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SALE AND PURCHASE AGREEMENT
This Sale and Purchase Agreement ("Agreement") dated as of the 1st day
of May, 1998, by and between FW MARINE PROPERTIES, INC., a Texas corporation
("Purchaser"), and GALVESTON SHIPBUILDING COMPANY, a Texas corporation
("Seller").
INTRODUCTION
Seller desires to sell and Purchaser desires to purchase the assets of
Seller's barge construction operations located at 0000 Xxxxxxxxxx Xxxxx and
which began January 1, 1996 (the "Business") on the terms and conditions set
forth in this Agreement.
In consideration of the mutual promises of the parties; in reliance on the
representations, warranties, covenants, and conditions contained in this
Agreement; and for other good and valuable consideration, the parties agree as
follows:
ARTICLE 1
SALE
1.01. Seller agrees to sell, convey, transfer, assign, and deliver to Purchaser,
and Purchaser agrees to purchase from Seller, all of the assets (excluding the
Excluded Assets), used in the operation of the Business of Seller (the
"Assets"); including, but not limited to:
(a) Those assets (equipment and fixtures) located on the Land (defined
below) and those assets described in the WFA/Collateral Review Services, Inc.
appraisal dated March 25, 1998, and Tracts A and B described in the Xxxxxx,
Ford & XxXxxxxxx, Inc. appraisal dated March 25, 1998 (collectively the
"Appraisals"), attached hereto as Schedule 1.01(a). The legal descriptions for
Tracts A and B are described as three separate tracts and identified as Tracts
I, II, and III on Exhibit A. Tracts I, II, and III, collectively, are referred
to in this Agreement as the "Land".
(b) Seller's rights under the Barge Construction Agreement dated November
4, 1997, by and between Seller and Petroleum Transport Corporation, a Delaware
corporation, calling for
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construction of four (4) 297' x 50' x 12' double skin tank barges and attached
hereto as Schedule 1.01(b) (the "Assigned Contract").
(c) All of Seller's inventory supplies and work in progress related to the
ongoing activity as of the Closing Date (as defined in Section 1.13 below) under
the Assigned Contract.
(d) [RESERVED].
(e) All goodwill, trademarks, services marks and trade names associated
with, or used in connection with, the Business, including, without limitation,
the name "Galveston Shipbuilding Company".
(f) Originals or copies (at Seller's discretion) of all records in the
custody of Seller directly concerning or related to the Assets.
(g) All customer and client lists, records, drawings and charts associated
with the Business and not to Seller's other operations, whether written, stored
in computer memory, or on hard copy.
(h) All sales literature, promotional material, and other general files
and printed forms used in connection with the Business.
(i) All rights of Seller under all licenses and other governmental
approvals and permits associated with, or relating to, the Business
(collectively, the "Permits").
(j) All telephone numbers and telephone and yellow page directory listings
associated with, or relating to, the Business.
(k) All equipment and software for the drafting systems and software for
accounting systems used by Seller in connection with the Business.
(l) Copies of 1996-1998 payroll records for those employees of Seller who
work primarily with the Business.
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(m) All records relating to vendors dealing with Seller in connection with
the Business.
(n) All financial records of Seller related exclusively to the Business,
except that to the extent that Seller's financial records for the Business are
commingled with the financial records of Seller's other businesses, Seller shall
separate out the financial records of the Business.
(o) All rights of Seller under those gantry crane and crawler crane leases
attached hereto as Schedule 1.01(o) (collectively, the "Crane Leases"). Seller
shall have the option to assume other leases, if any, with lessor's consent, if
necessary.
All of the above described records, properties, assets and rights are
referred to herein collectively as the "Assets." The "Assets" shall not include
any "Excluded Assets," as defined in Section 1.02 below. The "Assets" shall
include, without limitation, all writings, software, records, properties, assets
and rights of the Seller used primarily in connection with the Business but
shall not include financial records of any nature which contain information
concerning Seller's other business operations.
EXCLUDED ASSETS
1.02. Notwithstanding the provisions of Section 1.01 hereof, (i) the Seller's
assets not used in connection with the Business; (ii) Seller's accounts
receivable, accounts payable, bank accounts; (iii) the office computers, office
equipment, office furniture and office furnishings located at 0000 Xxxxxxxxxx
Xxxxx, Xxxxxxxxx, Xxxxx 00000; (iv) other property, machinery, and equipment
exclusively associated with Seller's investment properties and Seller's tugboat
and repair yard, none of which are nor have been, items associated with the
Business; and (iv) Seller's books, papers, documents, records, writings and
software which contain information concerning Seller's other business
operations, shall not be acquired by Purchaser, shall not constitute "Assets,"
and shall be referred to herein collectively as the "Excluded Assets."
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NO ASSUMPTION OF LIABILITIES
1.03. Except as otherwise specifically provided for herein, Purchaser is not
assuming any obligations, debts or liabilities of Seller whatsoever, and Seller
hereby contracts and agrees to indemnify and hold Purchaser free and harmless
from and against any and all such debts, obligations and liabilities, including,
without limitation, the following described debts, obligations and liabilities:
(a) any liability, indebtedness or obligation of Seller for borrowed
money, whether absolute or contingent, direct or indirect;
(b) any liabilities or obligations arising out of or in connection with
any litigation, claim, investigation or proceeding (including, without
limitation, losses, costs, expenses, attorneys' fees, and damages incurred in
connection therewith) which relate to Seller, or which relate to services
performed or products delivered prior to the Closing, or which arise out of
actions taken by, or omissions of, Seller prior to the Closing;
(c) any federal, state, local or other income and other taxes payable by
Seller, and any interest, penalties and other charges with respect thereto;
(d) any liability under any employee benefit plan or employee welfare
benefit plan, or regarding any compensation or withholding taxes owed to or with
respect to any employee or contractor of Seller;
(e) any liabilities and obligations of Seller for payroll, wages,
salaries, bonuses, vacation, sick pay, severance pay, and other like amounts due
to officers, directors, employees, contractors and agents of Seller;
(f) any liabilities and obligations of Seller based upon tortious or
illegal conduct;
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(g) any liabilities and obligations of Seller for any breach or violation
of any contracts of Seller at any time other than the Assigned Contract, and any
liabilities and obligations of Seller for any breach or violation of the
Assigned Contract, the Crane Leases, or the Permits, prior to the Closing;
(h) any liabilities and obligations of Seller for environmental or
ecological matters, which occurred, existed or arose prior to the Closing,
including those relating to the use, transport, disposal, handling or storage of
hazardous or toxic materials, pollutants, contaminants, petroleum products, or
waste;
(i) any liability or obligation of Seller for violations of law;
(j) any liability or obligation to any customer or client of Seller, or
other third party, as a result of: recapture of amounts paid by any such payor
to Seller; or any overpayments made by such payor to Seller; or any disallowance
of any claim made by Seller; and
(k) any tort liability, products liability, liability for latent defects,
or errors of omissions liability of Seller.
All of such obligations, debts and liabilities are referred to herein
collectively as the "Excluded Liabilities." Notwithstanding the foregoing,
Purchaser will assume the obligations of Seller under the Assigned Contract, the
Crane Leases, and the Permits, but only to the extent that they represent
obligations which are assignable and are, by their written terms, to be
performed in the ordinary course subsequent to the Closing (collectively, the
"Assumed Obligations"). Purchaser shall not have any responsibility whatsoever
for any liability or obligation to any party to the Assigned Contract for
verbal, implied, or other terms, conditions, limitations, or commitments that
are not specifically set forth in writing on the face of the Assigned Contract
or arise as a matter of law, and Seller hereby agrees to indemnify and hold
Purchaser free and
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harmless from and against any and all of same. THE INDEMNIFICATION AND
ASSUMPTION PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER
OR NOT: THE LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE SOLELY OR IN
PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY
OR OTHER FAULT OF ANY INDEMNIFIED PARTY. THE PARTIES HERETO ACKNOWLEDGE THAT
THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.
NO ENCUMBRANCES
1.04. Except as to Permitted Encumbrances as defined in Section 1.06 and other
disclosures made by Seller to Purchaser in this Agreement, the conveyance of the
Assets to Purchaser hereunder shall be free and clear of all claims, security
interests, pledges, options, rights of first refusal, liens, financing
statements, deeds of trust, mortgages, charges, assessments, restrictions,
leases, and encumbrances. All such claims, security interests, pledges, options,
rights of first refusal, liens, financing statements, deeds of trust, mortgages,
charges, assessments, restrictions, leases and encumbrances are herein referred
to individually as an "Encumbrance" and collectively as "Encumbrances." Should
it be determined after the Closing Date that any Encumbrance (other than a
Permitted Encumbrance) exists, Purchaser shall give Seller written notice of
such Encumbrance and Seller will have ten (10) business days after written
notice to cure the same. Should Seller fail to cure same within such time
period, Purchaser may, at Purchaser's option, discharge such Encumbrance, and
proceed to recover from Seller all costs and expenses of discharging same,
including attorneys fees and court costs and other out-of-pocket expenses
incurred by Purchaser in discharging same and in recovering same from Seller.
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CONSIDERATION FOR SALE
1.05. In consideration of the sale and transfer of the Assets and the
representations, warranties, and covenants of Seller set forth in this
Agreement, Purchaser shall pay to Seller on the Closing Date, the sum of Five
Million Five Hundred Thousand and No/100 Dollars ($5,500,000.00) (the "Purchase
Price") of which the sum of One Million and No/100 Dollars ($1,000,000.00) shall
be placed into escrow as provided in Section 1.10 below and of which the sum of
Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) shall be placed into
escrow as provided in Section 1.12 below. The Purchase Price shall additionally
be subject to the Purchase Price Adjustments provided for in Section 1.07 below.
The Purchase Price will be paid in U.S. Dollars by wire transfer,
cashier's check or certified check on the Closing Date. After the Closing, the
Seller shall not distribute or pay to its shareholder and shall maintain a
minimum of One Million and No/100 Dollars ($1,000,000.00) in unsecured and
unpledged funds in its corporate accounts until the later of the date on which
the Purchaser has completed all work under the Assigned Contract and has been
paid-in-full for all such work, and any Purchase Price adjustments as required
in Section 1.07 have been made. Seller shall from time to time provide Purchaser
with confirmation of such funds.
TITLE COMMITMENT, SURVEY AND ENVIRONMENTAL
1.06. Seller has already delivered to Purchaser a commitment for title insurance
covering the Land issued by Chicago Title Company-Galveston. Seller has already
delivered to Purchaser a survey of the Land prepared by a licensed Texas
surveyor and a Phase I environmental audit covering the Land. Purchaser may
furnish to Seller written notice of any objections to the matters disclosed
therein. Should Purchaser fail to provide such notice prior to closing,
Purchaser shall have waived any objection. Should Purchaser object to any matter
shown on the title commitment
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or survey, Seller shall have until the Closing Date to address the objection to
Purchaser's reasonable satisfaction. If Seller is unable to cure Purchaser's
reasonable objection(s) to any matter shown on the title commitment or survey on
or before the Closing Date, Purchaser may (i) terminate this Agreement and
neither party shall thereafter have any obligation to the other, or (ii) proceed
to Closing, in which case Purchaser will be deemed to have accepted the Land
subject to such objections, and such objections will be deemed Permitted
Encumbrances. Any objections Purchaser makes to the Phase I environmental audit
will be cured by Seller in the manner described in Section 1.12 of this
Agreement. Any matter disclosed in the title commitment, survey or Phase I
environmental audit to which Purchaser does not object, any matter to which
Purchaser has objected but that Seller has cured to Purchaser's reasonable
satisfaction, and any matter deemed a Permitted Encumbrance shall be referred to
and considered a "Permitted Encumbrance" under this Agreement.
PURCHASE PRICE ADJUSTMENTS
1.07. As provided in Section 1.05, the total Purchase Price shall be Five
Million Five Hundred Thousand and No/100 Dollars ($5,500,000.00) payable at
Closing subject to the Purchase Price Adjustments provided in (a) and (b)
hereinbelow.
The Purchase Price defined above shall be adjusted upward or downward
after the completion of the Assigned Contract and of Purchaser's obligations
under the purchase orders described in Section 3.06 (the "Purchase Orders") for
completion of up to five barge canopy covers for Xxxxxxx, Inc., according to the
following:
(a) If Purchaser's total Net Profit as defined in Section 1.07(c) below on
the Assigned Contract and Purchase Orders does not equal or exceed One Million
and No/100 Dollars ($1,000,000.00), the Purchase Price shall be adjusted
downward by that amount by which the Net
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Profit on the Assigned Contract and Purchase Orders falls short of $1,000,000.00
(the "Downward Purchase Price Adjustment").
(b) If Purchaser's total Net Profit on the Assigned Contract and Purchase
Orders exceeds One Million and no/100 Dollars ($1,000,000.00), the Purchase
Price shall be adjusted upward by that amount by which the Net Profit on the
Assigned Contract and Purchase Orders exceeds One Million and No/100 Dollars
($1,000,000.00) (the "Upward Purchase Price Adjustment").
(c) The "Net Profit" on the Assigned Contract and Purchase Orders shall be
determined in accordance with generally accepted accounting principles with
overhead charged to such contracts at 114% of the cost of labor. All payments
under the Barge Construction Consulting Agreement, between West Gulf Marine,
Inc. and Purchaser, shall be included as additional costs of such contracts.
Purchaser shall submit to Seller the revenues and costs of the Assigned Contract
and Purchase Orders upon completion. Seller shall have five (5) business days to
verify such figures on the books and records of Purchaser. Five (5) business
days after approval of such figures by Seller, Purchaser shall pay to Seller the
amount of any Upward Purchase Price Adjustment or Seller shall pay to Purchaser
the amount of any Downward Purchase Price Adjustment.
ALLOCATION OF PURCHASE PRICE
1.08. The parties agree that the Purchase Price shall be allocated according to
the fair market values set forth in the Appraisal. In the event the Purchase
Price exceeds such fair market values as set forth in the Appraisal, the excess
shall be allocated to goodwill. Each party will timely file IRS Form 8594 as
required under the Internal Revenue Code, which shall be completed in conformity
with the allocations set forth in this Agreement.
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REIMBURSEMENT OF DEPOSITS
1.09. Purchaser agrees to reimburse Seller at, or immediately after, Closing for
the amount of any deposits, such as utility or telephone deposits, which
Purchaser desires to assume.
TITLE COMPANY ESCROW AGREEMENT
1.10. The Seller and Purchaser shall execute and deliver the escrow agreement
attached hereto as Exhibit B and incorporated herein (the "Title Company Escrow
Agreement"), under which Seller shall deposit One Million and No/100 Dollars
($1,000,000.00) of the Purchase Price with Chicago Title Insurance Company
pending Seller's ability to obtain a patent (the "Patent") from the State of
Texas and convey good and marketable title (subject to the exceptions identified
in the title commitment for such property issued by Chicago Title Insurance
Company under GF# 224172) to Purchaser to the 2.573 acres described in Exhibit C
attached hereto and incorporated herein (the "Filled Land").
Seller shall have a period of five (5) years in which to obtain the Patent
and convey the Filled Land to Purchaser during which time Purchaser shall lease
the Filled Land from Seller for One and No/100 Dollars ($1.00) each year,
pursuant to the Possession\Lease Agreement attached hereto and incorporated
herein as Exhibit D. When Seller obtains the Patent for the Filled Land, Seller
shall convey such to Purchaser, and Seller shall be entitled to, and the escrow
agent shall pay to Seller, the One Million and No/100 Dollars ($1,000,000.00)
held in escrow together with any interest which has accrued thereon. If at the
end of said five (5) year period Seller has not obtained the Patent and cannot
convey the Filled Land to Purchaser, Seller shall convey to Purchaser, by deed
without warranty, the Filled Land, and Purchaser shall be entitled to, and the
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escrow agent shall pay to Purchaser, the One Million and No/100 Dollars
($1,000,000.00) held in escrow together with any interest which has accrued
thereon. Notwithstanding anything to the contrary above, the parties agree that
the terms of the Title Company Escrow Agreement shall control as to all
particulars of the sale of the Filled Land by Seller to Purchaser.
OPTION TO ACQUIRE ADDITIONAL PROPERTY
1.11. For and in consideration of the agreements herein and in the event that
the Purchaser consummates the purchase of the Land and the Business, Seller
grants to Purchaser and Purchaser accepts for a period of one (1) year from the
date hereof (the "Option Period"), the option to acquire the tract of land owned
by Seller on the south side of Harborside Drive in Galveston, Texas, which is
comprised of 4.95 acres, more or less (the "Option Property"), for a purchase
price of Two Hundred Seventy-Five Thousand and No/100 Dollars ($275,000.00),
free and clear of all liens and encumbrances (except those exceptions identified
in the title commitment for such property issued by Chicago Title Insurance
Company under GF# 224146) through a general warranty deed from Seller conveying
good and marketable title (subject to the exceptions identified in the title
commitment for such property issued by Chicago Title Insurance Company under GF#
224146). The legal description for the Option Property is attached as Exhibit E.
Prior to exercising the option, Purchaser shall have the right to inspect the
Option Property, including the right to access and conduct environmental
inspections and tests, at Purchaser's cost and risk. Purchaser hereby
indemnifies Seller from and against any claims made against Purchaser that may
result from the exercise of Purchaser's rights to access and inspect the Option
Property. Purchaser may exercise this option during the Option Period upon
thirty (30) days written notice to Seller, and the sale shall be consummated on
the thirty-fifth (35th) day after Purchaser exercises the option at Chicago
Title Company - Galveston at 10:00 a.m. Galveston time. Purchaser shall bear the
cost
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of any title insurance on the Option Property. The Owner's policy shall be in
the form of the commitment covering said property and accepted by Purchaser.
Taxes for the year of sale shall be prorated to the date of the sale with Seller
being responsible for all ad valorem taxes and assessment prior to the date of
Closing.
ENVIRONMENTAL REMEDIATION AND ESCROW AGREEMENT
1.12. (a) The Seller and Purchaser shall execute and deliver the Escrow
Agreement attached hereto as Exhibit F and incorporated herein (the
"Environmental Remediation Escrow Agreement"), under which the Seller shall
deposit Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) of the
Purchase Price with Southwest Bank of Texas, N.A., to cover costs or expenses
relating to the environmental remediation described in Section 1.12(b) during a
period of four (4) years after the Closing. The Environmental Remediation Escrow
Agreement does not in any way limit Seller's indemnification obligation to
Purchaser under Section 1.03.
(b) Seller has obtained a Phase I environmental audit, a copy of which is
attached as Schedule 1.12(b). Seller will engage one or more environmental
consultants and attorneys to assist Seller in determining the nature of any
contamination on the Land and the extent of remediation necessary to perform a
complete closure of any such contamination. Seller will cooperate with all
federal, state, and local agencies with appropriate jurisdiction and will
satisfy all governmental requirements necessary to effectuate an appropriate
remediation of the Land. Seller will remediate the Land to the extent and to all
levels required by governmental regulation pursuant to applicable guidelines,
rules, and regulations.
(1) Specifically, Seller will perform all remediation necessary to attain
closure under the Texas Risk Reduction Rules (30 Texas Administrative Code
Sections 335.551 et seq.) in effect at the Closing date. Purchaser shall
have the right to approve in
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advance any proposed remediation plan and schedule, such approval not to
be unreasonably withheld or delayed. Seller shall take all steps necessary
to complete such remediation within four months of the Closing Date.
Seller shall have the responsibility to restore the Assets to their
original pre-remediation operating condition after the remediation is
complete. If Seller fails to complete such remediation with four months of
the Closing Date, Purchaser can at its sole discretion assume control of
and complete such remediation, and Purchaser can draw on the funds
deposited under the Environmental Remediation Escrow Agreement to pay for
costs as they are incurred during and related to such remediation.
(2) At Purchaser's sole election, Seller shall obtain a certificate of
completion from the Texas Natural Resource Conservation Commission under
the Texas Voluntary Cleanup Program. If Purchaser elects to approve
Seller's pursuit of TNRCC approval under the Voluntary Cleanup Program,
Seller shall take all reasonable actions necessary to assure the Purchaser
enjoys, to the extent provided by law or regulation, all benefits and
protections provided by the Voluntary Cleanup Program (VCP). Purchaser
shall have the right to approve in advance any written submittals, plan or
material communications by Seller with TNRCC related to the Land. Seller
shall notify and inform Purchaser of any communications with TNRCC related
to the Land within two business days.
(c) Seller, upon presentment to Purchaser of all approvals for such
activities from any appropriate agency, may draw down on the funds in an amount
necessary for completion of any required remediation of the Land. Schedule
1.12(c) lists all estimated remediation costs
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anticipated at this time. Upon receipt by Seller, and tender of copies of same
to Purchaser, of final approval by all appropriate agencies of the completion of
all such remediation, required by any such agencies, any funds remaining in
escrow will be released to Seller. Purchaser must provide Seller and Seller's
consultants reasonable access to the Land for such investigation and
remediation.
CLOSING
1.13. The Closing shall take place at the offices of CHICAGO TITLE COMPANY,
Galveston, Texas, or such other location agreed to by Purchaser and Seller on or
before May 15, 1998 (the "Closing Date").
DEFAULT AND TERMINATION
1.14. In the event Closing does not occur on or before the Closing Date, the
following provisions shall apply:
(a) If this Agreement has been properly terminated by either party
pursuant to a right granted to that party hereunder, or has terminated by
operation of law pursuant to the terms hereof, neither party shall thereafter
have any obligation to the other except as set forth in Section 9.12 hereof.
(b) If Closing failed to occur as a result of a breach or default of any
term of this Agreement, the non-breaching party may, at its option, exercise and
seek any and all legal remedies available to it including, without limitation,
specific performance of this Agreement.
ARTICLE 2
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to Purchaser that the following
facts and circumstances are at the Closing Date true and correct:
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SELLER'S EXISTENCE AND POWER
2.01. Seller is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Texas, and has full corporate power and
authority to conduct the Business as previously and presently being conducted.
To the best of Seller's knowledge, the nature of the Business and the character
or location of the Assets do not require qualification by it to do business in
any other states. Seller has the corporate power to own its property and to
carry on the Business.
OWNERSHIP OF ASSETS
2.02. Except as set forth in Schedule 1.01(o), Seller is the sole owner of the
Assets with full right to sell or dispose of them as Seller may choose. The
Assets constitute all of the properties, assets and rights owned by, leased or
rented by Seller and used in connection with the Business as reflected in the
Financial Statements. Seller does not use any material software, properties,
assets or rights in connection with the Business, except these Assets.
TAXES AND TAX RETURNS
2.03. Seller has filed all federal, state and local tax returns and reports of
Seller which have become due to be filed, including extensions (including,
without limitation, those due in respect of its properties, income, franchises,
licenses, sales and payrolls), and such returns are complete and accurate in all
material respects. Seller has paid all taxes, assessments, fees, interest,
penalties (if any) and other governmental charges due with respect to the
periods covered by such tax returns and reports and as reflected on said returns
and reports. Seller is not delinquent in the payment of any taxes, assessments
or governmental charges, and there are no assessments of additional taxes
threatened against Seller or any of Seller's properties. No waiver of any
statute of limitations or agreement for extension of time for assessment in
respect of any tax liability of
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Seller has been given by Seller which is presently in effect. Without limiting
the foregoing: (a) Seller has timely filed all FICA, FUTA and similar state and
local tax returns and withholding of employee tax returns and reports of Seller
which are required to be, and have become due to be, filed and has paid all
amounts required to be paid thereunder, and (b) Seller has paid over to the
appropriate taxing authorities all amounts required to have been withheld by
Seller from employee compensation, except such withheld amounts not yet due to
have been paid over, all of which amounts not yet paid over are being held by
Seller for the account of the appropriate taxing authority. Seller does not know
of any questions which have been raised by any federal, state or local taxing
authority relating to taxes or assessments of Seller which, if determined
adversely to Seller, would result in the assertion of any material tax
deficiency.
TITLE TO ASSETS AND PROPERTIES
2.04. Seller has good and marketable title to all of the Assets other than those
disclosed on Schedule 1.01(o). All such Assets are free and clear of mortgages,
liens, pledges, charges, encumbrances, equities, claims, easements, rights of
way, covenants, conditions, and restrictions, except for the following:
(a) As to the personal property Assets, those liens disclosed on the UCC
lien search to be provided by Seller to Purchaser, all of which shall be paid
and discharged by Seller at or before Closing.
(b) As to the Land, those matters accepted by Purchaser as Permitted
Encumbrances; and
(c) The lien of current Taxes not yet due and payable. No officer,
director, or employee of Seller, nor any spouse, child, or other relative of any
of these persons owns or has any interest, directly or indirectly, in any of the
Assets.
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LAWS AND REGULATIONS
2.05. Except as disclosed on Schedule 2.05, Seller is not in default or in
violation of any law; regulation; court order; or order of any federal, state,
municipal, foreign, or other government department, board, bureau, agency, or
instrumentality, wherever located, relating to the Business or that would
materially adversely affect the Assets.
LITIGATION
2.06. Except as disclosed in Schedule 2.06, there is no litigation, action,
suit, proceeding or governmental investigation pending or threatened against
Seller or affecting Seller which would affect the Business or the Assets, at law
or in equity or before any federal, state, municipal, local or other
governmental authority, or before any arbitrator. Seller is not subject to any
order, writ or decree of any court or other governmental authority affecting the
Assets or the Business other than those disclosed in this Agreement and the
Schedules thereto.
AUTHORITY
2.07. Seller has the corporate power to execute and deliver this Agreement and
the other documents and agreements contemplated hereby, and to consummate the
transactions contemplated hereby, and has taken (or by the Closing will have
taken) all action required by law, its Articles of Incorporation, Bylaws and
otherwise to authorize such execution and delivery and the consummation of the
transactions contemplated hereby. The person or persons signing this Agreement
on behalf of Seller are authorized to do so (or have been properly authorized to
do so) under the Articles of Incorporation, Bylaws, or other documents governing
Seller's business affairs. All acts, reports, and returns required to be filed
by Seller with any government or regulatory agency with respect to this
transaction have been or will be properly filed prior to the Closing Date. No
provisions exist in any contract, document, or other instrument to which Seller
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is a party or by which Seller is bound that would be violated by consummation of
the transactions contemplated by this Agreement.
BROKERS
2.08. Neither Seller nor any of Seller's officers, directors, employees, or
stockholders, has retained, consented to, or authorized any broker, investment
banker, or third party to act on Seller's behalf, directly or indirectly, as a
broker or finder in connection with the transactions contemplated by this
Agreement.
INSIDER TRANSACTIONS
2.09. Except as disclosed in Schedule 2.09 attached hereto, Seller is not,
directly or indirectly, a party to any contract, lease or commitment with any
officer or director of Seller or any affiliate of any such officer or director
that relates to the Business. As used in this Section 2.09, the term "affiliate"
shall mean any member of the immediate family of such officer or director, or
any corporation, partnership, limited liability, trust, or other entity in which
such officer or director has a substantial interest or is a director, officer,
partner, manager or trustee.
NO SUBSIDIARIES
2.10. Seller has no subsidiaries. Seller is not a partner or member of (nor is
any part of the Business conducted through) any partnership or limited liability
company.
ACCURACY OF FINANCIAL STATEMENTS
2.11. Seller has delivered to Purchaser copies of financial statements dated
December 31, 1996, and December 31, 1997, copies of which are annexed hereto as
Schedule 2.11, which are sometimes referred to herein collectively as the
"Financial Statements." The Financial Statements are complete and accurate and
fairly present the financial condition of the Business and the income and
expenses of the Business as of the respective dates thereof. The Business has no
"material"
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liabilities or obligations ("material," for purposes of this Section 2.11 only,
shall mean liabilities or obligations totaling in the aggregate more than
$1,000) known or unknown, accrued, absolute or contingent, whether or not now
due and payable (including, without limitation, any liability for federal, state
or local taxes of the Seller), for any period ended on or prior to the
respective dates of the Financial Statements or any liability or obligation in
connection with any transaction or state of affairs entered into or existing on
or before the respective dates thereof, which are not fully reflected and
required so to be on the Financial Statements or otherwise disclosed to
Purchaser in this Agreement or any of the Schedules attached hereto and
incorporated herein.
CONTRACTS
2.12. Schedule 1.01(b) attached hereto and incorporated herein is a copy of the
Assigned Contract. Schedule 2.12 is a list of all material contracts and
agreements of Seller that relate to the Business other than the Assigned
Contract. Except as set forth in Schedule 1.01(b) or in Schedule 2.12 hereto,
Seller is not a party to any material contract, agreement, lease, or power of
attorney of any kind whatsoever associated with or relating to the Business. As
to Seller, the Assigned Contract is valid and in full force and effect according
to its material terms (except as enforceability may be restricted, limited, or
delayed by bankruptcy, insolvency, moratorium or similar laws affecting or
relating to the enforcement of creditors' rights in general). No material
default by Seller exists under any contract, lease or agreement described in
Schedule 2.12, and no condition or state of facts exists which, with notice or
the passage of time, or both, would constitute a default under any such
contract, lease or agreement. To Seller's knowledge, the Assigned Contract is
valid as to the other contracting parties thereto (except as enforceability may
be restricted, limited, or delayed by bankruptcy, insolvency, moratorium or
similar laws affecting or relating to the enforcement of creditors' rights in
general) and there is no material default by
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any such party existing under the Assigned Contract, and no condition or state
of facts exists which, with notice or the passage of time, or both would
constitute a default by any such party thereunder. To the best of Seller's
knowledge, the Assigned Contract is enforceable in accordance with the terms
specifically set forth in writing on the face of the Assigned Contract against
all other parties thereto (except as enforceability may be restricted, limited,
or delayed by bankruptcy, insolvency, moratorium or similar laws affecting or
relating to the enforcement of creditors' rights in general). To the best of
Seller's knowledge, neither the execution, the delivery nor the performance of
this Agreement or any other document or agreement contemplated hereby by Seller
will cause any default in or breach of any provision of Seller's Articles of
Incorporation, as amended, bylaws or any contract, agreement, or commitment to
which Seller is a party or by which Seller is bound, and none of such actions
will result in either acceleration, or any similar right, of any other party
under the Assigned Contract, or constitute a default under the Assigned
Contract, or result in the creation or imposition of any Encumbrance against any
of the Assets. Should it be determined after the Closing Date that any such
breach or default has occurred, Purchaser shall give Seller written notice of
such breach or default and ten (10) business days after written notice to cure
the same. Should Seller fail to cure same within such time period, Purchaser
may, at Purchaser's option, cure same, and proceed to recover from Seller all
costs and expenses of discharging same, including all attorney's fees, court
costs, and other out-of-pocket expenses incurred by Purchaser incurring same and
in recovering same from Seller.
EMPLOYEE PLANS AND AGREEMENTS
2.13. With regard to any and all employees of Seller who work or worked
primarily for the Business, and except as disclosed in Schedule 2.13, Seller is
not a party to any written or unwritten: (a) collective bargaining agreement,
labor agreement, or other contract, agreement or
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arrangement with any union or other employee organization; (b) any employee
welfare benefit plan, employee pension benefit plan, or other plan, program or
arrangement that is subject to any portion of The Employee Retirement Income
Security Act of 1974, as amended, or 29 U.S.C. Section 1001 et seq.; (c) any
retirement plan or other benefit plan, program or arrangement intended to meet
the requirements of Code Section 401; (d) any other retirement, deferred
compensation, savings, for other plan, program or arrangement that provides
retirement, savings or other economic benefits to employees and/or contractors
of Seller; (e) any bonus, commission, incentive, or other contingent
compensation plan, program or arrangement of any kind; (f) any plan, program or
arrangement whereby one or more employees or contractors may receive, acquire,
or purchase ownership interests in Seller, or the option to acquire same; (g)
any plans, policies, programs or other arrangements providing for paid, unpaid,
insured, uninsured or other benefits such as vacation days or time, sick days or
time, personal days or time, jury duty days or time, severance pay, disability
pay, maternity leave, other leave, etc.; (h) any plan, program, policy or
arrangement providing for periodic increases in the rate of pay, compensation,
remuneration or other benefits for any one or more employees or contractors of
Seller; (i) any contract, agreement, or other arrangement dealing with or
relating to any one or more employee's or contractor's employment, consulting
services or work, other services, retainer, or otherwise.
INSURANCE
2.14. All insurance maintained by Seller that relates primarily to the Business
is listed and described on Schedule 2.14 hereto.
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ABSENCE OF CERTAIN CHANGES
2.15. Except as described in Schedule 2.15, since December 31, 1997, Seller has
not, with regard to the Business:
(a) mortgaged, pledged or otherwise subjected (whether or not voluntarily)
to any Encumbrance, any of the Assets;
(b) sold, assigned or transferred or agreed to sell, assign or transfer
any of Seller's tangible assets or canceled any debts or claims, except in each
case in the ordinary course of business;
(c) sold, assigned, exclusively licensed, or transferred or agreed to
sell, assign, exclusively license, or transfer any trade names, copy rights, or
other intangible assets or intellectual property;
(d) suffered any extraordinary loss or knowingly waived or permitted to
lapse any right of substantial value;
(e) made any capital expenditures, or otherwise entered into any executory
transactions or commitments to make any capital expenditures, in excess of
$5,000 per item or $25,000 in the aggregate;
(f) to the best of Seller's knowledge, failed to comply in any material
respect with any applicable local, state or federal law, rule or regulation;
(g) suffered any event or condition of any character, materially and
adversely affecting the Assets, Business, properties, or prospects of Seller; or
(h) made no material change in its employee labor force or in employee
compensation or benefits.
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EMPLOYEES
2.16. A listing of all employees (including their rates of pay and their accrued
but unpaid vacation, and sick days, and other accrued benefits) of Seller
associated with the Business is attached as Schedule 2.16. Said Schedule 2.16
shall be updated as of the Closing.
LICENSES
2.17. Schedule 2.17 is a list of or copies of all governmental or other
regulatory licenses and permits held by (a) Seller relating to the operation of
the Business (including, as to each such license or permit, the name of the
owner of the license or permit, the issuing authority, a description of the
subject matter of the license or permit, and the termination date, if any, or
notice requirement with respect to termination and renewal options) and (b) any
employees of Seller in connection with their services for the Business. To the
best of Seller's knowledge, the licenses and permits described on Schedule 2.17
authorize Seller to operate the Business. To the best of Seller's knowledge, all
such licenses and permits are in full force and effect, and there currently are
not any material defaults or deficiencies thereunder; and no event has occurred
which (whether with or without notice, lapse of time, or the happening or
occurrence of any other event) would constitute a material default or deficiency
thereunder. It is the parties' desire that the validity, continuation and
effectiveness of all of Seller's licenses and permits will in no way be affected
by the transfer of such licenses to Purchaser under this Agreement. To that end,
Seller shall use all reasonable and necessary means at its disposal to cause an
appropriate consent to such transfer to be delivered to Purchaser, any costs of
same to be borne by Seller. Seller is not aware of any proceeding or
investigation by any governmental body, governmental subsidiary, or governmental
agency relating to the Business.
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DISCLOSURE
2.18. No representation or warranty by Seller in this Agreement or in any other
document or agreement contemplated hereby, and no statement in this Agreement or
any Schedule or certificate furnished or to be furnished to Purchaser pursuant
hereto contains any materially untrue statement or omits to state a fact
necessary in order to make the statements contained herein or therein not
materially misleading.
VALIDITY OF AGREEMENTS
2.19. Upon execution and delivery by all parties, the obligations of Seller
under this Agreement and all other documents and agreements to be executed by
Seller in connection herewith will constitute the valid and binding obligations
of Seller, and be binding against Seller and enforceable in accordance with
their respective terms (except as enforceability may be restricted, limited, or
delayed by bankruptcy, insolvency, moratorium or similar laws affecting or
relating to the enforcement of creditors' rights in general).
TRANSFER NOT SUBJECT TO ENCUMBRANCES OR THIRD-PARTY APPROVAL
2.20. Except as provided in Schedule 2.20, the execution and delivery of this
Agreement and the other documents and agreements contemplated hereby by Seller
and the consummation of the transactions contemplated hereby, will not result in
the creation or imposition of any Encumbrance on any of the Assets, and will not
require the authorization, consent, or approval of any third party, including
any governmental entity, subdivision or regulatory agency as to Seller's
participation herein.
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CONDITION OF PERSONAL PROPERTY
2.21. Except as shown in Schedule 2.21, all of the tangible Assets are, as of
the Closing, in a condition suitable for the purposes for which they are being
used by Seller immediately prior to the Closing.
NET PROFIT IN ASSIGNED CONTRACT
2.22. The Assigned Contract, from the date of Closing to the Date of Completion
shall have an aggregate Net Profit of One Million and No/100 Dollars
($1,000,000.00) computed in accordance with Section 1.07(c) hereof.
ARTICLE 3
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to Seller that:
PURCHASER'S EXISTENCE AND POWER
3.01. Purchaser is a corporation duly organized, validly existing, and in good
standing under the laws of Texas and has full corporate power and authority to
conduct its business as previously and presently being conducted.
AUTHORITY
3.02. Purchaser has the corporate power to execute and deliver this Agreement
and the other documents and agreements contemplated hereby, and to consummate
the transactions contemplated hereby, and has taken (or by the Closing will have
taken) all action required by law, its Articles of Incorporation, Bylaws and
otherwise to authorize such execution and delivery and the consummation of the
transactions contemplated hereby. The person or persons signing this Agreement
on behalf of Purchaser are authorized to do so under the Articles of
Incorporation, Bylaws, or other documents governing Purchaser's business
affairs. All acts, reports, and returns required to be filed by Purchaser with
any government or regulatory agency with respect to this
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transaction have been or will be properly filed prior to the Closing Date. No
provisions exist in any contract, document, or other instrument to which
Purchaser is a party or by which Purchaser is bound that would be violated by
consummation of the transactions contemplated by this Agreement.
LAWS & REGULATIONS
3.03. Purchaser is not in default or in violation of any law; regulation; court
order; or order of any federal, state, municipal, foreign, or other government
department, board, bureau, agency, or instrumentality, wherever located,
relating to the Business or that would materially adversely affect the Assets.
LITIGATION
3.04. Except as disclosed in Schedule 3.04, there is no litigation, action,
suit, proceeding or governmental investigation pending or threatened against
Purchaser or affecting Purchaser or any of Purchaser's assets, at law or in
equity or before any federal, state, municipal, local or other governmental
authority, or before any arbitrator. Purchaser is not subject to any order, writ
or decree of any court or other governmental authority.
LIMITED REPRESENTATIONS OR WARRANTIES BY PURCHASER
3.05. Purchaser is sophisticated and experienced in vessel construction and has
been afforded full opportunity to inspect the Assets. Except as explicitly set
forth in Articles 2 and 4, and subject to performance of the obligations set
forth in Section 1.12, Purchaser is not relying on any statements or
representations by Seller as to the fitness of the Assets in connection with
this transaction. Purchaser accepts the Assets "As Is", and with all faults.
Purchaser agrees that Seller makes no warranties, express or implied, concerning
the Assets or the potential income to be derived from the Assets other than
those representations and warranties in Article 2 hereof and the
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covenants in Article 4 hereof. SELLER EXPRESSLY DISCLAIMS ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE WITH REGARD TO THE ASSETS.
CONSTRUCTION OF CANOPY COVERS
3.06. Purchaser understands that Seller will have after Closing a continuing
obligation to produce and deliver a number (not to exceed five) of sets of barge
canopy covers for Xxxxxxx, Xxxxxxxxxxxx. The specifications for such covers are
set forth in Schedule 3.06 hereto. Purchaser agrees that it will build and
deliver up to five sets of these covers under purchase orders to be delivered by
Seller to Purchaser within ten (10) business days after the Closing. Purchaser
will not charge in excess of Eighty-Eight Thousand Nine Hundred Fifty-Five and
No/100 Dollars ($88,955) per set of covers to produce the covers to
specification and install the covers on Cargill's barges, which are otherwise
completed.
BROKERS
3.07. Neither Purchaser nor any of Purchaser's officers, directors, employees,
or stockholders, has retained, consented to, or authorized any broker,
investment banker, or third party to act on Purchaser's behalf, directly or
indirectly, as a broker or finder in connection with the transactions
contemplated by this Agreement.
VALIDITY OF AGREEMENTS
3.08. Upon execution and delivery by all parties, the obligations of Purchaser
under this Agreement and all other documents and agreements to be executed by
Purchaser in connection herewith will constitute the valid and binding
obligations of Purchaser, and be binding against Purchaser and enforceable in
accordance with their respective terms (except as enforceability may be
restricted, limited, or delayed by bankruptcy, insolvency, moratorium or similar
laws affecting or relating to the enforcement of creditors' rights in general).
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TRANSFER NOT SUBJECT TO ENCUMBRANCES OR THIRD-PARTY APPROVAL
3.09. The execution and delivery of this Agreement and the other documents and
agreements contemplated hereby by Purchaser and the consummation of the
transactions contemplated hereby will not require the authorization, consent, or
approval of any third party, including any governmental entity, subdivision or
regulatory agency as to Purchaser's participation herein.
ARTICLE 4
SELLER'S COVENANTS
Seller covenants to Purchaser that from and after the date of this
Agreement until the Closing Date, and after Closing where specified, Seller
shall:
BUSINESS OPERATIONS
4.01. Prior to the Closing, except as otherwise approved by Purchaser, Seller
shall conduct the Business only in the ordinary course consistent with past
practice and in such a manner that the representations, warranties and covenants
contained herein shall be true and correct at and as of the Closing (except for
changes contemplated, permitted or required by this Agreement) and so that the
conditions to be satisfied by Seller at the Closing shall have been satisfied.
Seller shall, consistent with conducting the business of the Business in
accordance with reasonable business judgment, preserve the Business intact,
endeavor to keep available to Seller the services of its present employees
(except those dismissed by Seller or those who voluntarily discontinue their
employment), and endeavor to preserve for Purchaser the goodwill of the
customers, suppliers, clients and others having business relations with Seller
that relate to the Business.
MAINTENANCE OF ASSETS AND PROPERTIES
4.02. Maintain the Assets in as good a state of operating condition and repair
as they are on the date of this Agreement, except for ordinary depreciation,
wear, and tear.
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ABSENCE OF LIENS
4.03. Not, sell, pledge, lease, mortgage, encumber, dispose of, or agree to do
any of these acts regarding any of the Assets, other than in the normal course
of business, without the prior written approval of Purchaser.
MAINTAIN INSURANCE
4.04. Keep in force all policies of insurance covering the Assets. If Purchaser
so requests in writing, Seller shall purchase additional insurance as may be
reasonably required at Purchaser's expense.
PERFORMANCE OF OBLIGATIONS
4.05. Perform all of its obligations and not make any material amendment to its
obligations under all agreements relating to or affecting the Assets.
NOTIFICATION OF LITIGATION
4.06. Promptly notify Purchaser in writing of any outstanding or threatened
claims; legal, administrative, or other proceedings, suits, investigations,
inquiries, complaints, notices of violation, or other process; or other
judgments, orders, directives, injunctions, or restrictions against or involving
the Assets or that could adversely affect the Assets.
NOT SOLICIT
4.07. Not negotiate with any person or entity, or solicit or entertain any
proposal concerning any acquisition, sale, lease or transfer of any or all of
the Business or the Assets.
RESIST BROKERS
4.08. Assist and cooperate with Purchaser in resisting any claim of any broker,
investment banker, or third party for any brokerage fee, finder's fee, or
commission against Purchaser or Seller in connection with the transactions
contemplated by this Agreement.
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COOPERATE IN PUBLICITY
4.09. Coordinate any written publicity regarding this transaction with
Purchaser.
PROVIDE SALES AND USE TAX CERTIFICATES
4.10. Furnish to Purchaser clearance certificates from the appropriate agencies
in all states where Seller is qualified to do business and any related
certificates that Purchaser may reasonably request as evidence that all sales,
use, and other tax liabilities of Seller (other than income tax liabilities)
accruing before the Closing Date have been fully satisfied or provided for by
Seller.
PROVIDE UCC CLEARANCES
4.11. Deliver to Purchaser a Business and Commerce Code search report issued by
the Secretary of State in each state where Seller owns personal property and
dated as of a date not more than ten (10) days before the Closing Date. The
report must indicate that there are no filings under the UCC on file with the
Secretary of State that name Seller as debtor or otherwise indicate any lien on
the assets and properties of Seller, except for the liens otherwise disclosed in
this Agreement which shall be paid and released at Closing.
DELIVER TITLE POLICIES
4.12. Deliver to Purchaser title insurance policies, dated as of the Closing
Date, issued by title insurance companies acceptable to Purchaser and at
Purchaser's expense. The policies shall insure fee simple title in Purchaser to
the Land, subject only to the following:
(a) The lien, if any, of current real property taxes, payment of which
are not delinquent.
(b) Objections and exceptions noted in the title insurance policies that
have been approved by Purchaser pursuant to Article 1.06 hereof.
(c) The Permitted Encumbrances.
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Liability coverage under the title insurance policies shall be at least equal to
or greater than the portion of the Purchase Price allocated to the Land in this
Agreement.
CHANGE CORPORATE NAME
4.13. Deliver to Purchaser an amendment to Seller's Articles of Incorporation
and any other documents necessary to reflect the assignment or transfer of the
name "Galveston Shipbuilding Company" in favor of Purchaser.
ACCESS AND INFORMATION
4.14. (a) Prior to the Closing, Seller shall give to Purchaser and Purchaser's
representatives reasonable access during normal business hours to the Assets and
to the financial statements and other relevant documents that relate only to the
Business and will make available, and use Seller's best efforts to cause its
employees and agents to make available, copies of all such documents and
information with respect only to the Business as representatives of Purchaser
may from time to time request. Seller shall not be obligated to provide
Purchaser with access to or copies of any information that does not relate
strictly and exclusively to the Business or the Assets, including without
limitation, documents containing information concerning Seller's other business
operations. Prior to the Closing Date, Seller shall be available to confer on a
reasonable basis upon request by Purchaser with one or more representatives of
Purchaser to report material operational matters and to report the general
status of on-going operations. Seller shall notify Purchaser of any material
adverse change in the Assets, or in the financial position, earnings or business
of the Business prior to Closing, and any unexpected emergency or other
unanticipated material change in the Business, and any governmental complaints,
investigations or hearings or adjudicatory proceedings (or communications
indicating that any of same may be contemplated or pending) involving Seller and
relating to the Business, and shall keep Purchaser fully informed of
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such events and permit Purchaser's representatives to participate in all
discussions relating thereto. After Closing, and prior to the completion of the
Assigned Contract, Seller shall give to Purchaser and Purchaser's
representatives reasonable access during normal business hours to financial
information and other documents relevant only to the Business and will use
Seller's best effort to cause its employees and agents to make available copies
of all such documents and information which relate to the Business and not to
Seller's other business operations.
(b) Purchaser is required under the federal securities laws to present the
audited financial statements for two (2) fiscal years of Seller's operations as
part of Purchaser's financial statements to be filed with the Securities and
Exchange Commission. Seller agrees to cooperate after the Closing with
Purchaser's accountants in the preparation of such audited financials. Seller
acknowledges that Seller has been informed that Purchaser must have such audited
financial statements completed within sixty (60) days after Closing and Seller
shall use its best efforts to assist in the compilation of such information.
CONSENTS AND APPROVALS
4.15. Seller shall take the necessary corporate or other action and shall use
its best efforts to secure before the Closing all necessary consents, approvals
and amendments of agreements required of Seller to carry out the transactions
contemplated by this Agreement and to satisfy the conditions precedent specified
herein.
USE OF NAME
4.16. At the Closing and at any time thereafter upon the request of Purchaser,
Seller shall provide to Purchaser such consents and shall perform such other
acts as may be necessary to enable Purchaser to have the exclusive right to use
the name "Galveston Shipbuilding Company" and such other logos, trade names and
trademarks used by Seller in connection with the Business.
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ARTICLE 5
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser to Close under this Agreement is subject to
each of the following conditions (any one of which may, at the option of
Purchaser, be waived in writing by Purchaser) existing on the Closing Date, or
such earlier date as the context may require.
REPRESENTATIONS, WARRANTIES AND COVENANTS TRUE
5.01. All of the representations, warranties and covenants of Seller contained
in this Agreement shall be true as of the date of this Agreement, shall be
deemed to have been made again at and as of the Closing, and shall be true at
and as of the date of Closing in all material respects; Seller shall have
performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by Seller prior to or at the Closing;
and Purchaser shall be furnished with a certificate of an officer of Seller
dated the Closing, certifying to the truth of such representations, warranties
and covenants as of the time of the Closing and to the fulfillment of such
covenants and conditions.
CORPORATE AND STOCKHOLDER ACTION
5.02. All corporate and stockholder action necessary to consummate the
transactions contemplated in this Agreement shall be properly taken by Seller.
Purchaser shall also receive copies of all appropriate resolutions of Seller's
Board of Directors and shareholders relating to this Agreement. The resolutions
shall be certified by their respective corporate secretaries.
EXECUTION OF CONSULTING AGREEMENT
5.03. West Gulf Marine, Inc. and Purchaser shall execute a Barge Construction
Consulting Agreement attached hereto as Exhibit G and incorporated herein.
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OPINION OF SELLER'S COUNSEL
5.04. Purchaser shall have been furnished with an opinion, dated as of the
Closing of McLEOD, ALEXANDER, XXXXX & XXXXXX, P.C., legal counsel to Seller, in
substance as set forth in Exhibit H attached hereto or as otherwise acceptable
to Purchaser.
AUTHORITY
5.05. All action required to be taken by or on the part of Seller to authorize
the execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Board of Directors and shareholders of Seller.
NO OBSTRUCTIVE PROCEEDING
5.06. No action or proceedings shall have been instituted against, and no order,
decree or judgment of any court, agency, commission or governmental authority
shall be subsisting against Sellers or its affiliates which seeks to, or would,
render it unlawful to effect the asset sale in accordance with the terms hereof,
and no such action shall seek damages in a material amount by reason of the
transactions contemplated hereby. Also, no substantive legal objection to the
transactions contemplated by this Agreement shall have been received from or
threatened by any governmental department or agency.
NO ADVERSE CHANGE
5.07. From the date of this Agreement until the Closing, the operations of the
Seller's Business shall have been conducted in the ordinary course of business,
and from the date of the Financial Statements until the Closing no event shall
have occurred or have been threatened which has or would have a material and
adverse affect upon the Business; and Seller shall not have sustained
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any loss or damage to its Assets or property, whether or not insured, or union
activity, that affects materially and adversely its ability to conduct the
Business.
RELEASE OF ENCUMBRANCES
5.08. All Encumbrances except Permitted Encumbrances shall have been released at
or prior to the Closing.
CONSENTS
5.09. Seller has obtained all written third party consents necessary for the
valid assignment to Purchaser of those contracts and leases to be assumed by
Purchaser, including but not limited to the Assigned Contract and the Crane
Leases.
NAME CHANGE
5.10. Seller shall amend its Articles of Incorporation to change its name from
"Galveston Shipbuilding Company" to "West Gulf Marine, Inc." In the event that
West Gulf Marine, Inc. is not available, any other name may be used, provided
the Barge Construction Consulting Agreement provided for in Section 5.03 is
executed with such company.
ARTICLE 6
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
The obligation of Seller to Close under this Agreement is subject to each
of the following conditions (any one of which at the option of Seller may be
waived in writing by Seller) existing on the Closing Date.
CORPORATE ACTION
6.01. All corporate and stockholder action necessary to consummate the
transactions contemplated in this Agreement shall be properly taken by
Purchaser. Seller shall receive copies of all appropriate resolutions of
Purchaser's Board of Directors and shareholders relating to this Agreement. The
resolutions shall be certified by their respective corporate secretaries.
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REPRESENTATIONS AND WARRANTIES
6.02. All of the representations, warranties and covenants of Purchaser
contained in this Agreement shall be true as of the date of this Agreement,
shall be deemed to have been made again at and as of the Closing, and shall be
true at and as of the date of Closing in all material respects; Purchaser shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by Purchaser prior to or at the
Closing; and Seller shall be furnished with a certificate of an officer of
Purchaser dated the Closing, certifying to the truth of such representations,
warranties and covenants as of the time of the Closing and to the fulfillment of
such covenants and conditions.
OPINION OF PURCHASER'S COUNSEL
6.03. Seller shall have been furnished an opinion dated as of the Closing of
Xxxxxx & Xxxxxxxx, P.C., Texas counsel to Purchaser, in substance, as set forth
in Exhibit I, attached hereto or as otherwise acceptable to Seller.
EXECUTION OF CONSULTING AGREEMENT
6.04. West Gulf Marine, Inc. and Purchaser shall execute a Barge Construction
Consulting Agreement attached hereto as Exhibit G and incorporated herein.
NO OBSTRUCTIVE PROCEEDING
6.05. No action or proceedings shall have been instituted against, and no order,
decree or judgment of any court, agency, commission or governmental authority
shall be subsisting against Purchaser or its affiliates which seeks to, or
would, render it unlawful to effect the asset sale in accordance with the terms
hereof, and no such action shall seek damages in a material amount by reason of
the transactions contemplated hereby. Also, no substantive legal objection to
the
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transactions contemplated by this Agreement shall have been received from or
threatened by any governmental department or agency.
ARTICLE 7
PARTIES' OBLIGATIONS AT THE CLOSING
SELLER'S OBLIGATIONS AT THE CLOSING
7.01. At the Closing, Seller shall execute, if appropriate, and shall deliver to
Purchaser:
(a) A xxxx of sale and assignment in substantially the form attached as
Exhibit J, sufficient to convey to Purchaser all rights, title, and interest in
and to all of the Assets which constitute personal property.
(b) A General Warranty Deed in substantially the form attached as Exhibit
K, conveying good and marketable title to the Land, subject only to the matters
listed in Article 4.12 hereof.
(c) All documentation in the possession of Seller necessary to operate and
to use the Assets.
(d) Corporate and shareholders' resolutions authorizing the sale and
transfer of the Assets.
(e) The documents described in Article 4 hereof.
(f) A consulting contract between West Gulf Marine, Inc. and Purchaser in
the form attached hereto as Exhibit G;
(g) The executed certificate required in Section 5.01 hereof;
(h) The signed opinion of counsel referred to in Section 5.04 hereof; and
(i) All other documents and instruments required or contemplated by this
Agreement.
(k) Articles of Amendment of Seller charging Seller's name from Galveston
Shipbuilding Company.
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Seller, at any time before or after the Closing Date, shall execute,
acknowledge, and deliver to Purchaser any further deeds, assignments,
conveyances, documents, and instruments of transfer of the Assets reasonably
requested by Purchaser consistent with this Agreement. Seller shall also take
any other action consistent with the terms of this Agreement that may be
reasonably requested by Purchaser for the purpose of assigning, transferring,
granting, conveying, and confirming to Purchaser or reducing to possession the
Assets.
PURCHASER'S OBLIGATION AT CLOSING
7.02. At the Closing, Purchaser shall deliver to Seller against delivery of the
items specified in Article 7.01:
(a) A certified or cashier's check or wire transfer in the amount of the
Purchase Price payable to Seller in federal funds currently available in Texas;
(b) An assumption agreement by which Purchaser agrees to perform the
Assumed Obligations, in substantially the form attached as Exhibit L;
(c) The documents described in Section 6.01 hereof and all other documents
and instruments required or contemplated by this Agreement.
ARTICLE 8
SELLER'S OBLIGATIONS AFTER THE CLOSING
REMOVAL OF PROPERTY
8.01. Seller agrees that it will, within thirty (30) days after Closing, remove
any of its property not sold under this Agreement and located on the Land.
Purchaser will provide Seller with reasonable access to the property for this
purpose.
INDEMNIFICATION
INDEMNITY BY SELLER
8.02. Seller shall indemnify, defend and hold Purchaser free and harmless from
and against:
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(a) all Excluded Liabilities;
(b) any Encumbrance(s) except for Permitted Encumbrances upon any of the
Assets;
(c) any and all damages, losses, liabilities, obligations, claims, causes
of action, expenses and costs incurred as a result of or arising out of any
breach by Seller of, or any failure to perform by Seller of, any term,
condition, provision, warranty, representation or undertaking of this Agreement
or any other document(s) and agreement(s) executed by Seller in connection with
this Agreement; and
(d) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses (including, without limitation, attorneys' fees,
interest, penalties and amounts paid in settlement of any such claim) relating
to any of the foregoing.
Seller shall pay to Purchaser or any affiliate of Purchaser, as the case
may be, all amounts owed to Purchaser pursuant to this Section 8.02 within ten
(10) days after written demand therefor. In the event that any third person,
including, without limitation, any governmental taxing authority, shall assert
any claim or action in excess of $1,000 against Purchaser or an affiliate of
Purchaser which, if successful, might result in a claim for indemnity hereunder
(collectively, an "indemnifiable loss"), Purchaser shall promptly notify Seller,
in writing, of such claim or action, and at Seller's option, Seller may, at
Seller's sole expense, assume control over the defense of such claim or action;
but in any event Purchaser (and its affiliates, as the case may be) shall have
the right to participate in the defense of any such claim or action. If, after
notice thereof, Seller shall not assume the defense of, or if after so assuming
such defense Seller shall fail to continue to defend, any such claim or action,
Purchaser (and its affiliates, as the case may be) may defend any such claim or
action, and Purchaser (and its affiliates, as the case may be) may then settle
or compromise such claim or action on terms it deems reasonable. Seller shall
promptly satisfy and
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pay any final judgment rendered with respect to any such claim or action, or any
compromise or settlement thereof, and shall pay the reasonable expenses, legal
or otherwise of Purchaser (and its affiliate, as the case may be) in the defense
of any such claim or action. If Seller does not pay any such indemnifiable loss
pursuant to any such judgment, settlement or compromise within ten (10) days
after written demand, Purchaser may pay the same and may proceed directly
against Seller to recover same, together with all costs, including attorney's
fees, court costs, and other out-of-pocket expenses incurred by Purchaser in
pursuing same. For purposes hereof, an "affiliate" of Purchaser shall mean any
person or entity directly or indirectly controlling, controlled by, or under
common control with Purchaser. The indemnity obligations established in Section
8.02(c) shall be subject to an aggregate deductible of Twenty-Five Thousand and
No/100 Dollars ($25,000.00), such that Purchaser shall not be entitled to
recover from Seller under this Section 8.02(c) until the total amount
recoverable exceeds Twenty-Five Thousand and No/100 Dollars ($25,000.00).
INDEMNITY BY PURCHASER
8.03. Purchaser shall indemnify, defend and hold Seller free and harmless from
and against:
(a) all liabilities of Seller assumed by Purchaser hereunder;
(b) any and all damages, losses, liabilities, obligations, claims, causes
of action, expenses and costs incurred as a result of or arising out of any
breach by Purchaser of, or any failure to perform by Purchaser of, any term,
condition, provision, warranty, representation or undertaking of this Agreement
or any other document(s) and agreement(s) executed by Purchaser in connection
with this Agreement;
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(c) any and all damages, losses, liabilities, obligations, claims, causes
of action, expenses and costs incurred as a result of or arising out of any
error, omission or act of Purchaser, its agents, employees or officers after
Closing; and
(d) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses (including, without limitation, attorneys' fees,
interest, penalties and amounts paid in settlement of any such claim) relating
to any of the foregoing.
Purchaser shall pay to Seller or any affiliate of Seller, as the case may
be, all amounts owed to Seller pursuant to this Section 8.03 within ten (10)
days after written demand therefor. In the event that any third person,
including, without limitation, any governmental taxing authority, shall assert
any claim or action in excess of $1,000 against Seller or an affiliate of Seller
which, if successful, might result in a claim for indemnity hereunder
(collectively, an "indemnifiable loss"), Seller shall promptly notify Purchaser,
in writing, of such claim or action, and at Purchaser's option, Purchaser may,
at Purchaser's sole expense, assume control over the defense of such claim or
action; but in any event Seller (and its affiliates, as the case may be) shall
have the right to participate in the defense of any such claim or action. If,
after notice thereof, Purchaser shall not assume the defense of, or if after so
assuming such defense Purchaser shall fail to continue to defend, any such claim
or action, Seller (and its affiliates, as the case may be) may defend any such
claim or action, and Seller (and its affiliates, as the case may be) may then
settle or compromise such claim or action on terms it deems reasonable.
Purchaser shall promptly satisfy and pay any final judgment rendered with
respect to any such claim or action, or any compromise or settlement thereof,
and shall pay the reasonable expenses, legal or otherwise of Seller (and its
affiliate, as the case may be) in the defense of any such claim or action. If
Purchaser does not pay any such indemnifiable loss pursuant to any such
judgment, settlement or
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compromise within ten (10) days after written demand, Seller may pay the same
and may proceed directly against Purchaser to recover same, together with all
costs, including attorney's fees, court costs, and other out-of-pocket expenses
incurred by Seller in pursuing same. For purposes hereof, an "affiliate" of
Seller shall mean any person or entity directly or indirectly controlling,
controlled by, or under common control with Seller. The indemnity obligations
established in Section 8.03(b) shall be subject to an aggregate deductible of
Twenty-Five Thousand and No/100 Dollars ($25,000.00), such that Seller shall not
be entitled to recover from Purchaser under this Section 8.03(b) until the total
amount recoverable exceeds Twenty-Five Thousand and No/100 Dollars ($25,000.00).
THE INDEMNIFICATION AND ASSUMPTION PROVISIONS PROVIDED FOR IN THIS AGREEMENT
SHALL BE APPLICABLE WHETHER OR NOT: THE LOSSES, COSTS, EXPENSES AND DAMAGES IN
QUESTION AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF ANY INDEMNIFIED PARTY. THE
PARTIES HERETO ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS
NEGLIGENCE RULE AND IS CONSPICUOUS.
ARTICLE 9
GENERAL PROVISIONS
SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS
9.01. All statements contained in any certificate delivered by or on behalf of a
party to this Agreement pursuant hereto shall be deemed to be representations
and warranties made by such party hereunder. The covenants, representations and
warranties made by the parties each to the other in this Agreement or pursuant
hereto shall survive the Closing for the longest period permitted by applicable
law.
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NOTICES
9.02. All notices that are required or that may be given pursuant to the terms
of this Agreement shall be in writing, are effective upon receipt, and shall be
sufficient in all respects if given in writing and delivered personally or by
registered or certified mail, return receipt requested, postage prepaid as
follows:
If to Seller: Xx. Xxxxx X. Xxxxxx, Xx.
Galveston Shipbuilding Company
X.X. Xxx 0000
Xxxxxxxxx, Xxxxx 00000
with a copy to: Xx. Xxxxx X. Xxxxx
McLeod, Alexander, Xxxxx & Xxxxxx, P.C.
X.X. Xxx 000
Xxxxxxxxx, Xxxxx 00000
If to Purchaser: Xx. Xxxxxx X. Xxxxx
FW Marine Properties, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx Xxxx., Xxx. 000
Xxxxx Xxxxx, Xxxxxxxxx 00000
with a copy to: Xx. Xxxxxx X. Xxxxxxx
Xxxxxxxxx, Sachse & Xxxxxx, L.L.P.
Twenty-Third Floor, One American Place
X.X. Xxx 0000
Xxxxx Xxxxx, Xxxxxxxxx 00000-0000
BINDING EFFECT/ASSIGNMENT OF AGREEMENT
9.03. This Agreement shall be binding on and inure to the benefit of the parties
to this Agreement and their respective successors and permitted assigns. This
Agreement may not be assigned by any other party without the written consent of
all parties and any attempt to make an assignment without consent is void.
GOVERNING LAW
9.04. This Agreement shall be construed and governed by the laws of the State of
Texas and is to be performed in Galveston, Galveston County, Texas.
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AMENDMENTS; WAIVER
9.05. This Agreement may be amended only in writing by the mutual consent of all
of the parties, evidenced by all necessary and proper corporate authority. No
waiver of any provision of this Agreement shall arise from any action or
inaction of any party, except an instrument in writing expressly waiving the
provision executed by the party entitled to the benefit of the provision.
ENTIRE AGREEMENT
9.06. This Agreement, together with any documents and schedules given or
delivered pursuant to this Agreement, constitutes the entire agreement between
the parties to this Agreement. No party shall be bound by any communications
between them on the subject matter of this Agreement unless the communication is
(a) in writing, (b) bears a date contemporaneous with or subsequent to the date
of this Agreement, and (c) is agreed to by all parties to this Agreement. On
execution of this Agreement, all prior agreements or understandings between the
parties shall be null and void.
WAIVER
9.07. No delay or omission on the part of any party hereto in exercising any
right hereunder shall operate as a waiver of such right or any other right under
this Agreement. No term, condition or provision of this Agreement will be deemed
to have been waived unless such waiver is expressed in writing and signed by the
party against whom enforcement of such waiver is sought.
SCHEDULES AND EXHIBITS
9.08. All schedules, exhibits, and documents referred to in or attached to this
Agreement are hereby incorporated herein by reference in their entirety, and are
integral parts of this Agreement as if fully set forth herein. The inclusion of
any matter on a Schedule hereto does not automatically
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constitute an admission by Seller that such matter: (a) is material; or (b)
reaches or exceeds the limits or qualifications set forth in the corresponding
Section of this Agreement; or (c) arose out of the ordinary course of business.
Capitalized terms used in the Schedules shall have the same meanings as set
forth in the Agreement for such capitalized terms.
EXPENSES
9.09. All expenses incurred by the parties in connection with the preparation of
this Agreement and the other agreements contemplated hereby and in connection
with the Closing of the transactions contemplated hereby, including, without
limitation, attorneys' fees, accounting fees, investment advisor's fees and
disbursements, shall be borne by the respective parties incurring such expense.
COUNTERPARTS
9.10. This Agreement may be executed in any number of duplicate counterparts,
each of which shall be an original, but all of which together shall comprise one
and the same instrument.
RULES OF CONSTRUCTION
9.11. All captions, titles and section numbers are for convenience only, and
shall not be construed to explain, modify, amplify, or aid in interpreting or
determining the meaning of any provision of this Agreement. All references
herein to the singular shall include the plural, and vice versa, and all
references herein to the neuter shall include the masculine or feminine, as the
case may be, and vice versa. When general words or terms are used herein
followed by the word "including" (or another form of the word "include") and
words of particular and specific meaning, the general words shall be construed
in their widest extent, and shall not be limited to persons or things of the
same general kind or class as those specifically mentioned in the words of
particular and specific meaning. Each term, condition and provision of this
Agreement shall be interpreted
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and construed in such manner as is necessary to make same valid and enforceable
to the fullest extent permitted by law. All parties have participated in the
drafting of this Agreement. No provision of this Agreement shall be construed
against or interpreted to the disadvantage of a party by reason of such party
having or being deemed to have drafted, structured or dictated such provisions.
Time is of the essence of this Agreement.
CONFIDENTIALITY
9.12. Seller has or will disclose to Purchaser the confidential information
called for herein and may disclose other information to Purchaser of a
confidential and proprietary nature not specifically called for herein. All such
information is referred to as the "Confidential Information." Purchaser agrees
that in the event this Agreement is terminated and fails to close for any
reason, and in any event prior to Closing, Purchaser will not use the
Confidential Information for any purpose other than the confidential evaluation
by Purchaser of this transaction. Purchaser agrees not to disclose the
Confidential Information to any third party except as absolutely necessary for
confidential evaluation of the transaction, and Purchaser will cause any such
third party to agree in writing to abide by the terms of this Section 9.12. Upon
termination of this Agreement, all documents and tangible items reflecting
Confidential Information, including all copies thereof, will be returned to
Seller immediately.
SIGNED on this the 1st day of May, 1998.
SELLER:
GALVESTON SHIPBUILDING COMPANY
By: /s/ XXXXX X. XXXXXX, XX.
------------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
Title: President
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PURCHASER:
FW MARINE PROPERTIES, INC.
By: /s/ XXXXXX X. XXXXX
------------------------------------
Name: Xxxxxx X. Xxxxx
-------------------------------
Title: Chairman and Chief
Executive Officer
------------------------------
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LIST OF EXHIBITS
A - Description of Land [Section 1.01(a)]
B - Title Company Escrow Agreement [Section 1.10]
C - Description of Filled Land [Section 1.10]
D - Lease for Filled Land [Section 1.10]
E - Description of Option Property [Section 1.11]
F - Environmental Remediation Escrow Agreement [Section 1.12]
G - Barge Consulting Agreement [Section 5.03]
H - MAPA Legal Opinion [Section 5.04]
I - G&H Legal Opinion [Section 6.03]
J - Xxxx of Sale and Assignment [Section 7.01(a)]
K - Warranty Deed [Section 7.01(b)]
L - Assignment and Assumption of Contracts [Section 7.02(b)]
LIST OF SCHEDULES
1.01(a) Appraisals
1.01(b) Assigned Contracts
1.01(o) Crane Leases
1.12(b) Phase I Audit
1.12(c) Estimated Remediation Costs
2.05 Laws and Regulations
2.06 Litigation Concerning Seller
2.09 Insider Transactions
2.11 Financial Statements
2.12 Contracts (Except Assigned Contracts)
2.13 Employee Plans and Agreements
2.14 Insurance
2.15 Absence of Certain Changes
2.16 Employees
2.17 Licenses
2.20 Encumbrances or Third Party Approval
2.21 Condition of Tangible Assets
3.04 Litigation Concerning Purchaser
3.06 Canopy Cover Specifications
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