws relating to or affecting creditors' rights.
(f) Non-Contravention. The execution, delivery, and
performance of this Agreement by the Company do not and the
consummation by the Company of the transactions contemplated hereby
will not (1) to the knowledge of the Shareholders and the Company,
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, government agency, or court to which the Company or any of
its assets is subject or (2) violate any provision of the Articles of
Incorporation or Bylaws of the Company or any Subsidiary, or (3) to
the knowledge of the Shareholders and the Company, violate or result
in, with the giving of notice or the lapse of time or both, the
violation of any provision of, or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice or
lapse of time or both) any obligation under, or result in the creation
or imposition of any lien, charge, pledge, security interest or other
encumbrance upon any of the property of the Company or any Subsidiary
pursuant to any provision of any mortgage, lien, lease, contract,
agreement, license, or instrument to which the Company or any
Subsidiary is a party or by
Xxxx Agreement and Plan of Merger//Page 12
21
which any of their respective assets are bound. The execution,
delivery and performance of this Agreement by the Company do not and
will not violate or conflict with any other restriction of any kind or
character to which the Company or any Subsidiary is subject or by
which any of their respective assets may be bound, and the same do not
and will not constitute an event permitting termination of any such
mortgage, lien, lease, agreement, license or instrument to which the
Company or any Subsidiary is a party or by which any of their
respective assets are bound.
(g) Financial Information. The Shareholders have
previously furnished Parent with true and complete copies of the
balance sheets of the Company and its Subsidiaries as of December 31,
1996 and December 31, 1995, and the related statements of income,
retained earnings and cash flows for each of the three years in the
period ended December 31, 1996, together with the report of Xxxxxxxx,
Xxxxxxx & Co., the independent accountants of the Company, with
respect to such financial statements. Such financial statements have
been prepared in conformity with Generally Accepted Accounting
Principals ("GAAP") consistently applied and, to the knowledge of the
Shareholders and the Company, present fairly the financial position
and results of operations of the Company and its consolidated
Subsidiaries as of and for the respective periods then ended. The
Shareholders have also previously furnished the Parent with a copy of
the unaudited monthly balance sheets of the Company as of the last day
of each month from January through June 1997, and the related monthly
unaudited statement of income, retained earnings and cash flows of the
Company with respect to each month from January through June 1997
certified by the chief executive officer and the chief accounting
officer of the Company (including such certificates, the "Unaudited
Monthly Financial Statements"). To the knowledge of Shareholders and
the Company, such financial statements have been prepared in
conformity with GAAP consistently applied and present fairly the
financial position and results of operations of the Company and its
consolidated Subsidiaries as of and for the subject periods, except
for normal recurring year-end adjustments and except for the absence
of footnotes. The Company and its Subsidiaries do not have any
liabilities or obligations of a type which should be included in or
reflected as such in financial statements prepared in accordance with
GAAP, whether related to tax or non-tax matters, accrued or
contingent, due or not yet due, liquidated or unliquidated, or
otherwise, except as and to the extent disclosed or reflected in such
financial statements. Collectively, the financial statements
described in this Section 2.2(g) are the "Company Financial
Statements."
(h) Absence of Certain Changes or Events. Since December
31, 1996, except to the extent described in Schedule 2.2(h) of the
Company Disclosure Schedule, and except as contemplated by this
Agreement or in connection with the transactions contemplated by this
Agreement:
Xxxx Agreement and Plan of Merger//Page 13
22
(1) none of the Company and its Subsidiaries has
sold, leased, transferred, or assigned any of its assets,
tangible or intangible, other than for a fair consideration in
the ordinary course of business;
(2) none of the Company and its Subsidiaries has
entered into any agreement, contract, lease, permit or license
(or series of related agreements, contracts, leases, permits
and licenses) either involving more than $20,000 or outside
the ordinary course of business;
(3) to the knowledge of the Shareholders and the
Company, no party (including any of the Company and its
Subsidiaries) has breached, accelerated, terminated, modified,
or canceled any agreement, contract, lease, permit or license
(or series of related agreements, contracts, leases, permits
and licenses) involving more than $20,000 to which any of the
Company and its Subsidiaries is a party or by which any of
them is bound ("Company Contracts");
(4) none of the Company and its Subsidiaries has
imposed or suffered to exist any lien, encumbrance or security
interest upon any of its assets, tangible or intangible (other
than the Permitted Exceptions, as defined below);
(5) none of the Company and its Subsidiaries has
made any capital expenditure (or series of related capital
expenditures) either involving more than $20,000 or outside
the ordinary course of business;
(6) none of the Company and its Subsidiaries has
made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other
corporation, partnership, limited liability company or other
person (or series of related capital investments, loans, and
acquisitions) either involving more than $20,000 or outside
the ordinary course of business;
(7) none of the Company and its Subsidiaries has
issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation either involving more
than $25,000 singly or $50,000 in the aggregate;
(8) none of the Company and its Subsidiaries has
delayed or postponed the payment of accounts payable and other
liabilities outside the ordinary course of business;
(9) none of the Company and its Subsidiaries has
canceled, compromised, satisfied, settled, waived, or released
any right or claim (or series of related rights
Xxxx Agreement and Plan of Merger//Page 14
23
and claims) either involving more than $20,000 or outside the
ordinary course of business;
(10) none of the Company and its Subsidiaries has
granted any license or sublicense of any rights under or with
respect to any Intellectual Property (as defined in Section
2.2(m) below);
(11) there has been no change made or authorized in
the Articles of Incorporation or bylaws of any of the Company
and its Subsidiaries (except that the Articles may be changed
to include the exculpation provisions permitted by law);
(12) none of the Company and its Subsidiaries has
issued, sold, or otherwise disposed of any of its capital
stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
(13) none of the Company and its Subsidiaries has
declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired
any of its capital stock, except for dividends and
distributions to shareholders of S-corporations which in the
aggregate do not exceed 43.2% of the Company's pre-tax net
income during 1997 through the date of the latest such
distribution and except as permitted by Section 3.1(m);
(14) none of the Company and its Subsidiaries has
experienced any damage, destruction, or loss to its property
in excess of $20,000 which is not covered by insurance;
(15) none of the Company and its Subsidiaries has
made any loan to, or entered into any other transaction with,
any of its directors, officers, and employees outside the
ordinary course of business;
(16) none of the Company and its Subsidiaries has
entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(17) none of the Company and its Subsidiaries has
granted any increase in compensation to any of its directors,
officers, employees, consultants or agents in excess of five
percent of such person's base compensation and discretionary
bonuses to officers and employees in the aggregate amount of
up to 10% of the pre-tax net income of the Company during 1997
up to the date of the latest such payment;
Xxxx Agreement and Plan of Merger//Page 15
24
(18) none of the Company and its Subsidiaries has
adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract,
or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect
to any other employee benefit plan);
(19) none of the Company and its Subsidiaries has
made any other change in employment terms for any of its
directors, officers, and employees outside the ordinary course
of business;
(20) none of the Company and its Subsidiaries has
made or pledged to make any material charitable or other
contribution outside the ordinary course of business;
(21) to the knowledge of the Shareholders and the
Company, there has not been any other material occurrence,
event, incident, action, failure to act, or transaction
outside the ordinary course of business involving any of the
Company or its Subsidiaries;
(22) to the knowledge of the Shareholders and the
Company, there has not been any material adverse change in the
business, financial condition, operation, results of
operation, or future prospects of the Company and its
Subsidiaries;
(23) there have not been any work interruptions, or
to the knowledge of the Shareholders and the Company, labor
grievances or employee claims filed (the existence of which is
known, or under the normal course of business should be known,
to the Company) against the Company or its Subsidiaries;
(24) there has not been any merger or consolidation
or agreement to merge or consolidate with or into any other
corporations; and
(25) none of the Company and its Subsidiaries has
committed to do any of the foregoing.
"Permitted Exceptions" shall mean (i) mechanic's,
materialman's, warehouseman's and carrier's liens and purchase money
security interests arising in the ordinary course of business, a
correct and complete list of which is set forth on Schedule 2.2 of the
Company Disclosure Schedule or arising by operation of law; (ii) liens
for taxes and assessments not yet payable; (iii) liens for taxes,
assessments and charges and other claims, the validity of which the
Company or the Shareholders are contesting in good faith, a correct
and complete list of which is set forth on Schedule 2.2; and (iv)
imperfections of title, liens, security interests, claims and other
charges and encumbrances the existence of which does not adversely
affect the operation, value, use or enjoyment of the affected asset or
property.
Xxxx Agreement and Plan of Merger//Page 16
25
(i) Undisclosed Liabilities. To the knowledge of the
Shareholders and the Company, the Company and its Subsidiaries have no
liabilities (and there is no known basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against the Company or its Subsidiaries giving rise
to any liability), except for (i) liabilities set forth on the face of
the Company Financial Statements (rather than in any notes thereto)
and (ii) liabilities which have arisen after May 31, 1997 in the
ordinary course of business (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of
law).
(j) Permits and Legal Compliance. To the knowledge of
the Shareholders and the Company, the Company and its Subsidiaries
have all permits, licenses, orders, qualifications, and approvals of
all governmental and regulatory authorities material to the conduct of
their business, a correct and complete list of which is set forth in
Schedule 2.2. To the knowledge of the Shareholders and the Company,
all such permits, licenses, orders and approvals are in full force and
effect, and no suspension or cancellation of any of them is pending or
threatened. To the knowledge of the Shareholders and the Company,
none of such permits, licenses, orders or approvals, and no
application for any of such permits, licenses, orders or approvals,
will be adversely affected by the consummation of the transactions
contemplated by this Agreement. To the knowledge of the Shareholders
and the Company, the Company and its Subsidiaries have complied with
all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against the Company or its Subsidiaries alleging
any failure so to comply.
(k) Title to Properties; Absence of Liens and
Encumbrances, etc. To the knowledge of the Shareholders and the
Company, the Company and its Subsidiaries have good and marketable
title to all of the real, tangible personal and mixed properties and
assets owned by it and used in its business, free and clear of any
liens, charges, pledges, mortgages, conditional sales contracts,
security interests or other encumbrances (other than Permitted
Exceptions), except as reflected in the Company Financial Statements.
A correct and complete list of all such properties and assets (other
than properties and assets described in Sections 2.2(l), 2.2(m) and
2.2(n)) with a historical cost in excess of $5,000 is set forth on
Schedule 2.2(k). The properties and assets of the Company and its
Subsidiaries (other than the properties and assets described in
Sections 2.2(l), 2.2(m) and 2.2(n), which sections contain the
Company's and Shareholders' representations and warranties with
respect to intangible properties and assets) are free and clear of any
liens, charges, pledges, mortgages, conditional sales contracts,
security interests or other encumbrances (other than Permitted
Exceptions), except as reflected in the Company Financial Statements.
Xxxx Agreement and Plan of Merger//Page 17
26
(l) Software. Schedule 2.2(l) contains a list or
description by type of all operating and applications computer
programs and data bases ("Software") which the Company or any
Subsidiary uses or has available for use and plans to use, and such
Software constitutes all the Software which is used to operate the
business of the Company and its Subsidiaries as currently conducted.
All such Software is owned outright by the Company or its Subsidiaries
except as indicated on Schedule 2.2(l). As to any Software which
Schedule 2.2(l) indicates is not owned by the Company or its
Subsidiaries, the owner of such Software is identified on Schedule
2.2(l) and the Company and its Subsidiaries have the right to use the
same pursuant to valid leases or licenses therefor. To the knowledge
of the Shareholders and the Company, none of the Software used by or
available to the Company or its Subsidiaries, and no use thereof,
infringes upon or violates any patent, copyright, trade secret or
other proprietary right of anyone else and no claim with respect to
any such infringement or violation is known to be threatened.
(m) Patent, Trademark, etc. Claims. To the knowledge of
the Shareholders and the Company, the Company or its Subsidiaries is
the owner or licensee of all patents, patent licenses,
trademarks/servicemarks/trade names, trademark/servicemark/trade name
registrations, copyrights, and copyright registrations or any other
intellectual property ("Intellectual Property") used in the operation
of the Company's business as presently conducted and purported to be
owned or licensed by it; and a correct and complete list of such
Intellectual Property is set forth in Schedule 2.2(m) of the Company
Disclosure Schedule. Each item of Intellectual Property owned or used
by the Company or its Subsidiaries immediately prior to the Final
Closing will be owned or available for use by the Company or its
Subsidiaries on the same terms and conditions immediately after the
Final Closing. To the knowledge of the Shareholders and the Company,
each of the Company and its Subsidiaries owns or has the right to use
all such Intellectual Property. To the knowledge of the Shareholders
and the Company, each of the Company and its Subsidiaries has not
infringed, and is not now infringing, on any trade name, trademark,
service xxxx, or copyright belonging to any other person, firm or
corporation and has not received any notice of such infringement.
Neither the Company nor any Subsidiary is a party to any license,
sublicense, agreement or arrangement pursuant to which the Company or
its Subsidiaries uses Intellectual Property except as shown in
Schedule 2.2(m). With respect to each such license, sublicense,
agreement or arrangement set forth in Schedule 2.2(m), to the
knowledge of the Shareholders and the Company:
(1) the license, sublicense, agreement or
arrangement covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(2) the license, sublicense, agreement or
arrangement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
immediately following the Final Closing;
Xxxx Agreement and Plan of Merger//Page 18
27
(3) no party to such license, sublicense,
agreement or arrangement is in breach or default, and no event
has occurred which with notice or lapse of time would
constitute a breach or default or permit termination,
modification or acceleration thereunder; and
(4) no party to the license, sublicense,
agreement or arrangement has repudiated any provision thereof.
Each of the Company and its Subsidiaries owns, or holds adequate
licenses or other rights to use, its trade names in the business as
now conducted by it, and such use does not, and will not, conflict
with, infringe on, or otherwise violate any rights of others. The
Shareholders have delivered to Parent correct and complete copies of
all such licenses, sublicenses agreements and arrangements (as amended
to date) disclosed on Schedule 2.2(m).
(n) List of Properties, Contracts and Other Data. The
Company and its Subsidiaries own or lease all property and tangible
assets used in the conduct of their business as presently conducted.
To the knowledge of the Shareholders and the Company, and except as
reflected in such Schedule 2.2(n), all of the property of the Company
and its Subsidiaries is in existence and is in good condition and
repair, except for reasonable wear and tear, and in conformity in all
material respects with all building, zoning, OSHA, Coast Guard,
safety, or other applicable ordinances, regulations, or laws.
Schedule 2.2(n) contains a list setting forth with respect to the
Company and its Subsidiaries as of the date hereof the following:
(1) Schedule 2.2(n)(1) lists and describes briefly
all real property which the Company and each Subsidiary owns.
With respect to each such parcel of owned real property
(collectively, the "Owned Real Property"):
(i) the identified owner has good and marketable
title to the parcel of real property, free and clear
of any security interest, easement, covenant, or
other restriction, except for installments of special
assessments not yet delinquent and recorded
easements, covenants, and other restrictions which do
not impair the current use, occupancy, or value, or
the marketability of title, of the Owned Real
Property subject thereto and except as set forth on
Schedule 2.2(n)(1);
(ii) there are no pending or, to the knowledge of
the Shareholders and the Company, threatened
condemnation proceedings, lawsuits, or administrative
actions or other matters relating to the Owned Real
Property which could reasonably be expected to
adversely affect the current ownership, maintenance,
use, occupancy, or value thereof;
Xxxx Agreement and Plan of Merger//Page 19
28
(iii) to the knowledge of the Shareholders and the
Company, the legal description for the parcel
contained in the deed thereof describes such parcel
fully and adequately, the buildings and improvements
are located within the boundary lines of the
described parcels of land, are not in violation of
applicable setback requirements, zoning laws, and
ordinances (and none of the properties or buildings
or improvements thereon is subject to "permitted
non-conforming use" or "permitted non-conforming
structure" classifications), and do not encroach on
any easement which may burden the land, and, except
as described on Schedule 2.2(n)(1), the land does not
serve any adjoining property for any purpose
inconsistent with the use of the land, and the Owned
Real Property is not located within any flood plain
or subject to any similar type restriction for which
any permits or licenses necessary to the use thereof
have not been obtained;
(iv) to the knowledge of the Shareholders and the
Company, all facilities have received all approvals
of governmental authorities (including licenses and
permits) required in connection with the ownership or
operation thereof and have been operated and
maintained in accordance with such approvals and
applicable laws, rules, and regulations;
(v) except as described on Schedule 2.2(n)(2) there
are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any
party or parties the right of use or occupancy of any
portion of the parcel of real property;
(vi) there are no outstanding options or rights of
first refusal to purchase the parcel of real
property, or any portion thereof or interest therein;
(vii) there are no parties (other than the Company
and its Subsidiaries) in possession of the parcel of
real property, other than tenants in possession of
property leased or subleased by the Company or any of
its Subsidiaries under any leases or subleases
disclosed on Schedule 2.2(n)(2) which tenants are in
possession of space to which they are entitled;
(viii) to the knowledge of the Shareholders and the
Company, except as described on Schedule 2.2(n)(1),
to the extent necessary or desirable for the use or
operation of facilities located on real property
owned by the Company or any Subsidiary, such
facilities are supplied with utilities and other
services, including gas, electricity, water,
telephone, sanitary sewer, and storm sewer, all of
which services are adequate in accordance with all
applicable laws, ordinances, rules, and regulations;
Xxxx Agreement and Plan of Merger//Page 20
29
(ix) to the knowledge of the Shareholders and the
Company, except as described on Schedule 2.2(n)(1),
each parcel of real property abuts on and has direct
vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant
easement benefitting the parcel of real property, and
access to the Property is provided by paved public
right-of-way with adequate curb cuts available;
(x) Except as described on Schedule 2.2(n)(1), the
Owned Real Property is not located within an area
that has been designated by the Federal Insurance
Administration, the Army Corps of Engineers or any
other governmental agency or body as being subject to
special flooding hazards; and
(xi) Except as described on Schedule 2.2(n)(1), the
improvements on the Property (A) have been
constructed in a good and workmanlike manner, free
from defects in workmanship and material and, to the
best of Shareholders' and Company's knowledge, do not
require any repair or replacement other than minor,
routine maintenance; and (B) have been constructed
and are being occupied, maintained, and operated in
compliance with all applicable laws, regulations,
insurance requirements, contracts, leases, permits,
licenses, ordinances, restrictions, building setback
lines, covenants, reservations, and easements, and
the Shareholders and Company have received no notice,
written or oral, claiming any violation of any of the
same or requesting or requiring the performance of
any repairs, alterations, or other work in order to
so comply.
(2) Schedule 2.2(n)(2) of the Company Disclosure
Schedule lists and describes briefly all real property leased
or subleased by or to the Company or any of its Subsidiaries
(whether as lessor or as lessee). Schedule 2.2(n)(2) also
identifies the properties leased or subleased to the Company
or any of its Subsidiaries for which title insurance policies
are to be procured as provided in Section 3.8 below. The
Shareholders have delivered to the Parent correct and complete
copies of the leases and subleases listed in Schedule
2.2(n)(2) (as amended to date) . With respect to each lease
and sublease listed in Schedule 2.2(n)(2);
(i) to the knowledge of the Shareholders and the
Company, the lease or sublease is legal, valid,
binding, enforceable, and in full force and effect;
(ii) to the knowledge of the Shareholders and the
Company, the lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force
and effect on identical terms immediately following
the consummation of the transactions contemplated
hereby;
Xxxx Agreement and Plan of Merger//Page 21
30
(iii) to the knowledge of the Shareholders and the
Company, no party to the lease or sublease is in
breach or default, and no event has occurred which,
with notice or lapse of time, would constitute a
breach or default or permit termination,
modification, or acceleration thereunder;
(iv) to the knowledge of the Shareholders and the
Company, no party to the lease or sublease has
repudiated any provision thereof;
(v) to the knowledge of the Shareholders and the
Company, except as described on Schedule 2.2(n)(2),
there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or
sublease;
(vi) to the knowledge of the Shareholders and the
Company, with respect to each sublease, the
representations and warranties set forth in
subsections (i) through (v) above are correct and
complete with respect to the underlying lease;
(vii) none of the Company and its Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in
trust, or encumbered any interest in the leasehold or
subleasehold;
(viii) to the knowledge of the Shareholders and the
Company, all facilities leased or subleased
thereunder have received all approvals of
governmental authorities (including licenses and
permits) required in connection with the operation
thereof and have been operated and maintained in
accordance with applicable laws, rules, and
regulations; and
(ix) to the knowledge of the Shareholders and the
Company, all facilities leased or subleased
thereunder are supplied with utilities and other
services necessary for the operation of said
facilities.
(3) Schedule 2.2(n)(3) of the Company Disclosure
Schedule lists and describes briefly all contracts and
commitments (including, without limitation, mortgages,
indentures and loan agreements) to which the Company or any
Subsidiary is a party, or to which it or any of its assets or
properties are subject and which are not specifically referred
to elsewhere in Section 2.2, provided that there need not be
listed in the Company Disclosure Schedule (unless required
pursuant to the preceding subsections of this Section 2.2(n))
any contract or commitment incurred in the ordinary course of
business which requires payments to or by the Company and its
Subsidiaries during its remaining life aggregating less than
$25,000 or which is terminable by the Company or any
Subsidiary within thirty days without payment of a premium or
penalty.
Xxxx Agreement and Plan of Merger//Page 22
31
Correct and complete copies of all documents, and descriptions
complete in all material respects of all oral agreements or
commitments (if any), referred to in this Section 2.2(n) have been
provided to Parent or its counsel. To the knowledge of the
Shareholders and the Company, none of the Company, the Shareholders
and the Subsidiaries has been notified of any claim that any contract
listed in Schedule 2.2(n)(3) of the Company Disclosure Schedule is not
valid and enforceable in accordance with its terms for the periods
stated therein, or that there is under any such contract any existing
material default or event of default or event which with notice or
lapse of time or both would constitute such a default.
(o) Use of Real Property. None of the Shareholders, the
Company and the Subsidiaries has received notice of violation of any
applicable zoning or building regulation, ordinance or other law,
order, regulation or requirement relating to the operations of the
Company or its Subsidiaries, or any notice of default under any
material lease, contract, commitment, license or permit, relating to
the use and operation of the owned or leased real property listed in
the Company Disclosure Schedules. To the knowledge of the
Shareholders and the Company, none of the Shareholders, the Company
and the Subsidiaries has received notice that any plant, facility or
other building which is owned or covered by a lease set forth in the
Company Disclosure Schedule does not substantially conform in all
material respects with all applicable ordinances, codes, regulations
and requirements, and none of the Shareholders, the Company and the
Subsidiaries has received notice that any law or regulation presently
in effect or condition precludes or restricts continuation of the
present use of such properties.
(p) Environmental Laws. To the knowledge of the
Shareholders and the Company, (i) the Company and its Subsidiaries,
including, without limitation, their businesses, facilities, property,
vessels, and equipment have been and are currently in compliance, in
all material respects, with all applicable federal, state, and local
laws, rules, and regulations of all authorities, including without
limitation, applicable Environmental Laws (as hereinafter defined),
and (ii) the Company and its Subsidiaries have all permits,
certificates, and licenses required to operate their businesses,
facilities, property, vessels, and equipment, including, without
limitation, any relating to the generation, processing, treatment,
discharge, storage, transport, disposal, or other management of
chemicals and other hazardous materials, of waste materials of any
kind, and those relating to the protection of environmentally
sensitive areas. To the knowledge of the Shareholders and the
Company, there is no material adverse effect on any of the facilities,
properties, vessels or equipment of the Companies, or with respect to
function, use, or value of any such assets, resulting from any
hazardous or toxic substance, or any pollutant or contaminant, or as a
result of exposure to petroleum or any by-product thereof.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, and the Occupational Safety and Health Act of
1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal,
Xxxx Agreement and Plan of Merger//Page 23
32
state, local, and foreign governments (and all agencies thereof)
concerning pollution or protection of the environment, public health
and safety including laws relating to emissions, discharges, releases,
or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes in ambient air,
surface water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
(q) Litigation. Except as provided on Schedule 2.2(q),
there are no actions, suits, audits, investigations, unfair labor
practices charges, complaints, claims, grievances or proceedings or,
to the knowledge of the Shareholders and the Company, any audits or
investigations with respect to the Company or any Subsidiary pending
against the Company or any Subsidiary at law or in equity, or before
or by any federal, state, municipal, foreign or other governmental
department, commission, board, bureau, agency or instrumentality, nor
to the knowledge of the Shareholders and the Company, are there any
such actions, suits, audits, investigations, unfair labor practices
charges, complaints, claims, grievances or proceedings that are known
to be threatened against the Company or any Subsidiary.
(r) Labor and Employment Matters.
(1) Schedule 2.2(r) of the Company Disclosure
Schedule sets forth all collective bargaining agreements,
employment and consulting agreements (other than consulting
agreements terminable by the Company or any Subsidiary within
60 days without payment of a premium or a penalty), executive
compensation plans, bonus plans, deferred compensation
agreements, employee pension plans or retirement plans,
employee profit sharing plans, employee stock purchase and
stock option plans, group life insurance, hospitalization
insurance or other plans or arrangements providing for
benefits to employees of the Company or any Subsidiary.
(2) To the knowledge of the Shareholders and the
Company, there are no controversies between the Company (or
any Subsidiary) and any employees or any unresolved labor
union grievances or unfair labor practice or labor arbitration
proceedings pending or threatened, related to the Company (or
any Subsidiary) and there are not any organizational efforts
presently being made or threatened in an organized fashion
involving any of the employees of the Company or any
Subsidiary.
(3) None of the Shareholders, the Company and the
Subsidiaries has received notice of any claim that it has not
complied with any laws relating to the employment of labor,
including any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and
similar taxes, equal employment opportunity, employment
discrimination and employment safety, or that it is liable
Xxxx Agreement and Plan of Merger//Page 24
33
for any arrears of wages or any taxes or penalties for failure
to comply with any of the foregoing.
(4) Schedule 2.2(r) of the Company Disclosure
Schedule sets forth the current annual compensation (or basis
thereof) of all employees of the Company and its Subsidiaries
(by position or by department) as of June 30, 1997.
(s) Accounts Receivable. To the knowledge of the
Shareholders and the Company (A) the accounts receivable reflected on
the balance sheet of the Company as of December 31, 1996, and all
accounts receivable arising between December 31, 1996 and the date
hereof, arose from bona fide transactions in the ordinary course of
business; (B) the services involved have been provided to the account
obligor and no further services are required to be provided in order
to entitle the Company or its assignees to collect the accounts
receivable in full; (C) no such account has been assigned or pledged
to any other person, firm or corporation; and (D) unless paid prior to
the Preliminary Closing Date, the accounts receivable are or will be
as of the Preliminary Closing Date current and collectible net of the
respective reserves, if any, shown on the Company Financial Statements
(which reserves are adequate and calculated consistent with past
practices). There is no contest, claim or right of set-off, other
than in the ordinary course of business, under any of the Company
Contracts with any obligor of an account receivable relating to the
amount or validity of such account receivable. Schedule 2.2(s) sets
forth a complete and accurate list of all accounts receivable as of
June 30, 1997, which list indicates the aging of such accounts
receivable.
(t) Insurance. Schedule 2.2(t) sets forth the following
information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company and
its Subsidiaries have been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past year (except as to
insurance policies owned by third party vendors, contractors and
clients of the Company which have contractually named the Company or
its Subsidiaries as insured or provided other benefits of coverage as
a result of contractual liability coverage, which policies need not be
listed on Schedule 2.2(t) but shall be made available for inspection
by Parent's representatives):
(1) the name, address, and telephone number of the
agent;
(2) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(3) the policy number and the period of coverage;
Xxxx Agreement and Plan of Merger//Page 25
34
(4) the scope (including an indication of whether
the coverage was on a claims made, occurrence, or other basis)
and amount (including a description of how deductibles and
ceilings are calculated and operate) of coverage; and
(5) a description of any retroactive or "swing"
premium adjustments or other loss-sharing arrangements.
To the knowledge of the Shareholders and the Company, with respect to
each such insurance policy owned by the Company or any of its
Subsidiaries: (A) the policy is legal, valid, binding, enforceable,
and in full force and effect with respect to the periods and risks
which such policy purports to insure; (B) the policy will continue to
be legal, valid, binding, enforceable, and in full force and effect in
accordance with its terms on the same terms immediately following the
consummation of the transactions contemplated hereby; (C) neither the
Company nor any of its Subsidiaries nor any other party to the policy
is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration, under
the policy; and (D) no party to the policy has repudiated any
provision thereof. To the knowledge of the Shareholders and the
Company, the Company and each of its Subsidiaries has been covered
during the past five years by insurance in scope and amount customary
and reasonable for the businesses in which it has engaged during the
aforementioned period. Schedule 2.2(t) of the Company Disclosure
Schedule describes any self-insurance arrangements affecting the
Company and its Subsidiaries. "Self insurance arrangements" means any
arrangement by which the Company or its Subsidiaries has assumed risks
in scope and amount customarily insured by businesses in the Company's
industry and geographic region.
(u) Employee Benefits.
(1) To the knowledge of the Shareholders and the
Company, the Company and its Subsidiaries have complied and
currently are in compliance, both as to form and operation, in
all material respects with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Internal Revenue Codes of 1954 and/or 1986,
as amended, respectively (for purposes of this Section 2.2(u)
only, the "Code"), with respect to each "employee benefit
plan" as defined under Section 3(3) of ERISA. Each employee
benefit plan of the Company and its Subsidiaries ("Plan") is
described in Schedule 2.2(u) of the Company Disclosure
Schedule, and a copy of each Plan is attached thereto.
(2) The Company and its Subsidiaries have never
maintained, adopted or established, contributed or been
required to contribute to, or otherwise participated or been
required to participate in, a "multiemployer plan" (as defined
in Section 3(37) of ERISA). No amount is due as owing from
the Company or any Subsidiary
Xxxx Agreement and Plan of Merger//Page 26
35
on account of a "multiemployer plan" (as defined in Section
3(37) of ERISA) or on account of any withdrawal therefrom.
(3) The Company and its Subsidiaries have not
incurred any liability with respect to a Plan including,
without limitation, under ERISA (including, without
limitation, Title I or Title IV of ERISA, other than liability
for premiums due to the Pension Benefit Guaranty Corporation
("PBGC")), the Code or other applicable law, which has not
been satisfied in full, and, to the knowledge of the
Shareholders and the Company, no event has occurred, and
there exists no known condition or set of circumstances, which
could result in the imposition of any liability with respect
to a Plan, including, without limitation, under ERISA
(including, without limitation, Title I or Title IV of ERISA),
the Code or other applicable law with respect to the Plan.
(4) The Company and its Subsidiaries have no
outstanding commitments to provide or to cause to be provided
any severance or other post-employment benefit, salary
continuation, termination, disability, death, retirement,
health or medical benefit or similar benefit to any person
(including, without limitation, any former or current
employee) that has not been reflected in the Company Financial
Statements or is not included in any Plan disclosed in
Schedule 2.2(u).
(v) Tax Matters.
(1) To the knowledge of the Shareholders and the
Company, all federal, state, local and foreign tax returns
required to be filed by the Company and its Subsidiaries prior
to the date hereof have been filed on a timely basis with the
appropriate governmental authorities in all jurisdictions in
which such tax returns are required to be filed, and all such
returns are correct and complete. Shareholders have delivered
to Parent correct and complete copies of all federal income
tax returns, examination reports, and statements of
deficiencies asserted against or agreed to by the Company or
any Subsidiary since January 1, 1992. To the knowledge of the
Shareholders and the Company, neither the Company nor its
Subsidiaries are currently the subject of any audit,
examination or any similar investigation by any governmental
authority. Schedule 2.2(v) of the Company Disclosure Schedule
sets forth all audits, examinations or similar investigations
of the Company and its Subsidiaries by any governmental
authority since January 1, 1992.
(2) To the knowledge of the Shareholders and the
Company, all federal, state, local and foreign income,
franchise, sales, use, property, and all other taxes, fees,
assessments, or other governmental charges (including
withholding taxes), and all interest and penalties thereon
(all of the foregoing collectively, "Taxes") due from or
properly accruable by the Company and its Subsidiaries have
been fully and timely
Xxxx Agreement and Plan of Merger//Page 27
36
paid or, in the cases of Taxes for which payment is not yet
required, properly and fully accrued for on the Company
Financial Statements or in Schedule 2.2(v) with respect to all
taxable periods ending on or prior to the date of this
Agreement and interim periods through the date of this
Agreement.
(3) None of the Company and its Subsidiaries has
filed a consent under Section 341(f) of the Code concerning
collapsible corporations. None of the Shareholders, the
Company or any Subsidiary is a party to any agreement,
contract or arrangement that would, by reason of the
consummation of any of the transactions contemplated by this
Agreement, individually or in the aggregate, result in the
payment of any "excess parachute payment" within the meaning
of Section 280G of the Code. None of the assets of the
Company or any Subsidiary is required to be treated as being
owned by any other person pursuant to the "safe harbor"
leasing provisions of Section 168 of the Internal Revenue Code
of 1954, as in effect prior to the repeal of said leasing
provisions.
(4) None of the Company and its Subsidiaries is a
party to any Tax allocation or sharing agreement. None of the
Company and its Subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal income tax
return (other than a group the common parent of which was the
Company or a Related Company) or (B) has any liability for the
taxes of any person (other than any of the Company or a
Related Company and their respective Subsidiaries) under
Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor,
by contract, or otherwise.
(5) Schedule 2.2(v) sets forth the following
information with respect to each of the Company and its
Subsidiaries (or, in the case of clause (B) below, with
respect to each of the Subsidiaries) as of the most recent
practicable date: (A) the basis of the Company or Subsidiary
in its assets; (B) the basis of the stockholder(s) of the
Subsidiary in its stock (or the amount of any excess loss
account); (C) the amount of any net operating loss, net
capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to
the Company or Subsidiary; and (D) the amount of any deferred
gain or loss allocable to the Company or Subsidiary arising
out of any Deferred Intercompany Transaction (as defined in
Treas. Reg. Section 1.1502-13).
(w) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by the
Shareholders and the Company directly with the Parent, without the
intervention of any other person on behalf of the Shareholders or the
Company in such manner as to give rise to any valid claim by any other
person against the Shareholders or the Company for a finder's fee,
brokerage commissions, or similar payment.
Xxxx Agreement and Plan of Merger//Page 28
37
(x) Powers of Attorney. There are no outstanding powers
of attorney executed on behalf of the Company.
(y) Investment Company. Each of the Company or its
Subsidiaries is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company", a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(z) Tax-Free Reorganization. With respect to the
qualification of the Merger as a reorganization pursuant to Section
368(a)(2)(D) of the Code:
(1) There is no plan or intention on the part of
Shareholders to sell, exchange or otherwise dispose of a
number of shares of Parent Common Stock received in the Merger
which would reduce the Shareholders' aggregate ownership of
such Parent Common Stock to a number of shares having a value,
as of the Effective Time, of less than fifty percent of the
value of all of the formerly outstanding capital stock of the
Company as of the same date.
(2) Immediately following the Merger, the
Surviving Corporation will hold at least 90 percent of the
fair market value of the Company's net assets and at least 70%
of the fair market value of the Company's gross assets.
(3) The liabilities of the Company assumed by the
Surviving Corporation and the liabilities to which the assets
of the Company are subject were incurred in the Company's
ordinary course of business.
(4) If the Merger is effected, the Company and
the Shareholders will each pay their respective expenses, if
any, incurred in connection with the Merger, and neither the
Company nor the Shareholders will pay any Parent or Merger Sub
expenses incurred in connection with the Merger.
(5) At the Effective Time, the Company will not
have any outstanding warrants, options, convertible
securities, or any other right pursuant to which any person
could acquire stock in the Company that, if exercised or
converted, would affect the Parent's retention of control of
the Surviving Corporation.
(6) The Company is not an investment company
within the meaning of Section 368(a)(2)(F) of the Code.
Xxxx Agreement and Plan of Merger//Page 29
38
(7) At the Effective Time, the fair market value
of the assets of the Company will exceed the sum of its
liabilities, plus the amount of liabilities, if any, to which
its assets are subject.
(8) The Company is not under the jurisdiction of
a court in a case under Title 11 of the United States Code, or
a receivership, foreclosure, or similar proceeding in a
federal or state court.
2.3 REPRESENTATIONS AND WARRANTIES BY THE PARENT. The Parent
represents and warrants to the Shareholders and the Company that the statements
contained in this Section 2.3 are correct as of the date of this Agreement and
will be correct as of the Preliminary Closing Date and the Final Closing Date
(as though made then), except as set forth in the disclosure schedule delivered
by the Parent to the Shareholders and the Company on the date hereof , as
supplemented or amended in accordance with Section 3.4 of this Agreement (such
schedule, as so supplemented or amended, the "Parent Disclosure Schedule").
The Parent Disclosure Schedule will be arranged in sections and paragraphs
corresponding to the lettered and numbered sections and paragraphs contained in
this Section 2.3. References in Section 2.3 to a numbered schedule mean the
section of the Parent Disclosure Schedule that corresponds with that number;
for example, references to "Schedule 2.3(a)" mean Section 2.3(a) of the Parent
Disclosure Schedule. The Parent Disclosure Schedule constitutes an exception
to each warranty or representation set forth herein, whether or not such
warranty or representation specifically refers to the Parent Disclosure
Schedule; accordingly each warranty or representation set forth herein is
deemed to be preceded by the clause: "Except as set forth in the Parent
Disclosure Schedule . . .".
(a) Organization and Qualification, etc. The Parent is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has corporate power and
authority to own all of its properties and assets and to carry on its
business as it is now being conducted, and is duly qualified to do
business and is in good standing in Louisiana and each other
jurisdiction where, to the reasonable belief of Parent, such
qualification is necessary or appropriate. Each such jurisdiction is
identified in Schedule 2.3(a). The copies of the Parent's Certificate
of Incorporation and Bylaws, as amended to date, which have been
delivered to the Shareholders are complete and correct, and such
instruments, as so amended, are in full force and effect.
(b) Capital Stock. The entire authorized capital of
Parent consists of 25,000,000 shares of capital stock which is divided
into (1) 3,000,000 shares of restricted common stock having a par
value of $.001 per share, (ii) 20,000,000 shares of common stock
having a par value of $.001 per share (i.e., Parent Common Stock), and
(3) 2,000,000 shares of preferred stock having a par value of $.001
per share.
(c) Subsidiaries, etc. Other than the Merger Sub, and
except (i) as set forth in Schedule 2.3(c) and (ii) for Parent's
interest in the transactions described in this Agreement
Xxxx Agreement and Plan of Merger//Page 30
39
and the Other Acquisition Agreements (collectively, the "Consolidation
Agreements"), the Parent does not own of record or beneficially,
directly or indirectly, (1) any shares of outstanding capital stock or
securities convertible into capital stock of any other corporation or
(2) any participating interest in any partnership, joint venture or
other non-corporate business enterprise. Merger Sub and any corporate
or non-corporate business entity listed in Schedule 2.3(c) are in
Sections 2.3 and 2.4 collectively called the "Subsidiaries." None of
the Subsidiaries has any material assets or liabilities.
(d) Authority Relative to Agreement. Parent has the
corporate power and authority to execute, deliver and perform this
Agreement, the other Consolidation Agreements and any amendments
thereto and all agreements and instruments to be executed and
delivered by Parent or any of its Subsidiaries in accordance with this
Agreement or any other Consolidation Agreement or any amendments
hereto or thereto and to consummate the transactions contemplated on
the part of Parent hereby and thereby. The execution and delivery by
Parent of this Agreement, the other Consolidation Agreements and any
amendments thereto and all agreements and instruments to be executed
and delivered by Parent or any of its Subsidiaries in accordance with
this Agreement or any other Consolidation Agreement or any amendments
hereto or thereto and the consummation by Parent of the transactions
contemplated on its part hereby and thereby have been duly authorized
by its Board of Directors. No other corporate proceedings on the part
of Parent are necessary to authorize the execution and delivery of
this Agreement, the other Consolidation Agreements and any amendments
thereto and all agreements and instruments to be executed and
delivered by Parent or any of its Subsidiaries in accordance with this
Agreement or any other Consolidation Agreement or any amendments
hereto or thereto by Parent. Except for corporate action related to
the IPO and described in Schedule 2.3(d), no other corporate
proceedings on the part of Parent are necessary to authorize the
performance of this Agreement, the other Consolidation Agreements and
any amendments thereto and all agreements and instruments to be
executed and delivered by Parent or any of its Subsidiaries in
accordance with this Agreement or any other Consolidation Agreement or
any amendments hereto or thereto by Parent or the consummation by
Parent of the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by Parent and is, and
upon their due execution and delivery by the parties thereto the other
Consolidation Agreements and any amendments thereto and all agreements
and instruments to be executed and delivered by Parent or any of its
Subsidiaries in accordance with this Agreement or any other
Consolidation Agreement and any amendments hereto or thereto will be,
enforceable against Parent in accordance with their respective terms,
except as such enforcement is subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws relating to or
affecting creditors' rights. The Consolidation Agreements (other than
this Agreement and the Related Agreements) and any amendments thereto
are enforceable against the other parties thereto in accordance with
their respective terms, in each case except as such enforcement is
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar law relating to or affecting creditors'
rights.
Xxxx Agreement and Plan of Merger//Page 31
40
(e) Non-Contravention. The execution, delivery and
performance of this Agreement, the other Consolidation Agreements and
any amendments thereto and all agreements and instruments to be
executed and delivered by Parent or any of its Subsidiaries in
accordance with this Agreement or any other Consolidation Agreement or
any amendments hereto or thereto by Parent do not and the consummation
by Parent of the transactions contemplated hereby and thereby will not
(1) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling change, or other restriction of any
government, government agency, or court to which Parent is subject, or
(2) violate any provision of the Articles of Incorporation or Bylaws
of Parent, or (3) violate or result in, with the giving of notice or
the lapse of time or both, the violation of any provision of, or
result in the acceleration of or entitle any party to accelerate
(whether after the giving of notice or lapse of time or both) any
obligation under, or result in the creation or imposition of any lien,
charge, pledge, security interest or other encumbrance upon any of the
property of Parent pursuant to, any provision of any mortgage, lien,
lease, agreement, contract, license, or instrument to which Parent is
a party or by which any of its assets are bound. The execution,
delivery and performance of this Agreement, the other Consolidation
Agreements and any amendments thereto and all agreements and
instruments to be executed and delivered by Parent or any of its
Subsidiaries in accordance with this Agreement or any other
Consolidation Agreement or any amendments hereto or thereto by Parent
do not and will not violate or conflict with any other restriction of
any kind or character to which Parent is subject or by which any of
its assets may be bound, and the same does not and will not constitute
an event permitting termination of any such mortgage, lien, lease,
agreement, license or instrument to which Parent is a party or by
which any of its assets is bound.
(f) Approvals. Except for the declaration of
effectiveness of the registration statement (the "Registration
Statement") filed in connection with Parent's IPO by the U.S.
Securities and Exchange Commission ("SEC") pursuant to the Securities
Act, and the consents and approvals required pursuant to state
securities laws with respect to the IPO, and except as set forth in
Schedule 2.3(f), no consent, authorization, order or approval of, or
filing or registration with, any governmental commission, board or
other regulatory body or any other person is required for the
execution and delivery of this Agreement and the other Consolidation
Agreements and any amendments thereto and the consummation by Parent
of the transactions contemplated hereby and thereby.
(g) Litigation. There are no actions, suits, audits,
investigations, unfair labor practices charges, complaints, claims,
grievances or proceedings with respect to the Parent or any of its
subsidiaries pending against the Parent or any of its Subsidiaries at
law or in equity, or before or by any federal, state, municipal,
foreign or other governmental department, commission, board, bureau,
agency or instrumentality, nor are there any such actions, suits,
audits, investigations, unfair labor practice charges, complaints,
grievances or proceedings that are known to be threatened against the
Parent or any of its Subsidiaries.
Xxxx Agreement and Plan of Merger//Page 32
41
(h) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by
Parent directly with Shareholders and the Company, without the
intervention of any person on behalf of Parent in such manner as to
give rise to any valid claim by any person (other than XxXxxxxxx,
Xxxxxxxx & Company, Inc.) against Parent for a finder's fee, brokerage
commission, or similar payment.
(i) Tax-Free Reorganization. With respect to the
qualification of the Merger as a reorganization pursuant to Section
368(a)(2)(D) of the Code:
(1) The Parent has no plan or intention to sell,
exchange or otherwise dispose or liquidate the Surviving
Corporation, to merge the Surviving Corporation with or into
any other corporation, to sell or otherwise dispose of any
capital stock of the Surviving Corporation except for
transfers of such capital stock to corporations of which the
Parent has control (within the meaning of Section 368(a) of
the Code) at the time of such transfer, or to cause the
Surviving Corporation to sell or otherwise dispose of any of
its assets or of any assets acquired in the Merger, except for
dispositions made in the ordinary course of business or
transfers of assets to a corporation of which the Surviving
Corporation has control (within the meaning of Section 368(a)
of the Code) at the time of such transfer.
(2) The Parent has no plan or intention to cause
the Surviving Corporation, after the Merger, to issue
additional shares of its stock that would result in the Parent
losing control of the Surviving Corporation within the meaning
of Section 368(c) of the Code.
(3) Following the Merger, the Surviving Corporation
will continue the Company's historic business or use a
significant portion of its historic business assets in a
business.
(4) If the Merger is effected, the Parent and the
Merger Sub will each pay their respective expenses, if any,
incurred in connection with the Merger.
(5) The Parent Common Stock that will be exchanged
in the Merger is voting stock within the meaning of Section
368(c) of the Code.
(6) At the time of the Merger, neither the Parent
nor Merger Sub will have any outstanding warrants, options,
convertible securities, or any other right pursuant to which
any person could acquire stock in the Parent or Merger Sub
which, if exercised or converted, would affect Parent's
acquisition or retention of control of the Surviving
Corporation.
Xxxx Agreement and Plan of Merger//Page 33
42
(7) The Parent and the Merger Sub are not investment
companies as defined in Section 368(a)(2)(F) of the Code.
(8) None of the Parent Common Stock received by
Shareholders as a part of the Merger Consideration will be
separate consideration for, or allocable to, any employment
agreement.
(9) Neither the Parent nor the Merger Sub is under
the jurisdiction of a court in a case under Title 11 of the
United States Code, or a receivership, foreclosure, or similar
proceeding in a federal or state court.
(j) Registration Statement; PPM. Each of (i) the PPM,
(ii) the Registration Statement, (iii) the prospectus forming part of
the Registration Statement (the "Prospectus"), and (iv) any amendment
or supplement to any of the foregoing complies as to form with all
requirements of the Securities Act and regulations thereunder
(assuming, in the case of the PPM, that there is at least one
non-accredited investor (as such term is defined in Regulation D under
the Securities Act) to whom the PPM must be delivered), and none of
the foregoing misstates any material fact or omits to state a material
fact required to make the statements made therein, in light of the
circumstances under which they are made, not misleading, except for
any such misstatement or omission that is caused by any misstatement
or omission of material fact contained in (A) any material submitted
by the Shareholders to Parent in writing with the Information Letter
contemplated by Section 3.9(b) specifically for inclusion in the
Registration Statement or Prospectus or PPM or any amendment or
supplement thereto or (B) the Shareholder Disclosure Schedule or
Company Disclosure Schedule.
(k) No Undisclosed Agreements. There do not exist any
agreements, understandings or commitments by Parent or any of the
Subsidiaries or any of the Other Companies, which provide any material
benefit or other thing of value to any officer, director or
shareholder of any Other Company, or that vary the express terms of
the Consolidation Agreements, or that provide material benefits or any
other thing of value to any officer, director or promoter of Parent
("Parent Insiders") except as set forth in any of the Other
Acquisition Agreements or any employment or consultant agreement that
is appended thereto as an exhibit, or, in the case of the Parent
Insiders, except as described in the PPM.
(l) Financial Statements. The financial statements of
Parent and its Subsidiaries set forth in the PPM and those set forth
in the Prospectus, including (without limitation) the combined
proforma financial statements of Parent, the Company and the Other
Companies, have been prepared in conformity with GAAP consistently
applied and present fairly the financial position and results of
operations of the entities covered thereby as of the end of and for
the respective periods presented. There has been no material adverse
change in the business, financial condition, or results of operations
of Parent, the Company, and the Other Companies on a combined basis
since March 31, 1997.
Xxxx Agreement and Plan of Merger//Page 34
43
(m) Remedies. Parent has an adequate remedy in damages,
and will diligently pursue same, for any loss or damage sustained by
it by reason of any breach of a warranty, representation or covenant
by any of the Other Companies or their shareholders under the Other
Acquisition Agreements, except: (i) to the extent of any deductible or
threshold amount that limits Parent's entitlement to indemnification
from shareholders of the Other Companies under the Other Acquisition
Agreements (none of which amounts is more, as a percentage of the
total consideration payable to the shareholders under any such Other
Acquisition Agreement, than the comparable percentage under this
Agreement); (ii) to the extent of any limitation on the maximum
aggregate liability of such shareholders, none of such maximums is
less than the comparable maximum under this Agreement), and (iii) to
the extent that claims for such remedies are limited by a period of
time (none of which limitations are shorter than the comparable
limitations under this Agreement).
(n) Parent Stock. The Parent Common Stock to be issued
to the Shareholders pursuant to this Agreement will, when so issued,
be validly and legally issued, fully paid and nonassessable, and will
be identical to the Parent Common Stock issued under the Other
Acquisition Agreements. The issuance, sale and delivery of Parent
Common Stock to the Shareholders pursuant to this Agreement will be
exempt from registration under the Securities Act by reason of the
exemption from registration set forth in Section 4(2) of the
Securities Act.
(o) Taxes.
(1) All federal, state, local and foreign tax
returns required to be filed by Parent and its Subsidiaries
prior to the date hereof have been filed on a timely basis
with the appropriate governmental authorities in all
jurisdictions in which such tax returns are required to be
filed and all such returns are correct and complete. Neither
the Parent nor any of its Subsidiaries has ever been the
subject of any audit, examination or any similar investigation
by any governmental authority.
(2) All Taxes due from or properly accruable by
Parent or any of its Subsidiaries have been fully and timely
paid or, in the case of Taxes for which payment is not yet
required, properly and fully accrued for with respect to all
taxable periods ending on or prior to the date of this
Agreement and interim periods through the date of this
Agreement.
(p) Other Acquisition Agreements. Parent does not know,
after reasonable inquiry, of the incorrectness of any representation
or warranty of any Other Company or its shareholders under any Other
Acquisition Agreement; and Parent will give the Shareholders prompt
notice of any such incorrectness upon learning of same.
(q) Investment Intent.
Xxxx Agreement and Plan of Merger//Page 35
44
(1) Parent is acquiring the Company Common Stock
solely for the purpose of investment, for its own account, and
not with a view to or for sale in connection with any
distribution thereof within the meaning of Section 2(11) of
the Securities Act. Parent acknowledges that the Company
Common Stock is being sold to Parent by each of the
Shareholders in reliance upon one or more exemptions from
registration contained in the Securities Act and applicable
state securities laws. The reliance by Shareholders upon such
exemptions is based in part upon the representations set forth
in this Section 2.3(q).
(2) Parent understands that the Company Common
Stock has not been registered under the Securities Act, that
there is no established market for the Company Common Stock,
and that the Company Common Stock must be held indefinitely
and cannot be transferred unless it is subsequently registered
under the Securities Act or an exemption from such
registration is available with respect to such transfer.
(3) Parent has such knowledge and experience in
financial and business matters that it is capable of
evaluating the merits and risks of an investment in the
Company Common Stock and of making an informed investment
decision.
(4) Parent is able to bear the economic risk of
its investment in the Company Common Stock, to hold the
Company Common Stock for an indefinite period of time and to
afford a complete loss of its investment in the Company Common
Stock .
(5) Parent and its representatives have been
given access to all documents, books and additional
information concerning the Company which they have requested.
(6) Parent has been represented by legal counsel
in this transaction and Parent and its representatives,
including such counsel, have been given the opportunity to ask
questions of, and receive answers from, the officers of the
Company and the Shareholders concerning the terms of the
transactions contemplated by this Agreement and the affairs
and the business and financial condition of the Company.
(7) Parent has conducted such investigations in
making a decision to enter into this Agreement and the
transactions contemplated herein as Parent has deemed
necessary and advisable.
(8) None of the representations made by Parent in
this Section 2.3(q) shall affect any of Parent's rights under
any other section of this Agreement.
Xxxx Agreement and Plan of Merger//Page 36
45
2.4 REPRESENTATIONS AND WARRANTIES CONCERNING THE MERGER SUB. The
Parent and Merger Sub, jointly and severally, hereby represent and warrant to
the Shareholders and the Company as follows as of the date of this Agreement,
the Preliminary Closing Date and the Final Closing Date:
(a) Organization and Standing. Each of Merger Sub and
Parent's other Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Louisiana. The copies of Merger Sub's Articles of Incorporation and
Bylaws, as amended to date, which have been delivered to the
Shareholders are complete and correct, and such instruments, as so
amended, are in full force and effect.
(b) Capital Structure. The authorized capital stock of
each of Merger Sub and Parent's other Subsidiaries consists of 5,000
shares of common stock, par value $.01 per share, 1,000 of which are
validly issued and outstanding, fully paid and nonassessable and are
owned by the Parent free and clear of all liens, encumbrances and
adverse claims.
(c) Authority. Each of Merger Sub and Parent's other
Subsidiaries has the corporate power and authority to execute, deliver
and perform this Agreement and the Other Acquisition Agreements to
which such Subsidiary is or will be a party and to consummate the
transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Other Acquisition Agreements to
which such Subsidiary is or will be a party, the performance by such
Subsidiary of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by its
Board of Directors and the Parent as its sole shareholder, and, except
for the corporate filings described in Schedule 2.4(c), no other
corporate proceedings on the part of any Subsidiary are necessary to
authorize this Agreement and the Other Acquisition Agreements, and the
transaction contemplated hereby and thereby. This Agreement has been
duly and validly executed and delivered by Merger Sub and (assuming
the due authorization, execution and delivery hereof by the Company)
is a valid and binding obligation of Merger Sub, enforceable against
Merger Sub in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a
proceeding at law or in equity).
ARTICLE 3
ADDITIONAL COVENANTS AND AGREEMENTS
3.1 CONDUCT OF BUSINESS. During the period from the date hereof
to the Final Closing Date, except as otherwise contemplated by this Agreement
and except as described on Exhibit 3.1 hereto, the Shareholders shall cause the
Company to, and the Company shall, conduct its operations according to its
ordinary and usual course of business, and shall use its best efforts to
preserve
Xxxx Agreement and Plan of Merger//Page 37
46
substantially intact its business organization, keep available the services of
its officers and employees, and maintain its present relationships with
licensors, suppliers, distributors, customers and others having significant
business relationships with it. Representatives of the Company will on request
confer during such period with representatives of Parent to keep it informed
with respect to the general status of the on-going operations of the business
of the Company. Without limiting the generality of the foregoing and except as
otherwise affected by matters contemplated by this Agreement or in connection
with the transactions contemplated by this Agreement, the Shareholders will
cause the Company during such period to:
(a) carry on the business in substantially the same manner as
heretofore carried on and not introduce any material new method of
management, operation or accounting, nor provide discounted services
outside the ordinary course of business;
(b) maintain its properties, facilities, equipment and other
assets, including those held under leases, in good working order,
condition and repair, ordinary wear and tear excepted;
(c) perform all of its obligations under all debt and lease
instruments and other agreements relating to or affecting its
business, assets, properties, equipment and rights, and pay all
vendors, suppliers, and other third parties (including mechanics and
materialmen) as and when their bills are due, except to the extent
that such payments may be subject to undisputed claims of offset or
reimbursement in favor of the Company, and pay in full all payroll
obligations when due;
(d) maintain its present debt and lease instruments (unless
same are otherwise mature) and refrain from entering into new or
amended debt or lease instruments, except for debt incurred or leases
entered into in the ordinary course of business which involve a total
liability of the Company not in excess of $20,000 per instance or
$50,000 in the aggregate, without prior written notice to Parent;
(e) not incur any indebtedness other than ordinary trade
accounts payable at market rates with no prepayment penalty which are
used to fund operations in the ordinary course of business;
(f) keep in full force and effect its present insurance
policies or other comparable insurance coverage;
(g) use its best efforts to maintain and preserve its
business organization intact, retain its present employees and
maintain its relationship with suppliers, customers and others having
business relations with the Company;
Xxxx Agreement and Plan of Merger//Page 38
47
(h) refrain from effecting any change in the articles of
incorporation, bylaws or capital structure of the Company and refrain
from entering into or agreeing to enter into any merger or
consolidation by the Company with or into, and refrain from acquiring
all or substantially all of the assets, capital stock or business of
any person, corporation, partnership, association or other business
organization or division of any thereof;
(i) refrain from incurring any expenditures outside the
normal course of business, including any capital expenditures (or
series of related expenditures) in excess of $50,000, without prior
written notification to Parent;
(j) refrain from starting or acquiring any new businesses
without the prior written notification to Parent;
(k) maintain its present salaries and commission levels for
all officers, directors, employees or agents, except for raises that
may be awarded to employees at or below the level of supervisor in
keeping with past practices of the Company in the ordinary course of
its business, refrain from entering into employment agreements except
in the ordinary course of business, and refrain from entering into any
collective bargaining agreement; and
(l) refrain from declaring or paying any fees, commissions or
loans outside the ordinary course of business, and refrain from
declaring or paying any bonuses except discretionary bonuses to
officers and employees to the extent that the aggregate amount of all
such discretionary bonuses paid or declared during 1997 do not exceed,
in the aggregate, 10% of the Company's pre-tax net income during 1997
through the date of the latest such payment (exclusive of production,
incentive or safety bonuses previously committed in connection with
contracts currently being performed which are described on Exhibit
3.1(l) attached hereto); and
(m) refrain from declaring or paying any dividends or
distributions to Shareholders, except for those assets listed on
Exhibit 3.1(m) attached hereto and except as contemplated by Section
2.2(h)(13)
(n) promptly notify Parent of any claim or litigation
threatened or instituted, or any other material adverse event or
occurrence involving or affecting the Company or any of its assets,
properties, operations, businesses or employees;
(o) comply with and cause to be complied with all
applicable laws, rules, regulations and orders of all federal, state
and local governments or governmental agencies affecting or relating
to the Company or its assets, properties, operations, businesses or
employees except where the failure to comply will not have a material
adverse effect on the Company;
Xxxx Agreement and Plan of Merger//Page 39
48
(p) other than in the ordinary course of business,
refrain from any sale, disposition, distribution or encumbrance of any
of its properties or assets and refrain from entering into any
agreement or commitment with respect to any such sale, disposition,
distribution or encumbrance (other than the sale or use of inventories
in the ordinary course of business);
(q) refrain from any purchase or redemption of any
capital stock or other voting interest of the Company and refrain from
issuing any capital stock or other voting interest;
(r) refrain from making any change in any accounting
principle, classification, policy or practice, except as required by
GAAP; and
(s) manage working capital in the ordinary course
consistent with past practice.
3.2 ACCESS TO INFORMATION BY PARENT. Until the Final Closing Date
or termination of this Agreement, Shareholders will furnish Parent with the
Unaudited Monthly Financial Statements for each month following May 1997
promptly as available. Parent may prior to the Final Closing have access to
the business and properties of the Company and information concerning its
financial and legal condition as Parent deems necessary or advisable in
connection with the consummation of the transactions contemplated hereby,
provided that such access shall not interfere with normal operations of the
Company. The Shareholders and the Company agree to permit Parent and its
authorized representatives, or cause them to be permitted, to have, after the
date hereof and until the Final Closing Date, full access to the premises,
books and records of the Company during normal business hours, and the officers
of the Company will furnish Parent with such financial and operating data and
other information with respect to the business and properties of the Company as
Parent shall from time to time reasonably request. No investigation by Parent
heretofore or hereafter made shall affect the representations and warranties of
the Shareholders and the Company, and each such representation and warranty
shall survive any such investigation.
3.3 ACCESS TO INFORMATION BY THE SHAREHOLDERS. Until the Final
Closing Date or the termination of this Agreement, the Shareholders shall have
access to the books, records, operating data, and any other information
concerning the financial and legal condition of the Parent and the Other
Companies as the Shareholders deem necessary or advisable in connection with
the transactions contemplated hereby; provided that the Shareholders shall not
have access to any information, the disclosure of which by Parent would
constitute a violation of any of the confidentiality agreements between the
Parent and any of the Other Companies (the "Confidentiality Agreements") unless
the Shareholders have entered into confidentiality agreements with Parent or
those of the Other Companies to whose information the Shareholders seek access.
In no event shall the Shareholders be denied access to financial information
(including pro forma information) regarding Parent. All requests by the
Shareholders for information pursuant to this Section 3.3 shall be directed to
the Parent and the Parent shall furnish such information as is reasonably
obtainable from the Other Companies in accordance with the terms of the
Confidentiality Agreements. No
Xxxx Agreement and Plan of Merger//Page 40
49
investigation by the Shareholders heretofore or hereafter made shall affect the
representations and warranties of Parent, and each such representation and
warranty shall survive any such investigation.
3.4 AMENDMENT TO SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the right and continuing obligation until the
Final Closing to supplement or amend promptly the Disclosure Schedules with
respect to any matter that would have been or would be required to be set forth
or described in the Disclosure Schedules in order to not materially breach any
representation, warranty or covenant of such party contained herein. Each
amendment or supplement to any Disclosure Schedule shall be clearly marked so
as to indicate the amending or supplemental information contained therein,
which shall be presented in appropriate detail, and shall be delivered prior to
the Final Closing and in the manner provided in Section 9.3. For all purposes
of this Agreement, including without limitation for purposes of determining
whether the conditions set forth in Section 4.1 and Section 4.2 have been
fulfilled, whether any party has breached any of its representations and
warranties herein, and for the purposes of Article 6, the Disclosure Schedules
hereto shall be deemed to be the Disclosure Schedules as amended or
supplemented pursuant to this Section. In the event that the Company or
Shareholders amend or supplement a Disclosure Schedule pursuant to this Section
3.4 and such amendment or supplement constitutes or reflects, individually or
in the aggregate, a material adverse change to the business, assets or
prospects of the Company or the Shareholders (all as determined in good faith
by Parent) then Parent may, by notice to the Company and the Shareholders given
within three business days after the amendment or supplement is delivered to
it, terminate this Agreement. In the event that Parent or Merger Sub amends or
supplements a Disclosure Schedule pursuant to this Section 3.4 and the
amendment or supplement constitutes or reflects, individually or in the
aggregate, a material adverse change to the business, assets or prospects of
Parent, Merger Sub or any Other Company or materially changes the content of
the PPM, the Registration Statement or the Prospectus or requires such a
material change (all as determined in good faith by the Required Shareholders
(defined below)) then Shareholders holding a majority of the Company Common
Stock ("Required Shareholders") may, by notice to Parent given within three
business days after the amendment or supplement is delivered to the
Shareholders, terminate this Agreement. Any termination pursuant to this
Section 3.4 shall have the same effect as a termination by mutual written
consent pursuant to Section 5.1(a)(1) of this Agreement. If this Agreement is
not terminated within the allotted time, or if the Final Closing should occur
before the allotted time has run, then the supplemented or amended Disclosure
Schedule, as so amended or supplemented, shall be deemed to be and to have at
all times been the Disclosure Schedule under this Agreement for all purposes
hereof.
3.5 CONFIDENTIALITY. The provisions of this Section 3.5 shall
supersede and replace all prior agreements and understandings of the parties
with respect to the subject matter hereof.
(a) Confidential Information. Until the Final Closing of
the transactions contemplated herein, all Confidential Information, as
hereinafter defined, acquired by Parent or Merger Sub with respect to
the Shareholders or the Company, or by the Shareholders or
Xxxx Agreement and Plan of Merger//Page 41
50
the Company with respect to Parent, shall be (i) maintained in strict
confidence, (ii) used only for the purpose of and in connection with
evaluating the transactions contemplated herein, and (iii) disclosed
only (A) to employees and duly authorized agents and representatives
who have been informed of the obligations of the parties under this
Agreement with respect to such Confidential Information, who have a
need to know the information in connection with consummating the
transactions contemplated herein, and who agree to keep such
information confidential, or (B) as required by legal process (of
which the other parties shall be given prompt notice). Parent, Merger
Sub, the Shareholders and the Company shall be responsible for any
breach of this Section by any of their respective representatives and
each agrees to take all reasonable measures to restrain its
representatives from prohibited or unauthorized disclosure of the
Confidential Information. For the purpose of this Agreement, the term
"Confidential Information" shall mean all information acquired by any
party from another party hereto or its representatives pursuant to
Section 3.2 hereof or otherwise with respect to the business or
operations of such other party, other than (A) information generally
available to the public which has not become available as a result of
disclosure in violation of this Section and (B) information which
becomes available on a nonconfidential basis from a source other than
a party to this Agreement or its representatives, provided that such
source is not known by the party to this Agreement receiving such
information to be bound by a confidentiality agreement or other
obligation of secrecy to another party to this Agreement or its
representatives. If the transactions contemplated herein are not
consummated, all Confidential Information in written or printed or
other tangible form (whether copies or originals) shall be returned to
the party of origin, and all documents, memoranda, notes and other
writings whatsoever prepared by any party or its representatives based
on Confidential Information shall be destroyed; and Parent, Merger Sub
and their representatives will thereafter hold all Confidential
Information concerning the Company or the Shareholders in strict
confidence.
(b) Public Announcements. No press release, public
announcement, confirmation or other information regarding this
Agreement or the contents hereof shall be made by Parent, the
Shareholders or the Company without prior consultation with the Parent
and the Company, except as may be necessary in the opinion of counsel
to any party to meet the requirements of any applicable law or
regulations, the determination of any court, or the requirements of
any stock exchange on which the securities of such party may be
listed. Notwithstanding the foregoing, the Company may make
appropriate disclosures of the general nature of the transaction
contemplated hereby to its employees, vendors and customers to protect
the Company's goodwill and to facilitate the consummation of the
transactions contemplated hereby, and Parent may disclose pertinent
information regarding the transaction contemplated hereby to its
existing and prospective investors, lenders or investment bankers or
financial advisors for the purposes of obtaining financing (including
the contemplated IPO). Parent may also make appropriate disclosures
of the general nature of the transaction contemplated hereby and the
identity, nature and scope of the Company's operations to prospective
acquisition candidates, including the Other Companies, in its
Xxxx Agreement and Plan of Merger//Page 42
51
efforts to attract additional acquisitions for Parent. Subject to
prior review, revision and approval by the Company of disclosure with
respect to matters relating to the Company, Parent may also make
appropriate disclosure as required in connection with any registration
statement or confidential information memorandum prepared by Parent,
but in that event will give the Shareholders prompt notice thereof.
Prior to the Effective Time, the Parent and the Company shall jointly
approve the contents of any press releases, written employee
presentations, or other comparable materials of potentially wide
distribution that disclose or refer to the transaction contemplated
hereby, except for such press releases or other communications
required by law. If the transactions contemplated herein are not
consummated, neither the Parent nor the Shareholders shall disclose to
any third party or publicly announce the proposed transaction
contemplated hereby, except as otherwise permitted hereinabove and
except as agreed in advance, in writing, by the parties or otherwise
required by law, in which case the party so compelled will give
reasonable written notice in advance to the other parties.
3.6 EXCLUSIVITY. After the signing of this Agreement until the
Final Closing Date or the termination of this Agreement, no Shareholder shall
(i) solicit, initiate, or encourage the submission of any proposal or offer
from any person or entity relating to the acquisition of any capital stock or
other voting securities of, or any substantial portion of the assets of, the
Company (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any negotiations or discussions
regarding, furnish any information with respect to, assist or participate in,
or facilitate in any other manner any effort or attempt by any person or entity
in favor of such acquisition (including any acquisition structured as a merger,
consolidation, or share exchange). The Shareholders will (and shall cause the
Company to) notify Parent if any person or entity makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing.
3.7 THE SHAREHOLDERS' RELEASE OF CLAIMS. Effective as of the
Final Closing, each Shareholder hereby (i) releases, acquits and forever
discharges the Company and its Subsidiaries from any and all liabilities,
obligations, indebtedness, claims, demands, actions or causes of action arising
from or relating to any event, occurrence, act, omission or condition occurring
or existing on or prior to the Final Closing, including, without limitation,
any claim for indemnity or contribution from the Company or any of its
Subsidiaries in connection with the obligations or liabilities of the
Shareholders hereunder, except for (A) the indemnification provided by Sections
3.16 and 3.21 hereof and any other contractual obligations in this Agreement,
(B) salary and expense reimbursement payable to the Shareholders as an officer,
director or employee in the ordinary course of business, and (C) all benefits
(including interests in benefit plans) and fringe benefits to which the
Shareholders are entitled; (ii) waives all breaches, defaults or violations of
each agreement, if any, among or between Shareholders applicable to the
Company Common Stock and agrees that any and all such agreements are terminated
as of the Final Closing, and (iii) waives any and all preemptive or other
rights to acquire any shares of capital stock of the Company and releases any
and all claims arising in connection with any prior default, violation or
failure to comply with or satisfy any such preemptive or other rights.
Xxxx Agreement and Plan of Merger//Page 43
52
3.8 REAL ESTATE MATTERS.
(a) Title Insurance Commitments. The Parent, in its sole
discretion, may elect to obtain title insurance with respect to any or
all real estate that the Company owns or leases listed on Schedule
2.2(n)(1) or Schedule 2.2(n)(2) of the Company Disclosure Schedule
(the "Title Insurance Property"). If Parent elects to obtain title
insurance Company will obtain and deliver to Parent, as soon as
practicable, and in any event on or before September 10, 1997,
commitments for title insurance ("Title Commitments") issued by title
insurance company(ies) reasonably acceptable to Parent with respect to
the Title Insurance Property, Surveys (defined below) of the Title
Insurance Property reasonably acceptable to the Parent and one set of
legible copies of title exception documents with respect to any
exceptions set forth in the commitments. The Title Commitments shall
set forth the status of title to the Title Insurance Property together
with all exceptions or conditions to such title, including, but not
limited to, all easements, restrictions, rights-of-way, covenants,
reservations and all other encumbrances affecting the Title Insurance
Property which would appear in an Owner's Policy of Title Insurance
(as defined below), if issued. The Title Commitments shall contain
the express commitment of the title underwriter to issue the Owner's
Policies of Title Insurance to the Parent and the Company with the
standard printed exceptions endorsed or deleted in accordance with
this Section 3.8. Parent shall bear the cost of any title insurance
premiums actually paid for title insurance obtained under this
Section.
(b) Surveys. With respect to each Title Insurance
Property, if requested by Parent, the Shareholders will cause the
Company to procure in preparation for the Preliminary Closing a
current survey of such real property, prepared by a licensed surveyor
and conforming to current ALTA Minimum Detail Requirements for Land
Title Surveys, disclosing the location of all improvements, easements,
party walls, sidewalks, roadways, utility lines, and other matters
shown customarily on such surveys, and showing access affirmatively to
public streets and roads (the "Survey"). The Survey shall disclose
any survey defect or encroachment from or onto the real property.
Parent shall bear the cost of fees actually paid for the preparation
of any Survey required under this Section.
(c) Title Insurance Policies. At the Preliminary
Closing, the Company shall deliver to Parent title insurance policies
("Policies of Title Insurance") requested pursuant to Section 3.8(a)
with respect to the Title Insurance Property, in an amount reasonably
acceptable to Parent, issued by such title insurance company(ies),
subject to those easements, reservations, restrictions, covenants,
conditions and other matters therein specified to the extent that the
same do not, in the reasonable judgment of Parent, render title
unmarketable or adversely affect the operation, value, use or
enjoyment of the Title Insurance Property affected thereby ("Real
Property Title Exceptions"). The Policies of Title Insurance may be
subject to the Real Property Title Exceptions but shall contain no
additional exceptions other than the standard preprinted exceptions
reasonably acceptable to Parent; provided that (i) the standard
preprinted exception, if any, for restrictive covenants shall be
deleted, except for
Xxxx Agreement and Plan of Merger//Page 44
53
Real Property Title Exceptions, (ii) the standard preprinted survey
exception, if any, shall be revised to read "shortages in area" only,
(iii) there shall be no exception as to easements, or claims of
easements, not shown by the public records, nor any exception as to
parties in possession, and (iv) the exception as to the lien for taxes
will be limited to the year in which the Preliminary Closing occurs.
The Policies of Title Insurance delivered under this Section 3.8 shall
insure title to the real property and all recorded easements
benefitting such real property.
(d) Phase I Environmental Assessment. The Company will
obtain and deliver to Parent, as soon as practicable, and in any event
on or before September 15, 1997, a Phase I environmental assessment
prepared by environmental engineers reasonably acceptable to Parent
with respect to all of the real estate owned or leased by the Company
listed on Schedule 2.2(n)(1) or Schedule 2.2(n)(2) of the Company
Disclosure Schedule (the "Environmental Assessment Property"). Each
of the Company and Parent shall pay one-half of the expenses incurred
by the Company in obtaining such assessments. Also during the period
prior to Final Closing, the Shareholders and the Company shall afford
Parent and its representatives the continuing right to inspect, during
the Company's normal business hours, the Environmental Assessment
Property and all books, records, contacts, documents and other data
pertaining to the use, ownership, operation, or maintenance of the
Environmental Assessment Property (collectively with the Phase I
assessment, the "Studies").
(e) Title and Environmental Objections. If for any
reason Parent, in its sole and absolute discretion, is not satisfied
with any matter contained in the Studies, any survey, or the Real
Property title exceptions, or is otherwise not satisfied with the real
property owned or leased by the Company for any reason whatsoever,
then Parent may, prior to the Preliminary Closing, notify the Company
and the Shareholders in writing of its objection (the "Objections"),
describing with specificity the subject real property and the
Objections thereto, failing which Merger Sub and Parent shall be
deemed to have waived all such objections and all remedies therefor
pursuant to this Agreement. If Parent shall request that the Company
cure such Objections and the Company or the Shareholders have not
cured such Objections to Parent's satisfaction by the Preliminary
Closing Date, Parent shall have the right to terminate this Agreement
in accordance with Section 5.1(a)(2) hereof or enter into negotiations
with the Company to lease any real property which is the subject of
the Objections.
3.9 PPM; REGISTRATION STATEMENT.
(a) Company to Provide Information. Prior to the Final
Closing, the Shareholders and the Company shall cooperate with Parent
to promptly provide such information as reasonably requested by Parent
to enable Parent to (i) prepare the PPM and all appropriate
supplements thereto, pursuant to Rule 506 of Regulation D promulgated
by the SEC under the Securities Act, for dissemination to the Other
Companies and their respective
Xxxx Agreement and Plan of Merger//Page 45
54
shareholders, including the Shareholders, and (ii) prepare and file
with the SEC the Registration Statement to be filed by Parent under
the Securities Act in connection with its IPO (including the
prospectus constituting a part thereof). Parent shall obtain all
necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement,
the PPM and the Registration Statement, and the Shareholders and the
Company shall furnish all information concerning them as may be
reasonably requested in connection with any such action.
(b) Accuracy of Information. Parent represents and
warrants that neither the PPM or any amendment or supplement thereto,
at the time distributed, nor the Registration Statement or any
amendment or supplement thereto, at the time the Registration
Statement becomes effective under the Securities Act or any such
amendment or supplement is distributed, nor any prospectus filed in
accordance with Rule 424(b) under the Securities Act, at the time when
filed or distributed, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. This
representation is in addition to that set forth in Section 2.3(j). If
requested by Parent prior to the Final Closing, the Shareholders and
the Company, respectively, shall use their reasonable best efforts to
agree with Parent as to the information and documents supplied by the
Shareholders and the Company for inclusion in the Registration
Statement and each shall indicate such information and documents in a
letter (the "Information Letter") to be delivered (i) prior to the
filing of the Registration Statement with the SEC, and (ii) prior to
filing any amendment to the Registration Statement with the SEC (other
than any prospectus filed with the SEC pursuant to Rule 424(b)). The
Shareholders and the Company shall each be entitled to review the PPM,
the Registration Statement and each amendment or supplement thereto,
if any, prior to delivery of the Information Letter. From the date of
this Agreement through the Final Closing Date, the Shareholders and
the Company shall immediately notify Parent in the event of any
development or occurrence involving or pertaining to either the
Company or any Shareholder that would cause matters referenced in the
Information Letter to be inaccurate, incomplete or misleading in any
material respect. The Shareholders and the Company acknowledge that
Parent has relied on the accuracy of factual information provided in
the Disclosure Schedules in preparing the PPM and the Registration
Statement. Except for the accuracy of such information in the
Disclosure Schedules, neither the Shareholders nor the Company takes
responsibility or shall be deemed responsible for (1) the presentation
or omission of any such information in or from the PPM or the
Registration Statement or (2) the factual adequacy or legal
sufficiency of disclosures contained therein.
(c) Further Information. Prior to the Final Closing, the
Shareholders and the Company, respectively, shall promptly upon
request, furnish Parent with all information concerning themselves or
itself as may be reasonably requested by Parent in connection with the
preparation of the PPM, the Registration Statement and each amendment
or supplement
Xxxx Agreement and Plan of Merger//Page 46
55
thereto, or any other statement, filing, notice or application made by
or Parent to any governmental entity in connection with the
transactions contemplated by this Agreement.
(d) Indemnification. Parent will indemnify and hold
harmless each of the Shareholders, the Company, and each of the
Company's directors, officers and other persons, if any, who control
the Company within the meaning of the Securities Act from and against
any losses, claims, damages, liabilities or judgments, joint or
several, to which they or any of them may become subject, under the
Securities Act or any state securities or blue sky laws or otherwise,
insofar as such losses, claims, damages, liabilities, or judgments (or
actions in respect thereof) are caused by an untrue statement or
alleged untrue statement of a material fact contained in the PPM,
Registration Statement, or the Prospectus, or in any amendment or
supplement thereto, or in any state application for qualification,
permit, exemption or registration as a broker/dealer, or in any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each such person for any legal expenses
reasonably incurred by such person in connection with investigating or
defending any such action or claim; provided, however, that Parent
shall not be liable, in any such case, to the extent that any such
loss, claim, damage, liability, or judgment (or action in respect
thereof) was caused by any untrue statement or alleged untrue
statement or omission or alleged omission made in the PPM,
Registration Statement, or the Prospectus, or any such amendment or
supplement thereto, or in any such state application, or in any
amendment or supplement thereto, in reliance upon and in conformity
with information furnished pursuant to the Information Letter
contemplated by Section 3.9(b) in writing to Parent by the Company or
the Shareholders specifically for inclusion therein. If
indemnification hereunder is not available, then Parent will provide
contribution to the parties who would have been indemnified, which
contribution shall be based on the relative benefits derived from the
PPM, Registration Statement or Prospectus, as the case may be, by
Parent on the one hand, and such indemnified persons on the other.
(e) Parent and Merger Sub shall use their best efforts,
at their expense, to have the directors, officers and controlling
persons of the Company, the Shareholders, and the persons listed on
Exhibit 3.21, added as additional named insureds to any insurance
coverage maintained by Parent (or its directors and officers) against
liabilities under the Securities Act.
(f) Parent will deliver to the Shareholders, with the
PPM, each of the Other Acquisition Agreements.
3.10 TAX-FREE REORGANIZATION.
(a) No Acts Jeopardizing Merger. Unless the other
parties shall otherwise agree in writing, none of the Shareholders,
the Parent, the Merger Sub, the Company or the Surviving Corporation
shall knowingly take or fail to take any action, which action or
failure
Xxxx Agreement and Plan of Merger//Page 47
56
to act would jeopardize the qualification of the Merger as a
reorganization pursuant to Section 368(a)(2)(D) of the Code.
(b) Two-Year Holding Period. No Shareholder will dispose
of any of the Parent Common Stock received in the Merger within two
years following the Effective Time if such disposition would reduce
the fair value of the Parent Common Stock (evaluated as of the
Effective Date) retained by such Shareholder to an amount less than
50% of the fair value of the Company Common Stock held by the
Shareholder immediately prior to the Merger, unless the Shareholder
obtains an opinion of counsel or of an accounting firm of national
standing, which counsel or firm is reasonably satisfactory to Parent,
that such transfer will not violate the continuity of shareholder
interest requirement set forth in Treasury Regulation Section 1.368-1.
3.11 SATISFACTION OF CONDITIONS BY THE COMPANY AND SHAREHOLDERS.
The Company and the Shareholders shall (i) use their reasonable efforts to
obtain, as soon as possible, all governmental approvals required to be obtained
by the Company and make, as soon as possible, all filings with any governmental
authority required on the part of the Company to consummate the transactions
contemplated hereby, (ii) use their reasonable efforts to obtain, as soon as
possible, all other consents to and approvals required to be obtained by the
Company to consummate the transactions contemplated hereby, and (iii) otherwise
use their reasonable efforts to satisfy the conditions set forth in Article 4
of this Agreement to the extent that such satisfaction is within their control;
provided, however, that this Section 3.11 shall not be construed to limit the
rights of Shareholders to terminate this Agreement as provided in Article 5 of
this Agreement.
3.12 SATISFACTION OF CONDITIONS BY PARENT. Parent shall (i) use
its reasonable efforts to obtain, as soon as possible, all governmental
approvals required to be obtained by the Parent and make, as soon as possible,
all filings with any governmental authority required on the part of the Parent
to consummate the transactions contemplated hereby, (ii) use its reasonable
efforts to obtain, as soon as possible, all of the consents to and approvals
required to be obtained by the Parent to consummate the transactions
contemplated hereby, and (iii) otherwise use its reasonable efforts to satisfy
the conditions set forth in Article 4 of this Agreement to the extent that such
satisfaction is within its control; provided, however, that this Section 3.11
shall not be construed to limit the rights of Parent to terminate this
Agreement as provided in Article 5 of this Agreement.
3.13 AMENDMENT OF OTHER ACQUISITION AGREEMENTS. Parent will not
enter into any amendment to any Other Acquisition Agreement unless the
Shareholders have previously consented thereto in writing, which consent may
not be unreasonably withheld or delayed unless (i) the Shareholders are not
given, simultaneously with the execution of any such amendment, all of the
benefits accorded thereby to the Other Company and its shareholders, or (ii)
the amendment is materially unfavorable to Parent and/or Merger Sub in the
reasonable belief of the Shareholders.
Xxxx Agreement and Plan of Merger//Page 48
57
3.14 DELIVERIES. Parent will promptly deliver, as soon as they are
available to Parent, all exhibits and schedules (including the disclosure
schedules) to each Other Acquisition Agreement and all amendments and
supplements to those exhibits and schedules.
3.15 PERIODIC REPORTS. Parent will, following the effective date
of the Registration Statement, timely file all periodic reports required to be
filed by it pursuant to the Securities Act or the Securities Exchange Act of
1934, and take all such other action as may be required of it, to the extent
the failure to timely file such reports or the failure to take such other
action would adversely affect the availability to the Shareholders of the
exemption from registration contained in Rules 144 or 145 under the Securities
Act with respect to resales of Parent Common Stock.
3.16 CORPORATE INDEMNIFICATION. From and after the Effective Time,
Merger Sub (as then successor to the Company) will, to the maximum extent
permitted by the Louisiana Business Corporation Law, indemnify (including,
without limitation, advancement of expenses) each of the Shareholders and the
persons identified in Exhibit 3.16 who was or is or becomes a party or is or
becomes threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative, or investigative, including any action
by or in the right of the corporation, by reason of the fact that he or she is
or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another business, foreign or non-profit corporation, partnership, joint
venture, or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement in connection therewith.
3.17 RELEASE OF SHAREHOLDERS AND OTHERS. Effective at the Final
Closing (with respect to the Company) and at the Effective Time (with respect
to Parent and Merger Sub), each of the Company, Parent and Merger Sub (acting
as the then-successor of the Company) hereby releases, acquits and forever
discharges the Shareholders and the persons listed on Exhibit 3.17 from (i) any
and all liabilities, obligations, indebtedness, claims, demands, actions or
causes of action arising from or relating to any event, occurrence, act,
omission or condition occurring or existing on or prior to the Final Closing,
or (ii) any claim for indemnity or contribution from the Shareholders in
connection with any liability of the Company under this Agreement; provided
that Shareholders shall not be released by this Section 3.17 from (a) any
liability or claims arising from any action taken or omitted by the
Shareholders as officers, directors, employees or agents of the Company
involving willful misconduct or (b) claims pursuant to Article 6 of this
Agreement. THE FOREGOING PROVISION IS SPECIFICALLY INTENDED TO RELEASE THE
RELEASED PERSONS FROM LIABILITY FOR (AMONG OTHER THINGS) THEIR OWN NEGLIGENCE
OR GROSS NEGLIGENCE.
3.18 RELEASE AND INDEMNIFICATION FROM GUARANTIES. Parent will use
its best efforts to have the Shareholders released, at the earliest possible
time, from all guaranties (including any pledges of assets) by any of them of
debts or obligations of the Company, including by repayment of such debt or
obligation if necessary to effect such release. From and after the Final
Closing,
Xxxx Agreement and Plan of Merger//Page 49
58
Parent and Merger Sub will defend, indemnify and hold each Shareholder harmless
of and from any claims made or threatened to be made, or loss incurred, in
connection with any such guarantee.
3.19 BENEFIT PLANS. Neither Parent nor Merger Sub shall terminate
any health or medical insurance, life insurance, 401(k) plan or other benefit
plan in effect with respect to the Company until such time as Parent replaces
such plan with a plan that is applicable to Parent and all of its then
subsidiaries. Any such replacement plan shall give the former officers and
employees of the Company full credit for the period of time each was employed
by the Company prior to the Effective Time and for the period of time each is
employed by the Surviving Corporation after the Effective Time. Each such
former officer and employee shall become fully vested under each such plan in
effect with respect to the Company that is terminated after the Effective Time
in accordance with this Section, including (without limitation) those former
officers and employees who may have been terminated after the Effective Time
but before termination of such plan. Any new health insurance plan shall
provide for coverage for pre-existing conditions. Parent and Merger Sub will
provide officers and employees of the Company with benefits that, in the
aggregate, are not less favorable than those provided to any of the Other
Companies.
3.20 NATURE OF OBLIGATIONS. All obligations of Parent in this
Agreement are guaranteed jointly and severally by Merger Sub, and vice-versa.
Where both Parent and Merger Sub are bound with respect to the same obligation,
the obligation is joint and several.
3.21 INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY.
(a) From and after the Final Closing Date, Parent and the
Surviving Corporation agree to indemnify, defend and hold harmless the
former directors and officers of the Company and the persons listed on
Exhibit 3.21 (as used in this Section, each an "Indemnified Person")
from and against all losses, claims, damages, liabilities and
judgments (and related expenses including, but not limited to,
attorney's fees and amounts paid in settlement), and any action or
other proceeding in respect thereof, to which any Indemnified Person
becomes subject, based upon or arising out of actions or omissions or
alleged actions or omissions of such persons occurring (or alleged to
have occurred) at or prior to the Final Closing Date, to the fullest
extent (including the advancement of expenses) permitted under (1) the
Delaware General Corporation Law or the Louisiana Business Corporation
Law, as applicable, or (2) the certificate of incorporation, bylaws or
other governing documents of the Company as in effect on the date of
this Agreement, whichever of (1) or (2) is greater.
(b) From and after the Final Closing Date, Parent shall
not amend, alter or repeal those provisions of the certificate of
incorporation, bylaws or other governing documents of the Company
relating to liability or indemnification of directors and officers,
except as required by law, if the effect of such amendment, alteration
or repeal would be to increase the potential liability of a director
or officer of the Company to the Company or to its stockholders for
monetary damages for breach of fiduciary duty, or to lessen or
otherwise
Xxxx Agreement and Plan of Merger//Page 50
59
adversely affect the indemnification rights of directors and officers
of the Company as provided in such certificate of incorporation,
bylaws or other governing documents as in effect on the date of this
Agreement.
(c) The rights granted to the Indemnified Persons hereby
shall be contractual rights inuring to the benefit of all Indemnified
Persons and shall survive this Agreement and the Final Closing. They
are in addition to the indemnification provided pursuant to Section
3.16.
3.22 PARENT'S IPO. Parent shall use its best efforts to cause the
Registration Statement to become effective, and to complete its IPO, as soon as
practicable. To the extent permitted by applicable law, Parent shall keep the
Company informed regarding the status of Parent's IPO.
3.23 LISTING. Parent shall use its best efforts to cause the
Parent Common Stock to be listed on a national securities exchange or a
national computerized quotation and trading system after the IPO.
3.24 PRINCIPAL OFFICE. Parent agrees that it will maintain the
principal office of the Surviving Corporation (or other entity or division
operating the Company's assets) at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx
for a period of 12 months after the Final Closing Date, and represents and
warrants to the Shareholders that it has no present plans or intentions to move
such principal office after such time.
3.25 DISTRIBUTIONS. The Company will, not later than immediately
before the Final Closing (except as otherwise provided by Section 8.2(b)), make
the distributions contemplated by Sections 2.2(h)(13) and 3.1(m).
3.26 CERTAIN ACTIONS. Parent will not (a) declare or pay,
following the Preliminary Closing and prior to the Final Closing, any stock
dividend, subdivision, reclassification, recapitalization, split-up,
combination, or exchange of shares or the like; and (b) take any action to
terminate the effectiveness of the Merger following the Final Closing and prior
to the Effective Time.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT. The
obligations of the Parent to consummate the Preliminary Closing under this
Agreement are subject to the satisfaction in all material respects of each of
the following conditions, unless waived by the Parent:
Xxxx Agreement and Plan of Merger//Page 51
60
(a) Accuracy of Representations and Warranties. Except
for such changes as are permitted pursuant to Section 3.4 of this
Agreement, the representations and warranties of the Shareholders and
the Company contained in this Agreement, in the Shareholders
Disclosure Schedule, the Company Disclosure Schedule and in each
closing certificate and document delivered to Parent by the Company or
the Shareholders pursuant hereto shall be correct in all material
respects at and as of the Preliminary Closing Date as though made at
and as of the Preliminary Closing Date, other than such
representations and warranties as are specifically made as of another
date which shall be correct at and as of such other date; and the
Shareholders and the Company shall each have delivered to Parent a
certificate to the effect set forth in this Section.
(b) Performance of Covenants. The Shareholders and the
Company shall have performed and complied with all covenants of this
Agreement to be performed or complied with by them at or prior to the
Preliminary Closing Date (except where the failure to so perform or
comply would not have an adverse effect on Parent or prevent the
Shareholders or Parent from consummating the transactions contemplated
hereby), and the Shareholders and the Company shall each have
delivered to Parent a certificate to that effect.
(c) Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted after the date hereof against
the Shareholders or the Company, or against Parent, arising by reason
of the acquisition of the Company pursuant to this Agreement, which is
reasonably likely (1) to restrain, prohibit or invalidate the
consummation of the transactions contemplated by this Agreement, (2)
to have a material adverse effect on the Company or (3) to have a
material adverse effect on the results of operations or financial
condition of Parent and its subsidiaries, taken as a whole, after
giving effect to the consummation of the transactions contemplated by
this Agreement and the Other Acquisition Agreements.
(d) Approvals. The Company and the Shareholders shall
have procured all of the consents, approvals and waivers specified in
Sections 2.1(b) and 2.2(e), and the Shareholders and the Company shall
each have delivered the same to Parent.
(e) [Intentionally left blank]
(f) Policies of Title Insurance. The Shareholders shall
have delivered Policies of Title Insurance insuring the Company's
ownership or leasehold interest in the Title Insurance Property.
(g) Employment Agreements. Each of the individuals
specified on Exhibit 4.1(g)(1) shall have executed and delivered an
Employment Agreement with the Company substantially in the form
attached as Exhibit 4.1(g)(2) hereto.
Xxxx Agreement and Plan of Merger//Page 52
61
(h) The Registration Rights Agreements and Shareholders
Lock-up Agreements. The Shareholders shall have executed and
delivered the Registration Rights Agreements and any lock-up agreement
reasonably requested by the managing underwriter of Parent's IPO which
restricts the sale or other disposition of Parent Common Stock for a
reasonable and customary period not exceeding 365 days following the
effectiveness of the Registration Statement.
(i) Parent's IPO. Parent and the underwriters shall have
executed and delivered the Underwriting Agreement.
(j) Lender Approval. Parent shall have secured a
commitment for approximately $25,000,000 in senior indebtedness.
(k) Audit of the Company. Parent shall have received the
results of an audit of the Company's financial statements by the
certified public accounting firm regularly engaged by Parent or such
other independent public accountant as agreed by the parties.
(l) Opinion of Counsel for the Company and the
Shareholders. Parent and the Merger Sub shall have received the
favorable opinion of Xxxxxxx Xxxxxxx Xxxxxxx Xxxxxx Xxxxx Xxxxxxxx &
Casteix, L.L.P., counsel for the Company and the Shareholders, dated
the Preliminary Closing Date, substantially in the form and to the
effect set forth in Exhibit 4.1(l) hereto.
(m) The Shareholders Release of the Company; Corporate
Records. The Shareholders shall have delivered to the Exchange Agent
(i) a release that effectuates Section 3.7 of this Agreement, and (ii)
the corporate records and books of Company, including the minute book,
the stock transfer books, and the corporate seal of the Company (of
any of which the Shareholders may retain copies for any proper
purpose).
(n) All Proceedings to be Satisfactory. All necessary
director and shareholder resolutions, waivers and consents and all
other actions to be taken by the Shareholders and the Company in
connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby
shall be satisfactory in form and substance to Parent and the Merger
Sub and their counsel.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SHAREHOLDERS
AND THE COMPANY. The obligations of the Shareholders and the Company to
consummate the Preliminary Closing under this Agreement are subject to the
satisfaction in all material respects or waiver by the Shareholders of each of
the following conditions:
Xxxx Agreement and Plan of Merger//Page 53
62
(a) Accuracy of Representations and Warranties. Except
for such changes as are permitted pursuant to Section 3.4 of this
Agreement, the representations and warranties of Parent and the Merger
Sub contained in this Agreement, in the Parent Disclosure Schedule and
in each closing certificate and document delivered by the Parent or
the Merger Sub to the Shareholders or the Company pursuant hereto
shall be correct in all material respects at and as of the Preliminary
Closing Date, as though made at and as of the Preliminary Closing
Date, other than such representations and warranties as are
specifically made as of another date which shall be correct at and as
of such other date; and Parent and the Merger Sub shall have delivered
to the Shareholders and the Company a certificate to the effect set
forth in this Section.
(b) Performance of Covenants. Parent and the Merger Sub
shall have performed and complied with all covenants of this Agreement
to be performed or complied with by them at or prior to the
Preliminary Closing Date (except where the failure to so perform or
comply would not have a material adverse effect on the Shareholders or
the Company or prevent Parent, Merger Sub or the Shareholders from
consummating the transactions contemplated hereby), and Parent and the
Merger Sub shall each have delivered to the Shareholders and the
Company a certificate to such effect.
(c) Approvals. Parent shall have procured all of the
consents, approvals and waivers specified in Section 2.3(f), and
Parent shall deliver the same to the Shareholders and the Company.
(d) Delivery of PPM. Parent shall have delivered the PPM
to the Shareholders.
(e) [Intentionally left blank]
(f) Employment Agreements. The Company shall have
executed and delivered to the Exchange Agent an Employment Agreement
with each of the individuals specified on Exhibit 4.1(g)(1) in the
form attached as Exhibit 4.1(g)(2) hereto.
(g) Registration Rights Agreement. Parent and each of
the Shareholders shall have executed and delivered to the Exchange
Agent a Registration Rights Agreement in the form attached as Exhibit
1.8 hereto.
(h) All Proceedings to be Satisfactory. The Shareholders
and their counsel shall have received Parent's PPM describing Parent
and the Parent Common Stock to be delivered as a part of the Merger
Consideration together with all such counterpart originals or
certified or other copies of all documents relating to Parent incident
to the transactions contemplated hereby as the Shareholders or such
counsel may reasonably request; and the PPM, the Registration
Statement (each as amended or supplemented) and all certificates,
opinions,
Xxxx Agreement and Plan of Merger//Page 54
63
instruments, and other documents required to effect the transactions
contemplated hereby shall be satisfactory in form and substance to
Shareholders, the Company and their counsel.
(i) Opinion of Counsel for The Parent and the Merger Sub.
The Shareholders and the Company shall have received the favorable
opinion of Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx, counsel
for Parent and the Merger Sub, dated the Preliminary Closing Date,
substantially in the form and to the effect set forth in Exhibit
4.2(i) hereto.
(j) Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted after the date hereof against
the Parent, or against the Shareholders or the Company, arising by
reason of the acquisition of the Company pursuant to this Agreement,
which is reasonably likely (1) to restrain, prohibit or invalidate the
consummation of the transactions contemplated by this Agreement, (2)
to have a material adverse effect on the Company or (3) to have a
material adverse effect on the results of operations or financial
condition of Parent and its subsidiaries, taken as a whole, after
giving effect to the consummation of the transactions contemplated by
this Agreement and the Other Acquisition Agreements.
(k) IPO. The Registration Statement shall have been
declared effective by the SEC and shall relate to the public offering
for cash of at least $45,000,000 from the sale of shares of Parent
Common Stock that do not exceed approximately 50% of the total number
of shares to be outstanding immediately following the closing of the
IPO and the Other Acquisition Agreements (in each case excluding any
shares sold under an over-allotment option and the proceeds therefrom)
and shall not be subject to any stop order or similar proceeding; and
the Underwriting Agreement shall have been executed and delivered by
the parties thereto.
(l) Release. The Company, Parent and Merger Sub shall
have delivered to the Exchange Agent a release that effectuates
Section 3.17 of this Agreement.
(m) Simultaneous Closings. The "preliminary closings"
under the Other Acquisition Agreements shall occur simultaneously with
or prior to the Preliminary Closing under this Agreement.
(n) No Material Adverse Change. There shall have been no
material adverse change in the business, financial condition or
prospects of Parent combined with the Other Companies on a proforma
basis.
(o) Shareholder Agreement. The Shareholders, the Parent
Insiders and their affiliates and Parent shall have entered into a
shareholder agreement with respect to, among other things, (i) mutual
"tag along" rights for the Shareholders and the Parent Insiders
applicable to sales of more than 75,000 shares of Parent Common Stock
(to be adjusted for
Xxxx Agreement and Plan of Merger//Page 55
64
stock splits and dividends occurring after the date hereof) in private
placement transactions, or in the alternative an additional demand
registration for the Shareholders under the Registration Rights
Agreement, (ii) restrictions on Parent Insiders and their affiliates
selling shares of Parent Common Stock for 2 years following the Final
Closing, and (iii) permitted sales of Parent Common Stock in private
sales by the Parent Insiders after one year from the Final Closing in
amounts not to exceed the lesser of the 90-day Rule 144 limits on
affiliates of companies, or 10% of the personal holding of each such
Parent Insider, in any 6-month period; which agreement shall be
reasonably acceptable to the Shareholders, the Parent Insiders and
Parent.
(p) Listing of Parent Common Stock. The Parent Common
Stock shall have been accepted for listing, subject only to issuance,
on a national securities exchange or the NASDAQ Stock Market (national
market system).
(q) Reliance Letters. The Shareholders shall have
received letters addressed to them by Xxxxxx Xxxxxxxx LLP and
Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx, permitting the
shareholders to rely on the comfort or opinion letters to be delivered
by those firms to the underwriters at the closing of the IPO, to the
extent such letters bear upon tax matters relating to the Merger, and
the accuracy or completeness of the Registration Statement or its
compliance with the Securities Act and other applicable law.
(r) Tax Opinion. The Shareholders shall have received a
favorable tax opinion from KPMG Peat Marwick LLP to the effect that
the Merger qualifies as a reorganization under Section 368(a)(2)(D) of
the Code.
ARTICLE 5
TERMINATION
5.1 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:
(a) Prior to the Preliminary Closing. The Parties may
terminate this Agreement at any time prior to the Preliminary Closing
as provided below:
(1) Mutual Consent. The Parent and the
Shareholders may terminate this Agreement by mutual written
consent of Parent and Required Shareholders at any time prior
to the Preliminary Closing;
(2) Termination by Parent. The Parent may
terminate this Agreement by giving written notice to the
Shareholders at any time prior to the consummation of
Xxxx Agreement and Plan of Merger//Page 56
65
the Preliminary Closing (1) in the event the Shareholders or
the Company has breached any material representation,
warranty, or covenant contained in this Agreement in any
material respect, the Parent has notified the Shareholders of
the breach, and the breach has continued without cure until
the earlier of (A) 20 days after the notice of such breach or
(B) the Preliminary Closing Date or (C) the date set forth
below in this Section, whichever is earlier, or (2) if the
Preliminary Closing shall not have occurred on or before
December 31, 1997, by reason of the failure of any condition
precedent under Section 4.1 hereof (unless the failure results
primarily from the Parent itself breaching an obligation to
proceed with the Preliminary Closing hereunder); and
(3) Termination by the Shareholders. The
Required Shareholders may terminate this Agreement by giving
written notice to the Parent at any time prior to the
consummation of the Preliminary Closing (1) in the event the
Parent or the Merger Sub has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, the Shareholders have
notified the Parent of the breach, and the breach has
continued without cure until the earlier of (A) 20 days after
the notice of such breach or (B) the Preliminary Closing Date
or (C) the date set forth below in this Section, whichever is
earlier, or (2) after execution of this Agreement, within
three business days after each date following the date of this
Agreement on which the Shareholders receive the PPM or any
amendment or supplement thereto, or any Other Acquisition
Agreement or exhibit or schedule thereto or any amendment to
any thereof, if any such document constitutes or reflects,
individually or in the aggregate, a material adverse change to
the business, assets or prospects of Parent and its
subsidiaries in the aggregate, including the Other Companies,
or materially changes, in a manner that is adverse to the
Shareholders, the content of the PPM, the Registration
Statement or the Prospectus or requires such a material change
(all of the matters set forth in clause (2) as determined in
good faith by the Required Shareholders), or (3) if the
Preliminary Closing shall not have occurred on or before
December 31, 1997 (or such earlier comparable date as may be
set forth in any Other Acquisition Agreement), or (4) if any
of the Other Acquisition Agreements are terminated.
(b) After the Preliminary Closing Date. This Agreement
may be terminated after the Preliminary Closing only as provided in
Section 1.2(d) or 3.4.
5.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 5.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto, except
that (1) Section 3.5, Section 9.1, Section 9.6, Section 9.7, Section 9.8,
Section 9.10 and Section 9.11 hereof shall survive such termination and (2)
nothing herein shall relieve any party from liability for (A) any willful and
intentional breach in bad faith that preceded such termination and continued
prior to such termination despite reasonable notice, except that this
Xxxx Agreement and Plan of Merger//Page 57
66
clause (A) will not apply to a termination under Section 5.1(a)(1); or (B) any
willful breach of any such surviving Section hereof.
ARTICLE 6
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to the
limitations of Section 6.6, the respective representations and warranties of
the parties contained in this Agreement shall survive the Preliminary Closing
Date and the Final Closing Date, regardless of any investigation made by or on
behalf of any party.
6.2 INDEMNIFICATION BY THE SHAREHOLDERS. Subject to the
limitations of Section 6.6, the Shareholders hereby agree to indemnify and hold
harmless the Surviving Corporation and Parent in respect of any losses, claims,
damages, liabilities or related expenses (including, but not limited to, all
litigation costs but net of all available proceeds of insurance) (collectively,
"Losses") which the Surviving Corporation or Parent (but without duplication)
incurs as a result of the breach of: (A) any of the representations or
warranties made by the Shareholders in or pursuant to this Agreement, except
that the Shareholders shall have no obligation to indemnify and hold harmless
with respect to (i) a breach of the representations or warranties set forth in
Section 2.2(p) ("Environmental Laws") to the extent that the Company has
insurance to adequately cover potential liabilities for environmental matters,
or (ii) any representation or warranty that any property is in good condition
or repair or otherwise fit for the purposes for which the property is intended;
or (B) any of the covenants made by the Shareholders in this Agreement which
are to be performed at or after the Final Closing; or (C) any of the covenants
made by the Shareholders in this Agreement which are to be performed at or
after the Preliminary Closing and prior to the Final Closing but only if the
breach thereof is willful and intentional and involves self-dealing or bad
faith. The indemnification obligations of the Shareholders under this Section
6.2 shall survive the Preliminary Closing and the Final Closing and will
terminate at the time specified in Section 6.6.
6.3 INDEMNIFICATION BY PARENT AND SURVIVING CORPORATION. Parent
and Surviving Corporation, jointly and severally, agree to indemnify and hold
harmless the Shareholders in respect of any losses, claims, damages,
liabilities or related expenses (including, but not limited to, all litigation
costs) which the Shareholders incur as a result of the breach of any of the
representations or warranties made by Parent in or pursuant to this Agreement
or any of the covenants made by Parent or the Surviving Corporation in this or
any related Agreement which are to be performed at or after the Preliminary
Closing or the Final Closing. The indemnification obligations of Parent and
Surviving Corporation under this Section 6.3 shall survive the Preliminary
Closing and the Final Closing.
6.4 NOTICE. Promptly after any party hereto (in Article 6, the
"Indemnified Party") has received notice or has knowledge of the occurrence of
any event which the Indemnified Party asserts
Xxxx Agreement and Plan of Merger//Page 58
67
is an indemnifiable event or after the threat or commencement of any action,
claim or proceeding commenced against the Indemnified Party by a third party
that might result in any claim for indemnity pursuant to this Agreement (a
"Third Party Claim"), the Indemnified Party shall provide the party obligated
to provide indemnification hereunder (in Article 6, the "Indemnifying Party")
written notice of such claim or the threat of commencement of such action or
proceeding. Promptly after receipt by an Indemnifying Party of any such
notice, the Indemnifying Party shall, within ten business days of receipt of
such notice, either: (i) acknowledge the debt, liability or obligation for
which indemnity is sought as a valid claim and forthwith pay (except as payment
is deferred pursuant to Section 6.5) the Indemnified Party an amount sufficient
to discharge such debt, liability or obligation; (ii) in the event of a Third
Party Claim which is not acknowledged by the Indemnifying Party to be owing,
notify the Indemnified Party whether the Indemnifying Party elects to undertake
the defense thereof and, if so, thereupon promptly assume and diligently
contest such Third Party Claim with counsel reasonably satisfactory to the
Indemnified Party; or (iii) in the event of a claim by the Indemnified Party
for indemnity hereunder which is challenged by the Indemnifying Party, notify
the Indemnified Party of such challenge. Failure to respond within the
appropriate time period following the receipt of a notice hereunder shall be
deemed to constitute a challenge by the Indemnifying Party of the claims to
indemnification by the Indemnified Party. In the event of such a challenge,
the Indemnified Party shall, if the claim is a Third Party Claim, defend
against such claim subject to such Party's right to be indemnified for all
litigation costs to the extent it is ultimately determined that the
Indemnifying Party was obligated (after applying the limitations of Section
6.6) to provide indemnification with respect to such Third Party Claim. The
Indemnified Party shall not compromise a Third Party Claim without the prior
written consent of the Indemnifying Party (which consent may not be
unreasonably withheld or delayed if the Indemnifying Party has challenged the
claim to indemnification by the Indemnified Party). The Indemnifying Party
shall not compromise a Third Party Claim unless the compromise includes a
complete release of the Indemnified Party and does not create any obligations
of the Indemnified Party.
6.5 TIME OF PAYMENT. The Shareholders may defer any payment due
under Article 6 to the Indemnified Parties, in an amount up to 50% of the
aggregate amount of indemnification (including such deferred payment) which
Shareholders are at the time obligated to pay or have paid, until the date that
is two years after the Final Closing Date, on which date any such deferred
payments shall become due without interest.
6.6 LIMITATIONS ON INDEMNIFICATION.
(a) No Indemnified Party shall be entitled to
indemnification from a Shareholder pursuant to Article 6 unless and until the
aggregate of all Losses for which indemnification would (but for the limitation
of this sentence) be required to be paid under Article 6 exceeds $105,000 (the
"Loss Threshold"), provided that if the aggregate Losses for which
indemnification is required to be paid shall exceed such sum then only those
Losses in excess thereof shall be payable (subject to the further limitations
set forth below). If an Indemnifying Party pays indemnification (including
without limitation, the cost of defending a Third Party Claim) that was not
required to be paid due
Xxxx Agreement and Plan of Merger//Page 59
68
to any limitation set forth in this Section 6.6, then the Indemnified Party
shall, promptly after demand by the Indemnifying Party, reimburse the latter
for such payments without interest. Losses for which indemnification is
required to be paid under Article 6 by reason of any breach of the
representations and warranties of Section 2.1 ("Section 2.1 Losses") shall not
be subject to the Loss Threshold, but the amount of Section 2.1 Losses shall
not be counted toward meeting that threshold with respect to other
indemnification claims. If an Indemnified Party's right to indemnification
arises by reason of the breach of any representation or warranty set forth in
Section 2.2 of this Agreement, then each Shareholder will be liable solely for
his or her proportionate share of such indemnification based on the proportion
that the Merger Consideration received by such Shareholder bears to the total
Merger Consideration received by all Shareholders. If an Indemnified Party's
right to indemnification arises by reason of the breach of any representation
or warranty of a Shareholder other than those set forth in Section 2.2 or by
reason of the breach of a covenant of a Shareholder, then (i) the Shareholder
who breached such representation or warranty shall be solely liable for
indemnification for Losses attributable to such breach, and (ii) the
Shareholder who breached such covenant shall be solely liable for
indemnification for Losses attributable to such breach, except that if more
than one Shareholder participated in such breach of a representation, warranty
or covenant then the participating Shareholders, jointly in the proportion that
the Merger Consideration received by each of them bears to the total Merger
Consideration received by all of such participating Shareholders, shall be
liable for indemnification for Losses attributable to such breach of a
representation, warranty or covenant. The maximum liability of any Shareholder
pursuant to Article 6 of this Agreement shall not exceed $350,000 in the
aggregate (the "Individual Limitation"). In addition, the maximum aggregate
liability of the Shareholders under Article 6 of this Agreement shall not
exceed $700,000 in the aggregate (the "Aggregate Limitation"). A Shareholder
shall have no further obligations under Article 6 of this Agreement at the
earlier of (i) the time when such Shareholder has paid and/or is obligated to
pay indemnification under Article 6 of this Agreement (including, without
limitation, payments in respect of defending against Third Party Claims and
payments that are deferred to a future date under Section 6.5) equal to the
Individual Limitation, or (ii) the time when all Shareholders have paid and/or
are obligated to pay indemnification under Article 6 of this Agreement
(including, without limitation, payments in respect of defending against Third
Party Claims and payments that are deferred to a future date under Section 6.5)
equal in the aggregate to the Aggregate Limitation. Upon reaching either
limitation, a Shareholder who is then defending against a Third Party Claim
shall turn the defense thereof over to any other Shareholder who then remains
liable for indemnification with respect thereto or, if there is no such other
Shareholder, to the Indemnified Parties, which shall thereafter undertake such
defense at their sole expense.
(b) An Indemnified Party shall not be entitled to make
any claim for indemnification against a Shareholder under this Article 6 unless
notice of such claim describing such claim with particularity is given prior to
the date that is 18 months after the Final Closing Date, or, with respect to
the warranties and representations in Section 2.2(v) ("Tax Matters"), the date
that is not later than the expiration of the applicable statute of limitations
for a claim by a taxing authority for any taxes, penalties or interest.
Xxxx Agreement and Plan of Merger//Page 60
69
(c) In no event will an Indemnified Party be entitled to
make a claim under Article 6 against a Shareholder for the breach of any
representation, warranty, or covenant if, at or prior to the Final Closing,
such Indemnified Party had knowledge of facts constituting such breach and
failed to notify the Shareholders thereof prior to the Final Closing.
6.7 EFFECTIVE DATE; EXCLUSIVE REMEDY. The obligations of the
parties under Article 6 shall only become effective from and after the Final
Closing. Upon becoming effective, the right to indemnification set forth in
this Article 6 shall be the sole and exclusive remedy of the parties for breach
of any representation, warranty, covenant or agreement set forth in or made
pursuant to this Agreement, and each party covenants and agrees not to seek or
assert any other remedy following the Final Closing, except that any party may
seek such injunctive relief as may be available. Parent and Merger Sub
acknowledge that, except as expressly set forth in this Agreement, there are no
other representations or warranties of the Shareholders or the Company in
connection with the transactions contemplated hereby, all such other
representations and warranties being expressly disclaimed.
ARTICLE 7
STOCK TRANSFER RESTRICTIONS
7.1 COMPLIANCE WITH SECURITIES LAWS. The Shareholders acknowledge
and agree with Parent that the shares of Parent Common Stock issued pursuant to
this Agreement (the "Restricted Shares") to the Shareholders shall not be
transferable except upon the conditions specified in this Article 7, which
conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act and any applicable state securities laws in
respect of the transfer of such Restricted Shares. The Shareholders
acknowledge and agree that the certificates representing the Restricted Shares
will contain a restrictive legend to the effect that transfer of such shares is
prohibited unless the shares are registered under the Securities Act and
applicable state securities laws, or in the event that such transfer is, in the
opinion of counsel to Parent or counsel to the Shareholders which is reasonably
satisfactory to the Parent, exempt from the registration provisions of the
Securities Act and applicable state securities laws.
7.2 RESTRICTIONS ON TRANSFER. Prior to any transfer or attempted
transfer of Restricted Shares other than the sale of such shares pursuant to
registration under the Securities Act, the Shareholders agree to give written
notice to Parent of its intention to effect such transfer. The notice shall
describe the manner and circumstances of the proposed transfer in detail and
shall contain an undertaking to furnish such other information as may be
required to enable Parent's counsel to render the opinions referred to below,
and shall give the identity and address of the Shareholders' counsel. Parent
shall promptly submit a copy of the notice to its counsel, and the following
provisions shall apply:
(a) If, in the opinion of the Parent's counsel or counsel
to the Shareholders which is reasonably satisfactory to the Parent, the
proposed transfer may be effected without registration
Xxxx Agreement and Plan of Merger//Page 61
70
of the Restricted Shares under the Securities Act, Parent shall, as promptly as
practicable, so notify the Shareholders who will then be entitled to transfer
the Parent Common Stock in accordance with the terms of the notice delivered by
the Shareholders to Parent.
(b) If, in the opinion of the Parent's counsel or counsel
to the Shareholders which is reasonably satisfactory to the Parent, the
proposed transfer of the Parent Common Stock may not be effected without
registration under the Securities Act, Parent shall, as promptly as
practicable, so notify the Shareholders, and the Shareholders shall not be
allowed to effect the proposed transfer except pursuant to an offering
registered under the Securities Act.
(c) The Shareholders understand and agree that except as
set forth in the Registration Rights Agreement or any similar agreement or this
Agreement, Parent is not obligated to furnish a registration statement under
the Act or any state securities laws covering the Restricted Shares nor is
Parent under any obligation to aid the Shareholders in obtaining any exemption
from any such registration requirements. Each Shareholder also acknowledges
that they shall be responsible for compliance with all conditions of transfer
of the Restricted Shares imposed by any administrator of any state and for the
fees of their counsel. Parent shall be responsible for the fees and expenses
incurred by Parent for legal or accounting services in connection with
reviewing such proposed transfer and issuing opinions in connection therewith.
(d) The Shareholders understand and agree that transfer
of the Restricted Shares may be effected only on the books of Parent, and that
stop transfer instructions will be issued to the transfer agent of Parent
Common Stock in accordance with the legend on any certificate representing the
Restricted Shares. The transfer agent will not remove the legend from any
certificate representing the Restricted Shares without either registration of
the Restricted Shares under the Securities Act and applicable state securities
laws or an opinion of the Parent's counsel or counsel to the Shareholders which
is reasonably satisfactory to the Parent stating that the transfer of the
Restricted Shares is exempt from such registration requirements by reason of
Rule 144(k) under the Securities Act or other exemption.
(e) The foregoing restrictions on transfer of Restricted
Shares shall terminate as to any Shareholder as soon as the provisions of Rule
144(k) under the Securities Act (or any successor rule) become available to
such Shareholder and Parent shall at that time, upon request of any
Shareholder, cause Parent's transfer agent to reissue certificates to such
Shareholder not containing any legend relating to resales of unregistered
securities.
Xxxx Agreement and Plan of Merger//Page 62
71
ARTICLE 8
FURTHER ASSURANCES
8.1 FURTHER ASSURANCES. At any time and from time to time on and
after the Final Closing Date (a) at the request and expense of Parent or the
Surviving Corporation, the Shareholders shall deliver to Parent (but may retain
copies for any proper purpose) any records, documents and data possessed by the
Shareholders and not previously delivered to Parent or the Surviving
Corporation to which Parent or the Surviving Corporation is entitled and
execute and deliver or cause to be executed and delivered all such deeds,
assignments, consents, documents and further instruments of transfer and
conveyance, and take or cause to be taken all such other actions, as Parent or
the Surviving Corporation may reasonably deem necessary or desirable in order
to fully and effectively vest in Parent or the Surviving Corporation, or to
confirm its title to and possession of, the Company Common Stock or to assist
Parent in exercising rights with respect thereto which Parent or the Surviving
Corporation is entitled to exercise pursuant to the terms of this Agreement;
and (b) Parent or the Surviving Corporation shall execute and deliver or cause
to be executed and delivered such further instruments and take or cause to be
taken such further actions as the Shareholders may reasonably deem necessary or
desirable to carry out the terms and provisions of this Agreement.
8.2 BOOKS AND RECORDS.
(a) Parent agrees that it shall preserve and keep all
books and records relating to the Company in Parent's possession until
the later of December 31, 2003, or six months following the expiration
of the statute of limitations (including extensions thereof)
applicable to the tax returns filed by or with respect to the Company
for taxable periods ending prior to or on the Final Closing Date to
which such books or records are relevant. After such time, before
Parent shall dispose of any of such books and records, at least 90
calendar days' prior written notice to such effect shall be given by
Parent to the Shareholders, and the Shareholders shall be given an
opportunity, at Parent's cost and expense, to remove all or any part
of such books and records as the Shareholders may select, and the
Shareholders may retain copies thereof. Duly authorized
representatives of the Shareholders shall, upon reasonable notice,
have access at any time to such books and records during normal
business hours to examine, inspect and copy such books and records.
(b) In any instance in which any Shareholder or Parent,
as the case may be, is required to prepare or file (or cause to be
filed) tax returns which cover a period that includes the Final
Closing Date or to respond to an audit by the Internal Revenue Service
or other governmental agency with respect to a period prior to the
Final Closing Date, each Shareholder or Parent, as the case may be,
will furnish all information and records reasonably available to it
and reasonably requested of him, her or it and necessary or
appropriate for use in preparing such returns or responding to such
audit. The Shareholders shall at Parent's
Xxxx Agreement and Plan of Merger//Page 63
72
expense prepare and file, subject to giving Parent a reasonable
opportunity to comment on, tax returns covering periods ending on the
Final Closing Date. The amount of any dividends permitted by Section
3.25 hereof but not taken by the Final Closing shall be paid by the
Surviving Corporation to the Shareholders in proportion to their
ownership of Company Common Stock as soon thereafter as the unpaid
amount thereof is made known to it by the Shareholders.
(c) Parent, Merger Sub and the Shareholders shall
cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of tax returns and any
audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include the provision of records and information
which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any
material provided hereunder.
ARTICLE 9
MISCELLANEOUS
9.1 EXPENSES, ETC. Whether or not the transactions contemplated
by this Agreement are consummated, none of the parties hereto shall have any
obligation to pay any of the fees and expenses of the other parties incident to
the negotiation, preparation and execution of this Agreement, including the
fees and expenses of counsel, accountants and other experts. The Company shall
pay its own fees and expenses. The Shareholders, the Company, Parent, and the
Surviving Corporation will indemnify the other parties, and hold them harmless
from and against any claims for finders' fees or brokerage commissions in
relation to or in connection with such transactions as a result of any
agreement or understanding between such indemnifying party and any third party.
The Shareholders shall pay and be responsible for any stock transfer Taxes with
respect to the Company Common Stock incident to the Merger. Parent shall pay
and be responsible for any stock transfer Taxes arising from the issuance and
sale of shares of Parent Common Stock hereunder.
9.2 EXECUTION IN COUNTERPARTS. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
9.3 NOTICES. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered or mailed by
registered or certified mail postage prepaid, or sent by telex, telecopier,
facsimile transmission or telegraph as follows:
Xxxx Agreement and Plan of Merger//Page 64
73
If to the Shareholders or, prior With a copy to:
to the Final Closing, to the Company:
Xxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
000 Xxxxxxx Xx. Xxxxxxx Xxxxxxx
Xxxxxxx
Xxxxxxxxx, XX 00000 Xxxxxx Xxxxx
Walmsley & Casteix, L.L.P.
000 Xx. Xxxxxxx Xxxxxx, 00xx Floor
Xxxxxx X. Xxxxxxx Xxx Xxxxxxx, Xxxxxxxxx 00000
000 Xxxxxxx Xx. Facsimile: (000) 000-0000
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx
000 Xxxxxxxx
Xxxxxxxxx, XX 00000
If to Parent or the Surviving
Corporation, to: With a copy to:
TransCoastal Marine Services, Inc. Xxxxx X. Spring, III
000 Xxxxx Xxxxxx, Xxxxx X Chamberlain, Hrdlicka, White,
Xxxxxxxxx, Xxxxxxxxx 00000 Xxxxxxxx & Xxxxxx
Attention: President 0000 Xxxxx Xxxxxx, Xxxxx 0000
Facsimile No. (000) 000-0000 Xxxxxxx, Xxxxx 00000-0000
Facsimile No. (000) 000-0000
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto. Any notice or other
communication pursuant to this Agreement shall be deemed to have been duly
given or made and to have become effective upon the earliest of (a) when
delivered in hand to the party to which directed, or (b) if sent by first-class
mail postage prepaid, certified mail, return receipt requested, or by telex,
telecopier, facsimile transmission or telegraph and properly addressed as set
forth above, at the time when received by the addressee or (c) with respect to
delivery by certified mail, return receipt requested, when delivery thereof,
properly addressed as set forth above, is made by the U.S. Postal Service.
9.4 WAIVERS. Any party hereto (as to itself, but not as to other
parties without their consent) may, by written notice to the other parties
hereto, (a) extend the time for the performance of any of the obligations or
other actions of the other parties under this Agreement; (b) waive any
inaccuracies in the representations or warranties of another party contained in
this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance with any of the conditions or covenants of another party
contained in this Agreement; or (d) waive performance of any of the obligations
of another party under this Agreement. Except as otherwise provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation any investigation
Xxxx Agreement and Plan of Merger//Page 65
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by or on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representation, warranty,
covenant or agreement contained in this Agreement. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed a waiver of any subsequent breach.
9.5 AMENDMENTS, SUPPLEMENTS, ETC. At any time this Agreement may
be amended or supplemented by such additional agreements, articles or
certificates, as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of the Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants,
terms or conditions hereof or to effect or facilitate any governmental approval
or acceptance of this Agreement or to effect or facilitate the filing or
recording of this Agreement or the consummation of any of the transactions
contemplated hereby. Any such instrument must be in writing and signed by all
parties.
9.6 ENTIRE AGREEMENT. This Agreement, its Exhibits and Disclosure
Schedules and the documents executed on the Preliminary Closing Date and the
Final Closing Date in connection herewith, constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof. No
representation, warranty, promise, inducement or statement of intention has
been made by any party hereto which is not embodied in this Agreement or such
other documents, and no party hereto shall be bound by, or be liable for, any
alleged representation, warranty, promise, inducement or statement of intention
not embodied herein or therein.
9.7 CHOICE OF FORUM; CONSENT TO JURISDICTION. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas. Any suit, action or proceeding arising with respect to the validity,
construction, enforcement or interpretation of this Agreement, and all issues
relating in any matter hereto, shall be brought in the United States District
Court for the Western District of Louisiana, or in the event that federal
jurisdiction does not pertain, in the state courts of the State of Louisiana in
Lafayette Parish. Each of the parties hereto hereby submits and consents to
the jurisdiction of such courts for the purpose of any such suit, action or
proceeding and hereby irrevocably waives (a) any objection which any of them
may now or hereafter have to the laying of venue in such courts, and (b) any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
9.8 BINDING EFFECT, BENEFITS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors, assigns, heirs and legatees. Nothing in this Agreement, expressed
or implied, is intended to confer on any person other than the parties hereto
or their respective successors and assigns, and third parties who are expressly
given rights hereunder, any rights, remedies, obligations or liabilities under
or by reason of this Agreement. In particular, but without limitation, no
representation, warranty or covenant of the Company or Shareholders herein or
in any related document shall confer on any present or future shareholder of
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75
Parent or any of the Other Companies any rights or remedies except as is
expressly granted to Relatives.
9.9 ASSIGNABILITY. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto without the prior
written consent of the other parties hereto.
9.10 INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
rule or regulation, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof. The remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
9.11 KNOWLEDGE. As used in this Agreement and the Disclosure
Schedules, the phrase "to the knowledge" of the Company and the Shareholders
means to the actual knowledge of the Shareholders or other representatives of
the Company listed on Exhibit 9.11.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed effective as of the date first above written.
PARENT:
TRANSCOASTAL MARINE SERVICES, INC.,
A DELAWARE CORPORATION
By: /s/ G. XXXXX XXXX
------------------------------------
Name: G. Xxxxx Xxxx
-------------------------------
Title: Vice President
------------------------------
SHAREHOLDERS:
/s/ XXXXX X. XXXXXXX
---------------------------------------
Xxxxx X. Xxxxxxx
/s/ XXXXXX X. XXXXXXX
-----------------------------------------
Xxxxxx X. Xxxxxxx
/s XXXXX X. XXXXXXX
-----------------------------------------
Xxxxx X. Xxxxxxx
THE COMPANY:
XXXX CORPORATION, A LOUISIANA CORPORATION
By: /s/ XXXXX X. XXXXXXX
--------------------------------------
Xxxxx X. Xxxxxxx, Vice President
Xxxx Agreement and Plan of Merger//Page 67
