STOCK PURCHASE AGREEMENT
DATED
DECEMBER 12, 1997
AMONG
XXXXXX INDUSTRIES, INC.,
ORANGE SHIPBUILDING COMPANY, INC.
AND
XXXXXX X. XXXXX, XXXXXX X. XXXXX AND XXXXXX X. XXXXX
TABLE OF CONTENTS
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Page
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SECTION 1 DEFINITIONS 2
SECTION 2 SALE AND PURCHASE OF STOCK 2
(a) Sale and Purchase 2
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2
(a) Organization 2
(b) Power and Authority; Enforceability 2
(c) Corporate Existence and Qualification of the Company 3
(d) Capitalization and Ownership 3
(e) No Conflicts 4
(f) Financial Statements 4
(g) Applicable Laws 6
(h) Title to Assets 6
(i) Intellectual Property 9
(j) Prepayments; Accounts Receivable; Backlog, Bid Bonds 10
(k) Insurance 11
(l) Tax Matters 11
(m) Contractual Rights 12
(n) Employee Matters 13
(o) Warranties 14
(p) Absence of Certain Changes or Events 14
(q) Environmental Matters 14
(r) Litigation, Judgments, etc 15
(s) Absence of Certain Business Practices 16
(t) Minute Book and Charter Documents 16
(u) Disclosure of Facts 16
(v) No Brokers or Finders 17
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE SELLERS 17
(a) Power and Authority; Enforceability 17
(b) No Conflicts 18
(c) Good and Valid Title 18
(d) No Brokers or Finders 19
SECTION 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 19
(a) Organization 19
(b) Power and Authority; Enforceability 19
(c) No Conflicts 20
SECTION 6 COVENANTS OF PARTIES 20
(a) Access 20
(b) Operation of Business and Consents 21
(c) Regulatory Compliance 22
(d) Continued Operation of Business 22
i
(e) Press Releases 22
(f) Confidential Nature of Information 23
SECTION 7 CONDITIONS TO THE CLOSING 23
(a) The Sellers 23
(b) The Purchaser 26
SECTION 8 CLOSING 29
(a) Stock Certificates; Payment of Purchase Price 30
(b) Consulting Agreement 30
(c) Resignations of Directors of the Company 30
SECTION 9 POST-CLOSING INDEMNITY 30
SECTION 10 LIMITATION OF LIABILITY 35
SECTION 11 POST-CLOSING TAX COOPERATION AND ACCESS 35
SECTION 12 TERMINATION OF AGREEMENT 36
(a) Mutual Consent 36
(b) Expiration Date 36
SECTION 13 EXPENSES 36
SECTION 14 NOTICE 37
SECTION 15 NO SOLICITATION 38
SECTION 16 GOVERNING LAW 39
SECTION 17 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS 39
SECTION 18 SEVERABILITY 40
SECTION 19 HEADINGS AND SCHEDULES 40
SECTION 20 ASSIGNMENT; SUCCESSORS BOUND 40
SECTION 21 EXECUTION IN COUNTERPARTS 40
SECTION 22 XXXXX XXXX PATENT; APPLICABILITY 40
ii
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as
of this 12th day of December, 1997, by and between Xxxxxx Industries, Inc., a
Louisiana corporation (the "Purchaser"), Orange Shipbuilding Company, Inc., a
Texas corporation (the "Company"), and Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxx and
Xxxxxx X. Xxxxx (each, a "Seller" and collectively, the "Sellers").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has 533,332 shares of common stock, par value $1.00 per
share (the "Common Stock"), issued and outstanding and no other shares of
capital stock outstanding;
WHEREAS, all the outstanding Common Stock of the Company is owned directly by
the Sellers;
WHEREAS, the Sellers propose to sell all of the shares of Common Stock to the
Purchaser and the Purchaser proposes to purchase such shares of Common Stock
from the Sellers, as herein provided;
WHEREAS, the Purchaser requires, as a condition to the closing of the
transactions contemplated by this Agreement, that each of the Sellers execute
and deliver a Consulting Agreement between such Seller, the Purchaser and the
Company in the form attached hereto as Exhibit A (each, a "Consulting
Agreement);
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Closing" and "Closing Date" have the meanings specified in Section 8.
(b) "Parties" means the parties to this Agreement.
(c) "Person" means an individual, partnership, joint venture, corporation,
limited liability company, bank, trust or unincorporated organization.
2. Sale and Purchase of Stock.
(a) Sale and Purchase. Subject to the terms and conditions contained in
this Agreement and in reliance upon the representations, warranties, covenants
and agreements contained in this Agreement, at the Closing, the Sellers shall
sell to the Purchaser, and the Purchaser shall purchase from the Sellers, all of
the shares of Common Stock owned by the Sellers for an aggregate purchase price
equal to $25,392,000 (the "Purchase Price"), payable at Closing by wire transfer
of immediately available funds to the accounts designated by each Seller, with
such aggregate amount to be paid to the Sellers based on their proportionate
ownership of shares of Common Stock of the Company as specified in Schedule 3(d)
attached hereto.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
(a) Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas with
corporate power to carry on its business as now being conducted. The Company
has no subsidiaries and has no ownership or equity interest in any Person.
(b) Power and Authority; Enforceability. The Company has all requisite
corporate power to enter into this Agreement and to perform its obligations
hereunder. This
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Agreement has been duly authorized, executed and delivered on behalf of the
Company, and, assuming due authorization, execution and delivery by the
Purchaser and the Sellers, constitutes a legal, valid and binding obligation of
the Company enforceable in accordance with its terms, except that (i) such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors' rights generally and (ii)
the remedy of specific performance and injunction and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) Corporate Existence and Qualification of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas, there being no other jurisdictions where the character of
its properties or the nature of its business requires it to be so qualified, and
has the corporate power to own, operate and lease its properties and to carry on
its business as presently conducted.
(d) Capitalization and Ownership. The authorized capital stock of the
Company consists of 5,000,000 shares of Common Stock, and no other shares of
capital stock are authorized or outstanding. The Company has 533,332 shares of
Common Stock outstanding. All of such 533,332 shares of Common Stock are duly
authorized, validly issued, fully paid and non-assessable and were not issued in
violation of any preemptive or other rights of any person to acquire securities
of the Company. Schedule 3(d) sets forth a complete and accurate list of the
holders of record of the issued and outstanding shares of Common Stock of the
Company, specifying the ownership thereof by each Seller. Except for this
Agreement, there are no outstanding options, convertible securities, rights
(preemptive or other), warrants, calls or agreements relating to the Company's
capital stock. The Sellers are, and immediately prior to the Closing will be,
the lawful owner of all the outstanding
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Common Stock of the Company, with full right, power and authority to sell and
transfer the Common Stock, free and clear of any and all security interests,
proxies, shareholder agreements, voting agreements, voting trusts, encumbrances
and adverse claims, to the Purchaser pursuant to the provisions of this
Agreement. The Company has no other commitment, plan or arrangement to issue or
sell any share of its capital stock or to issue or sell any options, warrants or
other securities that are convertible or exchangeable for shares of capital
stock of the Company.
(e) No Conflicts. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated herein (i) will conflict with
or result in a breach, default or violation of (A) any of the terms, provisions
or conditions of the Articles of Incorporation or By-Laws of the Company or (B)
any material agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which the Company is a party or
to which it is subject or by which its property is bound, or (ii) will result in
the creation of any lien, charge or other encumbrance on any material property
or asset of the Company, or (iii) will require the Company to obtain the consent
of any private nongovernmental third party. No consent, action, approval or
authorization of, or registration, declaration or filing with any governmental
department, commission, agency or other instrumentality having jurisdiction over
the Company is required by the Company to authorize the execution and delivery
of this Agreement by the Company or the performance of its terms by the Company.
(f) Financial Statements. (i) Schedule 3(f) attached hereto contains the
balance sheets of the Company at September 30, 1997, 1996 and 1995 and the
related statements of income and retained earnings and cash flows for the years
then ended (collectively, the "Financial Statements"). All fixed or contingent
obligations, liabilities, or commitments of the Company as
4
of September 30, 1997 are reserved against or disclosed in the Company's balance
sheet as of September 30, 1997 contained in the Financial Statements (the "1997
Balance Sheet") to the extent required to be reserved against or disclosed
therein by generally accepted accounting principles ("GAAP"). The Financial
Statements fairly present, in accordance with GAAP applied on a consistent basis
throughout the periods involved, the financial position and results of
operations of the Company at September 30, 1997, 1996 and 1995 and for the years
then ended.
(ii) The trade accounts and other receivables of the Company which are
classified as current assets on the 1997 Balance Sheet are bona fide
receivables, were acquired in the ordinary course of business, are stated in
accordance with GAAP and, except to the extent of the amount of the reserve for
doubtful accounts reflected on the 1997 Balance Sheet need not be written-off as
uncollectible in accordance with GAAP.
(iii) The inventories of the Company reflected on the 1997 Balance
Sheet have been valued in accordance with GAAP, and the value of obsolete
materials and materials of below-standard quality has been written down or
reserved against in accordance with GAAP. There have been no write-ups of
inventories or other assets of the Company reflected in the Financial
Statements.
(iv) The books of account and other financial records from which the
Financial Statements were prepared have been kept in the ordinary course of
business and in accordance with the Company's customary internal bookkeeping and
accounting policies and practices, and are complete and correct in all material
respects. The Company (i) makes and keeps books and records which, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets of the Company, and (ii) has in place a system of
internal accounting controls
5
sufficient to provide reasonable assurances that (A) transactions are executed
only in accordance with management's authorization, (B) transactions are
recorded so as to permit proper accounting and maintain accountability for
assets, (C) access to assets is only in accordance with management's
authorization, and (D) recorded accountability for assets is compared with
existing assets at reasonable intervals and corrective action is taken if
appropriate.
(g) Applicable Laws. The Company is in compliance with all federal, state
and local laws, rules, regulations, ordinances, decrees and orders, including,
but not limited to, building, zoning, environmental, pollution, wage, working
conditions, labor, political contribution, antitrust or related laws, rules and
regulations ("Laws"), and possesses all currently required governmental
approvals, authorizations, consents, licenses and permits ("Permits") applicable
to the operation of its business. The list of Permits set forth in Schedule
3(g) attached hereto is a complete and accurate list of all Permits in effect
with respect to the assets, business and operations of the Company as of the
date of this Agreement. The Company has not received any written notification
of any asserted present or past unremedied failure by the Company to comply with
any of such Laws or Permits.
(h) Title to Assets. (i) The Company has good title to all of the assets
reflected in the 1997 Balance Sheet, other than those sold or disposed of in the
ordinary course of business subsequent to September 30, 1997, in each case free
and clear of any lien, encumbrance, mortgage, deed of trust, pledge or other
similar security interest ("Lien") except (i) Liens for property and ad valorem
taxes, assessments and other applicable governmental charges, if such taxes,
assessments and charges shall not be due and payable, or if currently payable,
if the Company shall concurrently be contesting the validity thereof in good
faith and (ii) Liens specifically identified on Schedule 3(h)(I) attached
hereto.
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(ii) Schedule 3(h)(ii) attached hereto sets forth an accurate list of
inventory as of the date of this Agreement. All items of finished inventory of
the Company are of a quality usable or saleable in the ordinary course of the
Company's business, and all inventory consisting of raw materials and work-in-
progress is of a quality usable in the manufacture or production of finished
inventory that is saleable in the ordinary course of the Company's business.
(iii) Schedule 3(h)(iii)(1) contains a complete and accurate list or
description of all real property owned by the Company, or as to which the
Company has an option to purchase, as of the date of this Agreement (the "Owned
Real Property"). All of the Company's current operations are located on the
Owned Real Property. Schedule 3(h)(iii)(2) includes a complete and accurate
list or description of all real property which the Company leases or has agreed
(or has an option) to lease as of the date hereof (the "Leased Real Property")
and all leasehold improvements thereto (the Leased Real Property and all
leasehold improvements thereto referred to herein as the "Leasehold
Facilities"). Each of Schedule 3(h)(iii)(1) and Schedule 3(h)(iii)(2) includes
a list of any guaranty policies, zoning and special permits with respect to the
Owned Real Property or the Leased Real Property, as the case may be. The
description in Schedule 3(h)(iii)(2) includes the name of the lessor, the
location of the property covered by the lease, the current annual rent and the
amount of any security deposits. True and complete copies of all leases
described in Schedule 3(h)(iii)(2) have been delivered or made available to
Purchaser by the Company. The leases described in Schedule 3(h)(iii)(2) are in
full force and effect and there are no material defaults thereunder by the
Company. There are no underground storage tanks (i) existing on any of the
Owned Real Property or Leased Real Property (collectively, the "Real Property")
or (ii) of which the Company is or was the owner or operator. To the Company's
knowledge, each lessor of any
7
Leased Real Property is in compliance with all Laws and has received all Permits
applicable to such real property leased by the Company. No improvement or
structure on any Real Property encroaches on any adjacent property. No
improvement or structure on any Real Property has been damaged by any casualty
or act of God, or been subject to any condemnation proceedings.
(iv) Schedule 3(h)(iv)(1) attached hereto lists, by various groupings,
a complete and accurate list of all machinery and equipment, material handling
equipment, vehicles, furniture, office equipment, computer equipment and
hardware, business machines and other tangible personal property ("Personal
Property") owned by the Company as of the date of this Agreement (the "Owned
Personal Property") and shows, by various groupings, the original acquisition
price and date, method of depreciation used and current book and tax value (if
different). Schedule 3(h)(iv)(2) includes a complete and accurate list of all
leased Personal Property leased by the Company from third parties as of the date
hereof (the "Leased Personal Property"). For Leased Personal Property for which
the annual lease payment is more than $10,000, Schedule 3(h)(iv)(2) indicates
the name of the lessor, the date of the lease, the initial term of the lease and
the annual payments made thereunder. The Personal Property owned or leased by
the Company (i) is in good operating condition, order and repair, subject to
ordinary wear and tear, and have been maintained in accordance with standard
industry practice, (ii) is adequate for the purposes for which they are being
used and are capable of being used in the Company's business as presently being
conducted without present need for repair or replacement except in the ordinary
course of the Company's business, (iii) conforms in all material respects with
all applicable licensing and other legal requirements, and (iv) in the aggregate
provides the capacity to enable the Company to engage in
8
commercial operation on a continuous basis (subject to normal maintenance and
repair outages in the ordinary course).
(v) All of the plants, facilities, machinery and equipment are
adequate and sufficient for all operations conducted by the Company in
substantially the same manner as conducted prior to the Closing Date. No
condition exists with respect to any Real Property or Personal Property
(collectively, the "Property") that would prevent, or require repair or
modification thereof as a prerequisite to, Purchaser using such Property in the
conduct of the Company's business except with respect to ordinary wear and tear
and scheduled maintenance and repair. The Company enjoys peaceful and
undisturbed possession of all Leased Real Property and Leased Personal Property.
(vi) Since the date of the 1997 Balance Sheet, the Company has not
sold, transferred, leased, distributed or otherwise disposed of any of its
assets, or agreed to do so, except for sales of products and services in the
ordinary course of business or the disposition of immaterial assets in the
ordinary course of business or which in the reasonable judgment of management of
the Company are not necessary or advisable to the efficient operations of the
Company's business.
(i) Intellectual Property. The Company owns or possesses adequate licenses
or other rights to use (without making any payment or granting rights to any
person in exchange) all patents, patent applications, trademarks, copyrights,
service marks and trade names (collectively, the "Intellectual Property")
necessary to conduct its business as currently conducted. Neither the validity
of the Intellectual Property nor the title thereto or use thereof by the Company
is being questioned in any pending litigation, and the conduct of the Company's
business, as currently conducted, does not conflict with licenses, copyrights,
uncopyrighted works, trade marks, service marks, trade names, trade name rights,
patents, patent rights, unpatented inventions or trade secrets of others.
Neither the validity of the Intellectual Property nor the title thereto or use
thereof by the Company is being questioned in any pending or, to the knowledge
of the Company, threatened infringement claims or litigation, and the conduct of
the Company's business, as now conducted, does not conflict with licenses,
copyrights, uncopyrighted works, trade marks, service
9
marks, trade names, trade name rights, patents, patent rights, unpatented
inventions or trade secrets of others. The Intellectual Property will afford
Purchaser at all times after the Closing Date the rights to use all technology,
proprietary information, know-how or patented ideas, designs, inventions,
trademarks, copyrights, tradenames and servicemarks owned by the Company or
others necessary for the conduct of the Company's business as presently being
conducted. After the Closing Date, no person or business entity other than the
Company will be authorized directly or indirectly to use the corporate name of
the Company or any name deceptively or confusingly similar thereto.
(j) Prepayments; Accounts Receivable; Backlog, Bid Bonds. Schedule 3(j)(1)
attached hereto sets forth a complete and accurate list of all lease, security,
insurance, utility, permit, tax or other bonds or deposits cash advances and
similar prepayments made by the Company (collectively, "Prepayments") in
existence as of the date of this Agreement. Schedule 3(j)(2) attached hereto
sets forth a complete and accurate list of accounts receivable, notes receivable
and other receivables, foreign and domestic, of the Company, whether billed or
unbilled, including any and all accrued interest thereon (collectively the
"Accounts Receivable") in existence as of the date of this Agreement and sets
forth the name and invoice number relating to each Account Receivable. Schedule
3(j)(3) attached hereto sets forth a complete and accurate list of order backlog
of the Company as of September 30, 1997, consisting only of orders that have not
been cancelled, altered
10
or reduced as of such date. Schedule 3(j)(4) attached hereto sets forth a
complete and accurate list of all performance guaranties, letters of credit,
performance and bid bonds and similar arrangements of the Company ("Bid Bonds")
in effect as of the date of this Agreement.
(k) Insurance. The Company maintains fire and casualty, product and other
liability insurance providing coverage for its assets, business and operations
that is reasonable in light of the nature and scope of the Company's assets,
business and operations and that is consistent with insurance coverage in the
industry in which the Company operates. The Company shall use reasonable
efforts to continue such coverage (or obtain insurance providing substantially
similar coverage) through the Closing Date. Schedule 3(k) attached hereto sets
forth a complete and accurate summary of all insurance policies maintained by
the Company in respect of the business and assets of the Company, including,
without limitation, insurance providing benefits for employees, in effect as of
the date of this Agreement. The Company has not received any notice from any
insurance carrier of the intention of such carrier to discontinue any insurance
coverage afforded to the Company.
(l) Tax Matters. All federal, state and other tax returns and reports
required to be filed by or on behalf of the Company and its predecessors have
been duly filed, except those for which extensions have been obtained. All
taxes and other assessments and levies (including all interest and penalties)
and all installments of estimated taxes required to be paid, withheld or
collected by the Company with respect to any period ending on or before
September 30, 1997 have been duly paid, withheld or collected, as the case may
be, and the same have been paid over to the property governmental agencies or
segregated and set aside for such payment as required by law. The Company has
not received any notice of an assessment, deficiency notice, 30-day letter, or
11
similar notice with respect to income tax, sales tax or other taxes from the
Internal Revenue Service or any other taxing authority with respect to any
taxable period ending on or before the Closing Date, the Company has not
executed or filed with the Internal Revenue Service or any other taxing
authority any agreement extending the period for assessment or collection of any
income or other taxes, and the Company is not a party to any pending action or
proceeding by any governmental authority for assessment or collection of taxes
and no claim for assessment or collection of taxes has been asserted against it.
(m) Contractual Rights. Schedule 3(m) attached hereto sets forth a
complete and accurate list of all executory purchase and sales orders and
similar forward commitments, distribution agreements, and all other executory
contracts, agreements and undertakings to which the Company is a party
(collectively, the "Contracts") in effect as of the date of this Agreement which
either (I) extend for a period longer than one year after the Closing Date
(unless the same may be terminated at the option of the Company without penalty,
on notice of 30 days or less), (ii) require future payment by the Company of
more than $5,000, including future commitments such as purchase orders, or (iii)
are otherwise material to the Company's business. All leases relating to Leased
Real Property and Leased Personal Property (collectively, the "Leases") and
Contracts and other material agreements, commitments and obligations, including,
without limitation, licenses, royalties, assignments and similar agreements with
respect to Intellectual Property (collectively, the "Instruments") are valid,
binding and in full force and effect, have not been amended or supplemented in
any manner or respect, and are enforceable by the Company in accordance with
their respective terms. The Company is not in default, and no notice of alleged
default has been received by the Company, under the terms of any such
Instrument, and the Company does not have
12
any knowledge of a default or alleged default by the other party to any such
Instrument. The Company (a) has not received payment under any Contract for the
sale of products which requires material delivery in the future of any products,
(b) the Company has not delivered under any Contract materially more products
than any other party thereto is obligated to acquire, (C) there exists no
material requirement on the part of the Company to "make-up" any deliveries of
products to any third party under any Contract and (d) there have not been
delivered by the Company under any Contract materially less products than any
other party thereto paid for. To the Company's knowledge, no event has occurred
that with the lapse of time or action or inaction by any party thereto would
result in a violation thereof or a default thereunder. Subject to any required
third party consents, none of the rights under the Instruments will be impaired
by the consummation of the transactions contemplated by this Agreement, and all
such rights will inure to and be enforceable by the Company after the Closing
Date without the authorization, consent, approval, permit or licenses of, or
filing with, any other person.
(n) Employee Matters. As of the date of this Agreement, (i) there is no
unfair labor practice complaint against the Company threatened in writing or
pending before the National Labor Relations Board or any state or local
governmental agency, (ii) there is no charge of discrimination against the
Company, threatened in writing or pending, with the Equal Employment Opportunity
Commission or any other state or federal anti-discrimination agency, (iii) there
is no strike or similar labor action actually pending or threatened against the
Company, and (iv) there is no collective bargaining agreement between the
Company and any labor organization or other employee group. Schedule 3(n)(1)
attached hereto is a complete and accurate list of each material employee
benefit plan or program that the Company maintains, contributes to, or is
required to
13
contribute to or with respect to which the Company has any obligation or
liability (whether or not current, contingent or secondary) on behalf of any of
its current or former employees (or any beneficiary thereof) providing current
or deferred compensation or health, life insurance, disability, severance or
similar benefits (other than workers' compensation) to such persons
(collectively, "Employee Plans"). No such plan is a multiemployer plan described
in Section 3(37) and Section 4001(a)(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or an employee pension benefit plan
within the meaning of Section 3(2) of ERISA. Except as described on Schedule
3(n)(2), the Company is not a party to any written employment agreement,
termination agreement, severance agreement or similar agreement.
(o) Warranties. The Company does not have any warranties to third parties
with respect to any services performed or products sold by it, other than
warranties imposed by law or pursuant to written contracts between the Company
and its customers. The Company does not have any liability, contingent, fixed
or otherwise, based on or arising from the manufacture or sale of any products
pursuant to warranties or otherwise.
(p) Absence of Certain Changes or Events. Except as set forth in Schedule
3(p), the Company has not, between September 30, 1997 and the date of this
Agreement, taken any action of the type described in clauses (i) through (ix) of
Section 6(b) hereof. Since September 30, 1997, there has not occurred any
material adverse change in the operations, assets, financial condition or
results of operations of the Company.
(q) Environmental Matters. There are no present or past environmental
conditions relating to the assets or operations of the Company resulting from a
past or present spill, discharge, leak, emission, injection, escape, dumping or
"release" (as defined in Section 101(14) of
14
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA")), whether accidental or intentional, of (i) any
"hazardous substance" (as defined in Section 101(14) of CERCLA) that would be
reportable pursuant to Section 103(a) of CERCLA (regardless of whether such
section of CERCLA was in effect at the time of any such spill, discharge, leak,
emission, injection, escape, dumping or release), (ii) any petroleum products or
other hydrocarbons in violation of applicable law, from or onto any property
covered by any Lease to any medium, including but not limited to, air, land,
surface waters or underground waters, including, without limitation, releases of
such substances that constitute raw materials, intermediates or products of the
Company's business, or (iii) any "hazardous substance," petroleum products or
other hydrocarbons which are present and require remediation under applicable
law. No material citations, fines or penalties have been assessed, threatened in
writing or asserted in connection with the conduct of the Company's business
under any applicable Laws relating to noise or to air, water or land pollution
or other environmental protection matters or to occupational safety or health
matters. The Company has not received any written notice from a Governmental
Agency of any material violation of any environmental protection Law or Permit.
(r) Litigation, Judgments, etc. Except as described on Schedule 3(r)
attached hereto, there are no actions, suits, investigations or proceedings to
which the Company is a party pending in any court or before or by any federal,
state or other governmental department, commission, agency or other
instrumentality (excluding any rule making, investigation, or similar proceeding
of general applicability and any appeal or petition for review relating
thereto), or before any arbitrator, and the Company has not received written
notice threatening any such matter. The Company is not in default with respect
to any judgment, order, writ, injunction, decree or award
15
applicable to it of any court or other governmental instrumentality or
arbitrator having jurisdiction over it.
(s) Absence of Certain Business Practices. Neither the Company nor any
officer, employee or agent of the Company nor any other person acting on its
behalf, has, directly or indirectly, within the past five years, given or agreed
to give any gift or similar benefit to any customer, supplier, government
employee or other person who is or may be in a position to help or hinder the
business of the Company (or to assist the Company in connection with any actual
or proposed transaction) which (1) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (2) if
not given in the past, might have had a material adverse effect on the assets,
business or operations of the Company as reflected in the Financial Statements,
or (3) if not continued in the future, might materially adversely effect the
assets, business operations or prospects of the Company or which might subject
the Company to suit or penalty in a private or governmental litigation or
proceeding.
(t) Minute Book and Charter Documents. The minute book of the Company that
has been made available to the Purchaser for its review constitutes the sole
minute book of the Company and contains a complete and accurate record of all
actions of the stockholders and Board of Directors (and any committees thereof)
of the Company. The Company has delivered to the Purchaser true and correct
copies of the Articles of Incorporation and By-Laws of the Company as currently
in effect.
(u) Disclosure of Facts. There are no facts peculiar to the Company that
the Company has not disclosed to Purchaser that materially adversely affect, or
insofar as the Company
16
can reasonably foresee, will materially adversely affect, the business,
financial condition, assets or results of operations or prospects of the
Company.
(v) No Brokers or Finders. The Company has not entered into any agreement,
understanding or arrangement with any broker or finder, and has not incurred any
brokerage or finder's fees or agent's commissions or other similar charges to
any person or entity with respect to the transactions contemplated by this
Agreement.
4. Representations and Warranties of the Sellers. Each of the Sellers,
severally and not jointly, represent and warrant to the Purchaser as follows:
(a) Power and Authority; Enforceability. This Agreement has been duly
executed and delivered by such Seller and, assuming the due authorization,
execution and delivery of this Agreement by the other parties hereto, this
Agreement constitutes a legal, valid and binding obligation of such Seller
enforceable in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors, rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought. When executed and
delivered by such Seller at the Closing, the Consulting Agreement to which such
Seller is a party will be duly executed and delivered by such Seller and,
assuming the due authorization, execution and delivery thereof by the Company
and the Purchaser, will constitute a legal, valid and binding obligation of such
Seller, enforceable in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies, including specific
17
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
(b) No Conflicts. Neither the execution, delivery and performance of this
Agreement or Consulting Agreement to which such Seller will be a party at the
Closing nor the consummation of the transactions contemplated hereby or thereby
will (i) result in any breach or constitute a default with or without notice or
lapse of time, or both) under, or give rise in others to any rights of
termination, cancellation or acceleration under, any indenture, contract,
instrument, or loan agreement pursuant to which such Seller is a borrower, or
any license, franchise, permit, order, decree, concession, lease, judgment,
statute, law, ordinance, rule or regulation applicable to such Seller or his
assets. No filing or registration with, or authorization, consent or approval
of, any governmental or regulatory body or authority is necessary for the
consummation by such Seller of the transactions contemplated by this Agreement
or the Consulting Agreement to which such Seller will be a party at the Closing.
(c) Good and Valid Title. Such Seller holds of record and owns
beneficially the number of shares of Common Stock specified with respect to such
Seller on Schedule 3(d), free and clear of any Lien, option, warrant, purchase
right or other encumbrances (except for encumbrances created by this Agreement
and restrictions on sales of securities under applicable securities laws). By
the purchase of the shares of Common Stock owned by such Seller pursuant to this
Agreement, the Purchaser will obtain good and valid title to all of such shares,
free and clear of all liens, options, warrants, purchase rights, or other
encumbrances (other than those created by, through or under the Purchaser
pursuant to this Agreement and restrictions on sales of securities under
applicable securities laws). Such Seller is not a party to any option, warrant,
purchase right, or other contract
18
or commitment (other than this Agreement) that could require such Seller to
sell, transfer, or otherwise dispose of any shares of Common Stock. Such Seller
is not a party to any voting trust, proxy, or other agreement or understanding
with respect to the voting of any shares of Common Stock.
(d) No Brokers or Finders. Such Seller has not made any arrangements with
any broker, finder or investment banker that would require the Company to pay
any fee or commission if the transactions contemplated by this Agreement are not
consummated.
5. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Sellers as follows:
(a) Organization. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of Louisiana, with corporate power
to carry on its business as now being conducted.
(b) Power and Authority; Enforceability. The Purchaser has all requisite
corporate power to enter into this Agreement and to perform its obligations
hereunder and thereunder. This Agreement has been duly authorized, executed and
delivered on behalf of the Purchaser and, assuming due authorization, execution
and delivery by the other parties hereto, constitutes a legal, valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except
that (i) such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally and (ii) the remedy of specific performance and injunction and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Each of the Consulting Agreements has been duly authorized and, when executed
and delivered on
19
behalf of the Purchaser at the Closing, will be duly executed and delivered and,
assuming due authorization, execution and delivery by the other parties thereto,
will constitute a legal, valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except that (i) such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally and (ii) the remedy of
specific performance and injunction and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) No Conflicts. Neither the execution and delivery of this Agreement or
the Consulting Agreements nor the consummation of the transactions contemplated
herein or therein (i) will conflict with or result in a breach, default or
violation of (A) any of the terms, provisions or conditions of the Articles of
Incorporation or By-Laws of the Purchaser or (B) any material agreement,
document, instrument, judgment, decree, order, governmental permit, certificate
or license to which the Purchaser is a party or to which it is subject or by
which its property is bound, or (ii) will result in the creation of any Lien on
any material property or asset of the Purchaser, or (iii) will require the
Purchaser to obtain the consent of any private non-governmental third party. No
consent, action, approval or authorization of, or registration, declaration or
filing with, any governmental department, commission, agency or other
instrumentality having jurisdiction over the Purchaser is required by the
Purchaser to authorize the execution, delivery or performance of this Agreement
or the Consulting Agreements by the Purchaser.
6. Covenants of Parties. The Parties hereby covenant and agree as follows:
(a) Access. The Company will permit the Purchaser and its authorized
employees, agents, accountants, legal counsel and other representatives to have
access to the books,
20
records, facilities, properties, personnel and officers of the Company;
provided, however, that such investigation shall be conducted in a manner that
does not interfere with normal operations of the Company and its employees or
its relationships with suppliers and customers. The Company will cause the
employees, legal counsel, accountants, engineers and other representatives of
the Company to be available to the Purchaser at all reasonable times for such
purposes.
(b) Operation of Business and Consents. Prior to the Closing and except as
otherwise contemplated in this Agreement, the Company will not, without the
consent of the Purchaser:
(i) increase the rate or form of compensation payable to any employee
or increase any employee benefits, except increases in compensation and benefit
changes made in the ordinary course of business in accordance with established
policies and past practice and except for the payment of bonuses to employees in
the aggregate amount of $310,000 prior to the Closing;
(ii) dispose of any properties or assets, except in the ordinary
course of business consistent with past practice and except for those assets and
properties identified on Schedule 6(b)(ii) attached hereto which will be
transferred to the Sellers prior to the Closing;
(iii) engage in any one or more activities or transactions outside the
ordinary course of business;
(iv) amend its Articles of Incorporation or By-Laws;
(v) create, incur, assume, guarantee or otherwise become liable or
obligated with respect to any indebtedness, or make any loan or advance to, or
any investment in, any person or entity, except in each case in the ordinary
course of business consistent with past practice;
21
(vi) file any motions, orders, briefs, settlement agreements or other
papers in any proceeding before any court or any federal, state or other
governmental department, commission or agency or any arbitrator except with
respect to pending proceedings where positions advanced are substantially
consistent with previous positions;
(vii) issue any securities relating to its capital stock or grant, or
enter into any agreement to grant, any options, convertibility rights, other
rights, warrants, calls or agreements relating to its capital stock; or redeem,
repurchase or otherwise reacquire any of its capital stock;
(viii) maintain its books of account other than in the usual, regular
and ordinary manner in accordance with generally accepted accounting principles
and on a basis consistent with prior periods or make any change in any of its
accounting methods or practices; or
(ix) pay any dividend on or make any distribution with respect to, or
purchase or redeem, any of its capital stock.
(c) Regulatory Compliance. Prior to the Closing, the Company will comply
in all material respects with all applicable local, state and federal laws,
rules and regulations, judgments, decrees, orders, governmental permits,
certificates and licenses, including, without limitation, those relating to the
filing of reports and the payment of income, franchise and other taxes due to be
paid prior to the Closing.
(d) Continued Operation of Business. Prior to the Closing, the Company
will use commercially reasonable efforts (i) to preserve substantially intact
the business organization of the Company, (ii) to keep available the services of
the employees of the Company and (ii) to preserve the present relationships of
the Company with persons having significant business relations therewith.
22
(e) Press Releases. None of the Purchaser, the Company or any of the
Sellers shall issue or cause publication of any press release or other
announcement or public communication with respect to this Agreement or the
transactions contemplated hereby without the consent of the other parties
hereto, which consent shall not unreasonably be withheld; provided that nothing
herein shall prohibit either Party from issuing or causing publication of any
such press release, announcement or public communication to the extent that such
Party reasonably determines that such action is required by law.
(f) Confidential Nature of Information. The Purchaser shall treat in
confidence all documents, materials and other information which it shall have
obtained regarding the Company during the course of the negotiations leading to
the execution of this Agreement, in the investigation of the Company, and in the
preparation of agreements and other documents relating to the consummation of
the transactions contemplated by this Agreement, provided, however, that from
and after the Closing Date, the foregoing prohibition shall not apply to the
Purchaser. In the event the transactions contemplated hereby are not
consummated, the Purchaser shall return to the Company all originals and copies
of non-public documents and materials relating to the Company which have been
furnished or acquired in any manner in connection therewith.
(g) Continuance of Health Insurance Benefits. From and after the Closing,
the Purchaser shall either (i) include each of the Sellers and Xxxxxx X. Xxxxx
and Xxxxx X. Xxxxx (the "Covered Persons") under the health insurance coverage
of the Purchaser as in existence with respect to the Purchaser's employees, as
such coverage changes from time to time, or (ii) cause the Company to continue
to include each of the Covered Persons under the health insurance coverage of
the Company as in existence with respect to the Company's employees, as such
coverage changes from
23
time to time, in each case for so long as (x) either the Purchaser or the
Company maintains health insurance coverage for their respective employees and
(y) each of the Covered Persons pays the applicable premium with respect to such
coverage.
7. Conditions to the Closing.
(a) The Sellers. The obligations of the Sellers to consummate the
transactions contemplated by this Agreement are subject, at the option of the
Sellers, to the satisfaction or waiver of the following conditions:
(i) The Purchaser shall have furnished the Sellers with certified
copies of resolutions duty adopted by the Board of Directors of the Purchaser
authorizing the execution, delivery and performance of this Agreement and the
Consulting Agreements;
(ii) The representations and warranties of the Purchaser contained
herein will be accurate in all material respects at and as of the Closing Date
as though such representations and warranties had been made at and as of such
date; all terms, covenants and conditions of this Agreement to be complied with
and performed by the Purchaser at or prior to the Closing will have been duly
complied with and performed; and the Purchaser will have delivered to the
Sellers a certificate dated as of the Closing Date and signed on behalf of the
Purchaser by the President or any Vice President thereof to the foregoing
effect;
(iii) All statutory requirements for the valid consummation of the
transactions contemplated herein shall have been fulfilled and all governmental
consents, approvals or authorizations necessary for the valid consummation of
the transactions contemplated herein shall have been obtained;
24
(iv) As of the Closing, no order, writ, injunction or decree shall
have been entered into and be in effect that restrains, enjoins or invalidates
any of the transactions contemplated hereby, and no action, suit or other
proceeding shall be pending (irrespective of whether instituted by the U.S.
government or any agency thereof or by any private party) or threatened by the
U.S. government or any agency thereof that has a reasonable likelihood of
resulting in (A) an award of substantial damages by reason of any of the
transactions contemplated hereby payable by the Company or (B) the divestiture
of any material assets by the Company by reason of any of the transactions
contemplated hereby; and
(v) The Sellers will have received an opinion from Xxxxxxx & Xxxxx
L.L.P., counsel for the Purchaser, dated the Closing Date, in form and substance
satisfactory to counsel for the Sellers, that:
(A) the Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Louisiana with corporate power to carry on its business as now being
conducted;
(B) the Purchaser has full corporate power, authority and
legal right to enter into this Agreement and the Consulting Agreements
and to consummate the transactions contemplated hereby and thereby;
and this Agreement and the Consulting Agreements have been duly
authorized and approved by proper corporate action of the Purchaser,
have been duly executed by the Purchaser and, assuming due
authorization, execution and delivery by the other parties thereto,
constitute legal, valid and binding agreements of the Purchaser,
enforceable in accordance with their terms, except that (i) such
enforcement may be limited by bankruptcy, insolvency,
25
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and (ii) the remedy of specific
performance and injunction and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought; and
(C) To the best of such counsel's knowledge, the
consummation of the transactions contemplated by this Agreement and
the Consulting Agreements will not result in the breach of any term or
provisions of or constitute a default under any indenture, mortgage,
deed of trust or other loan agreement or debt instrument to which the
Purchaser is a party or by which the Purchaser or the properties of
the Purchaser may be bound and will not conflict with any provision of
the Articles of Incorporation or By-Laws of the Purchaser.
(b) The Purchaser. The obligations of the Purchaser to consummate the
transactions contemplated by this Agreement are subject, at the option of the
Purchaser, to the satisfaction or waiver of the following conditions:
(i) The Company shall have furnished the Purchaser with certified
copies of resolutions duly adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance by the Company of this
Agreement and the Consulting Agreements;
(ii) The representations and warranties of the Company contained
herein will be accurate in all material respects at and as of the Closing Date
as though such representations and warranties had been made at and as of such
date; all terms, covenants and conditions of this Agreement to be complied with
and performed by the Company at or prior to the Closing will have been duly
complied with and performed; and the Company will have delivered to the
Purchaser a
26
certificate dated as of the Closing Date and signed on behalf of the Company by
the President or any Vice President thereof to the foregoing effect;
(iii) The representations and warranties of the Sellers contained
herein will be accurate in all material respects at and as of the Closing Date
as though such representations and warranties had been made at and as of such
date; and all terms, covenants and conditions of this Agreement to be complied
with and performed by the Sellers at or prior to the Closing will have been duly
complied with and performed.
(iv) All statutory requirements for the valid consummation of the
transactions contemplated herein shall have been fulfilled and all governmental
consents, approvals or authorizations necessary for the valid consummation of
the transactions contemplated herein;
(v) As of the Closing, no order, writ, injunction or decree shall have
been entered and be in effect that restrains, enjoins or invalidates any of the
transactions contemplated hereby, and no action, suit or other proceeding shall
be pending (irrespective of whether instituted by the U.S. government or any
agency thereof or by any private party) or threatened by the U.S. government or
any agency thereof that has a reasonable likelihood of resulting in (A) an award
of substantial damages by reason of any of the transactions contemplated hereby
payable by the Purchaser or the Company or (B) the divestiture of any material
assets by the Purchaser or the Company or any direct or indirect subsidiary
thereof by reason of any of the transactions contemplated hereby;
(vi) Each of the Sellers shall have execute and delivered a Consulting
Agreement;
27
(vii) The Purchaser shall have obtained bank financing for the full
amount of the Purchase Price on terms satisfactory to the Purchaser in its sole
discretion; and
(viii) The Purchaser will have received an opinion of Xxxxxxx
& Xxxxxxx, L.L.P., counsel for the Company and the Sellers, dated the Closing
Date, in form and substance satisfactory to counsel for the Purchaser, that:
(A) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of Texas, with corporate
power to carry on its business as now being conducted;
(B) The Company has full corporate power, authority and
legal right to enter into this Agreement and each of the Consulting
Agreements; and this Agreement and each of the Consulting Agreements
have been duly authorized and approved by the proper corporate action
of the Company, have been duly executed by the Company and, assuming
due authorization, execution and delivery by the other parties
thereto, constitute legal, valid and binding agreements of the
Company, enforceable in accordance with its terms, except that (i)
such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and (ii) the remedy of specific
performance and injunction and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;
(C) To the best of such counsel's knowledge, neither the
execution and delivery of this Agreement and the Consulting
Agreements, nor the
28
consummation of the transactions contemplated by this Agreement and
the Consulting Agreements, will result in the breach of any term or
provision of or constitute a default under any indenture, mortgage,
deed of trust or other loan agreement or debt instrument to which the
Company is a party or by which the Company or the respective
properties of the Company may be bound or conflict with the Articles
of Incorporation or By-Laws of the Company; and
(D) Each of the Consulting Agreements have been duly
executed and delivered by the Seller who is a party thereto and each
Consulting Agreement constitutes a legal, valid and binding agreement
of the Seller who is a party thereto, enforceable in accordance with
its terms, except that (i) such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally and (ii) the
remedy of specific performance and injunction and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
8. Closing. Subject to the conditions stated in Section 7 of this
Agreement, the consummation of the transactions contemplated by this Agreement
(the "Closing") shall be held at the offices of the Company in Orange, Texas on
December 12, 1997, or at such other date, time or place as the parties may agree
in writing (the date upon which the Closing takes place being referred to herein
as the "Closing Date"). At the Closing, the following events shall occur, each
such event under the control of one Party hereto being a condition precedent to
the events under the control of
29
the other Party, and each such event being deemed to have occurred
simultaneously with the other events:
(a) Stock Certificates; Payment of Purchase Price. The Sellers shall
deliver to the Purchaser one or more stock certificates representing all of the
shares of outstanding Common Stock, with stock powers attached thereto duly
executed in blank. The Purchase Price shall be paid in
United States dollars and, unless the Sellers shall agree otherwise, shall be
made by wire or intrabank transfer of immediately available funds by 11:00 a.m.
Houston time on the Closing Date to such account as the Sellers may designate at
least two business days prior to the Closing Date.
(b) Consulting Agreement. Each of the Sellers and the Purchaser
shall execute and deliver a Consulting Agreement.
(c) Resignations of Directors of the Company. The Company will
deliver to the Purchaser resignations of all directors and officers of the
Company.
9. Post-Closing Indemnity. (a) Subject to the provisions of Section
10, from and after the Closing, (i) the Sellers shall, jointly and severally,
indemnify and hold harmless the Purchaser from and against any claim, liability,
loss, cost, damage or expense (including, without limitation, court costs and
reasonable attorneys' fees) (collectively, "Loss") arising out of, resulting
from or in any way related to the breach of, or the failure to perform or
satisfy any of, the representations, warranties and covenants made by the
Company in this Agreement, provided that Sellers shall not have any liability
under this clause (i) with respect to the breach of any representation set forth
in subsections (g) through (k) and subsections (m) through (v) of Section 3 to
the extent that none of the Sellers had actual knowledge of the fact, matter or
event that gives rise to or results in such breach, and (ii) each Seller shall,
severally and not jointly, indemnify and hold harmless the
30
Purchaser from and against any Loss arising out of, resulting from or in any way
related to the breach of, or the failure to perform or satisfy any of, the
representations, warranties or covenants made by such Seller in this Agreement.
Subject to the provisions of Section 10, from and after the Closing, the
Purchaser shall indemnify and hold harmless the Sellers from and against any
claim, liability, loss, cost, damage or expense (including, without limitation,
court costs and reasonable attorneys' fees) arising out of, resulting from or in
any way related to a breach of, or the failure to perform or satisfy any of, the
representations, warranties and covenants made by the Purchaser in this
Agreement.
(b) All claims for indemnification under Section 9(a) of this
Agreement shall be asserted and resolved as follows:
(i) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party claim or
claims asserted against the Indemnified Party ("Third Party Claim") which could
give rise to a right of indemnification under this Agreement and (ii) transmit
to the Indemnifying Party a written notice ("Claim Notice") describing in
reasonable detail the nature of the Third Party Claim, a copy of all papers
served with respect to such claim (if any), an estimate of the amount of damages
attributable to the Third Party Claim and the basis of the Indemnified Party's
request for indemnification under this Agreement. Within 30 days after receipt
of any Claim Notice (the "Election Period"), the Indemnifying Party shall notify
the Indemnified Party (i) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Section 9 with respect to such
Third Party Claim and (ii) whether the Indemnifying Party
31
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Third Party Claims.
(ii) If the Indemnifying Party notifies the Indemnified Party within
the Election Period that the Indemnifying Party does not dispute its potential
liability to the Indemnified Party under this Section 9 and that the
Indemnifying Party elects to assume the defense of the Third Party Claim, then
the Indemnifying Party shall have the right to defend, at its sole cost and
expense, such Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying Party in accordance
with this Section 9(b)(ii). The Indemnifying Party shall have full control of
such defense and proceedings, including any compromise or settlement thereof.
The Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is actually entitled to
indemnification hereunder or if the Indemnifying Party assumes the defense with
respect to the Third Party Claim), to file, during the Election Period, any
motion, answer or other pleadings which the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party and not prejudicial to the Indemnifying Party (it being understood and
agreed that if an Indemnified Party takes any such action which is prejudicial
and conclusively causes a final adjudication which is adverse to the
Indemnifying Party, the Indemnifying Party shall be relieved of its obligations
hereunder with respect to such Third Party Claim). If requested by the
Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense
of the Indemnifying Party, to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim which the Indemnifying Party elects
to contest, including, without limitation, the making of any related
counterclaim against the person
32
asserting the Third Party Claim or any cross-complaint against any person. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
Section 9(b) and shall bear its own costs and expenses with respect to such
participation.
(iii) If the Indemnifying Party fails to notify the Indemnified Party
within the Election Period that the Indemnifying Party elects to defend the
Indemnified Party pursuant to Section 9(b)(ii), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 9(b)(2) but fails to
diligently and promptly prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party, the Third Party Claim by all appropriate proceedings,
which proceedings shall be promptly and vigorously prosecuted by the Indemnified
Party to a final conclusion or settled. The Indemnified Party shall have full
control of such defense and proceedings, provided, however, that the Indemnified
Party may not enter into, without the Indemnifying Party's consent, which shall
not be unreasonably withheld, any compromise or settlement of such Third Party
Claim. Notwithstanding the foregoing, if the Indemnifying Party has delivered a
written notice to the Indemnified Party to the effect that the Indemnifying
Party disputes its potential liability to the Indemnified Party under this
Section 9 and if such dispute is resolved in favor of the Indemnifying Party by
final, nonappealable order of a court of competent jurisdiction, the
Indemnifying Party shall not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this Section 9 or of the Indemnifying
Party's participation therein at the Indemnified Party's request and the
Indemnified Party shall reimburse the Indemnifying Party in full for all costs
and expenses of such litigation. The Indemnifying Party may participate in, but
not control, any defense or settlement
33
controlled by the Indemnified Party pursuant to this Section 9, and the
Indemnifying Party shall bear its own costs and expenses with respect to such
participation.
(iv) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder which does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim and the basis of
the Indemnified Party's request for indemnification under this Agreement. If the
Indemnifying Party does not notify the Indemnified Party within 60 days from its
receipt of the Indemnity Notice that the Indemnifying Party disputes such claim,
the claim specified by the Indemnified Party in the Indemnity Notice shall be
deemed a liability of the Indemnifying Party hereunder. If the Indemnifying
Party has timely disputes such claim, as provided above, such dispute shall be
resolved by litigation in an appropriate court of competent jurisdiction.
(v) Payments of all amounts owing by the Indemnifying Party pursuant
to this Section 9 shall be made within 60 days after the latest of (i) the
settlement of the Third Party Claim, (ii) the expiration of the period for
appeal of a final adjudication of such Third Party Claim or (iii) the expiration
of the period for appeal of a final adjudication of the Indemnifying Party's
liability to the Indemnified Party under this Agreement. Payments of all
amounts owing by the Indemnifying Party pursuant to Section 9(b)(iv) shall be
made within 60 days after the later of (i) the expiration of the 60-day
Indemnity Notice period or (ii) the expiration of the period for appeal of a
final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement.
34
(c) In determining the amount of any loss, liability or expense for
which any party is entitled to indemnification under this Agreement, the gross
amount thereof will be reduced by any correlative tax benefit or insurance
proceeds realized or to be realized by such party (or, in the case of the
Purchaser, by the Company or any subsidiary of the Purchaser or the Company) and
such correlative insurance benefit shall be net of any insurance premium which
becomes due as a result of such claim.
(d) The representations, warranties and covenants of the Company, the
Sellers and the Purchaser set forth in this Agreement shall survive the Closing;
provided, however, that (i) the rights of the parties hereto to initiate any
action for breach of any representation, warranty or covenant made by the
Company, the Sellers or the Purchaser hereunder shall survive only until the
close of business on the first anniversary of the Closing Date and (ii) any
claim asserted in the manner specified in this Section 9 on or prior to the
first anniversary of the Closing Date shall survive until such claim is resolved
in the manner set forth in this Section 9.
10. Limitation of Liability. Notwithstanding any other provision
hereof, (a) the liability of the Purchaser and the Sellers under this Agreement
for any breach of any representation, warranty or covenant herein shall be
limited to actual damages only and shall not include incidental, consequential
or indirect damages and (b) the Sellers shall not have any liability for any
such breaches unless the aggregate liabilities for all breaches exceeds $50,000.
11. Post-Closing Tax Cooperation and Access. From and after the
Closing, the Purchaser shall make available to the Sellers, and to any Federal,
state, municipal or local government, governmental authority, regulatory or
administrative agency, governmental commission, department, board, agency,
governmental commission, department, board, agency or instrumentality, court,
35
tribunal, arbitrator or arbitral body responsible for the imposition or
collection of any taxes ("Taxing Authority") as reasonably requested by the
Sellers, all information, records or documents relating to tax liabilities or
potential tax liabilities of or relating to the Company for all periods prior to
or including the Closing Date and shall preserve all such information, records
and documents until the expiration of any applicable statute of limitations or
extensions thereof. Purchaser shall prepare and provide to the Sellers any
federal, state, local or foreign tax data and other information, including such
information required by any of the Seller's customary tax and accounting
questionnaires, requested by any of the Sellers for such Seller's use in
preparing its tax returns for any period prior to or including the Closing Date.
Such tax data and other information shall be prepared by Purchaser
and provided to Sellers within 60 days after any request for such data or other
information. Each party shall bear its own expenses in complying with the
foregoing provisions.
12. Termination of Agreement. Anything herein to the contrary
notwithstanding, this Agreement shall terminate upon the occurrence of any of
the following events:
(a) Mutual Consent. By mutual consent of the Purchaser, the Company
and the Sellers evidenced in writing; or
(b) Expiration Date. The written notice from the Sellers to the
Purchaser, or from the Purchaser to the Sellers, if the Closing has not occurred
on or before January 1, 1998, or such later date as such Parties shall have
agreed to in writing; provided, however, that any termination pursuant to this
Section 12(b) shall not relieve any Party of any liabilities to the other
Parties for its willful breach of the provisions hereof occurring before such
termination, it being understood and agreed that, if all of the conditions to a
Party's obligations set forth in Section 7(a) or 7(b) have been satisfied or
waived by the date scheduled for the Closing pursuant to Section 8, the failure
of such
36
Party to perform its obligations under Section 8 on such date shall be deemed to
be a willful breach by such Party.
In the event of termination of this Agreement as provided in this
Section 12, this Agreement shall forthwith become void and there shall be no
liability on the part of any Party hereto with respect thereto, except as
provided in Section 12(b) and in the next sentence. The provisions of Section
13 shall survive any termination of this Agreement.
13. Expenses. Regardless of whether the transactions contemplated
herein occur, each of the Parties will be responsible for its own expenses and
fees incurred in connection with the transaction contemplated herein.
14. Notice. Any notice, request, instruction, correspondence or other
document to be given hereunder by any Party to another (herein collectively
called "Notice") shall be in writing and delivered personally or mailed by
certified mail, postage prepaid and return receipt requested, or by telegram or
telecopier, as follows:
To the Company: Orange Shipbuilding Co., Inc.
P. O. Xxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Mr. Xxxx Xxxxxxx
Telecopier: (000) 000-0000
37
To the Purchaser: Xxxxxx Industries, Inc.
000 Xxxxx Xxxxxx
P. O. Xxx 000
Xxxxxx Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
with a copy to: Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopier: (000) 000-0000
To the Sellers: Xxxxxx X. Xxxxx
00 Xxx Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Xxxxxx X. Xxxxx
0000 Xxxxxx
Xxxxxx, Xxxxx 00000
Xxxxxx X. Xxxxx
000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All Notices by telegram or
telecopier shall be confirmed promptly after transmission in writing by
certified mail or personal delivery. Any Party may change any address to which
Notice is to be given to it by giving Notice as provided above of such change of
address.
38
15. No Solicitation. Neither the Company nor the Sellers shall
encourage, solicit, initiate, engage or participate in discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group other than the Purchaser or its affiliates and
representatives (a "Third Party") concerning the Company or concerning the
business of the Company in connection with any merger, consolidation, sale of
all or any substantial amount of assets, sale of securities, liquidation,
dissolution or similar transactions involving the Company (any such proposal,
announcement or transaction being referred to herein as a "Acquisition
Proposal"). The Company and the Sellers shall promptly inform the Purchaser of
any inquiry (including the terms thereof and the identity of the Third Party
making such inquiry) which it may receive in respect of an Acquisition Proposal
and furnish to the Purchaser a copy of any such written inquiry within three
days after receipt thereof.
16. Governing Law. The provisions of this Agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Texas (excluding any conflicts-of-law rule or principle
that might refer same to the laws of another jurisdiction), except to the extent
that same are mandatorily subject to the laws of another jurisdiction pursuant
to the laws of such other jurisdiction.
17. Entire Agreement; Amendments and Waivers. This Agreement, together
with all Exhibits and Schedules attached hereto, constitutes the entire
agreement among the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties, and there are no warranties,
representations or other agreements among the Parties in connection with the
subject matter hereof except as set forth specifically herein or contemplated
hereby. No supplement, modification or waiver of this
39
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
18. Severability. In the event that any provision contained in this
Agreement shall be determined to be invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and the remaining provisions of this Agreement
shall not, at the election of the party for whose benefit the provision exists,
be in any way impaired.
19. Headings and Schedules. The headings of the several Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement. The Exhibits
and Schedules referred to herein are attached hereto and incorporated herein by
this reference.
20. Assignment; Successors Bound. This Agreement may not be assigned by
any Party without the consent of the other Party, except that the Purchaser may
assign to a wholly owned subsidiary its right to purchase the Common Stock so
long as the Purchaser will not be relieved of any of its obligations hereunder.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and assigns.
21. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute a full and complete Agreement.
40
22. Xxxxx Xxxx Patent; Applicability. The parties agree that the barge
connector and pontoon devices developed by Xxxxx Xxxx, or future modifications
or enhancements thereon, and for which an application or applications by Xxxxx
Xxxx for one or more patents is or are pending, are excluded from the scope of
this Agreement and the Consulting Agreements.
IN WITNESS WHEREOF, the Purchaser, the Company and the Sellers have caused
this Agreement to be signed in multiple originals by their respective officers
thereunto duly authorized, all as of the date first above written.
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
ORANGE SHIPBUILDING CO., INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
/s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx
41
