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EXHIBIT 10.19
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TRANSCOASTAL MARINE SERVICES, INC.,
RNI ACQUISITION CORP.,
AND
THE RED FOX COMPANIES OF NEW IBERIA, INC.
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TABLE OF CONTENTS
PAGE
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ARTICLE 1
BASIC TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Basic Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Real Estate Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Conversion of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Merger Sub Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Cancellation of the Company Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Final Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) IPO Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Delivery of Company Common Stock and Closing Merger Consideration . . . . . . . . . . . . . . 4
(b) Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Indemnification of Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(f) Payment in Full Satisfaction of All Rights . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Deliveries at the Closing and on the IPO Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 2
CONSIDERATION ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Post-Closing Adjustments to Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Determination of Earn-Out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Certain Definitions Related to the Earn-Out . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Review of Earn-Out Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Payment of Earn-Out. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Protection of Tax-Free Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Representations and Warranties by Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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(d) Ownership of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Representations and Warranties of Shareholder and the Company . . . . . . . . . . . . . . . . . . . 11
(a) Organization and Qualification, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Qualification of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(g) Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(j) Permits and Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(k) Title to Properties; Absence of Liens and Encumbrances, etc. . . . . . . . . . . . . . . . 18
(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
3.3 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(e) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(f) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(h) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(i) Tax-Free Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.4 Representations and Warranties Concerning the Merger Sub. . . . . . . . . . . . . . . . . . . . . . 33
(a) Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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ARTICLE 4
ADDITIONAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.2 Access to Information by Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.3 Amendment to Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.5 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.6 Release of Shareholder's Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.7 Shareholder's Release of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.8 Real Estate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Title Insurance Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Title Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(d) Phase I Environmental Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(e) Title and Environmental Objections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.9 Confidential Information Memorandum; Registration Statement. . . . . . . . . . . . . . . . . . . . . 41
(a) Company to Provide Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(b) Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(c) Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.10 Tax-Free Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(a) No Acts Jeopardizing Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(b) Two-Year Holding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(a) Tax Periods Ending on or Before the IPO Closing Date. . . . . . . . . . . . . . . . . . . 42
(b) Cooperation on Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(c) Tax Sharing Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(d) Certain Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.12 Satisfaction of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 5
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.1 Conditions Precedent to the Obligations of the Parent. . . . . . . . . . . . . . . . . . . . . . . . 44
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 44
(b) Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(c) Legal Actions or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(d) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(e) Leasehold Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(f) Executive Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(g) Shareholder Lock-up Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(h) Completion of Parent's IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(i) Lender Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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(j) Audit of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(k) Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(l) Opinion of Counsel for the Company and Shareholder . . . . . . . . . . . . . . . . . . . . 45
(m) Shareholder Release of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(n) All Proceedings to be Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2 Conditions Precedent to the Obligations of Shareholder and the Company . . . . . . . . . . . . . . . 46
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 46
(b) Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(c) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(d) Leasehold Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(e) Executive Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(f) All Proceedings to be Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(g) Opinion of Counsel for The Parent and the Merger Sub . . . . . . . . . . . . . . . . . . . 47
(h) Legal Actions or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 6
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) After the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 7
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.2 Indemnification by Shareholder. Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.3 Indemnification by Parent and Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . 49
7.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 8
STOCK TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.1 Compliance with Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.2 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 9
FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.1 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.2 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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ARTICLE 10
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.1 Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.2 Execution in Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.4 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.5 Amendments, Supplements, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.7 Choice of Forum; Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.8 Binding Effect, Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
10.9 Assignability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
10.10 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
EXHIBITS:
EXHIBIT 1.1(b) - Leasehold Purchase Agreement
EXHIBIT 1.1(c)-1 - Xxxxxx X. Xxx, Xx. Executive Employment Agreement
EXHIBIT 1.1(c)-2 - Form of Key Employee Employment Agreement
EXHIBIT 1.5(c) - Secured Promissory Note
EXHIBIT 1.5(c-1) - Security Agreement
EXHIBIT 1.6 - Letter of Transmittal
EXHIBIT 5.1 - Opinion of Counsel for the Company and Shareholder
EXHIBIT 5.2 - Opinion of Counsel for the Parent and the Merger Sub
SCHEDULES:
Schedule 1.1 - Description of Real Estate
Schedule 1.1(c) - Certain Key Employees
SHAREHOLDER DISCLOSURE SCHEDULE
Schedule 3.1(b) - Approvals
Schedule 3.1(d) - Holders of Company Common Stock
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COMPANY DISCLOSURE SCHEDULE
Schedule 3.2(a) - Jurisdictions Where Qualified
Schedule 3.2(c) - Subsidiaries of the Company
Schedule 3.2(e) - Approvals
Schedule 3.2(g) - Company Financial Statements
Schedule 3.2(h) - Changes and Events since December 31, 1996
Schedule 3.2(h-1) - Permitted Exceptions
Schedule 3.2(j) - Permits and Legal Compliance
Schedule 3.2(k) - Properties and Assets of the Company
Schedule 3.2(l) - Software
Schedule 3.2(m) - Intellectual Property
Schedule 3.2(n)(1) - Real Estate Owned by the Company
Schedule 3.2(n)(2) - Real Estate Leased by the Company
Schedule 3.2(n)(3) - Contracts and Commitments of the Company
Schedule 3.2(q) - Litigation, Actions and Proceedings
Schedule 3.2(r) - Employment Agreements, Benefit Plans, and Compensation
Schedule 3.2(s) - Accounts Receivable of the Company
Schedule 3.2(t) - Insurance Coverage; Self Insurance
Schedule 3.2(u) - Company Benefit Plan
Schedule 3.2(v) - Tax Audits; Basis in Assets; NOLs
BUYER DISCLOSURE SCHEDULE
Schedule 3.3(a) - Jurisdictions Where Qualified
Schedule 3.3(c) - Subsidiaries of Parent
Schedule 3.3(f) - Approvals
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") made effective as
of August 27, 1997, by and among TRANSCOASTAL MARINE SERVICES, INC., a
Delaware corporation (the "Parent"), RNI ACQUISITION CORP., a Louisiana
corporation (the "Merger Sub"), THE RED FOX COMPANIES OF NEW IBERIA, INC., a
Louisiana corporation (the "Company"), and the XXXXXX X. XXX, XX.
GRANDCHILDREN'S TRUST NO. 1 (Xxxxxxx X. Xxx, Trustee), SOLE SHAREHOLDER OF THE
COMPANY (the "Shareholder").
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, no 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"), and certain
other consideration, 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
Shareholder, as the holder 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");
WHEREAS, the Shareholder desires to sell to the Parent, and the Parent
desires to purchase, certain real estate interests used in connection with the
Company's business operations under certain terms and conditions.
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 BASIC TRANSACTION. Subject to the terms and conditions of this
Agreement:
(a) Merger. In accordance with the Louisiana Business
Corporation Law ("Applicable Corporate Law") upon the Effective Time (as
defined in Section 1.3), the Company
Red Fox of New Iberia Merger Agreement/Page 1
9
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."
(b) Real Estate Purchase. The Parent agrees to purchase
from the Shareholder, or to cause its designee to purchase from the
Shareholder, and the Shareholder agrees to sell and convey to the Surviving
Corporation or its designee certain immovable property and leasehold interests
located in Iberia Parish, Louisiana, described in Schedule 1.1(b) hereto,
together with all improvements located thereon and all rights and appurtenances
thereto (collectively, the "Real Estate Interests"). On the date of closing of
the Parent's initial public offering of Common Stock (the "IPO Closing Date"),
the Parent or its designee will pay and deliver to the Shareholder $1,500,000
in cash (the "Real Estate Purchase Price") in consideration for the purchase
and sale of the Real Estate Interests. The acquisition of the Real Estate
Interests shall be subject to all terms and conditions of that certain
Leasehold Purchase Agreement between Shareholder and Parent in the form
attached as Exhibit 1.1(b) (the "Leasehold Purchase Agreement") to be executed
concurrently herewith.
(c) Employment Agreement. At the Closing, (i) Merger Sub
(the Surviving Corporation) and Xxxxxx X. Xxx, Xx. shall execute and deliver
an Executive Employment Agreement in the form attached as Exhibit 1.1(c)-1 (the
"Executive Employment Agreement"), providing for the employment of Xx. Xxxxxx
X. Xxx, Xx. as an executive of the Surviving Corporation for an initial term of
three years, and (ii) Merger Sub (the Surviving Corporation) and certain
individuals named on Schedule 1.1(c) will each execute an employment agreement
in the form attached as Exhibit 1.1(c)-2 (the "Key Employee Employment
Agreements"), providing for employment of such individuals by Merger Sub for a
period of two years.
1.2 THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Chamberlain,
Hrdlicka, White, Xxxxxxxx & Xxxxxx, in Houston, Texas, commencing at 9:00 a.m.
local time following the satisfaction or waiver of all conditions to the
obligations of the parties to consummate the transactions contemplated hereby
(other than the closing of the IPO (as defined below) and conditions with
respect to actions the respective parties will take at the Closing itself) not
later than the fourth business day prior to the IPO Closing Date (the "Closing
Date"); provided, however, that the Closing Date shall be no later than
December 31, 1997. The actions taken at the Closing will not include the
completion of the Merger, delivery of the Closing Merger Consideration pursuant
to Section 1.6, or delivery of the Real Estate Purchase Price pursuant to
Section 1.1(b). Instead, on the IPO Closing Date the Certificate of Merger
will become effective as provided in this Section and all transactions pursuant
to this Agreement to be closed or completed on or before the IPO Closing Date,
including delivery of the Closing Merger Consideration and delivery of the Real
Estate Purchase Price, will be closed or completed. During the period from the
Closing until the IPO Closing Date, this Agreement may be terminated by the
parties only pursuant to Section 6.1(b).
1.3 EFFECTIVE TIME OF THE MERGER. In accordance with the
requirements of the Applicable Corporate Law, an appropriate Certificate of
Merger of shall be prepared, executed, certified, acknowledged and submitted
for filing with the Secretary of State of the State of Louisiana. The effective
time of the Merger ("Effective Time") will be the time on the IPO Closing Date
which
Red Fox of New Iberia Merger Agreement/Page 2
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the Certificate of Merger specifies, or if the Certificate of Merger does not
specify another time, 12:00 noon central daylight time on the IPO Closing Date.
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 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 "The Red Fox Companies of New
Iberia, 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 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
Red Fox of New Iberia Merger Agreement/Page 3
11
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) Final Merger Consideration. All of the outstanding
shares of Company Common Stock, in the aggregate (other than shares to be
canceled in accordance with Section 1.5(b)), shall be converted into the right
to receive: (i) a secured promissory note given by Parent with an original
principal amount of $3,000,000 in substantially the form attached hereto on
Exhibit 1.5(c) (the "Purchase Note"); (ii) the number of validly issued, fully
paid and nonassessable shares of Parent Common Stock resulting from dividing
$3,000,000 by the IPO Price (as defined below) and rounding down to the nearest
whole number; and (iii) the Earn Out, as defined in Section 2.1 below
(collectively, the "Final Merger Consideration"); provided, however, that the
Shareholder shall also be entitled to cash in lieu of a fractional share
pursuant to Section 1.6(d) below with regard to the fraction of a share
eliminated as a result of rounding pursuant to clause (ii) of this Section
1.5(c); and provided further that if between the date of this Agreement and the
Effective Time, the outstanding shares of Parent 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 1.5(c) shall be correspondingly revised to provide for the
proportionate amount of Parent Common Stock or any other interests into which
the Parent Common Stock may have changed.
(d) IPO Statement. At the Closing, Parent shall cause to
be prepared and delivered to Shareholder a statement (the "IPO Statement")
reporting the price per share paid by the public for shares of Parent Common
Stock (the "IPO Price") in the initial public offering of Parent Common Stock
("IPO"). The IPO Statement shall report the IPO Price and the quotient
resulting from dividing $3,000,000 by the IPO Price. Such quotient, rounded
down to the nearest whole number, shall represent the number of shares of
Parent Common Stock included in the Closing Merger Consideration (as defined
below).
1.6 EXCHANGE OF CERTIFICATES.
(a) Delivery of Company Common Stock and Closing Merger
Consideration. Prior to the Closing, the Parent will deliver to Shareholder a
letter of transmittal, in substantially the form attached hereto as Exhibit
1.6, to be used for the purpose of surrendering to the Parent all certificates
representing Company Common Stock in exchange for the right to receive the
Final Merger Consideration. On the IPO Closing Date, (i) Parent shall deposit
the aggregate amount of Final Merger Consideration other than the Earn-Out (the
"Closing Merger Consideration") with the exchange agent selected by Parent and
reasonably acceptable to Shareholder (the "Exchange Agent"), and (ii)
Shareholder shall surrender each and every outstanding certificate which prior
Red Fox of New Iberia Merger Agreement/Page 4
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thereto represented shares of Company Common Stock, together with a properly
completed and executed letter of transmittal (with such signature guaranteed by
an eligible guarantor institution pursuant to any medallion signature guarantee
program), to the Exchange Agent. Upon such surrender of Company Common Stock to
the Exchange Agent, Shareholder shall be entitled receive in exchange therefor
the Closing Merger Consideration and, in accordance with Section 2.2 below,
Shareholder shall be entitled to payment of the Earn-Out. Adoption of this
Agreement by Shareholder and the Parent shall constitute ratification of the
appointment of such Exchange Agent. 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 Final 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 certificate 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.
(c) Indemnification of Exchange Agent . Notwithstanding
any of the foregoing, the parties agree that Exchange Agent shall not be
individually responsible or liable in any manner whatsoever for anything which
he may do or refrain from doing in connection herewith, and that in the event
Exchange Agent becomes involved in any litigation, claim a controversy in
connection with his actions under this Agreement, Shareholder agrees to
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.
(d) No Fractional Shares. Fractional shares of the Parent
Common Stock will not be issued in exchange for the Company Common Stock. Upon
delivery of all certificates representing shares of Company Common Stock,
together with a duly and properly completed and executed letter of transmittal
to the Exchange Agent on or after the Effective Time, Exchange Agent will
deliver the Closing Merger Consideration and, in accordance with Section 2.2
below, the Earn-Out, if any, provided that in lieu of any fractional share,
Exchange Agent shall deliver a cash amount equivalent to the amount obtained by
multiplying such fraction by the IPO Price. No interest shall be payable with
respect to payment of such cash distribution.
(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.
Red Fox of New Iberia Merger Agreement/Page 5
13
(f) Payment in Full Satisfaction of All Rights. The
delivery of the Closing Merger Consideration to Shareholder 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, except for the right
to receive additional shares of Parent Common Stock pursuant to the Earn-Out as
described in Article 2 hereof.
1.7 DELIVERIES AT THE CLOSING AND ON THE IPO CLOSING DATE. At the
Closing, (i) the Shareholder will deliver to Exchange Agent the various
certificates, instruments, and documents referred to in Section 5.1 below
(other than conveyance of the Real Estate Interests), and (ii) the Parent will
deliver to Exchange Agent the various certificates, instruments, and documents
referred to in Section 5.2 below (other than payment of the Leasehold Purchase
Price). At the IPO Closing, (A) Shareholder will deliver to Exchange Agent a
completed and executed letter of transmittal in the form of Exhibit 1.6
attached hereto, representing all of the Company Common Stock owned by the
Shareholder, free and clear of any pledge, lien, claim, encumbrance, or
interest of any third party, (B) Exchange Agent will release the various
certificates, instruments and documents to be delivered to Parent pursuant to
Section 5.1 and the various certificates, instruments and documents to be
delivered to Shareholder pursuant to Section 5.2, (C) Shareholder shall execute
and deliver to Parent or its designee a Transfer of Immovable Property and the
other certificates, instruments and documents provided for in the Leasehold
Purchase Agreement, as required to convey the Real Estate Interests to Parent
or its designee pursuant to terms of the Leasehold Purchase Agreement, and (D)
Parent will deliver the Closing Merger Consideration and the Leasehold Purchase
Price to Shareholder as specified above.
ARTICLE 2
CONSIDERATION ADJUSTMENTS
2.1 POST-CLOSING ADJUSTMENTS TO MERGER CONSIDERATION. The Final
Merger Consideration into which the Company Common Stock shall be converted is
subject to the adjustments described in this Section 2.1:
(a) Determination of Earn-Out. Shareholder shall prepare
and deliver to the Parent, on or before February 28, 1998, a statement (the
"Earn-Out Statement") based on the financial statements of the Company for the
period from January 1, 1997 to December 31, 1997, prepared in accordance with
GAAP, and showing (a) the calculation of the amount of the Company's current
assets and current liabilities as of the IPO Closing Date and the amount of the
Working Capital Adjustment (defined below), if any, (b) the calculation of the
amount of the Company's Adjusted 1997 EBITDA (defined below), and (c) the
amount, if any, by which the product of 4.5 multiplied by such Adjusted 1997
EBITDA exceeds the sum of $6,000,000 plus Long-Term Debt (defined below) as of
the IPO Closing Date. The amount of such excess (if any) reduced by the Working
Capital Adjustment (if any) is the "Earn-Out."
Red Fox of New Iberia Merger Agreement/Page 6
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(b) Certain Definitions Related to the Earn-Out.
(1) "GAAP" means U.S. generally accepted accounting
principles consistently applied.
(2) "Working Capital Adjustment" means the extent, if
any, to which 1.2 times current liabilities exceeds current
assets, based on current assets and current liabilities of the
Company determined as of the IPO Closing Date in accordance
with GAAP; provided however, that for purposes of determining
the Working Capital Adjustment, current maturities of Long
Term Debt shall be excluded from current liabilities of the
Company and prepaid expenses shall be excluded from current
assets of the Company.
(3) "Long Term Debt" means all long-term liabilities
(including current maturities) of the Company owed to persons
other than Shareholder and its affiliates as of the IPO
Closing Date, including deferred taxes and capitalized lease
obligations, determined in accordance with GAAP.
(4) "Adjusted 1997 EBITDA" means the sum of (i) Net
After-Tax Income (as defined below), plus (ii) the amount of
income and franchise taxes deducted in the calculation of Net
After-Tax Income, plus (iii) the amount of depreciation and
amortization deducted in the calculation of Net After-Tax
Income, plus (iv) the amount of interest expense deducted in
the calculation of Net After-Tax Income (with amounts in
clauses (i) through (iv) above determined in accordance with
GAAP), determined with respect to the period from January 1,
1997 through December 31, 1997.
(5) "Net After-Tax Income" means, with respect to any
period, the consolidated net income (or loss) of the Company
after deduction for income, franchise and other taxes and
without giving effect to non-recurring gains and losses,
interest income or investment income, determined for such
period in accordance with GAAP.
(c) Review of Earn-Out Statement. Parent shall have the
right to review the Earn-Out Statement (and supporting work papers) and provide
written notice to the Shareholder of Parent's objections with respect to any
error, omission or other discrepancy in the Earn-Out Statement (the
"Discrepancy Notice") until the later of March 20, 1998 or 20 days following
Parent's receipt of the Earn-Out Statement. Parent and Shareholder shall work
together in good faith to resolve any such dispute and agree on the final
Earn-Out Statement. In the event that Parent and Shareholder cannot agree on
the final Earn-Out Statement within 10 days after delivery of Parent' s
Discrepancy Notice, Parent and Shareholder shall refer the disputed issue or
issues to a national independent public accounting firm (other than the regular
accountants for any party or the accountants who prepared the Earn-Out
Statement) which is reasonably acceptable to each party (the
Red Fox of New Iberia Merger Agreement/Page 7
15
"Arbitrating Accountants") within 15 days following delivery of Parent's
Discrepancy Notice. The Arbitrating Accountants shall be instructed to render a
decision, which shall be binding upon both parties, within 20 days. Each party
shall be entitled to present any information or analysis concerning the matter
in good faith to the Arbitrating Accountants with a copy provided to the other
party. Parent and Shareholder shall each bear their own fees and expenses, and
the fees and expenses of the Arbitrating Accountants shall be shared equally by
Parent and Shareholder.
2.2 PAYMENT OF EARN-OUT. Within thirty days following delivery of
the Earn-Out Statement, Parent shall deliver payment of the Earn-Out to
Shareholder (if the Earn-Out is greater than zero) by delivery Parent Common
Stock (the "Adjustment Shares") such that 100% of the aggregate amount of the
Earn-Out is received by Shareholder in the form of shares of Parent Common
Stock. For purposes of this Section 2.2, the Adjustment Shares shall have a
value (the "Earn- Out Price") equal to the lesser of: (i) the IPO Price or (ii)
the average of the daily closing prices (or if no closing price is reported,
the average of the daily closing bid and asked prices) of the Parent Common
Stock for the ten consecutive trading days ending on and including the date
that is three trading days prior to the payment date.
2.3 PROTECTION OF TAX-FREE REORGANIZATION. Notwithstanding
anything in this Article 2 to the contrary, in the event that any of the
adjustments required in this Article 2 would jeopardize the qualification of
the Merger as a reorganization pursuant to Section 368(a)(2)(D) of the Code,
the parties agree to reallocate the Aggregate Merger Consideration payable to
Shareholder such that the portion allocated to Parent Common Stock satisfies
the requirements for a tax-deferred reorganization pursuant to such Code
section, and the parties agree to amend the provisions of this Article 2 as
necessary to cause the Merger to comply with the provisions of Section
368(a)(2)(D).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES BY SHAREHOLDER. Shareholder
represents and warrants to the Parent and the Merger Sub that the statements
contained in this Section 3.1 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date and as of the
IPO Closing Date (as though made then and as though such dates were substituted
for the date of this Agreement throughout this Section 3.1) except as set forth
in the disclosure schedule delivered by the Shareholder to the Parent and the
Merger Sub on the date hereof and initialed by the parties hereto (the
"Shareholder Disclosure Schedule"). Nothing in the Shareholder Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Shareholder Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other
item shall not be deemed adequate to disclose an exception to a representation
or warranty made herein (unless the representation or warranty has to do with
the existence of the document or other item itself). The Shareholder Disclosure
Schedule will be arranged in sections
Red Fox of New Iberia Merger Agreement/Page 8
16
and paragraphs corresponding to the lettered and numbered sections and
paragraphs contained in this Section 3.1.
(a) Qualification. Shareholder has the legal power and
authority to own its properties and assets and carry on its business
and affairs as currently conducted.
(b) Authority Relative to Agreement. Shareholder has the
full right, power, and legal authority to execute and deliver this
Agreement. Shareholder has the full right, power, and legal authority
to perform this Agreement and to consummate the transactions
contemplated on the part of the Company hereby. No proceeding on the
part of Shareholder, and, except for those approvals described in
Schedule 3.1(b), no notice, consent, authorization, order or approval
of, filing or registration with, any governmental commission, board or
other regulatory body or any bank, bonding company, lender, surety,
customer, supplier, or any other person whatsoever is required for or
in connection with the execution and delivery of this Agreement. No
proceeding on the part of Shareholder, and, except for those approvals
described in Schedule 3.1(b), no notice, consent, authorization, order
or approval of, filing or registration with, any governmental
commission, board or other regulatory body or any bank, bonding
company, lender, surety, customer, supplier, or any other person
whatsoever is required for or in connection with the performance of
this Agreement and the consummation by Shareholder of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Shareholder and is a valid and binding agreement of
Shareholder, enforceable against Shareholder in accordance with its
terms.
(c) Non-Contravention. The execution, delivery and
performance of this Agreement by Shareholder do not, and the
consummation by 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 Shareholder or the Company pursuant to any provision of, any
mortgage, lien, lease, agreement, license, instrument, law, ordinance,
regulation, order, arbitration award, judgment or decree to which
Shareholder or the Company is a party or by which any of their
respective assets are bound. The execution, delivery and performance
of this Agreement by Shareholder do not and the consummation by
Shareholder of the transactions contemplated hereby will not violate
or conflict with any other restriction of any kind or character to
which Shareholder or the Company is subject or by which any of their
respective assets may be bound.
(d) Ownership of Company Common Stock. Shareholder holds
of record and owns beneficially the number of shares of Company Common
Stock set forth next to its name in Schedule 3.1(d) of the
Shareholder's Disclosure Schedule. The Shareholder is, and as of the
IPO Closing Date will be, the sole and exclusive lawful owner of all
of the
Red Fox of New Iberia Merger Agreement/Page 9
17
outstanding shares of Company Common Stock free and clear of all
liens, claims, encumbrances and rights of others of any nature
whatsoever, with full power to vote all such shares on any matter that
may properly come before shareholders of the Company, and 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 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 IPO Closing Date, thereafter or as a
result thereof or in connection therewith except as provided in this
Agreement.
(e) Restricted Securities.
(1) Shareholder acknowledges that the shares of
Parent Common Stock which 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 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 8 below.
(2) Shareholder has the knowledge and experience
in financial and business matters to enable it to evaluate the
merits and risks of approving this Agreement and the
transactions contemplated herein and acquiring shares of
Parent Common Stock.
(3) Shareholder is able to bear the economic
risks of its investment in the Parent Common Stock, including
the risk of a complete loss of the value of Parent Common
Stock.
(4) Shareholder has been represented by legal
counsel in this transaction and Shareholder and its
representatives, 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) Shareholder has received a confidential
private placement memorandum concerning the Parent and an
investment in shares of Parent Common Stock, and Shareholder
and its representatives have been given access to all
documents, books and additional information concerning Parent
which they have requested regarding Parent.
(6) Shareholder has conducted such investigations
by itself and through its representatives in making a decision
to approve this Agreement and the transactions contemplated
herein as it has deemed necessary and advisable.
Red Fox of New Iberia Merger Agreement/Page 10
18
(7) Shareholder acknowledges and agrees that the
Parent Common Stock issued to Shareholder may not be disposed
of except in accordance with the requirements of the
Securities Act and any applicable state securities laws.
3.2 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER AND THE COMPANY.
Shareholder and the Company, jointly and severally, represent and warrant to
the Parent and the Merger Sub that the statements contained in this Section 3.2
are correct and complete as of the date of this Agreement and will be correct
and complete as of the IPO Closing Date (as though made then and as though the
IPO Closing Date were substituted for the date of this Agreement throughout
this Section 3.2), except as otherwise set forth in the disclosure schedule
delivered by the Shareholder and the Company to the Parent and the Merger Sub
on the date hereof and initialed by the parties hereto (the "Company Disclosure
Schedule"). Nothing in the Company Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein, however,
unless the Company Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or
other item itself). The Company Disclosure Schedule will be arranged in
sections and paragraphs corresponding to the lettered and numbered sections and
paragraphs contained in this Section 3.2.
(a) Organization and Qualification, etc. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Louisiana, has the full right, power
and legal authority and all licenses, permits, titles and
authorizations necessary to own all of its properties and assets and
to carry on its business as it is now being conducted, and is duly
qualified to do business and is in good standing in each jurisdiction
as set forth in Schedule 3.2(a) of the Company Disclosure Schedule
where, to the reasonable belief of Shareholder 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 at the date hereof. The
Company is qualified to transact business as a foreign corporation and
is in good standing in all jurisdictions in which it is engaged in
business and in which its properties or assets are located, which
foreign jurisdictions are listed in Schedule 3.2(a).
(b) Capital Stock. The entire authorized capital stock of
the Company consists of 10,000 shares of Company Common Stock of which
as of the date hereof 100 shares of Company Common Stock are validly
issued and outstanding, fully paid and nonassessable, all of which are
held of record and beneficially by Shareholder. 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
Red Fox of New Iberia Merger Agreement/Page 11
19
or other agreements of any character under which the Company or Parent
would be obligated to issue or purchase shares of its capital stock.
There is no voting agreement, voting trust, proxy, or other agreement
or understanding with respect to the voting of the capital stock of
the Company. The Company has no commitments to issue or sell any
securities or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire from the
Company, any shares of its capital stock and no securities or
obligations evidencing any such rights are outstanding.
(c) Subsidiaries. With respect to each corporation, firm,
partnership or other business entity in which the Company holds an
interest, Schedule 3.2(c) of the Company Disclosure Schedule sets
forth the name, the interest of the Company, and the capitalization of
such entity (each such entity in which the Company owns or controls
more than 50% of the voting securities, directly or indirectly, or in
which the Company acts as manager or general partner is hereinafter a
"Subsidiary"). Except as described on Schedule 3.2(c) of the Company
Disclosure Schedule neither the Company nor any Subsidiary owns or has
any right or obligation to acquire any class of securities (including,
without limitation, debt securities) issued by any person or company
and neither the Company nor any Subsidiary is a party to or bound to
any partnership, joint venture, 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 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.
Red Fox of New Iberia Merger Agreement/Page 12
20
(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 Shareholder in its
capacity as the holder of all of the capital stock of the Company. No
proceeding on the part of the Company, and, except for those approvals
described in Schedule 3.2(e), no notice, consent, authorization, order
or approval of, filing or registration with, any governmental
commission, board or other regulatory body, or any bank, bonding
company, lender, surety, customer, supplier, or any other person
whatsoever is required for or in connection with the execution and
delivery of this Agreement. No proceeding on the part of the Company,
and, except for those approvals described in Schedule 3.2(e), no
notice, consent, authorization, order or approval of, filing or
registration with, any governmental commission, board or other
regulatory body or any bank, bonding company, lender, surety,
customer, supplier, or any other person whatsoever is required for or
in connection with the performance of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms.
(f) Non-Contravention. 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) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, government agency, or court to which
the Company or any of its assets is subject or (2) violate any
provision of the Articles of Incorporation or Bylaws of the Company or
any Subsidiary, or (3) violate or result in, with the giving of notice
or the lapse of time or both, the violation of any provision of, or
result in the acceleration of or entitle any party to accelerate
(whether after the giving of notice or lapse of time or both) any
obligation under, or result in the creation or imposition of any lien,
charge, pledge, security interest or other encumbrance upon any of the
property of the Company or any Subsidiary pursuant to any provision of
any mortgage, lien, lease, contract, agreement, license, or instrument
to which the Company or any Subsidiary is a party or by which any of
their respective assets are bound. 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, except as such enforcement is subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws relating to or affecting creditors' rights.
Red Fox of New Iberia Merger Agreement/Page 13
21
(g) Financial Information. Shareholder has previously
furnished Parent with true and complete copies of the audited balance
sheets of the Company and its Subsidiaries as of December 31, 1996 and
December 31, 1995, and the related audited statements of income,
retained earnings and cash flows for each of the three years in the
period ended December 31, 1996 audited by Dannall, Xxxxx & Xxxxxxxx,
the independent accountants of the Company, together with the
unqualified audit report of such accountants with respect to such
financial statements. Such financial statements have been prepared in
conformity with GAAP consistently applied and present fairly and
accurately the financial position and results of operations of the
Company and its consolidated Subsidiaries as of and for the respective
periods then ended. Shareholder has also previously furnished the
Parent with a correct and complete copy of the unaudited monthly
balance sheets of the Company as of the last day of each month from
January through June 1997, and the related monthly unaudited statement
of income, 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"). Such financial statements have been prepared in
conformity with GAAP consistently applied and present fairly and
accurately 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. 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 3.2(g) are the "Company
Financial Statements."
(h) Absence of Certain Changes or Events. Since December
31, 1996, and except to the extent described in Schedule 3.2(h) of the
Company Disclosure Schedule:
(1) none of the Company and its Subsidiaries has
sold, leased, transferred, or assigned any of its assets,
tangible or intangible, other than for a fair consideration in
the ordinary course of business;
(2) none of the Company and its Subsidiaries has
entered into any agreement, contract, lease, permit or license
(or series of related agreements, contracts, leases, permits
and licenses) either involving more than $20,000 outside the
ordinary course of business;
(3) no party (including any of the Company and its
Subsidiaries) has breached, accelerated, terminated, modified,
or canceled any agreement, contract, lease, permit or license
(or series of related agreements, contracts, leases, permits
and licenses) involving more than $20,000 to which any of the
Company and its Subsidiaries is a party or by which any of
them is bound ("Company Contracts");
Red Fox of New Iberia Merger Agreement/Page 14
22
(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 $20,000 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 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 hereinafter defined);
(11) there has been no change made or authorized in
the Articles of Incorporation or bylaws of any of the Company
and its Subsidiaries;
(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
Red Fox of New Iberia Merger Agreement/Page 15
23
stock except for dividends and distributions to shareholders
which in the aggregate do not exceed 10% of the Company's
pre-tax net income during 1997 through the date of the latest
such distribution;
(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;
(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 charitable or other capital
contribution outside the ordinary course of business;
(21) 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) there has not been any adverse change in the
business, financial condition, operation, results of
operation, or future prospects of the Company and its
Subsidiaries;
Red Fox of New Iberia Merger Agreement/Page 16
24
(23) there has not been any work interruptions, labor
grievances or claims filed, proposed law or regulation (the
existence of which is known, or under the normal course of
business should be known, to the Company) or any event or
condition of any character materially adversely affecting the
business of future prospects of the Company or its
Subsidiaries;
(24) there has not been any merger or consolidation
or agreement to merge or consolidate with or into any other
corporations (except the transactions contemplated by this
Agreement); and
(25) none of the Company and its Subsidiaries has
committed to 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 3.2(h-1)
of the Company Disclosure Schedule; (ii) liens for taxes and
assessments not yet payable; (iii) liens for taxes, assessments and
charges and other claims, the validity of which the Company or
Shareholder are contesting in good faith, a correct and complete list
of which is set forth on Schedule 3.2(h-1); and (iv) imperfections of
title, liens, security interests, claims and other charges and
encumbrances the existence of which does not adversely affect the
operation, value, use or enjoyment of such asset or property.
(i) Undisclosed Liabilities. The Company and its
Subsidiaries have no liabilities (and there is no basis for any
present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Company or its
Subsidiaries giving rise to any 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
June 30, 1997 in the ordinary course of business (none of which
results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).
(j) Permits and Legal Compliance. The Company and its
Subsidiaries have all permits, licenses, orders, qualifications, and
approvals of all governmental and regulatory authorities material to
the conduct of their business, a correct and complete list of which is
set forth in Schedule 3.2(j) of the Company Disclosure Schedule. All
such permits, licenses, orders and approvals are in full force and
effect, and no suspension or cancellation of any of them is pending or
threatened. None of such permits, licenses, orders or approvals, and
no application for any of such permits, licenses, orders or approvals,
will be adversely affected by the consummation of the transactions
contemplated by this Agreement. 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,
Red Fox of New Iberia Merger Agreement/Page 17
25
proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has been filed or commenced against the Company or its
Subsidiaries alleging any failure so to comply.
(k) Title to Properties; Absence of Liens and
Encumbrances, etc. The Company and its Subsidiaries have good and
marketable title to all of the real, tangible personal and mixed
properties and assets owned by it and used in its business, 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 3.2(l),
3.2(m) and 3.2(n)) with a historical cost in excess of $1,000 is set
forth on Schedule 3.2(k). The properties and assets of the Company and
its Subsidiaries (other than the properties and assets described in
Sections 3.2(l), 3.2(m) and 3.2(n), which sections contain the
Company's and Shareholder's representations and warranties with
respect to such 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.
(l) Software. Schedule 3.2(l) of the Company Disclosure
Schedule 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 necessary
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 3.2(l). As
to any Software which Schedule 3.2(l) indicates is not owned by the
Company or its Subsidiaries, the owner of such Software is identified
on Schedule 3.2(l) and the Company and its Subsidiaries have the right
to use the same pursuant to valid leases or licenses therefor. None of
the Software used by or available to the Company or its Subsidiaries,
and no use thereof, infringes upon or violates any patent, copyright,
trade secret or other proprietary right of anyone else and no claim
with respect to any such infringement or violation is threatened.
(m) Patent, Trademark, etc. Claims. The Company or its
Subsidiaries is the owner or licensee of all patents, patent licenses,
trademarks/servicemarks/trade names, trademark/servicemark/trade name
registrations, copyrights, and copyright registrations or any other
intellectual property ("Intellectual Property") used by or necessary
to the operation of the Company's business as presently conducted and
a correct and complete list of such Intellectual Property is set forth
in Schedule 3.2(m) of the Company Disclosure Schedule. Each item of
Intellectual Property owned or used by the Company or its Subsidiaries
immediately prior to the Closing will be owned or available for use by
the Company or its Subsidiaries on the same terms and conditions
immediately after the Closing. Each of the Company and its
Subsidiaries owns or has the right to use all such Intellectual
Property and has taken all necessary action to maintain and protect
each item of Intellectual Property that
Red Fox of New Iberia Merger Agreement/Page 18
26
it owns or uses. Each of the Company and its Subsidiaries has not
infringed, and is not now infringing, on any trade name, trademark,
service 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 3.2(m). With respect to each such license, sublicense,
agreement or arrangement disclosed:
(1) the license, sublicense, agreement or
arrangement covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(2) the license, sublicense, agreement or
arrangement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the Closing;
(3) no party to such license, sublicense,
agreement or arrangement is in breach or default, and no event
has occurred which with notice or lapse of time would
constitute a breach or default or permit termination,
modification or acceleration thereunder; and
(4) no party to the license, sublicense,
agreement or arrangement has repudiated any provision thereof.
Each of the Company and its Subsidiaries owns, or holds adequate
licenses or other rights to use its trade names in the business as now
conducted by it, and that does not, and will not, conflict with,
infringe on, or otherwise violate any rights of others. Shareholder
has delivered to Parent correct and complete copies of all such
licenses, sublicenses agreements and arrangements (as amended to date)
disclosed on Schedule 3.2(m).
(n) List of Properties, Contracts and Other Data. The
Company and its Subsidiaries own or lease all property and tangible
assets necessary for the conduct of their business as presently
conducted. Except as reflected in such Schedule 3.2(n) of the Company
Disclosure Schedule, 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 3.2(n) of
the Company Disclosure Schedule contains a list setting forth with
respect to the Company and its Subsidiaries as of the date hereof the
following:
(1) Schedule 3.2(n)(1) of the Company Disclosure
Schedule 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
"Property"):
Red Fox of New Iberia Merger Agreement/Page 19
27
(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 Property subject
thereto and except as set forth on Schedule 3.2(n)(1)
of the Company Disclosure Schedule;
(ii) there are no pending or, to the knowledge of
Shareholder and the directors and officers (and
employees with responsibility for real estate
matters) of the Company and its Subsidiaries,
threatened condemnation proceedings, lawsuits, or
administrative actions or other matters relating to
the Property which could reasonably be expected to
adversely affect the current ownership, maintenance,
use, occupancy, or value thereof;
(iii) 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 3.2(n)(1), the land does not
serve any adjoining property for any purpose
inconsistent with the use of the land, and the
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) 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 3.2(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
Red Fox of New Iberia Merger Agreement/Page 20
28
property leased or subleased by the Company or any of
its Subsidiaries under any leases or subleases
disclosed on Schedule 3.2(n)(2) which tenants are in
possession of space to which they are entitled;
(viii) Except as described on Schedule 3.2(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;
(ix) Except as described on Schedule 3.2(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 3.2(n)(1), the
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 3.2(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 Shareholder's 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
Shareholder 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 3.2(n)(2) of the Company Disclosure
Schedule lists and describes briefly all real property leased
or subleased by or to the Company or any of its Subsidiaries
(whether as lessor or as lessee). Schedule 3.2(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 4.8 below. The
Shareholder has delivered to the Parent correct and complete
copies of the leases and subleases listed in Schedule
3.2(n)(2) (as amended to date). With respect to each lease and
sublease listed in Schedule 3.2(n)(2):
Red Fox of New Iberia Merger Agreement/Page 21
29
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and
effect on identical terms following the consummation
of the transactions contemplated hereby;
(iii) no party to the lease or sublease is in breach
or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or
default or permit termination, modification, or
acceleration thereunder;
(iv) no party to the lease or sublease has repudiated
any provision thereof;
(v) Except as described on Schedule 3.2(n)(2), there
are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the
representations and warranties set forth in
subsections (i) through (v) above are correct and
complete with respect to the underlying lease;
(vii) none of the Company and its Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in
trust, or encumbered any interest in the leasehold or
subleasehold;
(viii) all facilities leased or subleased thereunder
have received all approvals of governmental
authorities (including licenses and permits) required
in connection with the operation thereof and have
been operated and maintained in accordance with
applicable laws, rules, and regulations;
(ix) all facilities leased or subleased thereunder
are supplied with utilities and other services
necessary for the operation of said facilities; and
(3) Schedule 3.2(n)(3) of the Company Disclosure
Schedule lists and describes briefly all contracts and
commitments (including, without limitation, mortgages,
indentures and loan agreements) to which the Company or any
Subsidiary is a party, or to which it or any of its assets or
properties are subject and which are not specifically referred
to elsewhere in Section 3.2, provided that there need not be
listed in the Company Disclosure Schedule (unless required
pursuant to the preceding subsections of this Section 3.2(n))
any contract or commitment incurred in the ordinary course of
business which requires payments to or by the Company and its
Subsidiaries during its remaining life aggregating less than
$20,000 or which is terminable by the Company or any
Subsidiary within thirty days without payment of a premium or
penalty; and
Red Fox of New Iberia Merger Agreement/Page 22
30
Correct and complete copies of all documents and descriptions
complete in all material respects of all oral agreements or
commitments (if any) referred to in this Section 3.2(n) have been
provided to Parent or its counsel. None of the Company, the
Shareholder and the Subsidiaries has been notified of any claim that
any contract listed in Schedule 3.2(n)(3) of the Company Disclosure
Schedule is not valid and enforceable in accordance with its terms for
the periods stated therein, or that there is under any such contract
any existing material default or event of default or event which with
notice or lapse of time or both would constitute such a default.
(o) Use of Real Property. None of the Shareholder, the
Company and the Subsidiaries has received notice of violation of any
applicable zoning or building regulation, ordinance or other law,
order, regulation or requirement relating to the operations of the
Company or its Subsidiaries, or any notice of default under any
material lease, contract, commitment, license or permit, relating to
the use and operation of the owned or leased real property listed in
the Company Disclosure Schedules and there is no such violation or
default. None of the Shareholder, 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 Shareholder, 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. The Company and its Subsidiaries,
including, without limitation, their businesses, facilities, property,
vessels, and equipment of the Company and its Subsidiaries have been
and are currently in compliance, in all material respects, with all
applicable federal, state, and local laws, rules, and regulations of
all authorities, including without limitation, applicable
Environmental Laws (as hereinafter defined), and 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. There is no adverse
effect on any of the facilities, properties, vessels or equipment of
the Companies, or with respect to function, use, or value of any such
assets, resulting from any hazardous or toxic substance, or any
pollutant or contaminant, or as a result of exposure to petroleum or
any by-product thereof. "Environmental Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, and the Occupational
Safety and Health Act of 1970, each as amended, together with all
other laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies
thereof) concerning pollution or protection of the environment, public
health and safety including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or
chemical, industrial,
Red Fox of New Iberia Merger Agreement/Page 23
31
hazardous, or toxic materials or wastes in ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
(q) Litigation. Except as provided on Schedule 3.2(q) of
the Company Disclosure Schedule, there are no actions, suits, audits,
investigations, unfair labor practices charges, complaints, claims,
grievances or proceedings with respect to the Company or any
Subsidiary pending against the Company or any Subsidiary at law or in
equity, or before or by any federal, state, municipal, foreign or
other governmental department, commission, board, bureau, agency or
instrumentality, nor are there any such actions, suits, audits,
investigations, unfair labor practices charges, complaints, claims,
grievances or proceedings with respect to the Company (or any
Subsidiary) or threatened against the Company or any Subsidiary.
(r) Labor and Employment Matters.
(1) Schedule 3.2(r) of the Company Disclosure
Schedule sets forth all collective bargaining agreements,
employment and consulting agreements (other than consulting
agreements terminable by the Company or any Subsidiary within
60 days without payment of a premium or a penalty), executive
compensation plans, bonus plans, deferred compensation
agreements, employee pension plans or retirement plans,
employee profit sharing plans, employee stock purchase and
stock option plans, group life insurance, hospitalization
insurance or other plans or arrangements providing for
benefits to employees of the Company or any Subsidiary;
(2) 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 Shareholder, the Company and the
Subsidiaries has received notice of any claim that it has not
complied with any laws relating to the employment of labor,
including any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and
similar taxes, equal employment opportunity, employment
discrimination and employment safety, or that it is liable for
any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing.
(4) Schedule 3.2(r) of the Company Disclosure
Schedule sets forth the current annual compensation of all
employees of the Company and its Subsidiaries (by position or
by department) as of a recent date.
Red Fox of New Iberia Merger Agreement/Page 24
32
(s) Accounts Receivable. The accounts receivable
reflected on the balance sheet of the Company as of December 31, 1996,
and all accounts receivable arising between December 31, 1996 and the
date hereof, arose from bona fide transactions in the ordinary course
of business; the services involved have been provided to the account
obligor and no further services are required to be provided in order
to complete the sales and to entitle the Company or its assignees to
collect the accounts receivable in full. No such account has been
assigned or pledged to any other person, firm or corporation. Unless
paid prior to the IPO Closing Date, the accounts receivable are or
will be as of the IPO 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). Subject to such reserves, each of the accounts receivable
either has been or will be collected in full, without any set-off,
within 90 days after the day on which it first became due and payable.
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 3.2(s) sets forth a
complete and accurate list of all accounts receivable as of July 31,
1997, which list indicates the aging of such accounts receivable.
(t) Insurance. Schedule 3.2(t) of the Company Disclosure
Schedule sets forth the following information with respect to each
insurance policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety
arrangements) to which the Company and its Subsidiaries have been a
party, a named insured, or otherwise the beneficiary of coverage at
any time within the past five years (except as to insurance policies
owned by third party vendors, contractors and clients of the Company
which have contractually named the Company or its Subsidiaries as
insured or provided other benefits of coverage as a result of
contractual liability coverage, which policies need not be listed on
Schedule 3.2(t) but shall be made available for inspection by 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;
(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.
Red Fox of New Iberia Merger Agreement/Page 25
33
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 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. The Company and each of its
Subsidiaries has been covered during the past five years by insurance
in scope and amount customary and reasonable for the businesses in
which it has engaged during the aforementioned period. Schedule 3.2(t)
of the Company Disclosure Schedule describes any self- insurance
arrangements affecting the Company and its Subsidiaries. "Self
insurance arrangements" means any arrangement by which the Company or
its Subsidiaries has assumed risks in scope and amount customarily
insured by businesses in the Company's industry and geographic region.
(u) Employee Benefits.
(1) The Company and its Subsidiaries have complied
and currently is in compliance, both as to form and operation,
in all material respects with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Internal Revenue Codes of 1954 and/or 1986,
as amended, respectively (for purposes of this Section 3.2(u)
only, the "Code"), with respect to each "employee benefit
plan" as defined under Section 3(3) of ERISA. Each employee
benefit plan of the Company and its Subsidiaries ("Plan") is
described in Schedule 3.2(u) of the Company Disclosure
Schedule, and a copy of each Plan is attached thereto.
(2) The Company and its Subsidiaries have never
maintained, adopted or established, contributed or been
required to contribute to, or otherwise participated or been
required to participate in, a "multiemployer plan" (as defined
in Section 3(37) of ERISA). No amount is due as owing from the
Company or any Subsidiary on account of a "multiemployer plan"
(as defined in Section 3(37) of ERISA) or on account of any
withdrawal therefrom.
(3) The Company and its Subsidiaries have not
incurred any liability with respect to a Plan including,
without limitation, under ERISA (including, without
limitation, Title I or Title IV of ERISA, other than liability
for premiums due to the Pension Benefit Guaranty Corporation
("PBGC")), the Code or other applicable law, which has not
been satisfied in full, and no event has occurred, and there
exists no
Red Fox of New Iberia Merger Agreement/Page 26
34
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 3.2(u) of the Company Disclosure Schedule to this
Agreement.
(v) Tax Matters.
(1) All federal, state, local and foreign tax returns
required to be filed by the Company and its Subsidiaries prior
to the date hereof have been filed on a timely basis with the
appropriate governmental authorities in all jurisdictions in
which such tax returns are required to be filed, and all such
returns are correct and complete. Shareholder has 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. Neither the Company nor its
Subsidiaries are currently the subject of any audit,
examination or any similar investigation by any governmental
authority. Schedule 3.2(v) of the Company Disclosure Schedule
sets forth all audits, examinations or similar investigations
of the Company and its Subsidiaries by any governmental
authority since January 1, 1992.
(2) All federal, state, local and foreign income,
franchise, sales, use, property, and all other taxes, fees,
assessments, or other governmental charges (including
withholding taxes), and all interest and penalties thereon
(all of the foregoing collectively, "Taxes") due from or
properly accruable by the Company and its Subsidiaries have
been fully and timely paid or, in the cases of Taxes for which
payment is not yet required, properly and fully accrued for on
the Company Financial Statements or in Schedule 3.2(v) of the
Company Disclosure Schedule with respect to all taxable
periods ending on or prior to the date hereof and interim
periods through the date hereof.
(3) None of the Company and its Subsidiaries has
filed a consent under Section 341(f) of the Code concerning
collapsible corporations. None of the Shareholder, 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
Red Fox of New Iberia Merger Agreement/Page 27
35
payment of any "excess parachute payment" within the meaning
of Section 280G of the Code. None of the assets of the Company
or any Subsidiary is required to be treated as being owned by
any other person pursuant to the "safe harbor" leasing
provisions of Section 168 of the Internal Revenue Code of
1954, as in effect prior to the repeal of said leasing
provisions.
(4) None of the Company and its Subsidiaries is a
party to any Tax allocation or sharing agreement. None of the
Company and its Subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal income tax
return (other than a group the common parent of which was the
Company) or (B) has any liability for the taxes of any person
(other than any of the Company and its Subsidiaries) under
Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor,
by contract, or otherwise.
(5) Schedule 3.2(v) of the Company Disclosure
Schedule sets forth the following information with respect to
each of the Company and its Subsidiaries (or, in the case of
clause (B) below, with respect to each of the Subsidiaries) as
of the most recent practicable date: (A) the 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).
(6) The Company has not waived any statute of
limitations, or agreed to any extension of time with respect
to an assessment or deficiency, with respect to any Taxes.
(7) The amount of Company's liability for unpaid
Taxes for all periods ending on or before the date of this
Agreement do not, in the aggregate, exceed the amount of the
current liability accruals for Taxes (other than any reserve
for deferred Taxes established to reflect timing differences
between book and Tax income) solely with respect to Company as
of the date of this Agreement, and the amount of Company's
liability for unpaid Taxes for all periods ending on or before
the IPO Closing Date shall not, in the aggregate, exceed the
amount of the current liability accruals for Taxes (other than
any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) as such accruals are
reflected on the face of the Company Financial Statements.
(w) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by
Shareholder and the Company directly with the Parent, without the
intervention of any other person on behalf of Shareholder or the
Red Fox of New Iberia Merger Agreement/Page 28
36
Company in such manner as to give rise to any valid claim by any other
person against Shareholder or the Company for a finder's fee,
brokerage commissions, or similar payment.
(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
Shareholder 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.
Red Fox of New Iberia Merger Agreement/Page 29
37
(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.
3.3 REPRESENTATIONS AND WARRANTIES BY THE PARENT. The Parent
represents and warrants to the Shareholder and the Company that the statements
contained in this Section 3.3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the IPO Closing Date (as
though made then and as though the IPO Closing Date were substituted for the
date of this Agreement throughout this Section 3.3), except as set forth in the
disclosure schedule delivered by the Parent to the Shareholder and the Company
on the date hereof and initialed by the parties hereto (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 3.3.
(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 each jurisdiction as set forth in
Schedule 3.3(a) of the Parent Disclosure Schedule where, to the
reasonable belief of Parent, such qualification is appropriate. The
copies of the Parent's Certificate of Incorporation and Bylaws, as
amended to date, which have been delivered to Shareholder are complete
and correct, and such instruments, as so amended, are in full force
and effect at the date hereof.
(b) Capital Stock. The entire authorized capital stock of
Parent consists of 25,000,000 shares of capital which is divided into
(1) 3,000,000 shares of restricted common stock having a par value of
$.001 per share, (2) 20,000,000 shares of common stock having a par
value of $.001 per share (i.e., 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 as set forth in Schedule 3.3(c) of the Parent Disclosure
Schedule, 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.
(d) Authority Relative to Agreement. Parent has the
corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated on the part
of Parent hereby. The execution and delivery by Parent of this
Red Fox of New Iberia Merger Agreement/Page 30
38
Agreement and the consummation by Parent of the transactions
contemplated on its part hereby have been duly authorized by its Board
of Directors. No other corporate proceedings on the part of Parent are
necessary to authorize the execution and delivery of this Agreement by
Parent. Except for corporate action related to the IPO, no other
corporate proceedings on the part of Parent are necessary to authorize
the performance of this Agreement by Parent or the consummation by
Parent of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Parent and is enforceable against
Parent in accordance with its terms.
(e) Non-Contravention. The execution, delivery and
performance of this Agreement by Parent do not and the consummation by
Parent of the transactions contemplated hereby will not (1) violate
any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling change, or other restriction of any government,
government agency, or court to which Parent is subject to, 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 is bound. The execution, delivery and
performance of this Agreement 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, 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) Approvals. Except for the declaration of
effectiveness of 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 3.3(f) of the Parent Disclosure
Schedule, no consent, authorization, order or approval of, or filing
or registration with, any governmental commission, board or other
regulatory body or any other person is required for the execution and
delivery of this Agreement and the consummation by Parent of the
transactions contemplated hereby.
(g) Litigation. There are no actions, claims, proceedings
or governmental investigations pending against Parent or any of its
assets or properties at law or in equity, before or by any federal,
state, or municipal court, agency or other governmental entity, or by
any other person, which, individually or in the aggregate, could
reasonably be expected
Red Fox of New Iberia Merger Agreement/Page 31
39
(1) to have a material adverse effect on the financial condition or
results of operations of Parent or (2) to prevent the consummation of
the transactions contemplated hereby.
(h) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by
Parent directly with Shareholder 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 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 his 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
Red Fox of New Iberia Merger Agreement/Page 32
40
which, if exercised or converted, would affect Parent's
acquisition or retention of control of the Surviving
Corporation.
(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
Shareholder 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.
3.4 REPRESENTATIONS AND WARRANTIES CONCERNING THE MERGER SUB. The
Parent and Merger Sub, jointly and severally, hereby represent and warrant to
the Shareholder and the Company as follows:
(a) Organization and Standing. Merger Sub is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Louisiana.
(b) Capital Structure. The authorized capital stock of
Merger Sub 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. Merger Sub has the corporate power and
authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement, the performance by Merger Sub 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 required by state law, no other corporate
proceedings on the part of Merger Sub are necessary to authorize this
Agreement and the transaction contemplated hereby. 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) constitutes 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).
Red Fox of New Iberia Merger Agreement/Page 33
41
ARTICLE 4
ADDITIONAL COVENANTS AND AGREEMENTS
4.1 CONDUCT OF BUSINESS. During the period from the date hereof to
the IPO Closing Date, except as otherwise contemplated by this Agreement,
Shareholder shall cause the Company to, and the Company shall, conduct its
operations according to its ordinary and usual course of business, subject to
the foregoing, to preserve substantially intact its business organization, keep
available the services of its officers and employees, and maintain its present
relationships with licensors, suppliers, distributors, customers and others
having significant business relationships with it. Representatives of the
Company will confer with representatives of 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, Shareholder will
cause the Company to:
(a) carry on the business in substantially the same manner as
heretofore carried on and not introduce any material new method of
management, operation or accounting, nor provide discounted services
outside the ordinary course of business;
(b) 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 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 without prior written consent of
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;
Red Fox of New Iberia Merger Agreement/Page 34
42
(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 $20,000, without prior written
notification to Parent;
(j) refrain from starting or acquiring any new businesses
without the prior written consent of Parent;
(k) maintain its present salaries and commission levels for
all officers, directors, employees or agents, refrain from entering
into an employment agreement except in the ordinary course of
business, and refrain from entering into any collective bargaining
agreement; and
(l) refrain from declaring or paying any fees, commissions or
loans outside the ordinary course of business, and refrain from
declaring or paying any bonuses except discretionary bonuses to
officers and employees to the extent that the aggregate amount of all
such discretionary bonuses paid or declared during 1997 do not exceed,
in the aggregate, 10% of the Company's pre-tax net income during 1997
through the date of the latest such payment; and
(m) refrain from declaring or paying any dividends or
distributions to Shareholder, directors, management, sales agents,
employees or other personnel, except for dividends and distributions
to shareholders paid or declared in 1997 which in the aggregate do not
exceed 10% of the Company's pre-tax net income during 1997 through the
date of the latest such distribution; and
(n) promptly notify Parent of the receipt by it or the
Company of any notice or claim, written or oral, of (a) default or
breach by the Company under, or of any termination (other than at the
end of the stated term thereof) or cancellation, or threat of
termination (other than at end of the stated term thereof) of
cancellation, of any Company Contract, (b) any loss of, damage to or
disposition of, any of the properties, assets or the products of the
Company of a value of $20,000 or more, singly or in the aggregate
(other than the sale or use of inventories in the ordinary course of
business), (c) any claim or litigation threatened or instituted, or
any other adverse event or occurrence involving or affecting the
Company or any of its assets, properties, operations, businesses or
employees, and (d) any proposal made by any third party received by
the Company or of which Shareholder obtains knowledge in respect of
any sale or other disposition, direct or indirect, of the assets
(other than the sale
Red Fox of New Iberia Merger Agreement/Page 35
43
or use of inventories in the ordinary course of business), businesses
or outstanding capital stock or other ownership or voting interests of
the Company;
(o) comply with and cause to be complied with all
applicable laws, rules, regulations and orders of all federal, state
and local governments or governmental agencies affecting or relating
to the Company or its assets, properties, operations, businesses or
employees except where the failure to comply will not have a material
adverse effect on the Company;
(p) 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;
(s) manage working capital in the ordinary course
consistent with past practice and refrain from introducing any new
method of management or operation, providing any discounted services
or products, discounting any receivables or taking any action to
accelerate payment of any receivable prior to its due date; and
(t) refrain from entering into any contract, lease,
undertaking, commitment, mortgage, indenture, note, security
agreement, license or other agreement (a) involving the receipt or
expenditure of more than $20,000 over the term thereof, (b) containing
provisions calling for the sale or purchase of raw materials, product
or service at prices that vary from the market prices of such raw
materials, products or services generally prevailing in customary
third-party markets, (c) which include "take or pay", "meet or
release", "most favored nations" or similar pricing or delivery
arrangements, (d) with any officer, director, shareholder or affiliate
of the Company, (e) requiring the Company to indemnify or hold
harmless any other person or entity, (f) evidencing any warranty
obligation of the Company with respect to goods, services or products
sold or leased by it (other than warranties given in the normal course
of business containing substantially the same terms as those presently
in effect), or (g) imposing on the Company any confidentiality,
non-disclosure or non- compete obligation.
4.2 ACCESS TO INFORMATION BY PARENT. Until the IPO Closing Date or
termination of this Agreement, Shareholder will furnish Parent with the
Unaudited Monthly Financial Statements for each month following June 1997
promptly as available, but in no event more than 20 days following the end of
such month. Parent may prior to the Closing have access to the business and
properties
Red Fox of New Iberia Merger Agreement/Page 36
44
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. Shareholder 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 IPO 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 Shareholder and the Company, and each such
representation and warranty shall survive any such investigation.
4.3 AMENDMENT TO SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until Closing to
supplement or amend promptly the Disclosure Schedules with respect to any
matter that would have been or would be required to be set forth or described
in the Disclosure Schedules in order to not materially breach any
representation, warranty or covenant of such party contained herein; provided
that no amendment or supplement to a Disclosure Schedule that constitutes or
reflects, individually or in the aggregate, a material adverse change (as
determined by Parent) to the business or assets of Shareholder or the Company
may be made unless Parent consents to such amendment or supplement, and no
amendment or supplement to a Disclosure Schedule that constitutes or reflects a
material adverse change (as determined by the Company) to Parent's assets or
business may be made unless the Company consents to such amendment or
supplement. For all purposes of this Agreement, including without limitation
for purposes of determining whether the conditions set forth in Section 5.1 and
Section 5.2 have been fulfilled, the Disclosure Schedules hereto shall be
deemed to be the Disclosure Schedules as amended or supplemented pursuant to
this Section. In the event that the Company or Shareholder seeks to amend or
supplement a Disclosure Schedule pursuant to this Section 4.3 and the consent
of Parent is required pursuant to this Section and Parent does not consent to
such amendment or supplement, or in the event that Parent seeks to amend or
supplement a Disclosure Schedule pursuant to this Section 4.3 and the consent
of the Company is required pursuant to this Section and the Company does not
consent, the party whose consent would be required (the "Non- Amending Party")
may elect to (i) terminate this Agreement, in which case this Agreement shall
be deemed terminated by mutual written consent as set forth in Section 6.1
hereof, or (ii) close the transactions contemplated by this Agreement without
such amendment to the Disclosure Schedule and preserve its remedies under
Article 7 hereof for the breach of such representation, warranty or covenant;
provided, however, that the Non-Amending Party shall not be entitled to
terminate this Agreement after the Closing Date for any reason except a
provided in Section 6.1(b).
4.4 CONFIDENTIALITY. The provisions of this Section 4.4 shall
supersede and replace all prior agreements and understandings of the parties
with respect to the subject matter hereof.
Red Fox of New Iberia Merger Agreement/Page 37
45
(a) Confidential Information. Until the closing of the
transactions contemplated herein, all Confidential Information, as
hereinafter defined, acquired by Parent with respect to Shareholder or
the Company, or by Shareholder or 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 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. Parent, Shareholder
and the Company shall be responsible for any breach of this Section by
any of their respective representatives and each agrees to take all
reasonable measures to restrain its representatives from prohibited or
unauthorized disclosure of the Confidential Information. For the
purpose of this Agreement, the term "Confidential Information" shall
mean all information acquired by any party from another party hereto
or its representatives pursuant to Section 4.2 hereof or otherwise
with respect to the business or operations of such other party, other
than (A) information generally available to the public which has not
become available as a result of disclosure in violation of this
Section and (B) information which becomes available on a
nonconfidential basis from a source other than a party to this
Agreement or its representatives, provided that such source is not
known by the party to this Agreement receiving such information to be
bound by a confidentiality agreement or other obligation of secrecy to
another party to this Agreement or its representatives. If the
transactions contemplated herein are not consummated, all Confidential
Information in written or printed or other tangible form (whether
copies or originals) shall be returned to the party of origin, and all
documents, memoranda, notes and other writings whatsoever prepared by
any party or its representatives based on Confidential Information
shall be destroyed.
(b) Public Announcements. No press release, public
announcement, confirmation or other information regarding this
Agreement or the contents hereof shall be made by Parent, Shareholder
or the Company without the prior consultation of 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 in its 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
Red Fox of New Iberia Merger Agreement/Page 38
46
required in connection with any registration statement or confidential
information memorandum prepared by Parent. Parent and the Company
shall jointly approve the contents of any press releases, written
employee presentations, or other materials of potentially wide
distribution that disclose or refer to the transaction contemplated
hereby, except for such press releases or other communications
required by law.
4.5 EXCLUSIVITY. After the signing of this Agreement until
September 30, 1997, Shareholder shall not (i) solicit, initiate, or encourage
the submission of any proposal of offer from any person or entity relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets of the Company (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate
in any negotiations or discussions regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any person or entity in favor of such acquisition
(including any acquisition structured as a merger, consolidation, or share
exchange). Shareholder will (and shall cause the Company to) notify Parent if
any person or entity make any proposal, offer, inquiry, or contact with respect
to any of the foregoing.
4.6 RELEASE OF SHAREHOLDER'S GUARANTEES. At or prior to the IPO
Closing Date, Parent will use its best efforts to obtain the release of
Shareholder and their respective affiliates, heirs, successors and assigns from
any and all personal guarantees previously given by Shareholder to secure the
Company's Long-Term Debt obligations and performance bonds. In the event that
Parent is unable to obtain such releases from the Company's lenders, Parent
shall cause the Company to pay off or otherwise retire all of the Company's
indebtedness secured by the personal guarantee of Shareholder, up to a maximum
of $0.0.
4.7 SHAREHOLDER'S RELEASE OF CLAIMS. Effective as of Closing, the
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 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 Shareholder hereunder, except for salary and
benefits payable to Shareholder as an employee in the ordinary course of
business; (ii) waives all breaches, defaults or violations of each agreement,
if any, applicable to the Company Common Stock or the Real Property and agrees
that any and all such agreements are terminated as of 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.
Red Fox of New Iberia Merger Agreement/Page 39
47
4.8 REAL ESTATE MATTERS.
(a) Title Insurance Commitments. 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
3.2(n)(1) or Schedule 3.2(n)(2) of the Company Disclosure Schedule
(the "Title Insurance Property"). The Company will obtain and deliver
to Parent, as soon as practicable, and in any event on or before
fifteen (15) days following the date of this Agreement, 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
4.8.
(b) Surveys. With respect to each Title Insurance
Property, Shareholder will cause the Company to procure in preparation
for the 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.
(c) Title Insurance Policies. At the Closing, the Company
shall deliver to Parent title insurance policies ("Policies of Title
Insurance") 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 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,
Red Fox of New Iberia Merger Agreement/Page 40
48
and (iv) the exception as to the lien for taxes will be limited to the
year in which the Closing occurs. The Policies of Title Insurance
delivered under this Section 4.8 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 1, 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 3.2(n)(1) or Schedule 3.2(n)(2) of the Company
Disclosure Schedule (the "Environmental Assessment Property"). Also
during the period prior to Closing, Shareholder 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, the 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 notify the Company and Shareholder in writing of its objection
(the "Objections"), describing with specificity the subject real
property and the Objections thereto, and, at the sole discretion of
Parent, either (i) the measures required of the Company to cure such
Objections, or (ii) directing that the Company divest itself of the
subject real property prior to or concurrently with the Closing. If
Parent shall request that the Company cure such Objections and the
Company or Shareholder has not cured such Objections to Parent's
satisfaction by the IPO Closing Date, Parent shall have the right to
terminate this Agreement in accordance with Section 6.1(a)(2) hereof.
4.9 CONFIDENTIAL INFORMATION MEMORANDUM; REGISTRATION STATEMENT.
(a) Company to Provide Information. Shareholder and the
Company shall cooperate with Parent to promptly provide such
information as reasonably requested by Parent to (i) prepare a
confidential information memorandum (the "Memorandum"), pursuant to
Rule 506 of Regulation D promulgated by the SEC under the Securities
Act, for dissemination to Parent's acquisition candidates and their
shareholders, and (ii) prepare and file with the SEC the registration
statement on Form S-1 (or other appropriate Form) to be filed by
Parent under the Securities Act in connection with its IPO (including
the prospectus constituting a part thereof, the "Registration
Statement"). 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 Memorandum and the
Registration Statement, and Shareholder and the Company shall furnish
all information concerning them as may be reasonably requested in
connection with any such action.
Red Fox of New Iberia Merger Agreement/Page 41
49
(b) Accuracy of Information. Parent, Shareholder and the
Company each represent and warrant that none of the information or
documents supplied or to be supplied by it specifically for inclusion
in the Memorandum or the Registration Statement, by exhibit or
otherwise, will, at the time that such party has authorized
dissemination of the Memorandum, and at the time the Registration
Statement and each amendment and supplement thereto, if any, become
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
Shareholder and the Company, respectively, shall agree with Parent as
to the information and documents supplied by them for inclusion in the
Registration Statement and each shall indicate such information and
documents in a letter (the "Information Letter") to be delivered (i)
within two business days following dissemination of the Memorandum,
(ii) prior to the filing of the Registration Statement with the SEC,
and (iii) 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)). Shareholder and the Company shall be entitled to review
the Memorandum, the Registration Statement and each amendment thereto,
if any, prior to delivery of the Information Letter. Shareholder and
the Company shall immediately notify Parent in the event of any
development or occurrence that would cause matters referenced in the
Information Letter to be inaccurate, incomplete or misleading in any
material respect.
(c) Further Information. Shareholder and the Company,
respectively, shall promptly upon request, furnish Parent with all
information concerning itself and such other matters as may be
reasonably requested by Parent in connection with the preparation of
the Memorandum, the Registration Statement and each amendment or
supplement thereto, or any other statement, filing, notice or
application made by or on behalf of each such party to any
governmental entity in connection with the transactions contemplated
by this Agreement.
4.10 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 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. Shareholder will not dispose
of any of the Parent Common Stock received in the Merger within two
years following the Effective Date if such disposition would reduce
the fair value of the Parent Common Stock (evaluated as of the
Effective Date) retained by Shareholder to an amount less than 50% of
the fair value of the Company Common Stock held by Shareholder
immediately prior to the Merger, unless Shareholder obtains an opinion
of counsel reasonably satisfactory to Parent that such transfer will
not violate the continuity of shareholder interest requirement set
forth in Treasury
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50
Regulation Section 1.368-1. In the event that Shareholder wishes to
dispose of any shares of Parent Common Stock received in the Merger,
Shareholder shall provide written notice to Parent not less than ten
days prior to the date of the intended disposition specifying the
number of shares of which the Shareholder proposes to dispose.
4.11 CERTAIN TAX MATTERS.
(a) Tax Periods Ending on or Before the IPO Closing Date.
Buyer shall prepare or cause to be prepared and file or cause to be
filed all returns, declarations, reports, claims for refund, or
information returns or statements relating to Taxes, including any
schedule, attachment, or amendment thereto ("Tax Returns") for the
Company and its Subsidiaries for all periods ending on or prior to the
IPO Closing Date which are filed after the IPO Closing Date. Buyer
shall permit Sellers to review and comment on each such Tax Return
described in the preceding sentence prior to filing and shall make
such revisions to such Tax Returns as are reasonably requested by
Sellers. Sellers shall reimburse Buyer for Taxes of the Company and
its Subsidiaries with respect to such periods within fifteen (15) days
after payment by Buyer or the Company and its Subsidiaries of such
Taxes to the extent such Taxes are not reflected in the reserve for
Tax Liability (other than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) shown on
the face of the Company Financial Statements.
(b) Cooperation on Tax Matters.
(i) Buyer, Company (and its Subsidiaries) and
Sellers shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax
Returns pursuant to this Section and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Company (and its
Subsidiaries) and Sellers agree: (A) to retain all books and records
with respect to Tax matters pertinent to Company (and its
Subsidiaries) relating to any taxable period beginning before the IPO
Closing Date until the expiration of the statute of limitations (and,
to the extent notified by Buyer or Sellers, any extensions thereof) of
the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority; and (B) to give the
other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the other
party so requests, Company (and its Subsidiaries) or Sellers, as the
case may be, shall allow the other party to take possession of such
books and records.
Red Fox of New Iberia Merger Agreement/Page 43
51
(ii) Buyer and Sellers further agree, upon
request, to use their best efforts to obtain any certificate or other
document from any governmental authority or any other person as may be
necessary to mitigate, reduce or eliminate any Taxes that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(c) Tax Sharing Agreements. All tax sharing agreements or
similar agreements with respect to or involving Company (and its
Subsidiaries) shall be terminated as of the IPO Closing Date and,
after the IPO Closing Date, Company (and its Subsidiaries) shall not
be bound thereby or have any liability thereunder.
(d) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any
penalties and interest) incurred in connection with this Agreement
(including any corporate-level gains tax triggered by the sale of
Company stock, New York City Transfer Tax and any similar tax imposed
in other states or subdivisions), shall be paid by Sellers when due,
and the Sellers will, at their own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees,
and, if required by applicable law, Buyer will, and will cause its
affiliates to, join in the execution of any such Tax Returns and other
documentation.
4.12 SATISFACTION OF CONDITIONS. The Company and the Shareholder
shall (i) use their reasonable efforts to obtain, as soon as possible, all
governmental approvals required to be obtained by the Company and make, as soon
as possible, all filings with any governmental authority required on the part
of the Company to consummate the transactions contemplated hereby, (ii) use
their reasonable efforts to obtain, as soon as possible, all other consents to
and approvals required to be obtained by the Company to consummate the
transactions contemplated hereby, and (iii) otherwise use their reasonable
efforts to satisfy the conditions set forth in Article 5 of the Agreement to
the extent that such satisfaction is within their control; provided, however,
that this Section 4.12 shall not be construed to limit the rights of
Shareholder to terminate this Agreement as provided in Article 6 of the
Agreement.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT. The
obligations of the Parent under this Agreement are subject to the satisfaction
in all material respects of each of the following conditions, unless waived by
the Parent:
(a) Accuracy of Representations and Warranties. Except
for such changes as are permitted pursuant to Section 4.3 of this
Agreement, the representations and warranties of Shareholder and the
Company contained in this Agreement, in the Shareholder Disclosure
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52
Schedule, the Company Disclosure Schedule and in each closing
certificate and document delivered to Parent pursuant hereto shall be
correct and complete at and as of the Closing Date as though made at
and as of that time, other than such representations and warranties as
are specifically made as of another date, and Shareholder and the
Company shall each have delivered to Parent a certificate to that
effect.
(b) Performance of Covenants. Shareholder and the Company
shall have performed and complied with all covenants of this Agreement
to be performed or complied with by them at or prior to the Closing
Date (except where the failure to so perform or comply would not have
an adverse effect on Parent or prevent Shareholder or Parent from
consummating the transactions contemplated hereby), and Shareholder
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
Shareholder 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 Shareholder and the Company shall each have
delivered to Parent a certificate to that effect.
(d) Approvals. The Company and Shareholder shall have
procured all of the consents, approvals and waivers specified in
Sections 3.1(b) and 3.2(e), and Shareholder and the Company shall each
have delivered to Parent a certificate to that effect.
(e) Leasehold Purchase Agreement. Shareholder shall have
executed and delivered to Parent and the Merger Sub the Leasehold
Purchase Agreement, and Shareholder shall execute and deliver a
Transfer of Immovable Property (or other appropriate instrument)
conveying title in the Real Estate Interests to Parent, the Merger Sub
or such other entity designated by them, together with the other
certificates, instruments and documents provided for in the Leasehold
Purchase Agreement, against payment of the Leasehold Purchase Price on
the IPO Closing Date.
(f) Executive Employment Agreement. At the Closing,
Xxxxxx X. Xxx, Xx. shall execute and deliver the Executive Employment
Agreement with the Company substantially in the form attached as
Exhibit 1.1(c) hereto.
(g) Shareholder Lock-up Agreements. At the Closing,
Shareholder shall have executed and delivered 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 following the effectiveness of the
Registration Statement.
Red Fox of New Iberia Merger Agreement/Page 45
53
(h) Completion of Parent's IPO. On the IPO Closing Date,
Parent's initial public offering of common stock, as described in the
Registration Statement, shall have successfully closed.
(i) Lender Approval. On or before the Closing Date,
Parent shall have secured a commitment for approximately $25 million
in senior indebtedness.
(j) Audit of the Company. On or before the Closing Date,
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.
(k) Long-Term Debt. The Company's Long-Term Debt
(including current maturities) as of the Closing Date shall not exceed
$0.0.
(l) Opinion of Counsel for the Company and Shareholder.
On or before the Closing Date, Parent and the Merger Sub shall have
received the favorable opinion of Xxxxx XxXxxx substantially in the
form and to the effect set forth in Exhibit 5.1 hereto.
(m) Shareholder Release of the Company. On or before the
Closing Date, Shareholder will deliver to Parent and the Merger Sub
(i) a complete and general release of all claims by the Shareholder
against the Company except otherwise agreed by the Parent in writing,
and (ii) the corporate records and books of Company, including the
minute book, the stock transfer books, and the corporate seal of the
Company.
(n) All Proceedings to be Satisfactory. At Closing, all
actions to be taken by Shareholder 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 its counsel.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SHAREHOLDER AND THE
COMPANY. The obligations of Shareholder and the Company under this Agreement
are subject to the satisfaction in all material respects or waiver by
Shareholder of each of the following conditions:
(a) Accuracy of Representations and Warranties. Except
for such changes as are permitted pursuant to Section 4.3 of this
Agreement, the representations and warranties of Parent and the Merger
Sub contained in this Agreement and in each closing certificate and
document delivered to Shareholder or the Company pursuant hereto shall
be correct and complete on and as of the Closing Date as though made
at and as of that date other than such
Red Fox of New Iberia Merger Agreement/Page 46
54
representations and warranties as are specifically made as of another
date, and Parent and the Merger Sub shall have delivered to
Shareholder and the Company a certificate to that effect.
(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 it at the Closing Date (except
where the failure to so perform or comply would not have a material
adverse effect on Shareholder and the Company or prevent it from
consummating the transactions contemplated hereby), and Parent and the
Merger Sub shall have delivered to Shareholder and the Company a
certificate to such effect.
(c) Approvals. On or before the Closing Date, Parent
shall have procured all of the consents, approvals and waivers
specified in Section 3.3(f), and Parent shall deliver to Shareholder
and the Company a certificate to that effect.
(d) Leasehold Purchase Agreement. On the IPO Closing
Date, Parent shall cause delivery of the Leasehold Purchase Price to
Shareholder against Shareholder's delivery of the Transfer of
Immovable Property and other certificates, instruments and documents
provided for in the Leasehold Purchase Agreement to effect conveyance
of the Real Estate Interests to Parent, the Merger Sub or any other
entity designated by them.
(e) Executive Employment Agreement. On or before the
Closing Date, the Merger Sub shall execute and deliver the Executive
Employment Agreement with Xxxxxx X. Xxx, Xx. in the form attached as
Exhibit 1.1(c)-1, and the Key Employee Employment Agreement with the
individuals named on Schedule 1.1(c) in the form attached as Exhibit
1.1(c)-2.
(f) All Proceedings to be Satisfactory. On or before the
Closing Date, Shareholder and its counsel shall have received Parent's
Memorandum describing Parent and the Parent Common Stock to be
delivered as a part of the Purchase Price together with all such
counterpart originals or certified or other copies of all documents
relating to Parent incident to the transactions contemplated hereby as
Shareholder or such counsel may reasonably request.
(g) Opinion of Counsel for The Parent and the Merger Sub.
On or before the Closing Date, Shareholder and the Company shall have
received the favorable opinion of Chamberlain, Hrdlicka, White,
Xxxxxxxx & Xxxxxx, counsel for Parent and the Merger Sub substantially
in the form and to the effect set forth in Exhibit 5.2 hereto.
(h) Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted that is reasonably likely to
restrain, prohibit, violate or otherwise affect the consummation of
the transactions contemplated hereby.
Red Fox of New Iberia Merger Agreement/Page 47
55
ARTICLE 6
TERMINATION
6.1 TERMINATION OF AGREEMENT. The parties may terminate this
Agreement only as provided below.
(a) Prior to Closing. The parties may terminate this
Agreement at any time prior to the Closing only as provided below:
(1) Mutual Consent. The Parent and the
Shareholder may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(2) Termination by Parent. The Parent may
terminate this Agreement by giving written notice to the
Shareholder at any time prior to the Closing (1) in the event
Shareholder or the Company has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, the Parent has notified
Shareholder of the breach, and the breach has continued
without cure until the earlier of 20 days after the notice of
such breach or the Closing Date, whichever is earlier, or (2)
if the Closing shall not have occurred on or before December
31, 1997, by reason of the failure of any condition precedent
under Section 5.1 hereof (unless the failure results primarily
from the Parent itself breaching any representation, warranty,
or covenant contained in this Agreement); and
(3) Termination by Shareholder. Shareholder may
terminate this Agreement by giving written notice to the
Parent at any time prior to the 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, Shareholder has notified
the Parent of the breach, and the breach has continued without
cure until the earlier of 20 days after the notice of such
breach or the Closing Date, whichever is earlier, or (2) if
the Closing shall not have occurred on or before December 31,
1997, by reason of the failure of any condition precedent
under Section 5.2 hereof (unless the failure results primarily
from Shareholder breaching any representation, warranty, or
covenant contained in this Agreement).
(b) After the Closing Date. This agreement may be
terminated after the Closing only as follows:
(1) Mutual Consent. Parent or Shareholder may
each terminate this Agreement by providing written notice to
the other upon termination, prior to the successful completion
of the IPO, of the agreement between Parent and certain
investment banking firms (the "Underwriting Agreement") under
which such firms
Red Fox of New Iberia Merger Agreement/Page 48
56
agree to purchase shares of Parent Common Stock from Parent on
a firm commitment basis for resale to the public initially at
the IPO Price.
(2) Automatic Termination. This Agreement shall
terminate automatically and without action on the part of any
party hereto if the IPO is not consummated within 15 business
days after the Closing.
6.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 6.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto, except
that (1) Section 4.4, Section 10.1, Section 10.6, Section 10.7, Section 10.8
and Section 10.10 hereof shall survive such termination and (2) nothing herein
shall relieve any party from liability for any willful breach of any other
provision hereof.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the parties contained in this Agreement
(except for Section 3.2(v)) shall survive the Closing Date and the IPO Closing
Date, regardless of any investigation made by or on behalf of any party, and
shall expire and terminate on the last day of the 18th month after the IPO
Closing Date. The representations and warranties contained in Section 3.2(v)
hereof shall not terminate until the expiration of the applicable statute of
limitations (including any extension thereof) for any claim by a taxing
authority for any taxes, penalties or interest.
7.2 INDEMNIFICATION BY SHAREHOLDER. Shareholder hereby agrees 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, as defined hereafter) which the Company
or the Parent incurs in excess of $50,000 in the aggregate as a result of the
breach of any of the representations, warranties and covenants made by
Shareholder in or pursuant to this Agreement. The indemnification obligations
of Shareholder under this Section 7.2 shall survive the Closing and will
terminate at the time specified in Section 7.1, except with respect to any
indemnity claim or claims pending on the date of such termination.
7.3 INDEMNIFICATION BY PARENT AND SURVIVING CORPORATION. Parent
and Surviving Corporation, jointly and severally, agree to indemnify and hold
harmless Shareholder in respect of any losses, claims, damages, liabilities or
related expenses (including, but not limited to, all litigation costs, as
defined hereafter) which Shareholder incurs in excess of $50,000 in the
aggregate as a result of the breach of any of the representations, warranties
and covenants made by Parent in or pursuant to this Agreement. The
indemnification obligations of Parent and Surviving Corporation under this
Section 7.3 shall survive the Closing and will terminate at the time specified
in Section 7.1, except with respect to any indemnity claim or claims pending on
the date of such termination.
Red Fox of New Iberia Merger Agreement/Page 49
57
7.4 NOTICE. Promptly after any party hereto (the "Indemnified
Party") has received notice or has knowledge of the occurrence of any event
which the Indemnified Party asserts is an indemnifiable event or after the
commencement of any action, claim or proceeding commenced against the
Indemnified Party by a third party that might result in any claim for indemnity
pursuant to this Agreement (a "Third Party Claim"), the Indemnified Party shall
notify the party obligated to provide indemnification hereunder (the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Promptly after receipt by an Indemnifying Party of any
such notice, the Indemnifying Party shall, within 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 the Indemnified
Party an amount sufficient to discharged such debt, liability or obligation;
(ii) in the event of a Third Party Claim which is not acknowledged by the
Indemnifying Party to be owing, notify the Indemnified Party of the defense
thereto and thereupon promptly assume and diligently contest such Third Party
Claim with counsel satisfactory to the Indemnified Party; or (iii) with respect
to a claim other than a Third Party Claim, in the event of a claim by the
Indemnified Party for indemnity hereunder which is challenged by the
Indemnifying Party, notify the Indemnified Party of such challenge. Failure to
respond within the appropriate time period following the receipt of a notice
hereunder shall be deemed acknowledgment of the right to be indemnified and
give rise to the immediate right in the Indemnified Party to payment in full of
the amount claimed.
ARTICLE 8
STOCK TRANSFER RESTRICTIONS
8.1 COMPLIANCE WITH SECURITIES LAWS. Shareholder acknowledges and
agrees with Parent that the shares of Parent Common Stock issued pursuant to
this Agreement (the "Restricted Shares") to Shareholder shall not be
transferable except upon the conditions specified in this Article 8, which
conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act and any applicable state securities laws in
respect of the transfer of such Restricted Shares. Shareholder acknowledges and
agrees that the certificates representing the Restricted Shares will contain a
restrictive legend to the effect that transfer of such shares is prohibited
unless the shares are registered under the Securities Act and applicable state
securities laws, or in the event the event that such transfer is, in the
opinion of counsel to Parent, exempt from the registration provisions of the
Securities Act and applicable state securities laws.
8.2 RESTRICTIONS ON TRANSFER. Prior to any transfer or attempted
transfer of Restricted Shares other than the sale of such shares pursuant to
registration under the Securities Act, Shareholder agrees 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 Shareholder's counsel. Parent
shall submit a copy of the notice to its counsel, and the following provisions
shall apply:
Red Fox of New Iberia Merger Agreement/Page 50
58
(a) If, in the opinion of the Parent's counsel, the
proposed transfer may be effected without registration of the Restricted Shares
under the Securities Act, Parent shall, as promptly as practicable, so notify
Shareholder who will then be entitled to transfer the Parent Common Stock in
accordance with the terms of the notice delivered by Shareholder to Parent.
(b) If, in the opinion of the Parent's counsel, 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 Shareholder, and Shareholder shall not be allowed to
effect the proposed transfer except pursuant to an offering registered under
the Securities Act.
(c) Shareholder understands and agrees that 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 Shareholder in obtaining any exemption from any such
registration requirements. Shareholder also acknowledges that he shall be
responsible for compliance with all conditions of transfer of the Restricted
Shares imposed by any administrator of any state and for any expenses incurred
by Parent for legal or accounting services in connection with reviewing such
proposed transfer and issuing opinions in connection therewith.
(d) Shareholder understands and agrees 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 stating that the transfer of the
Restricted Shares is exempt from such registration requirements and authorizing
removal of the stop transfer instructions.
ARTICLE 9
FURTHER ASSURANCES
9.1 FURTHER ASSURANCES. At any time and from time to time on and
after the Closing Date (a) at the request of Parent or the Surviving
Corporation, Shareholder shall deliver to Parent any records, documents and
data possessed by Shareholder 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 Shareholder may reasonably deem necessary or
desirable to carry out the terms and provisions of this Agreement.
Red Fox of New Iberia Merger Agreement/Page 51
59
9.2 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
six months following the expiration of the statute of limitations
(including extensions thereof) applicable to the tax returns filed by
or with respect to the Company for taxable periods ending prior to or
on the IPO Closing Date to which such books or records are relevant.
After such time, before 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 Shareholder, and Shareholder shall
be given an opportunity, at its sole cost and expense, to remove all
or any part of such books and records as Shareholder may select, and
Shareholder may retain copies thereof. Duly authorized representatives
of Shareholder shall, upon reasonable notice, have access to such
books and records during normal business hours to examine, inspect and
copy such books and records.
(b) In any instance in which 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 IPO Closing Date or
to respond to an audit by the Internal Revenue Service or other
governmental agency with respect to a period prior to the IPO Closing
Date, 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.
ARTICLE 10
MISCELLANEOUS
10.1 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 Shareholder,
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. Shareholder 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 sale of shares of Parent Common Stock hereunder.
Red Fox of New Iberia Merger Agreement/Page 52
60
10.2 EXECUTION IN COUNTERPARTS. For the convenience of the parties,
this Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
10.3 NOTICES. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered or mailed by
registered or certified mail postage prepaid, or sent by telex, telecopier,
facsimile transmission or telegraph as follows:
If to Shareholder, to: With a copy to:
The Xxxxxx X. Xxx, Xx. Grandchildrens Trust No. 1 Xxxxx XxXxxx
c/o Xxxxxxx X. Xxx, Trustee 000 Xxxxxxxx Xxxxxxxxxx Xx.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000 Xxxxxxxxx, Xxxxxxxxx 00000
Xxxxxxx, Xxxxx 00000 Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
If to Parent or the Surviving Corporation, to: With a copy to:
TransCoastal Marine Services, Inc. Xxxxxx X. Xxxxxx, Xx.
3535 Briarpark, Suite 210 Chamberlain, Hrdlicka, White,
Xxxxxxx, Xxxxx 00000 Xxxxxxxx & Xxxxxx
Attention: Chief Executive Officer 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 attempted by the U.S. Postal Service.
10.4 WAIVERS. Any party hereto (as to itself, but not as to other
parties without their consent) may, by written notice to the other parties
hereto, (a) extend the time for the performance of any of the obligations or
other actions of the other parties under this Agreement; (b) waive any
inaccuracies in the representations or warranties of another party contained in
this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance with any of the conditions or covenants of another party
contained in this Agreement; or (d) waive performance of any of the obligations
of another party under this Agreement. Except as otherwise provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation any investigation
Red Fox of New Iberia Merger Agreement/Page 53
61
by or on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representation, warranty,
covenant or agreement contained in this Agreement. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed a waiver of any subsequent breach.
10.5 AMENDMENTS, SUPPLEMENTS, ETC. At any time this Agreement may
be amended or supplemented by such additional agreements, articles or
certificates, as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of the Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants,
terms or conditions hereof or to effect or facilitate any governmental approval
or acceptance of this Agreement or to effect or facilitate the filing or
recording of this Agreement or the consummation of any of the transactions
contemplated hereby. Any such instrument must be in writing and signed by all
parties.
10.6 ENTIRE AGREEMENT. This Agreement, its Exhibits and Disclosure
Schedules and the documents executed on the Closing Date and the IPO Closing
Date in connection herewith, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral and written, between the parties
hereto with respect to the subject matter hereof. No representation, warranty,
promise, inducement or statement of intention has been made by any party hereto
which is not embodied in this Agreement or such other documents, and no party
hereto shall be bound by, or be liable for, any alleged representation,
warranty, promise, inducement or statement of intention not embodied herein or
therein.
10.7 CHOICE OF FORUM; CONSENT TO JURISDICTION. This Agreement shall
be governed by and construed in accordance with the laws of the State of Texas.
Any suit, action or proceeding arising with respect to the validity,
construction, enforcement or interpretation of this Agreement, and all issues
relating in any matter hereto, shall be brought in the United States District
Court for the Southern District of Texas, or in the event that federal
jurisdiction does not pertain, in the state courts of the State of Texas in
Xxxxxx County. Each of the parties hereto hereby submits and consents to the
jurisdiction of such courts for the purpose of any such suit, action or
proceeding and hereby irrevocably waives (a) any objection which any of them
may now or hereafter have to the laying of venue in such courts, and (b) any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
10.8 BINDING EFFECT, BENEFITS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Notwithstanding anything contained in this Agreement to
the contrary, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
10.9 ASSIGNABILITY. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto without the prior
written consent of the other parties hereto.
Red Fox of New Iberia Merger Agreement/Page 54
62
10.10 INVALID PROVISIONS. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, rule
or regulation, such provision shall be fully severable and this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof. The remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
Red Fox of New Iberia Merger Agreement/Page 55
63
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.
BY: /s/ G. XXXXX XXXX
---------------------------------------
G. XXXXX XXXX, VICE PRESIDENT
SHAREHOLDER:
THE XXXXXX X. XXX, XX.
GRANDCHILDRENS TRUST NO. 1
/s/ XXXXXXX X. XXX
------------------------------------------
XXXXXXX X. XXX, TRUSTEE
THE COMPANY:
THE RED FOX COMPANIES OF NEW IBERIA, INC.,
A LOUISIANA CORPORATION
By: /s/ XXXXXXX X. XXX
---------------------------------------
Name: Xxxxxxx X. Xxx
-------------------------------------
Title: President
------------------------------------
Red Fox of New Iberia Merger Agreement/Page 56
