As filed with the Securities and Exchange Commission on March 7, 1997.
Registration No. 333-21863
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GULF ISLAND FABRICATION, INC.
(Exact name of registrant as specified in its charter)
Louisiana 3441 72-1147390
(State or other (Primary Standard Industrial I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation
583 Thompson Road
Houma, Louisiana 70363
(504) 872-2100
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Kerry J. Chauvin
President and Chief Executive Officer
Gulf Island Fabrication, Inc.
583 Thompson Road
Houma, Louisiana 70363
(504) 872-2100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Carl C. Hanemann Thomas P. Mason
Jones, Walker, Waechter, Poitevent, Andrews & Kurth L.L.P.
Carrere & Denegre, L.L.P. 4200 Texas Commerce Tower
201 St. Charles Avenue 600 Travis, Suite 4200
New Orleans, Louisiana 70170 Houston, Texas 77002
(504) 582-8000 (713) 220-4200
__________________________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes
effective.
__________________________
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.
<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 to the Registration Statement contains only Part II
of the Registration Statement and is being filed solely to file certain
exhibits that have not been previously filed.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Estimated expenses payable in connection with the proposed sale
of Common Stock covered hereby are as follows:
SEC registration fee $ 11,152
NASD filing fee 4,180
Printing expenses
Legal fees and expenses
Accounting fees and expenses
Blue Sky fees and expenses
(including counsel fees)
Transfer agent fees and expenses
Miscellaneous expenses
_____________
Total expenses $
=============
Item 14. Indemnification of Directors and Officers.
The Louisiana Business Corporation Law (the "LBCL"), Section 83,
(i) gives Louisiana corporations broad powers to indemnify their present
and former directors and officers and those of affiliated corporations
against expenses incurred in the defense of any lawsuit to which they
are made parties by reason of being or having been such directors or
officers; (ii) subject to specific conditions and exclusions, gives a
director or officer who successfully defends such an action the right to
be so indemnified; and (iii) authorizes Louisiana corporations to buy
directors' and officers' liability insurance. Such indemnification is
not exclusive of any other rights to which those indemnified may be
entitled under any by-law, agreement, authorization of shareholders or
otherwise.
The Company's By-laws make mandatory the indemnification of
directors and officers permitted by the LBCL. The standard to be applied
in evaluating any claim for indemnification (excluding claims for
expenses incurred in connection with the successful defense of any
proceeding or matter therein for which indemnification is mandatory
without reference to any such standard) is whether the claimant acted in
good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company. With respect to any
criminal action or proceeding, the standard is that the claimant had no
reasonable cause to believe the conduct was unlawful. No indemnification
is permitted in respect of any claim, issue or matter as to which a
director or officer shall have been adjudged by a court of competent
jurisdiction to be liable for willful or intentional misconduct or to
have obtained an improper personal benefit, unless, and only to the
extent that the court shall determine upon application that, in view of
all the circumstances of the case, he is fairly and reasonably entitled
to indemnity for such expenses that the court shall deem proper.
The Company maintains liability policies to indemnify its officers
and directors against loss arising from claims by reason of their legal
liability for acts as officers and directors, subject to limitations and
conditions to be set forth in the policies.
The Underwriters have also agreed to indemnify the directors and
certain of the Company's officers against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the
"Securities Act"), or to contribute to payments that such directors and
officers may be required to make in respect thereof.
Each of the Company's directors and executive officers has entered
into an indemnity agreement with the Company, pursuant to which the
Company has agreed under certain circumstances to purchase and maintain
directors' and officers' liability insurance. The agreements also
provide that the Company will indemnify the directors and executive
officers against any costs and expenses, judgments, settlements and
fines incurred in connection with any claim involving a director or
executive officer by reason of his position as director or officer that
are in excess of the coverage provided by any such insurance, provided
that the director or officer meets certain standards of conduct. A form
of indemnity agreement containing such standards of conduct is included
as an exhibit to this Registration Statement. Under the indemnity
agreements, the Company is not required to purchase and maintain
directors' and officers' liability insurance if it is not reasonably
available or, in the reasonable judgment of the Board of Directors,
there is insufficient benefit to the Company from the insurance.
Item 15. Recent Sales of Unregistered Securities
None.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
1.1 Form of Underwriting Agreement.**
2.1 Stock Purchase Agreement with respect to Dolphin Services,
Inc. dated January 2, 1997.*
2.2 Stock Purchase Agreement with respect to Dolphin Steel
Sales, Inc., dated January 2, 1997.*
2.3 Stock Purchase Agreement with respect to Dolphin Sales &
Rentals, Inc.*
3.1 Amended and Restated Articles of Incorporation of the
Company.***
3.2 By-laws of the Company.***
4.1 See Exhibits 3.1 and 3.2 for provisions of the Company's
Amended and Restated Articles of Incorporation and By-laws
defining the rights of holders of Common Stock.
4.2 Specimen Common Stock certificate.**
5.1 Opinion of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre L.L.P.**
10.1 Form of Indemnity Agreement by and between the Company and
each of its directors and executive officers.***
10.2 Registration Rights Agreement between the Company and Alden
J. Laborde.*
10.3 Registration Rights Agreement between the Company and Huey
J. Wilson.*
10.4 Fifth Amended and Restated Revolving Credit and Term Loan
Agreement among the Company and First National Bank of
Commerce and Whitney National Bank, dated as of October 24,
1996 (the "Bank Credit Facility").*
10.5 First Amendment to the Company's Bank Credit Facility, dated
as of January 2, 1997.*
10.6 The Company's Long-Term Incentive Plan.***
10.7 Form of Stock Option Agreement under the Company's Long-Term
Incentive Plan.**
21.1 Subsidiaries of the Company.***
23.1 Consent of Price Waterhouse LLP.***
23.2 Consent of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre L.L.P. (included in Exhibit 5.1).**
24.1 Power of Attorney (included in the Signature Page to the
Registration Statement).***
27.1 Financial Data Schedule.***
Schedule II
* Filed herewith.
** To be filed by amendment.
*** Previously filed.
Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the
Underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as
required by the Underwriters to permit prompt delivery to each
purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the
time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item
14 above, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person
of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to the Registration
Statement (Registration No. 333-21863) to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Houma,
State of Louisiana, on March 6, 1997.
GULF ISLAND FABRICATION, INC.
By: /s/ Kerry J. Chauvin
___________________________
Kerry J. Chauvin
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
_________ _____ _____
* Chairman of the Board March 6, 1997
________________________
Alden J. Laborde
/s/ Kerry J. Chauvin President, Chief Executive Officer March 6, 1997
________________________ and Director (Principal Executive
Kerry J. Chauvin Officer)
* Vice President - Finance, Chief March 6, 1997
________________________ Financial Officer, Secretary and
Joseph P. Gallagher, III Treasurer (Principal Financial
and Accounting Officer)
* Director March 6, 1997
________________________
Gregory J. Cotter
* Director March 6, 1997
________________________
Thomas E. Fairley
* Director March 6, 1997
________________________
Hugh J. Kelly
* Director March 6, 1997
________________________
John P. Laborde
* Director March 6, 1997
________________________
Huey J. Wilson
By: /s/ Kerry J. Chauvin
_____________________
Kerry J. Chauvin
Attorney-in-Fact
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended December 31, 1996
<TABLE>
<CAPTION>
=====================================================================================================
Column A Column B Column C Column D Column E
_____________________________________________________________________________________________________
Additions Deductions
______________________ ____________
Balance at Charged to Charged Balance at
Beginning Costs and to Order End of
Description of Period Expenses Accounts (Write-Offs) Period
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994
Allowance for doubtful accounts $4,290 $ - $ - $ - $ 4,290
Year Ended December 31, 1995
Allowance for doubtful accounts 4,290 30 - - 4,320
Year Ended December 31, 1996
Allowance for doubtful accounts 4,320 - - - 4,320
</TABLE>
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description of Exhibits Page
1.1 Form of Underwriting Agreement.**
2.1 Stock Purchase Agreement with respect to Dolphin
Services, Inc. dated January 2, 1997.*
2.2 Stock Purchase Agreement with respect to Dolphin
Steel Sales, Inc., dated January 2, 1997.*
2.3 Stock Purchase Agreement with respect to Dolphin
Sales & Rentals, Inc.*
3.1 Amended and Restated Articles of Incorporation of
the Company.***
3.2 By-laws of the Company.***
4.1 See Exhibits 3.1 and 3.2 for provisions of the
Company's Amended and Restated Articles of
Incorporation and By-laws defining the rights of
holders of Common Stock.
4.2 Specimen Common Stock certificate.**
5.1 Opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.**
10.1 Form of Indemnity Agreement by and between the
Company and each of its directors and executive
officers.***
10.2 Registration Rights Agreement between the Company
and Alden J. Laborde.*
10.3 Registration Rights Agreement between the Company
and Huey J. Wilson.*
10.4 Fifth Amended and Restated Revolving Credit and
Term Loan Agreement among the Company and First
National Bank of Commerce and Whitney National
Bank, dated as of October 24, 1996 (the "Bank
Credit Facility").*
10.5 First Amendment to the Company's Bank Credit
Facility, dated as of January 2, 1997.*
10.6 The Company's Long-Term Incentive Plan.***
10.7 Form of Stock Option Agreement under the
Company's Long-Term Incentive Plan.**
21.1 Subsidiaries of the Company***
23.1 Consent of Price Waterhouse LLP***
23.2 Consent of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P. (included in Exhibit
5.1).**
24.1 Power of Attorney (included in the Signature Page
to the Registration Statement).***
27.1 Financial Data Schedule.***
______________________
* Filed herewith.
** To be filed by amendment.
*** Previously filed.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of
November 27, 1996 by, between and among Gulf Island
Fabrication, Inc., a Louisiana corporation (hereinafter referred
to as "Purchaser"), and E. M. Dupaquier, R. H. Marmande, Edward
Cunningham, Jules Ledet, Jimmy Benoit, Kenny Bollinger, Willis
Bonvillain, E. Hensley, Hugh Watson, Tina Piazza, Hays Adams,
Curtis Ledet, Mark Foret, Davy Martin, Shelly Hebert, Wayne
Verdun and David Weber, the holders of all of the outstanding
shares of capital stock (the "Sellers") of Dolphin Services, Inc.
(the "Corporation" or the "Company"). E. M Dupaquier and R. H.
Marmande are also referred to herein variously as the "Officers"
or "Sellers' Representatives".
W I T N E S S E T H :
WHEREAS, Sellers desire to sell and the Purchaser desire to
purchase all of the outstanding shares (the "Shares") of common
stock of the Corporation for the consideration and on the terms
and conditions set forth herein; and,
WHEREAS, Purchaser and certain of the Sellers desire to
enter into certain non-competition agreements (the "Non-
Competition Agreements") as provided in Section 4.01.
NOW, THEREFORE, the parties hereto hereby agree as follows:
I.
PURCHASE AND SALE OF ASSETS
1.01 Purchase and Sale.
At the closing of the transaction contemplated hereby
(the "Closing"), upon the terms and subject to the conditions
contained in this Agreement, Purchaser shall purchase from
Sellers and Sellers shall sell the Shares consisting of 111,898
shares of common stock, no par value per share, free and clear of
any and all liens, mortgages, encumbrances and security
interests.
1.02 Stock Purchase Price.
(a) The initial purchase price for the Shares
("Initial Purchase Price") shall be Four Million Five Hundred
Ninety-Three Thousand One Hundred Thirty-Two ($4,593,132)
Dollars, which shall be allocated among the Sellers in proportion
to the Shares sold by each of them to Purchaser.
(b)(1) The Initial Purchase Price shall be adjusted to
the final purchase price ("Final Purchase Price") by increasing
the Initial Purchase Price by the increase in the Net Book Value,
as hereinafter defined, or by decreasing the Initial Purchase
Price by the decrease in the Net Book Value of the Corporation
between September 30, 1996 and the Closing as reflected on the
Closing Balance Sheet (as hereinafter defined). However, the
Final Purchase Price shall not be less than $4,072,555.
(2) The term "Net Book Value" means the excess of (1)
the book value of all of the Corporation's assets over (2) the
book amounts of all the Corporation's current and long-term fixed
liabilities and accrued expenses, including all unpaid ad valorem
taxes prorated to the date of the Closing, whether or not any of
the Corporation's assets are then subject to a lien therefor as
of the Closing. All determinations of book value and book
amounts shall be made in accordance with the accounting
principles, methods and conventions employed in the preparation
of the Corporation's September 30, 1996 balance sheet, a copy of
which is attached as part of Schedule 1.02(b)(2) (hereinafter
"Interim Financial Statements"), but with all intercompany
payables, receivables and equity interests eliminated as among
the Corporation, Dolphin Steel Sales, Inc. and Dolphin Sales &
Rentals, Inc. as though they were members of a consolidated
group. Net Book Value at September 30, 1996 was $4,393,132.
(3) The term "Closing Balance Sheet" means for
purposes of this Section 1.02(b) the balance sheet of the
Corporation as of December 31, 1996 unless such date precedes the
Closing by more than five (5) business days, in which case as of
the date of the Closing ("Closing Date"), prepared in accordance
with the same accounting principles, methods and conventions
employed in the preparation of the Corporation's Interim
Financial Statements. The Closing Balance Sheet shall be
prepared by a certified public accountant or certified public
accounting firm designated by Purchaser and shall be presented to
Sellers and Purchaser within forty-five (45) days following the
Closing. In the event either Sellers or Purchaser disagree with
any of the figures shown on the Closing Balance Sheet, they or it
shall notify the other parties hereto, within ten (10) days after
their receipt of the Closing Balance Sheet, and shall furnish the
reasons why that party is in disagreement. If the parties have
not resolved their disagreements with respect to the Closing
Balance Sheet within twenty (20) days after said notice, Sellers
and Purchaser shall submit the handling of any disputed items to
an independent nationally recognized accounting firm (other than
Price, Waterhouse & Co.) selected by Purchaser and Sellers. If
Purchaser and Sellers are unable to agree upon such a nationally
recognized independent accounting firm within ten (10) days after
expiration of said twenty (20) day period, such an independent
nationally recognized accounting firm ("Arbitrator") shall be
selected in accordance with the rules of the American Arbitration
Association. The Arbitrator shall submit the correct Closing
Balance Sheet to Purchaser and Sellers and shall certify the
increase or decrease in Net Book Value between the date of the
Interim Financial Statements and the close of business on the
Closing Date.
1.03 Closing. The closing (the "Closing") shall take place
at the offices of Messrs. Jones, Walker, Waechter, Poitevent,
Carrere and Denegre, Baton Rouge, Louisiana, on a mutually
agreeable date (the "Closing Date"), not later than ten (10) days
following satisfaction of all conditions to Closing set forth in
Article IX, but after January 1, 1997. Assuming the conditions
set forth in Article IX shall have been satisfied, the Closing
shall be deemed effective as of the close of business of the
Corporation on the date of the Closing. At the Closing:
(a) Purchaser shall deliver to Sellers by wire
transfer or certified funds cash in an amount equal to Four
Million One Hundred Ninety-Three Thousand, One Hundred Thirty-Two
($4,193,132) Dollars, allocated among Sellers in proportion to
their ownership of the outstanding shares of capital stock of the
Corporation, and shall deliver to Whitney National Bank Four
Hundred Thousand and No/100 ($400,000.00) Dollars to be held
pursuant to the escrow agreement (the "Escrow Agreement") in the
form attached hereto as Schedule 1.03(a), which shall also be
executed at or prior to the Closing.
(b) Sellers shall deliver to Purchaser certificates
representing in the aggregate One Hundred, Eleven Thousand, Eight
Hundred, Ninety-eight (111,898) shares of capital stock of the
Corporation with stock powers attached executed in blank, with
signature guaranteed, free and clear of any and all liens,
mortgages, security interests and encumbrances.
(c) Purchaser and E. M. Dupaquier and R. H. Marmande
shall execute the Employment Agreements referred to in Section
6.01.
(d) All officers and directors of the Corporation
shall tender their resignations from such positions, said tender
to occur simultaneously with the act of delivery of funds
described in Section 1.03(a).
1.04 Post-Closing. Within ten (10) days following the date
on which the Closing Balance Sheet has been agreed upon by the
parties or otherwise determined to be accurate, if the Net Book
Value of the Corporation as reflected on the Closing Balance
Sheet is more than or less than the Net Book Value as reflected
on the September 30, 1996 balance sheet of the Corporation,
attached as part of Schedule 1.02(b)(2), Purchaser shall pay to
or receive from, respectively, Sellers (in proportion to their
present ownership of the Shares) cash (by wire transfer or bank
cashier's check) equal to the difference. Failure by any Seller
to make a payment required pursuant to this Section 1.04 shall
constitute a breach of a covenant for which the remedies provided
in Section 10.02 are applicable. Each of E. M. Dupaquier and R.
H. Marmande hereby jointly, severally and in solido guarantee the
obligations of all other shareholders other than Edward
Cunningham to make the payments required pursuant to this Section
1.04.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
For purposes of this Agreement the business (the "Business")
of the Company is the onshore and offshore oil and gas production
platform construction and maintenance business which consists of:
outfitting and interconnect piping, painting and maintenance of
onshore and offshore oil and gas production platforms; and the
construction (including interconnect piping and pile driving) of
shallow water and land platforms and pipeline installation. The
phrase "in the ordinary course" means in the course of performing
any one or more of those enumerated activities. Sellers herewith
represent and warrant to Purchaser as of the date hereof and as
of the Closing Date (unless another date is expressly set forth
below) that:
2.01 Corporate Existence and Power. The Corporation is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Louisiana, and the
Corporation has all corporate powers and all material
governmental licenses, permits, authorizations, consents and
approvals required to carry on the Business as now conducted.
Subject to the provisions of the following sentence, the
Corporation is duly qualified to conduct business as a foreign
corporation and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature
of its activities make such qualification necessary. Sellers
have heretofore delivered to Purchaser true and complete copies
of the Corporation's Articles of Incorporation and By-Laws as
currently in effect.
2.02 Governmental Authorization. The execution, delivery
and performance by Sellers of this Agreement and the consummation
by Sellers of the transactions contemplated hereby require no
action by or in respect of, or filing with, any governmental
body, agency, official or authority.
2.03 Non-Contravention. The execution, delivery and
performance by Sellers of this Agreement and the consummation by
Sellers of the transactions contemplated hereby do not and will
not (i) contravene or conflict with the Articles of Incorporation
or bylaws of the Corporation (other than any provision which may
be waived by the Corporation and/or Sellers), (ii) contravene or
conflict with or constitute a violation of any provision of law,
regulation, judgment, injunction, order or decree binding upon or
applicable to Sellers or the Corporation, or (iii) except as
disclosed in Schedule 2.03, require any consent, approval or
other action by any person or constitute a default under any
obligation of Sellers or the Corporation under any provision of
any contract or other instrument binding upon Sellers or the
Corporation other than contracts and obligations which may be
cancelled unilaterally upon notice to Sellers or the Corporation.
2.04 Subsidiaries. The Corporation does not own more than
fifty (50%) percent of all outstanding shares of capital stock
of, other ownership interests in, or other securities of any
corporation or other entity.
2.05 Financial Statements. The balance sheet of the
Corporation for the year ended December 31, 1995 (such date
referred to herein as the "Balance Sheet Date" and such balance
sheet the "Balance Sheet") and the related statements of income
for the year ended December 31, 1995 (collectively, the
"Financial Statements") have been previously delivered to
Purchaser and are attached as Schedule 2.05. In all material
respects, the Financial Statements fairly present the financial
position of the Corporation as of the date thereof and its
results of operations for the period then ended.
2.06 Absence of Certain Changes. Since the Balance Sheet
Date to the date hereof, the Corporation has conducted the
Business in the ordinary course consistent with past practice
and, except as set forth in Schedule 2.06 or otherwise
contemplated hereby, there has not been:
(a) Any event, occurrence, development or state of
circumstances or facts which has had or could reasonably be
expected to have a material adverse effect on the Corporation,
except to the extent the effect is reflected in the Interim
Financial Statements;
(b) Any incurrence, assumption or guarantee of any
indebtedness for borrowed money or any material obligation or
liability, except in the ordinary course of the Business
consistent with past practice and except as reflected on the
Interim Financial Statements;
(c) Any creation or other incurrence of any Lien (as
defined in Section 2.08) on any asset of the Corporation, except
in the ordinary course of the Business consistent with past
practice and except as reflected in the Interim Financial
Statements;
(d) Any making of any loan, advance or capital
contributions to or investment in any person, except as reflected
in the Interim Financial Statements;
(e) Any amendment of any material term of any
outstanding security of Seller;
(f) Any material damage, destruction or other casualty
loss affecting any of the assets of the Corporation, except those
covered by insurance and except as reflected in the Interim
Financial Statements;
(g) Any transaction or commitment made, or any
contract or agreement entered into, by the Corporation relating
to its assets or the Business or any relinquishment of any
contract or other right, in either case, material to the
Corporation, other than transactions and commitments (including
acquisitions and dispositions of steel and equipment) in the
ordinary course of the Business consistent with past practice and
except as reflected in the Interim Financial Statements;
(h) Any declaration or payment of any dividend or
other distribution by the Corporation or any repurchase,
redemption or other acquisition for value of any security or
other interest in the Corporation or any commitment to do any of
the foregoing;
(i) Any general or specific increase in the salary or
other compensation (including, without limitation, bonuses,
profit sharing or deferred compensation) payable or to become
payable to any employees of the Corporation, except in the
ordinary course of the Business consistent with past practice;
(j) Any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the
Corporation or any lockouts, strikes, slowdowns, work stoppages
or threats thereof by or with respect to any employees of the
Corporation; or
(k) Any agreement entered into to do any of the
foregoing.
2.07 Properties.
(a) The Corporation has good and marketable title to,
or in the case of leased property valid leasehold interests in,
all property and assets (whether real or personal, tangible or
intangible) reflected on the Balance Sheet or acquired after the
Balance Sheet Date, except for properties and assets sold since
the Balance Sheet Date in the ordinary course of business
consistent with past practice. None of such properties or assets
is subject to any liens, mortgages, security interests or other
encumbrances (herein "Liens") except:
(i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being
contested in good faith (and for which
adequate accruals or reserves have been
established on the Balance Sheet);
(iii) Liens disclosed in Schedule 2.07(a) or which
will be discharged at the Closing;
(iv) Liens which do not materially detract from
the value of such property or assets as now
used, or materially interfere with any
present or intended use of such property or
assets; or
(v) Liens in favor of vendors and lessors
incurred in the ordinary course of business.
Clauses (i), (ii), (iii) (iv) and (v) are, collectively, referred
to herein as "Permitted Liens".
(b) To the knowledge of Sellers and except as
reflected on the Interim Financial Statements, there are no
developments affecting any of such properties or assets pending
or threatened which could materially detract from the value of
such property or assets, materially interfere with any present or
intended use of any such property or assets or materially
adversely affect the marketability of such properties or assets.
(c) All such leases of real and personal property with
respect to which the Corporation is a lessee are as of the date
hereof and will be on the Closing Date valid, binding and
enforceable in accordance with their respective terms and there
does not exist under any such lease any material default or any
event which with notice or lapse of time or both would constitute
a material default.
(d) Schedule 2.07(d) identifies all real and personal
property used or held for use in connection with the Business as
of the date hereof (the "Property") and contains an accurate
balance sheet showing the adjusted tax basis of all of the
Corporation's assets for United States income tax purposes at
September 30, 1996. The plants, buildings, structures, tools,
steel inventory and equipment reflected on the Balance Sheet or
acquired after the Balance Sheet Date through the date hereof
have no material defects, are in good operating condition and
repair and have been reasonably maintained consistent with
standards generally followed in the industry (giving due account
to the age and length of use of same, ordinary wear and tear
excepted), are suitable for their present uses and, in the case
of plants, buildings and other structures (including without
limitation, the roofs thereof), are structurally sound, except as
set forth on Schedule 2.07(d). Such plants, buildings and
structures currently have access to (1) public roads or valid
easements over private streets or private property for such
ingress to and egress from all such plants, buildings and
structures and (2) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire
protection, drainage and other public utilities, as is necessary
for the conduct of the Business. None of the material structures
on the immovable or real property of the Corporation encroaches
upon real property of another person, and no structure of any
other person substantially encroaches upon any immovable or real
property of the Corporation. All items of equipment listed on
Schedule 2.07(d) are in the possession and control of the
Corporation and will be in the Corporation's possession and
control on the Closing Date and are in good operating condition
and are adequately performing the tasks which they are designed
to perform.
2.08 Sufficiency of and Title to the Purchased Assets.
(a) The assets (the "Assets") disclosed on the Balance
Sheet and in Schedule 2.07(d) constitute as of the date thereof
and hereof, respectively, all of the assets or property used or
held for use in the Business and are adequate to conduct the
Business as presently conducted.
(b) Upon consummation of the transactions contemplated
hereby, the Corporation will have good and marketable title in
and to each of the Assets, free and clear of all Liens, except
for Permitted Liens.
2.09 No Undisclosed Material Liabilities. Except as
disclosed on Schedule 2.09, as of the Closing there will be no
liabilities of the Corporation of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in
such a liability, other than:
(i) Liabilities disclosed or provided for in the
Interim Financial Statements;
(ii) Liabilities for which adequate insurance is
available; and,
(iii) Liabilities incurred in the ordinary course
of the Business, including tax liabilities
and liabilities for personal injuries and
property damage, which in the aggregate are
not material to the Business taken as a
whole.
2.10 Litigation. Except as set forth in Schedule 2.10, as
of the date hereof there is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or to the
knowledge of Sellers threatened against or affecting, Sellers,
the Corporation or any of their or its properties before any
court or arbitrator or any governmental body, agency, official or
authority, which, individually or in the aggregate, if determined
or resolved adversely to Sellers or the Corporation in accordance
with the plaintiff's demands, would reasonably be expected to
have a material adverse effect on Sellers or the Corporation or
which in any manner challenges or seeks to prevent, enjoin, alter
or materially delay the transactions contemplated by this
Agreement.
2.11 Material Contracts.
(a) Except as disclosed in Schedule 2.11(a) and
elsewhere in this Agreement, as of the date hereof the
Corporation is not a party to or subject to:
(i) Any lease of real or immovable property;
(ii) Any lease that is material to the Corporation
of personal or movable property as lessee;
(iii) Any contract for the purchase of materials,
supplies, goods, services, equipment or other
assets, other than in the ordinary course of
the Business;
(iv) Any sales, distribution or other similar
agreement providing for the sale by the
Corporation of materials, supplies, goods,
services, equipment or other assets, other
than to customers in the ordinary course of
the Business;
(v) Any lease of any item of tangible personal or
movable property or real or immovable
property as lessor other than to customers in
the ordinary course of the Business;
(vi) Any partnership, joint venture or other
similar contract, arrangement or agreement;
(vii) Any contract relating to indebtedness for
borrowed money (whether incurred, assumed,
guaranteed or secured by any asset);
(viii) Any license, franchise or similar agreement;
(ix) Any agency, dealer, sales representative or
other similar agreement;
(x) Any contract or commitment that substantially
limits the freedom of the Corporation to
compete in any line of business or with any
person or in any area or to own, operate,
sell, transfer, pledge or otherwise dispose
of or encumber any asset or which would so
limit the freedom of the Corporation after
the Closing;
(xi) Any consulting agreement;
(xii) Any contract relating to any guaranty or
indemnity issued by the Corporation;
(xiii) Any agreement relating to the acquisition or
disposition of any part of the Business; or
(xiv) Any other contract or commitment not made in
the ordinary course of the Business
consistent with past practice.
(b) Each contract disclosed in any schedule to this
Agreement or required to be disclosed pursuant to Section 2.11(a)
is a valid and binding agreement of the Corporation, and, to the
knowledge of Sellers, as of the date hereof is in full force and
effect, and neither the Corporation nor, to the knowledge of
Sellers, any other party thereto is in default or breach in any
material respect under the terms of any such Contract, nor, to
the knowledge of Sellers, has any event or circumstance occurred
that, with notice or lapse of time or both, would constitute any
such default or breach.
2.12 Licenses and Permits. Schedule 2.12 correctly
describes each material governmental license, permit,
authorization, consent or approval affecting, or relating in any
way to, the Corporation and its business, together with the name
of the governmental agency or entity issuing such license or
permit (the "Permits"). Except as set forth on Schedule 2.12,
such Permits are valid and in full force and effect and will not
be terminated or impaired or become terminable as a result of the
transactions contemplated hereby.
2.13 Ability to Conduct the Business. Except as set forth
in Schedule 2.13, as of the date hereof there is no contract, nor
any judgment, order, writ, injunction or decree that by its terms
prevents or would reasonably be expected to prevent the use by
the Corporation of the Assets or the conduct by the Corporation
of the Business after the Closing Date.
2.14 Material Suppliers. Schedule 2.14 lists the five
largest (in dollar value) suppliers of inventory to the
Corporation during each of the last two completed fiscal years
and through December 31, 1995. To the knowledge of Sellers,
since the Balance Sheet Date there has not been any adverse
change in the business relationship of the Corporation with any
such supplier or with any supplier that is otherwise material to
the Business or with any supplier as a result of the transactions
contemplated hereby, except as disclosed on Schedule 2.14.
2.15 Insurance Coverage. Sellers have furnished or provided
access to Purchaser to true and complete copies of, all insurance
policies currently in effect covering the assets, the Business
and the employees of the Corporation. Except as disclosed on
Schedule 2.15, as of the date hereof there is no claim by the
Corporation pending under any of such policies as to which
coverage has been questioned, denied or disputed by the
underwriters of such policies. All premiums payable under all
such policies have been paid and the Corporation is otherwise in
full compliance with the terms and conditions of all such
policies.
2.16 Compliance with Laws; No Defaults.
(a) As of the date hereof, the Corporation is not in
violation of, has not since December 31, 1995 violated, and to
Sellers' knowledge is not under investigation with respect to or
has not been threatened to be charged with or given notice of any
violation of, any law, rules, ordinances or regulations,
judgments, injunctions, orders or decrees binding upon or
applicable to the Corporation, except for any violations set
forth in Schedule 2.16(a) which would not, individually or in the
aggregate, if finally determined adversely, result in a material
adverse effect on the business of the Corporation.
(b) As of the date hereof, the Corporation is not in
default under, and no condition exists that with notice or lapse
of time or both would constitute a default under any contract or
other instrument binding upon the Corporation or affecting or
relating to its business or any license, authorization, permit,
consent or approval held by the Corporation or affecting or
relating to the Business, except as otherwise disclosed in this
Agreement or in Schedules attached hereto.
2.17 Inventories. The inventories set forth in the Balance
Sheet were properly stated therein at cost determined in
accordance with generally accepted accounting principles applied
on a consistent basis. Since the Balance Sheet Date, the
inventories related to the Business have been maintained in the
ordinary course of business. Except as set forth in Schedule
2.17, all such inventory is owned free and clear of all Liens,
except Permitted Liens. All of the inventory recorded on the
Balance Sheet consists of, and all inventory related to the
Business on the Closing Date will consist of, items of a quality
usable or saleable in the normal course of the Business
consistent with past practices and are and will be in quantities
sufficient for the normal operation of the Business in accordance
with past practice.
2.18 Receivables. All accounts, notes and other receivables
(other than receivables collected since December 31, 1995)
reflected on the Balance Sheet are, and all accounts, notes and
other receivables arising out of or otherwise relating to the
Corporation's business as of the Closing will be, valid, binding
and enforceable, subject to applicable laws governing bankruptcy,
moratorium or creditors' rights generally which may prevent their
enforcement. The dollar amount shown for all such accounts on
the Interim Financial Statements, less the allowance for doubtful
accounts shown thereon, is collectible in full. All accounts,
notes and other receivables arising out of or otherwise relating
to the Business at the Balance Sheet Date have been included in
the Balance Sheet, and all accounts, notes and other receivables
arising out of or otherwise relating to the Business at the
Closing Date will be reflected on the Corporation's financial
books and records.
2.19 Intellectual Property.
(a) Schedule 2.19(a) sets forth as of December 31,
1995 a list of all intellectual property rights (herein
"Intellectual Property Rights") used or held for use or otherwise
necessary in connection with the conduct of the Business,
specifying as to each, as applicable: (i) the nature of such
Intellectual Property Right; (ii) the owner of such Intellectual
Property Right and if Seller is not the owner, the rights held by
the Corporation; (iii) the jurisdictions by or in which such
Intellectual Property Right is recognized, issued or registered
or in which an application for such issuance or registration has
been filed, including the respective registration or application
numbers; and (iv) material licenses, sublicenses and other
agreements as to which the Corporation is a party and pursuant to
which any person is authorized to use such Intellectual Property
Right, including the identity of all parties thereto, a
description of the nature and subject matter thereof, the
applicable royalty and the term thereof.
(b) (i) Except as set forth in Schedule 2.19(b), the
Corporation has not since January 1, 1996 been sued or charged in
writing with or been a defendant in any claim, suit, action or
proceeding relating to its business that has not been finally
terminated prior to the date hereof and that involves a claim of
infringement by the Corporation of any intellectual property
rights of any other person, and (ii) the Corporation has no
knowledge of any basis for any such claim of infringement, and no
knowledge of any continuing infringement by any other person of
any intellectual property rights used or held for use or
otherwise necessary in connection with the conduct of the
Business. No such intellectual property right is subject to any
outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by the Corporation or restricting the
licensing thereof by the Corporation to any Person. The
Corporation has not entered into any agreement to indemnify any
other person against any charge of infringement of any
intellectual property rights.
(c) As used herein, the term "Intellectual Property
Right" means any trade name, trademark, service name, service
mark, copyright, invention, patent, trade secret, know-how
(including any registrations or applications for registration of
any of the foregoing) or any other similar type of proprietary
intellectual property right.
2.20 Employees. Schedule 2.20 identifies all of the
Corporation's officers and key employees as of December 31, 1995.
None of such key employees has indicated to the Corporation that
he or she intends to resign or retire as a result of the
transactions contemplated by this Agreement, except that E. M.
Dupaquier and R. H. Marmande shall retire from the Corporation's
employee six (6) months after the Closing.
2.21 Fees. There is no investment banker, broker, financial
advisor, finder or other intermediary which has been retained by
or is authorized to act on behalf of Sellers who might be
entitled to any fee or commission from Purchaser upon
consummation of the transactions contemplated by this Agreement.
2.22 Environmental Matters.
(a) The following defined terms, as used herein, have
the following meanings:
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
"Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions,
whether now or hereafter in effect, relating to human health, the
environment or to emissions, discharges or releases of
pollutants, contaminants, hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any and all
liabilities of, or relating to, Seller (including any entity
which is, in whole or in part, a predecessor of Seller), whether
vested or unvested, contingent or fixed, actual or potential,
known or unknown, which (i) arise under or relate to matters
covered by Environmental Laws (including without limitation any
matters disclosed or required to be disclosed in Schedule 2.22
hereto) and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date.
"Environmental Permits" means all permits, licenses,
authorizations, certificates and approvals of governmental
authorities relating to or required by Environmental Laws and
necessary or proper for the business of Seller as currently
conducted.
"Hazardous Substance" means any toxic, radioactive,
caustic or otherwise hazardous substance, including petroleum,
its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the
foregoing characteristics, including, without limitation, any
substance regulated under Environmental Laws.
"Regulated Activity" means any generation, treatment,
storage, recycling, transportation or disposal of any Hazardous
Substance.
"Release" means any discharge, emission or release
including a Release as defined in CERCLA at 42 U.S.C. 9601 (22).
The term "Released" has a corresponding meaning.
(b) Except as disclosed on Schedule 2.22 as of the
date hereof:
(i) No notice, notification, demand, request for
information, citation, summons, complaint or
order has been issued, no complaint has been
filed, no penalty has been assessed and, to
Seller's knowledge, no investigation or
review is pending or threatened by any
governmental entity or other person with
respect to any (a) alleged violation by the
Corporation of any Environmental Law or
liability thereunder, (b) alleged failure by
the Corporation to have any Environmental
Permit, (c) Regulated Activity, or (d)
Release of Hazardous Substances;
(ii) Other than generation in compliance with all
applicable Environmental Laws, (a) the
Corporation has not engaged in any Regulated
Activity and (b) no Regulated Activity has
occurred at or on any property now or
previously owned, leased or operated by the
Corporation;
(iii) No polychlorinated biphenyls, radioactive
material, urea formaldehyde, lead, asbestos,
asbestos-containing material or underground
storage tank (active or abandoned) is or has
been present at any property now or
previously owned, leased or operated by the
Corporation;
(iv) No Hazardous Substance has been Released (and
no notification of such Release has been
filed or made) or is present (whether or not
in a reportable or threshold planning
quantity) at, on or under any property now or
previously owned, leased or operated by the
Corporation;
(v) No property now or previously owned, leased
or operated by the Corporation or any
property to which the Corporation has,
directly or indirectly, transported or
arranged for the transportation of any
Hazardous Substances is listed or, to
Seller's knowledge, proposed for listing, on
the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar federal, state or
foreign list of sites requiring investigation
or clean-up;
(vi) There are no liens under Environmental Laws
on any of the real property or other assets
owned, leased or operated by the Corporation,
no governmental actions have been taken or
are in process which could subject any of
such properties or assets to such liens and
the Corporation would not be required to
place any notice or restriction relating to
Hazardous Substances at any property owned by
it in any deed to such property;
(vii) There are no Environmental Permits that are
nontransferable or require consent,
notification or other action to remain in
full force and effect following the
consummation of the transactions contemplated
hereby; and
(viii) All Perchloroethylene and each other chemical
substance used by the Corporation in
connection with the business has been
disposed of in accordance with all applicable
laws, rules, regulations and pronouncements
of the United States, all applicable states
and all applicable boards, agencies,
departments and other divisions thereof.
(c) There has been no environmental investigation,
study, audit, test, review or other analysis conducted of which
the Corporation or Sellers has knowledge in relation to the
current or prior business of the Corporation or any property or
facility now or previously owned or leased by the Corporation
which has not been delivered to Purchaser at least five days
prior to the date hereof.
(d) For purposes of this Section 2.22, the term
"Corporation" shall include any entity which is, in whole or in
part, a predecessor of the Corporation.
2.23 Labor Matters. As of the date hereof, the Corporation
is in compliance with all currently applicable laws respecting
employment and employment practices (including terms and
conditions of employment, wages and hours) and is not engaged in
any unfair labor practice, the failure to comply with which or
engagement in which, as the case may be, would reasonably be
expected to have a material adverse effect on the Business. As
of the date hereof there is no unfair labor practice complaint
pending or, to the knowledge of Sellers, threatened against the
Corporation before the National Labor Relations Board or before
any other state or local board, agency or tribunal.
2.24 The Shares. (a) There are presently outstanding and
at the Closing there will be outstanding a total of One Hundred
Eleven Thousand, Eight Hundred Ninety-Eight (111,898) shares of
no par value voting common stock of the Corporation (the
"Shares"). No other class of common, preferred or other type of
shares of stock is presently outstanding or will be outstanding
at the Closing and no person has or will have at the Closing the
right, option or obligation to acquire additional shares from the
Corporation.
(b) The issuance of all of the Shares has been duly
authorized by all required action by the Corporation and all of
the Shares are fully paid and non-assessable.
(c) The Shares are registered in the names of the
persons and in the amounts set forth in Schedule 2.24(c). All of
the Shares registered in the names of the above persons may be
conveyed by them without the consent of an person, other than
Consents of the Corporation and the other Sellers which are
waivable by them at or prior to the Closing Date.
(d) None of the Shares is subject to any lien,
mortgage, pledge, security interest or other encumbrance and each
Seller has good and marketable title to all Shares registered in
his name.
2.25 Binding Agreement. This Agreement constitutes a valid
and binding obligation of Sellers.
2.26 Other Information. None of the documents or
information delivered to Purchaser in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers that:
3.01 Organization and Existence. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Louisiana.
3.02 Corporate Authorization. The execution, delivery and
performance by Purchaser of this Agreement and the consummation
by Purchaser of the transactions contemplated hereby or thereby
are within the powers of Purchaser and have been duly authorized
by all necessary action on the part of Purchaser. This Agreement
constitutes a valid and binding agreement of Purchaser.
3.03 Governmental Authorization. The execution, delivery
and performance by Purchaser of this Agreement requires no action
by or in respect of, or filing with, any governmental body,
agency, official or authority.
3.04 Non-Contravention. The execution, delivery and
performance by Purchaser of this Agreement does not and will not
(i) contravene or conflict with the Articles of Incorporation or
By-Laws of Purchaser or (ii) assuming compliance with the matters
referred to in Section 3.03, contravene or conflict with any
provision of any law, regulation, judgment, injunction, order or
decree binding upon Purchaser.
3.05 Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to
act on behalf of Purchaser who might be entitled to any fee or
commission from Sellers upon consummation of the transactions
contemplated by this Agreement.
3.06 Financing. Purchaser will have on the Closing Date
sufficient funds available to purchase the Shares, provided all
conditions set forth in Article IX are satisfied.
3.07 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Purchaser
threatened against or affecting, Purchaser before any court or
arbitrator or any governmental body, agency or official which in
any matter challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
ARTICLE IV
COVENANTS OF SELLERS
4.01 Conduct of the Business. From the date hereof until
the Closing Date, Sellers shall cause the Corporation to conduct
the Business in the ordinary course consistent with past practice
and cause the Corporation to exert its best efforts to preserve
intact its business organization and relationships with third
parties and to keep available the services of its present
officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, Sellers
shall not cause the Corporation to and the Corporation shall not:
(i) Merge or consolidate with any other person or
acquire a material amount of assets of any
other person, other than steel, tools and
equipment purchased in the ordinary course of
the Business;
(ii) Declare and/or pay any dividend or make any
other distribution or transfer of cash or
other assets to its shareholders in their
capacities as such;
(iii) Sell, lease, license or otherwise dispose of
any assets except (a) pursuant to existing
contracts or commitments and (b) in the
ordinary course of the Business consistent
with past practices; or
(iv) Agree or commit to do any of the foregoing.
Sellers shall not permit the Corporation to (a) take or agree or
commit to take any action that would make any representation and
warranty of Sellers hereunder inaccurate in any respect at, or as
of any time prior to, the Closing Date or (b) omit or agree to
commit or omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect
at any such time.
4.02 "S" Election. Sellers and their spouses shall execute
and cause the Corporation to execute Internal Revenue Service
forms 2553 so as to elect the provisions of Subchapter S of the
United States Internal Revenue Code, sections 1361, et seq.,
effective January 1, 1997 and shall deliver fully completed forms
2553 with all of their signatures to Purchaser on or before the
earlier of the Closing Date or January 15, 1997.
4.03 Access to Information. Sellers (i) will give
Purchaser, its counsel, financial advisors, auditors and other
authorized representatives reasonable access to the offices,
properties, books and records of the Corporation and will allow
Purchaser or its representatives access to conduct all reasonable
environmental tests and inspections, (ii) will furnish to
Purchaser, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and
other information relating to the Corporation as such persons may
reasonably request and (iii) will instruct its employees, counsel
and financial advisors to cooperate with Purchaser in its
investigation of the Corporation; provided, however, Purchaser
shall utilize the minimum number of personnel as will not
interfere with the conduct of the Corporation's business and
shall utilize them only at the times the Corporation is open for
business. No investigation by Purchaser or other information
received by Purchaser shall operate as a waiver or otherwise
affect any representation, warranty or agreement given or made by
Sellers hereunder.
4.04 Life Insurance Policies. Prior to the Closing, each
seller shall purchase all policies of life insurance on his life
owned by the Corporation for cash in the amount of the cash
surrender values of these policies.
4.05 Notices of Certain Events. Sellers shall promptly
notify Purchaser of:
(i) Any notice or other communication from any
person alleging that the consent of such
person is or may be required in connection
with the transactions contemplated by this
Agreement;
(ii) Any notice or other communication from any
governmental or regulatory agency or
authority in connection with the transactions
contemplated by this Agreement;
(iii) Any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge,
threatened against, relating to or involving
or otherwise affecting the Corporation or the
Business that, if pending on the date of this
Agreement, would have been required to have
been disclosed pursuant to Section 2.10 or
that relate to the consummation of the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser agrees that:
5.01 Confidentiality. Prior to the Closing Date and for a
period of one (1) year after any termination of this Agreement,
Purchaser will hold, and will use its best efforts to cause its
respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by
other requirements of law, all confidential documents and
information (including, without limitation, confidential
commercial information and information with respect to customers
and proprietary systems, technologies or processes) concerning
the Business or which the Corporation or Sellers furnished to
Purchaser in connection with the transactions contemplated by
this Agreement, except to the extent that such information can be
shown to have been (i) previously known on a non-confidential
basis by Purchaser, (ii) in the public domain through no fault of
Purchaser or (iii) later lawfully acquired by Purchaser from
sources other than the Corporation or Sellers; provided, that
Purchaser may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors
and agents in connection with the transactions contemplated by
this Agreement so long as such persons are informed by Purchaser
of the confidential nature of such information and are directed
by Purchaser to treat such information confidentially. This
obligation shall be satisfied if Purchaser exercises the same
reasonable and customary care, in light of the industry and its
past practices, with respect to such information as it would take
to preserve the confidentiality of its own confidential
information. If this Agreement is terminated, Purchaser will,
and will use its best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents
to, destroy or deliver to Sellers, upon request, all documents
and other materials, and all copies thereof, obtained by
Purchaser or on their behalf from Sellers or the Corporation in
connection with this Agreement that are subject to such
confidence. Purchaser agrees that it will retain all documents
and other materials obtained by Purchaser from Sellers or the
Corporation in connection with this Agreement and the
transactions contemplated hereby for a reasonable and customary
period of time and will not destroy any material documents during
such period without first providing Seller with the opportunity
of making copies thereof.
5.02 Access. On and after the Closing Date, Purchaser will
afford promptly to Sellers through their representatives, E. M.
Dupaquier and/or R. H. Marmande ("Sellers' Representatives"),
reasonable access to the Corporation's properties, books,
records, employees and auditors to the extent necessary to permit
Sellers to determine any matter relating to their rights and
obligations hereunder and Sellers' federal and state income and
other tax liabilities with respect to any period ending on or
before the Closing Date and shall maintain them for a period of
five (5) years following the Closing or for such longer period as
any audit (private, tax or other governmental) of those documents
is continuing; provided that any such access by Sellers shall not
unreasonably interfere with the conduct of the Business of the
Corporation or Purchaser. Sellers will hold, and will use their
best efforts to cause their officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning Purchaser or
the Business provided to them pursuant to this Section 5.02.
5.03 No Election Under Section 338. (a) Purchaser shall
not cause nor shall the Corporation make or file any election
under any provision of Section 338, including Section 338(h)(10),
of the United States Internal Revenue Code (the "Code") with
respect to the transactions contemplated by this Agreement.
(b) Purchaser shall take no action nor permit any
action or course of conduct to be taken by it or by the
Corporation, or permit the filing of any Section 338 election
with respect to any other stock acquisition by Purchaser of any
other corporation, if such filing would have the same effect as
if a formal election under any provision of Section 338,
including Section 338(h)(10), of the Code had been filed with
respect to the transaction contemplated hereby.
ARTICLE VI
COVENANTS OF SELLERS AND PURCHASER
Sellers and Purchaser hereto agree that:
6.01 Employment Agreements. At the Closing, E. M.
Dupaquier, R. H. Marmande and the Company shall execute the
Employment Agreements in the forms attached hereto as Schedule
6.01.
6.02 Best Efforts; Further Assurances. Subject to the terms
and conditions of this Agreement, each of Sellers and Purchaser
will use their and its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things
necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
Sellers and Purchaser each agree to execute and deliver such
other documents, certificates, agreements and other writings and
to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions
contemplated by this Agreement, but without expanding the
obligations and responsibilities of any party hereunder.
6.03 Certain Filings. Sellers and Purchaser shall cooperate
with one another (a) in determining whether any action by or in
respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to
any material contracts, in connection with the consummation of
the transactions contemplated by this Agreement, and (b) in
taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely
to obtain any such actions, consents, approvals or waivers.
6.04 Public Announcements. The parties agree to consult
with each other before issuing any press release or making any
public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be required
by applicable law, will not issue any such press release or make
any such public statement prior to such consultation.
ARTICLE VII
TAX MATTERS
7.01 Tax Definitions. The following terms, as used herein,
have the following meanings:
"Code" means the Internal Revenue Code of 1986, as
amended.
"Post-Closing Tax Period" means any tax period ending
after the Closing Date, except that with respect to a tax period
that commences before but ends after the Closing Date, the
portion of such period after the close of business on the Closing
Date.
"Pre-Closing Tax Period" means any tax period ending on
or before the close of business on the Closing Date and with
respect to a tax period that commences before but ends after the
Closing Date, the portion of such period up to the close of
business on the Closing Date.
"Tax" means (i) any net income, alternative or add-on
minimum, gross income, gross receipts, sales, use, ad valorem,
franchise, capital, paid-up capital, profits, greenmail, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the
imposition of any such tax (a "Taxing Authority") and (ii) any
liability to any person (including any applicable Taxing
Authority) in respect of any tax included in Clause (i) above by
reason of any indemnity, transferee liability, contractual or
legal obligation.
7.02 Tax Matters. Sellers hereby represent and warrant to
Purchaser as of the date hereof and as of the Closing Date that,
except as provided in Schedule 7.02, the Corporation has paid or
will timely pay all material taxes payable by the Corporation and
attributable to any Pre-Closing Tax Period which are required to
be paid on or prior to the Closing Date, the non-payment of which
would result in a lien on the Shares on or after the Closing
Date, would otherwise materially adversely affect the Business
after the Closing Date or would result in Purchaser becoming
liable therefor, except for taxes caused by an actual or deemed
election under Section 338 of the Code, which is Purchaser's
responsibility pursuant to Section 5.03. Sellers herewith
represent that the only Taxes which will be owed by the
Corporation as of the Closing Date are those which arise or have
arisen or have been incurred in the ordinary course of the
Corporation's Business. The Corporation has filed all required
income, franchise, sales, ad valorem, employment and other tax
returns and paid the total amount of Taxes due by it. The
provision for the corporate income and franchise tax liability of
the Corporation for all periods through the Closing Date as shown
on the Closing Balance Sheet will be adequate relative to the
Corporation's actual liability therefor as finally determined.
Sellers represent that the Corporation is not prohibited by any
law, rule or regulation from electing the provisions of
Subchapter S of the Code, sections 1361, et seq., commencing
January 1, 1997.
7.03 Tax Cooperation: Allocation of Taxes.
(a) Purchaser and Sellers agree to furnish or cause to
be furnished to each other, upon request, as promptly as
practicable, such information and assistance relating to the
Corporation, the non-compete covenant described in Section 4.01
and the Business as is reasonably necessary for the filing of all
tax returns, and making of any election related to taxes, the
preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating
to any tax return. Sellers and Purchaser shall cooperate with
each other in the conduct of any audit or other proceeding
related to taxes involving the Business and each shall execute
and deliver such powers of attorney and other documents as are
reasonably necessary to carry out the intent of this Paragraph
(a) of Section 7.03.
(b) Any transfer, documentary, sales, use or other
taxes arising in connection with the transactions contemplated by
this Agreement and any recording or filing fees with respect
thereto (each, a "Transfer Tax") shall be the responsibility of
Purchaser. (c) Each of Sellers and Purchaser shall execute all
required elections pursuant to section 1377(a)(2) of the Code to
terminate the Corporation's taxable year commencing January 1,
1997 and ending as of the close of business on the Closing Date
(as defined in Section 1.03 entitled "Closing"), and allocate all
of the Corporation's income or loss for that period to Sellers
and the Corporation's income or loss for the remainder of
calendar year 1997 to Purchaser.
ARTICLE VIII
EMPLOYEE BENEFITS
8.01 Employee Benefits Definitions. The following terms, as
used herein, shall have the following meanings:
"Benefit Arrangement" means any employment, severance
or similar contract, or any other contract, plan, policy or
arrangement (whether or not written) providing for compensation,
bonus, profit-sharing, stock option or other stock related rights
or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits,
workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life
insurance benefits) that (i) is not an Employee Plan, (ii) is
entered into, maintained, administered or contributed to, as the
case may be, by Seller and (iii) covers any employee or former
employee of the Corporation.
"Employee Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA, (ii) is maintained, administered or
contributed to by the Corporation and (iii) covers an employee or
former employee of the Corporation.
"ERISA Affiliate" of any entity means any other entity
which, together with such entity, would be treated as a single
employer under Section 414 of the Code.
"Multi-Employer Plan" means each Employee Plan that is
a multi-employer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Title IV Plan" means an Employee Plan, other than any
Multi-Employer Plan, subject to Title IV of ERISA.
8.02 Employee Matters. The Sellers hereby represent and
warrant to Purchaser as of the date hereof:
(a) Schedule 8.02(a) lists each Employee Plan.
Sellers have provided or allow Purchaser access to as a true and
complete copy of each such Plan (and, if applicable, related
trust documents) and all amendments thereto and written
interpretations thereof together with (i) the three most recent
annual reports prepared in connection with each such Employee
Plan (Form 5500 including, if applicable, Schedule B thereto) and
(ii) the most recent actuarial report, if any, prepared in
connection with each Employee Plan. Schedule 8.02(a) identifies
each person who is a participant or who is eligible to
participate in each Employee Plan who is not an active employee
of Seller. The term "active employee" shall mean any person who,
on the Closing Date, is actively employed by the Corporation or
who is on short-term disability leave, authorized leave of
absence, military service or lay-off with recall rights as of the
Closing Date.
(b) Schedule 8.02(b) sets forth all Benefit
Arrangements presently in place for all employees of the
Corporation.
(c) As of the date hereof, there is no litigation,
administrative or arbitration proceeding or other dispute pending
or threatened that involves any Employee Plan or Benefit
Arrangement which could reasonably be expected to result in a
liability to the Corporation or Purchaser.
(d) No Employee Plan is (i) a Multi-Employer Plan,
(ii) a Title IV Plan or (iii) is maintained in connection with
any trust described in Section 501(c)(9) of the Code. No
"prohibited transaction", as defined in Section 406 of ERISA or
Section 4975 of the Code, has occurred that could result in a
liability to the Corporation, Purchaser or any of its Affiliates.
As used herein the term "Affiliate" means any individual, group
of individuals, corporation, partnership or other entity
controlled by, controlling or under common control with the
person or entity with respect to which that term is used.
Neither the Corporation nor any of its current or former
Affiliates (while an Affiliate) has within the last five (5)
years engaged in or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Section
4069 of ERISA. Neither the Corporation nor any of its current or
former Affiliates has ever maintained or become obligated to
contribute to any employee benefit plan (i) that is subject to
Title IV of ERISA, (ii) to which Section 412 of the Code applies,
or (iii) that is a multi-employer plan under Title IV of ERISA.
The Corporation has not incurred, and does not reasonably expect
to incur, (a) any liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial
withdrawal from, any plan covered or previously covered by Title
V of ERISA or (b) any liability under Section 4971 of the Code
that in either case could become a liability of the Corporation
or any of its Affiliates after the Closing Date.
(e) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and no event has occurred since such adoption that would
adversely affect such qualification and each trust created in
connection with each such Employee Plan forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Sellers
have furnished to Purchaser copies of the most recent Internal
Revenue Service determination letters with respect to each such
Plan. Each Employee Plan has been maintained in compliance with
its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations including but
not limited to ERISA and the Code.
(f) Seller has furnished to Purchaser copies or
descriptions of each Benefit Arrangement. Each Benefit
Arrangement has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to
such Benefit Arrangement. Schedule 8.02(f) identifies each
individual eligible to receive a benefit under a Benefit
Arrangement who is not an active employee, as defined in Section
8.02(a), of the Corporation.
(g) The Corporation has no current or projected
liability in respect of post-retirement or post-employment
welfare benefits for retired, current or former employees, except
as required to avoid excise tax under Section 4980B of the Code.
(h) Except as disclosed in writing to Purchaser prior
to the date hereof, there has been no amendment to, written
interpretation of or announcement (whether written or not
written) by the Corporation or any of its Affiliates relating to,
or change in employee participation or coverage under, any
Employee Plan or Benefit Arrangement which would increase
materially the expense of maintaining such Employee Plan or
Benefit Arrangement above the level of the expense incurred in
respect thereof in connection with the Corporation's Employees
for the most recently completed fiscal year.
(i) No employee of the Corporation will become
entitled to any bonus, retirement, severance, job security or
similar benefit or enhanced such benefit (including acceleration
of an award, vesting or exercise of an incentive award) or any
fee or payment of any kind solely as a result of any of the
transactions contemplated hereby.
(j) There is no contract, plan or arrangement (written
or otherwise) covering any employee or former employee of the
Corporation or any of its Affiliates that, individually or
collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of
the Code.
(k) No tax under Section 4980B of the Code has been
incurred in respect of any Employee Plan that is a group health
plan, as defined in Section 5000(b)(1) of the Code.
ARTICLE IX
CONDITIONS TO CLOSING
9.01 Conditions to the Obligations of Each Party. The
obligations of Purchaser and Sellers to consummate the Closing
are subject to the satisfaction, or waiver by both parties, of
the following conditions:
(a) No provision of any applicable law or regulation
and no judgment, injunction, order or decree shall (i) prohibit
the consummation of the Closing or (ii) restrain, prohibit or
otherwise interfere with the effective operation or enjoyment by
Purchaser of the Shares.
(b) All actions by or in respect of or filings with
any governmental body, agency, official or authority required to
permit the consummation of the Closing, and all material third
party consents necessary in connection with the consummation of
the Closing, shall have been obtained.
(c) All waivers of applicable rights of first refusal
by the Corporation and the Sellers have been obtained to permit
consummation of the transactions contemplated herein.
9.02 Conditions to Obligations of Purchaser. The obligation
of Purchaser to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Sellers shall have performed in all material
respects all of their obligations hereunder required to be
performed by them at or prior to the Closing Date (including
their obligations set forth in Section 4.02), (ii) the
representations and warranties of Sellers contained in this
Agreement and in any certificate or other writing delivered by
Sellers pursuant thereto, disregarding all qualifications and
exceptions contained therein relating to materiality, shall be
true at and as of the respective dates applicable to each of them
as set forth herein, and (iii) Purchaser shall have received a
certificate signed by the President of the Corporation to the
foregoing effects.
(b) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any person before any court, arbitrator or
governmental body, agency or official nor shall they be pending.
(c) Purchaser shall have received all documents it may
reasonably request relating to the existence of and good standing
of the Corporation.
(d) The Corporation shall have been issued an owner's
title insurance policy with respect to all real or immovable
property in a form and only with such exceptions as are
reasonably acceptable to Purchaser. The cost of the owner's
title insurance policy shall be borne equally between Sellers and
Purchaser.
(e) Nothing has come to Purchaser's attention which
would indicate that any of the representations and warranties of
Sellers are untrue in any material respect or that Sellers have
failed to perform any of their covenants contained herein.
9.03 Conditions to Obligations of Sellers. The obligation
of Sellers to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Purchaser shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Closing Date and (ii) the
representations and warranties of Purchaser contained in this
Agreement and in any certificate or other writing delivered by
Purchaser pursuant hereto shall be true in all material respects
at and as of the Closing Date, as if made at and as of such date.
(b) Sellers shall have received all documents they may
reasonably request relating to the existence of Purchaser and the
authority of Purchaser to execute and consummate this Agreement,
all in form and substance reasonably satisfactory to Seller.
ARTICLE X
SURVIVAL; INDEMNIFICATION
10.01 Survival. The covenants, agreements, representations
and warranties of the parties hereto contained in this Agreement
or in any certificate or other writing delivered pursuant hereto
or in connection herewith shall survive the Closing.
10.02 Indemnification.
(a) Sellers ("Indemnifying Party" or "Indemnifying
Parties") jointly, severally and in solido hereby indemnify
Purchaser and all of Purchaser's officers, directors, employees
and shareholders (hereinafter "Indemnified Parties") against and
agree to defend and hold them harmless from and against any and
all damage, loss, liability and expense, including, without
limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit
or proceeding (collectively, "Loss") incurred or suffered by any
of the Indemnified Parties arising out of any willful
misrepresentation or breach of warranty, covenant or agreement
made or to be performed by Sellers pursuant to this Agreement,
including all of those made by Sellers in Articles I, II, IV, VI,
VII and VIII hereof. Sellers shall have no obligation with
respect to any loss, claim, demand, suit or action against the
Corporation or Purchaser notice of which is given to Sellers'
Representatives after December 31, 1998 as to all claims,
demands, suits or actions other than for the payment of any Tax
and after December 31, 2000 as to all claims, demands, suits or
actions for the payment of any Tax.
(b) Purchaser hereby agrees to defend and indemnify
Sellers against and to hold Sellers harmless from any and all
Loss incurred or suffered by Sellers arising out of any failure
to perform, misrepresentation or breach of any warranty, covenant
or agreement made or to be performed by Purchaser pursuant to
this Agreement. Purchaser shall have no obligation with respect
to any loss, claim, demand, suit or action against Sellers notice
of which is given to Purchaser (by Sellers or any other person or
governmental agency) after December 31, 1998.
(c) Except as otherwise provided in Section 10.03
hereof in respect of matters relating to Taxes, the following
provisions shall apply:
(i) Promptly after receipt by an Indemnified
Party of notice of the commencement of any action or proceeding
involving a claim in respect of which indemnification is being
sought, such Indemnified Party will, if a claim for
indemnification hereunder is to be made against the Indemnifying
Party, give written notice to the Indemnifying Parties (through
Sellers' Representatives) of the commencement of such action or
proceeding, the basis for such claim for indemnification and such
other information relating thereto as the Indemnifying Party may
reasonably request; provided, however, that failure to so notify
the Indemnifying Parties or to provide such information shall not
relieve such Indemnifying Parties from any liability which they
may have with respect to such claim, except to the extent that
they are actually materially prejudiced by such failure to give
notice.
(ii) In case any such action is brought against
an Indemnified Party, the Indemnified Party shall assume and
control the defense of such action with counsel selected by the
Indemnified Party. It is understood that the Indemnifying
Parties shall not, in connection with any action or related
actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such
jurisdiction to act as counsel for all Indemnified Parties,
unless in any such Indemnified Party's reasonable judgment (i) a
conflict of interest between such Indemnified Party and any other
Indemnified Party may exist in respect of such claim or (ii) such
Indemnified Party has available to it reasonable defenses which
are different from or additional to those available to other
Indemnified Parties. The Indemnifying Parties shall not be
liable for any settlement of any proceeding effected without
their written consent (given by Sellers' Representatives), but if
settled with such consent or if there shall be a final judgment
for the plaintiff, the Indemnifying Parties agree to indemnify
the Indemnified Party and hold the Indemnified Party harmless
from and against any Losses by reason of such settlement or
judgment (it being understood that if the Sellers are the
Indemnifying Party such indemnification obligation shall be joint
and several). The Indemnifying Parties shall not, without the
consent of the Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as
an unconditional term the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect
to such claim or litigation. Any dispute as to whether any
Indemnified Party is entitled to indemnification in connection
with any action or proceeding under Section 10.02(c), the defense
or settlement of such action or proceeding, or any other rights
or obligations of the parties hereto in connection with such
action or proceeding shall be submitted to arbitration in
accordance with Section 12.06 of this Agreement.
(iii) In the event that an Indemnified Party
shall claim a right to payment pursuant to this Agreement with
respect to which there has been no action or proceeding involving
such claim, such Indemnified Party shall send written notice of
such claim to the Indemnifying Parties. Such notice shall
specify the basis for such claim in reasonable detail. As
promptly as possible after the Indemnified Party has given such
notice, such Indemnified Party and the Indemnifying Parties
(acting through Sellers' Representatives) shall establish the
merits and amount of Losses, if any, to which the Indemnified
Party is entitled. If the parties do not agree with respect to
these matters within 30 days after the giving of such notice,
either party may submit the matter to arbitration in accordance
with Section 12.06 of this Agreement. In such arbitration, if
the arbitrator determines that a breach of a representation,
warranty, covenant or agreement in this Agreement by the
Indemnifying Parties occurred and that such breach caused Losses
to an Indemnified Party, the arbitrator will determine the amount
of any such Losses. Within ten business days after the final
determination of the merits of such claim and amount of such
Losses, each Indemnifying Party shall, subject to the limitations
set forth herein, deliver to the Indemnified Party an amount of
cash in immediately available funds sufficient to satisfy such
Losses or the portion of such Losses for which such Indemnifying
Party is obligated to provide indemnity hereunder.
(iv) If any Seller fails to timely deliver cash
in the amount of any Losses payable by such Seller under the
terms of this Agreement, Purchaser may withdraw from funds held
in the Escrow Account (as defined below) an amount of cash equal
to the amount of Losses which has not been paid by that Seller.
(d) Wherever this Agreement requires actions or
decisions of the Indemnifying Parties, those actions or decisions
shall be taken by either or both of Sellers' Representatives
acting on behalf of all Indemnifying Parties.
10.03 Covenants Regarding Tax Matters.
(a) Taxes attributable to the taxable period of the
Corporation beginning before and ending after the Closing Date
shall be allocated (i) to the Sellers for the period up to and
including the Closing Date to the extent such Taxes exceed the
reserve therefor on the Closing Balance Sheet and (ii) to
Purchaser for the period up to and including the Closing Date to
the extent such Taxes do not exceed the reserve therefor on the
Closing Date Balance Sheet and for the period subsequent to the
Closing Date. For purposes of this Section 10.03(a), Taxes for
the period up to and including the Closing Date and for the
period subsequent to the Closing Date shall be determined on the
basis of an interim closing of the books as of the Closing Date.
(b) The Sellers may not file any amended returns or
refund claims in respect of any taxable period of the Corporation
ending on or prior to the Closing Date.
(c) The Sellers shall cooperate fully with Purchaser
and make available to Purchaser in a timely fashion such Tax data
and other information as may be reasonably required for the
preparation by Purchaser of any returns of the Corporation
required to be prepared and filed by Purchaser hereunder. The
Sellers and Purchaser shall make available to the other, as
reasonably requested, all information, records or documents in
their possession relating to Tax liabilities of the Corporation
for all taxable periods of the Corporation ending on, prior to or
including the Closing Date and shall preserve all such
information, records and documents until the expiration of any
applicable Tax statute of limitations or extensions thereof or,
if a proceeding has been instituted for which the information,
records or documents is required, until there is a final
determination with respect to such proceeding.
(d)(i) Purchaser shall promptly notify the Sellers'
Representatives upon receipt by Purchaser or the Corporation of
written notice of any Tax audits or of proposed assessments
against the Corporation for taxable periods of the Corporation
ending on or prior to the Closing Date; provided, however, that
the failure of Purchaser to give Sellers' Representatives prompt
notice as required herein shall not relieve the Sellers of any of
their obligations hereunder, except to the extent that the
Sellers are actually and materially prejudiced thereby.
Purchaser shall have the right to represent the interests of the
Corporation in any such Tax audit or administrative or court
proceeding and to employ counsel of its choice; provided,
however, that Purchaser may not agree to a settlement or
compromise thereof without the prior written consent of Sellers'
Representatives, which consent may be withheld solely in the
event that Sellers' Representatives have been advised in writing
by counsel reasonably acceptable to Purchaser that it is more
likely than not that the issue under audit (or the proposed
assessment) would be decided favorably to the Corporation and
that written advice has been furnished to Purchaser. The Sellers
agree that they will cooperate fully with Purchaser and its
counsel in the defense against or compromise of any claim in any
said audit or proceeding.
(ii) The Sellers shall promptly notify Purchaser
upon receipt by the Sellers of written notice of any Tax audit or
proposed assessment or other proposed change or adjustment which
may affect the Corporation or its Tax attributes. The Sellers
shall keep Purchaser duly informed of the progress thereof and,
if the results of such Tax audit or proceeding may have an
adverse effect on the Corporation, Purchaser or its affiliates
for any taxable period including or ending after the Closing
Date, then the Sellers may not agree to a settlement or
compromise thereof without Purchaser's consent.
(e) Within ten (10) days after notice by Purchaser to
Sellers' Representatives of the total amount of additional taxes,
penalties and interest owed by the Corporation for periods prior
to the Closing, Sellers shall remit to Purchaser the entire
amount thereof less the future tax benefit attributable to the
increase in future depreciation deductions as a result of the
adjustment which caused those additional taxes. The future tax
benefit shall be deemed equal to forty (40%) percent of the total
additional depreciation which the Corporation would thereby be
able to deduct in future years provided the amount of this
reduction shall not exceed the amount of additional taxes (apart
from penalties and interest) then owed by the Corporation. If
any Seller fails to remit his entire proportionate share of the
amount due, Purchaser may withdraw said amount from the Escrow
Account, to the extent thereof, and if the Escrow Account is
insufficient, any one or more of the other Sellers shall pay
Purchaser the shortfall upon ten (10) days written notice.
(f) The Sellers and Purchaser agree to treat any
indemnity payment made pursuant to this Agreement as an
adjustment to the Purchase Price for federal, state, local and
foreign income tax purposes. If, notwithstanding such treatment
by the parties, any indemnity payment is determined to be taxable
to Purchaser or the Corporation by any taxing authority, the
Sellers shall indemnify Purchaser and its Affiliates for any
Taxes payable by reason of the receipt of such indemnity payment
(including any payments under this Section 10.03(f)).
ARTICLE XI
TERMINATION
11.01 Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of Sellers'
Representatives and Purchaser;
(ii) By Purchaser if the Closing shall not have
been consummated on or before January 15,
1997 unless extended by mutual agreement of
Sellers' Representatives and Purchaser;
(iii) By either Sellers' Representatives or
Purchaser if there shall be any law or
regulation that makes the consummation of the
transactions contemplated hereby illegal or
otherwise prohibited or if consummation of
the transactions contemplated hereby would
violate any nonappealable final order, decree
or judgment of any court or governmental body
having competent jurisdiction; or,
(iv) By Purchaser if anything has come to its
attention that any of Sellers'
representations or warranties are untrue in
any respect or Purchaser has discovered any
contamination or any Hazardous Substance on
the premises of the Corporation or any
violations of any Environmental Laws by the
Corporation which have not been remedied as
of the date of the discovery.
The party desiring to terminate this Agreement pursuant to
Clauses (ii), (iii) or (iv) shall give notice of such termination
to the other party.
11.02 Effect of Termination. If this Agreement is
terminated as permitted by Section 11.01, such termination shall
be without liability of any party (or of any shareholder,
director, officer, employee, agent, consultant or representative
of such party) to the other parties to this Agreement; provided
that if such termination shall result from the willful failure of
any party to fulfill a condition to the performance of the
obligations of another party or to perform a covenant of this
Agreement or from a willful breach by any party to this
Agreement, such party shall be fully liable for any and all
Losses incurred or suffered by any other party as a result of
such failure or breach. The provisions of Sections 5.01 and
12.03 shall survive any termination hereof pursuant to Section
11.01.
ARTICLE XII
MISCELLANEOUS
12.01 Notices. All notices, requests and other
communications to either party hereunder shall be in writing
(including facsimile, telecopy or similar writing) and shall be
deemed given when delivered:
If to Purchaser, to: Gulf Island Fabrication, Inc.
Attn: Kerry J. Chauvin, President
583 Thompson Road
Houma, LA 70361-0310
With a Copy to: Robert R. Casey, Esq.
Four United Plaza, 5th Floor
8555 United Plaza Boulevard
Baton Rouge, LA 70809-7000
If to Sellers or to
Indemnifying Parties,
to Sellers'
Representatives: R. H. Marmande
1321 Dularge Road
Theriot, LA 70397
E. M. Dupaquier
206 Maple Avenue
Houma, LA 70364
Elward Cunningham
417 Parish Lane
Houma, LA 70363
Jules Ledet
4612 Highway 56
Chauvin, LA 70344
Jimmy Benoit
125 Harding Drive
Houma, LA 70364
Kenny Bollinger
601 Terre Haute Place
Houma, LA 70364
Willis Bonvillain
227 Levey Drive
Lafayette, LA 70506
E. Hensley
716 Park Ridge Drive
River Ridge, LA 70123
Hugh Watson
8539 Hiawatha
Houston, TX 77036
Tina Piazza
206 Angelle Drive
Houma, LA 70360
Hays Adams
3036 Copasaw Drive
Houma, LA 70364
Curtis Ledet
P. O. Box 805
Bourg, LA 70343
Mark Foret
119 Eustice
Houma, LA 70364
Davy Martin
3417 1/2 West Main
Houma, LA 70364
Shelly Hebert
127 Grace Street
Houma, LA 70360
Wayne Verdun
106 Nancy Court
Thibodaux, LA 70301
David Weber
2006 Mary Hughes Drive
Houma, LA 70363
With a Copy to: P. J. McMahon, Esq.
P. O. Box 1545
Houma, LA 70361
Each of the above persons may change their address or facsimile
number by notice to the other persons in the manner set forth
above.
12.02 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Purchaser and Seller,
or in the case of a waiver, by the party against whom the waiver
is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the existence of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12.03 Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense.
12.04 Successors and Assigns. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns;
provided that neither party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder.
12.05 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Louisiana
without regard to the conflicts of law rules of such state.
12.06 Jurisdiction and Forum: Arbitration. Any controversy
arising under, out of, in connection with, or relating to, this
Agreement, and any amendment hereof, or the breach hereof or
thereof, shall be determined and settled by arbitration in New
Orleans, Louisiana by an arbitrator or arbitrators mutually
agreed upon by Purchaser and the Sellers' Representatives or, if
Purchaser and Sellers' Representatives shall fail or be unable to
so agree within ten Business Days after the written request
therefor by Purchaser or the Representatives to the other, such
arbitrator or arbitrators as may be selected in accordance with
the rules of the American Arbitration Association. Any award
rendered therein shall specify the findings of fact of the
arbitrator or arbitrators and the reasons for such award, with
reference to and reliance on relevant law. Any such award shall
be final and binding on each and all of the parties thereto and
their personal representatives, and judgment may be entered
thereon in any court having jurisdiction thereof.
12.07 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received as a
counterpart hereof signed by the other party hereto.
12.08 Entire Agreement. This Agreement and any other
agreements referred to herein constitute the entire agreement
between the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect thereto.
No representation, inducement, promise, understanding, condition
or warranty not set forth herein has been made or relied upon by
either party hereto.
12.09 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
12.10 Severability. In the event any one or more of the
provisions of this Agreement shall be or become illegal or
unenforceable in any respect, the validity, legality, operation
and enforceability of the remaining provisions of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers effective as of the day and year first above written but
executed on the dates set forth below.
WITNESSES: GULF ISLAND FABRICATION, Purchaser
/s/ Alden J. Laborde BY: /s/ Kerry J. Chauvin
------------------------- -------------------------------
Kerry J. Chauvin, President
/s/ John P. Laborde Date Executed: November 25,1996
------------------------- -------------
SELLERS:
/s/ Alden P. Laborde /s/ R. H. Marmande
------------------------- -----------------------------------
R. H. Marmande
/s/ John P. Laborde Date Executed: November 25, 1996
------------------------- -------------
/s/ Alden P. Laborde /s/ E. M. Dupaquier
------------------------- -----------------------------------
E. M. Dupaquier
/s/ John P. Laborde Date Executed: November 25, 1996
------------------------- -------------
/s/ Alden P. Laborde /s/ Elward Cunningham
------------------------- -----------------------------------
Elward Cunningham
/s/ John P. Laborde Date Executed: November 25, 1996
------------------------- ------------
/s/ Jules Ledet
------------------------- -----------------------------------
Jules Ledet
------------------------- Date Executed: , 1996
---------------
/s/ Jimmy Benoit
------------------------- -----------------------------------
Jimmy Benoit
Date Executed: , 1996
------------------------- ----------------
/s/ Kenny Bollinger
------------------------- -----------------------------------
Kenny Bollinger
Date Executed: November 27 , 1996
------------------------- ----------------
/s/ Willis Bonvillain
------------------------- -----------------------------------
Willis Bonvillain
Date Executed: , 1996
------------------------- --------------
/s/ E. Hensley, III
------------------------- -----------------------------------
E. Hensley
------------------------- Date Executed: , 1996
---------------
/s/ Hugh Watson
------------------------- ------------------------------------
Hugh Watson
------------------------- Date Executed: , 1996
----------------
/s/ Tina Piazza
------------------------- ------------------------------------
Tina Piazza
------------------------- Date Executed: , 1996
----------------
/s/ Hays Adams
------------------------- ------------------------------------
Hays Adams
------------------------- Date Executed: , 1996
---------------
/s/ Curtis Ledet
------------------------- ------------------------------------
Curtis Ledet
Date Executed: , 1996
-------------------------- ----------------
/s/ Mark Foret
-------------------------- ------------------------------------
Mark Foret
Date Executed: , 1996
-------------------------- ---------------
/s/ Davy Martin
-------------------------- -----------------------------------
Davy Martin
-------------------------- Date Executed: , 1996
----------------
/s/ Shelly Hebert
------------------------- ------------------------------------
Shelly Hebert
------------------------- Date Executed: November 27 , 1996
----------------
/s/ Wayne Verdun
------------------------- ------------------------------------
Wayne Verdun
------------------------- Date Executed: , 1996
----------------
/s/ David Weber
------------------------- -------------------------------------
David Weber
------------------------- Date Executed: , 1996
------------------
All schedules have been intentionally omitted. A copy of any omitted
schedule will be furnished supplementally to the Commission upon request.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of
November 27, 1996 by, between and among Gulf Island
Fabrication, Inc., a Louisiana corporation (hereinafter referred
to as "Purchaser"), and E. M. Dupaquier and R. H. Marmande, the
holders of all of the outstanding shares of capital stock (the
"Sellers") of Dolphin Steel Sales, Inc. (the "Corporation" or the
"Company"). E. M Dupaquier and R. H. Marmande are also referred
to herein variously as the "Officers" or "Sellers'
Representatives".
W I T N E S S E T H :
WHEREAS, Sellers desire to sell and the Purchaser desire to
purchase all of the outstanding shares (the "Shares") of common
stock of the Corporation for the consideration and on the terms
and conditions set forth herein; and,
WHEREAS, Purchaser and certain of the Sellers desire to
enter into certain non-competition agreements (the "Non-
Competition Agreements") as provided in Section 4.01.
NOW, THEREFORE, the parties hereto hereby agree as follows:
I.
PURCHASE AND SALE OF ASSETS
1.01 Purchase and Sale.
At the closing of the transaction contemplated hereby
(the "Closing"), upon the terms and subject to the conditions
contained in this Agreement, Purchaser shall purchase from
Sellers and Sellers shall sell the Shares consisting of 1,000
shares of common stock, no par value per share, free and clear of
any and all liens, mortgages, encumbrances and security
interests.
1.02 Stock Purchase Price.
(a) The initial purchase price for the Shares
("Initial Purchase Price") shall be Seven Hundred Seventy-Five
Thousand, One Hundred Sixty-Three ($775,163) Dollars which shall
be allocated among the Sellers in proportion to the Shares sold
by each of them to Purchaser.
(b)(1) The Initial Purchase Price shall be adjusted to
the final purchase price ("Final Purchase Price") by increasing
the Initial Purchase Price by the increase in the Net Book Value,
as hereinafter defined, or by decreasing the Initial Purchase
Price by the decrease in the Net Book Value of the Corporation
between September 30, 1996 and the Closing as reflected on the
Closing Balance Sheet (as hereinafter defined). However, the
Final Purchase Price shall not be less than $775,163.
(2) The term "Net Book Value" means the excess of (1)
the book value of all of the Corporation's assets over (2) the
book amounts of all the Corporation's current and long-term fixed
liabilities and accrued expenses, including all unpaid ad valorem
taxes prorated to the date of the Closing, whether or not any of
the Corporation's assets are then subject to a lien therefor as
of the Closing. All determinations of book value and book
amounts shall be made in accordance with the accounting
principles, methods and conventions employed in the preparation
of the Corporation's September 30, 1996 balance sheet, a copy of
which is attached as part of Schedule 1.02(b)(2) (hereinafter
"Interim Financial Statements"), but with all intercompany
payables, receivables and equity interests eliminated as among
Dolphin Services, Inc., Dolphin Steel Sales, Inc. and Dolphin
Sales & Rentals, Inc. as though they were members of a
consolidated group. Net Book Value at September 30, 1996 was
$775,163.
(3) The term "Closing Balance Sheet" means for
purposes of this Section 1.02(b) the balance sheet of the
Corporation as of December 31, 1996 unless such date precedes the
Closing by more than five (5) business days, in which case as of
the date of the Closing ("Closing Date"), prepared in accordance
with the same accounting principles, methods and conventions
employed in the preparation of the Corporation's Interim
Financial Statements. The Closing Balance Sheet shall be
prepared by a certified public accountant or certified public
accounting firm designated by Purchaser and shall be presented to
Sellers and Purchaser within forty-five (45) days following the
Closing. In the event either Sellers or Purchaser disagree with
any of the figures shown on the Closing Balance Sheet, they or it
shall notify the other parties hereto, within ten (10) days after
their receipt of the Closing Balance Sheet, and shall furnish the
reasons why that party is in disagreement. If the parties have
not resolved their disagreements with respect to the Closing
Balance Sheet within twenty (20) days after said notice, Sellers
and Purchaser shall submit the handling of any disputed items to
an independent nationally recognized accounting firm (other than
Price, Waterhouse & Co.) selected by Purchaser and Sellers. If
Purchaser and Sellers are unable to agree upon such a nationally
recognized independent accounting firm within ten (10) days after
expiration of said twenty (20) day period, such an independent
nationally recognized accounting firm ("Arbitrator") shall be
selected in accordance with the rules of the American Arbitration
Association. The Arbitrator shall submit the correct Closing
Balance Sheet to Purchaser and Sellers and shall certify the
increase or decrease in Net Book Value between the date of the
Interim Financial Statements and the close of business on the
Closing Date.
1.03 Closing. The closing (the "Closing") shall take place
at the offices of Messrs. Jones, Walker, Waechter, Poitevent,
Carrere and Denegre, Baton Rouge, Louisiana, on a mutually
agreeable date (the "Closing Date"), not later than ten (10) days
following satisfaction of all conditions to Closing set forth in
Article IX, but after January 1, 1997. Assuming the conditions
set forth in Article IX shall have been satisfied, the Closing
shall be deemed effective as of the close of business of the
Corporation on the date of the Closing. At the Closing:
(a) Purchaser shall deliver to Sellers by wire
transfer or certified funds cash in an amount equal to Seven
Hundred Twenty-Five Thousand, One Hundred Sixty-Three ($725,163)
Dollars, allocated among Sellers in proportion to their ownership
of the remaining outstanding shares of capital stock of the
Corporation, and shall deliver to Whitney National Bank Fifty
Thousand and No/100 ($50,000.00) Dollars to be held pursuant to
the escrow agreement (the "Escrow Agreement") in the form
attached hereto as Schedule 1.03(a), which shall also be executed
at or prior to the Closing.
(b) Sellers shall deliver to Purchaser certificates
representing in the aggregate One Thousand (1,000) shares of
capital stock of the Corporation with stock powers attached
executed in blank, with signature guaranteed, free and clear of
any and all liens, mortgages, security interests and
encumbrances.
(c) All officers and directors of the Corporation
shall tender their resignations from such positions, said tender
to occur simultaneously with the act of delivery of funds
described in Section 1.03(a).
1.04 Post-Closing. Within ten (10) days following the date
on which the Closing Balance Sheet has been agreed upon by the
parties or otherwise determined to be accurate, if the Net Book
Value of the Corporation as reflected on the Closing Balance
Sheet is more than or less than the Net Book Value as reflected
on the September 30, 1996 balance sheet of the Corporation,
attached as part of Schedule 1.02(b)(2), Purchaser shall pay to
or receive from, respectively, Sellers (in proportion to their
present ownership of the Shares) cash (by wire transfer or bank
cashier's check) equal to the difference. Failure by any Seller
to make a payment required pursuant to this Section 1.04 shall
constitute a breach of a covenant for which the remedies provided
in Section 10.02 are applicable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
For purposes of this Agreement the business (the "Business")
of the Company is the onshore and offshore oil and gas production
platform construction and maintenance business which consists of:
outfitting and interconnect piping, painting and maintenance of
onshore and offshore oil and gas production platforms; and the
construction (including interconnect piping and pile driving) of
shallow water and land platforms and pipeline installation. The
phrase "in the ordinary course" means in the course of performing
any one or more of those enumerated activities. Sellers herewith
represent and warrant to Purchaser as of the date hereof and as
of the Closing Date (unless another date is expressly set forth
below) that:
2.01 Corporate Existence and Power. The Corporation is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Louisiana, and the
Corporation has all corporate powers and all material
governmental licenses, permits, authorizations, consents and
approvals required to carry on the Business as now conducted.
Subject to the provisions of the following sentence, the
Corporation is duly qualified to conduct business as a foreign
corporation and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature
of its activities make such qualification necessary. Sellers
have heretofore delivered to Purchaser true and complete copies
of the Corporation's Articles of Incorporation and By-Laws as
currently in effect.
2.02 Governmental Authorization. The execution, delivery
and performance by Sellers of this Agreement and the consummation
by Sellers of the transactions contemplated hereby require no
action by or in respect of, or filing with, any governmental
body, agency, official or authority.
2.03 Non-Contravention. The execution, delivery and
performance by Sellers of this Agreement and the consummation by
Sellers of the transactions contemplated hereby do not and will
not (i) contravene or conflict with the Articles of Incorporation
or bylaws of the Corporation (other than any provision which may
be waived by the Corporation and/or Sellers), (ii) contravene or
conflict with or constitute a violation of any provision of law,
regulation, judgment, injunction, order or decree binding upon or
applicable to Sellers or the Corporation, or (iii) except as
disclosed in Schedule 2.03, require any consent, approval or
other action by any person or constitute a default under any
obligation of Sellers or the Corporation under any provision of
any contract or other instrument binding upon Sellers or the
Corporation other than contracts and obligations which may be
cancelled unilaterally upon notice to Sellers or the Corporation.
2.04 Subsidiaries. The Corporation does not own more than
fifty (50%) percent of all outstanding shares of capital stock
of, other ownership interests in, or other securities of any
corporation or other entity.
2.05 Financial Statements. The balance sheet of the
Corporation for the year ended December 31, 1995 (such date
referred to herein as the "Balance Sheet Date" and such balance
sheet the "Balance Sheet") and the related statements of income
for the year ended December 31, 1995 (collectively, the
"Financial Statements") have been previously delivered to
Purchaser and are attached as Schedule 2.05. In all material
respects, the Financial Statements fairly present the financial
position of the Corporation as of the date thereof and its
results of operations for the period then ended.
2.06 Absence of Certain Changes. Since the Balance Sheet
Date to the date hereof, the Corporation has conducted the
Business in the ordinary course consistent with past practice
and, except as set forth in Schedule 2.06 or otherwise
contemplated hereby, there has not been:
(a) Any event, occurrence, development or state of
circumstances or facts which has had or could reasonably be
expected to have a material adverse effect on the Corporation,
except to the extent the effect is reflected in the Interim
Financial Statements;
(b) Any incurrence, assumption or guarantee of any
indebtedness for borrowed money or any material obligation or
liability, except in the ordinary course of the Business
consistent with past practice and except as reflected on the
Interim Financial Statements;
(c) Any creation or other incurrence of any Lien (as
defined in Section 2.08) on any asset of the Corporation, except
in the ordinary course of the Business consistent with past
practice and except as reflected in the Interim Financial
Statements;
(d) Any making of any loan, advance or capital
contributions to or investment in any person, except as reflected
in the Interim Financial Statements;
(e) Any amendment of any material term of any
outstanding security of Seller;
(f) Any material damage, destruction or other casualty
loss affecting any of the assets of the Corporation, except those
covered by insurance and except as reflected in the Interim
Financial Statements;
(g) Any transaction or commitment made, or any
contract or agreement entered into, by the Corporation relating
to its assets or the Business or any relinquishment of any
contract or other right, in either case, material to the
Corporation, other than transactions and commitments (including
acquisitions and dispositions of steel and equipment) in the
ordinary course of the Business consistent with past practice and
except as reflected in the Interim Financial Statements;
(h) Any declaration or payment of any dividend or
other distribution by the Corporation or any repurchase,
redemption or other acquisition for value of any security or
other interest in the Corporation or any commitment to do any of
the foregoing;
(i) Any general or specific increase in the salary or
other compensation (including, without limitation, bonuses,
profit sharing or deferred compensation) payable or to become
payable to any employees of the Corporation, except in the
ordinary course of the Business consistent with past practice;
(j) Any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the
Corporation or any lockouts, strikes, slowdowns, work stoppages
or threats thereof by or with respect to any employees of the
Corporation; or
(k) Any agreement entered into to do any of the
foregoing.
2.07 Properties.
(a) The Corporation has good and marketable title to,
or in the case of leased property valid leasehold interests in,
all property and assets (whether real or personal, tangible or
intangible) reflected on the Balance Sheet or acquired after the
Balance Sheet Date, except for properties and assets sold since
the Balance Sheet Date in the ordinary course of business
consistent with past practice. None of such properties or assets
is subject to any liens, mortgages, security interests or other
encumbrances (herein "Liens") except:
(i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being
contested in good faith (and for which
adequate accruals or reserves have been
established on the Balance Sheet);
(iii) Liens disclosed in Schedule 2.07(a) or which
will be discharged at the Closing;
(iv) Liens which do not materially detract from
the value of such property or assets as now
used, or materially interfere with any
present or intended use of such property or
assets; or
(v) Liens in favor of vendors and lessors
incurred in the ordinary course of business.
Clauses (i), (ii), (iii) (iv) and (v) are, collectively, referred
to herein as "Permitted Liens".
(b) To the knowledge of Sellers and except as
reflected on the Interim Financial Statements, there are no
developments affecting any of such properties or assets pending
or threatened which could materially detract from the value of
such property or assets, materially interfere with any present or
intended use of any such property or assets or materially
adversely affect the marketability of such properties or assets.
(c) All such leases of real and personal property with
respect to which the Corporation is a lessee are as of the date
hereof and will be on the Closing Date valid, binding and
enforceable in accordance with their respective terms and there
does not exist under any such lease any material default or any
event which with notice or lapse of time or both would constitute
a material default.
(d) Schedule 2.07(d) identifies all real and personal
property used or held for use in connection with the Business as
of the date hereof (the "Property") and contains an accurate
balance sheet showing the adjusted tax basis of all of the
Corporation's assets for United States income tax purposes at
September 30, 1996. The plants, buildings, structures, tools,
steel inventory and equipment reflected on the Balance Sheet or
acquired after the Balance Sheet Date through the date hereof
have no material defects, are in good operating condition and
repair and have been reasonably maintained consistent with
standards generally followed in the industry (giving due account
to the age and length of use of same, ordinary wear and tear
excepted), are suitable for their present uses and, in the case
of plants, buildings and other structures (including without
limitation, the roofs thereof), are structurally sound, except as
set forth on Schedule 2.07(d). Such plants, buildings and
structures currently have access to (1) public roads or valid
easements over private streets or private property for such
ingress to and egress from all such plants, buildings and
structures and (2) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire
protection, drainage and other public utilities, as is necessary
for the conduct of the Business. None of the material structures
on the immovable or real property of the Corporation encroaches
upon real property of another person, and no structure of any
other person substantially encroaches upon any immovable or real
property of the Corporation. All items of equipment listed on
Schedule 2.07(d) are in the possession and control of the
Corporation and will be in the Corporation's possession and
control on the Closing Date and are in good operating condition
and are adequately performing the tasks which they are designed
to perform.
2.08 Sufficiency of and Title to the Purchased Assets.
(a) The assets (the "Assets") disclosed on the Balance
Sheet and in Schedule 2.07(d) constitute as of the date thereof
and hereof, respectively, all of the assets or property used or
held for use in the Business and are adequate to conduct the
Business as presently conducted.
(b) Upon consummation of the transactions contemplated
hereby, the Corporation will have good and marketable title in
and to each of the Assets, free and clear of all Liens, except
for Permitted Liens.
2.09 No Undisclosed Material Liabilities. Except as
disclosed on Schedule 2.09, as of the Closing there will be no
liabilities of the Corporation of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in
such a liability, other than:
(i) Liabilities disclosed or provided for in the
Interim Financial Statements;
(ii) Liabilities for which adequate insurance is
available; and,
(iii) Liabilities incurred in the ordinary course
of the Business, including tax liabilities
and liabilities for personal injuries and
property damage, which in the aggregate are
not material to the Business taken as a
whole.
2.10 Litigation. Except as set forth in Schedule 2.10, as
of the date hereof there is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or to the
knowledge of Sellers threatened against or affecting, Sellers,
the Corporation or any of their or its properties before any
court or arbitrator or any governmental body, agency, official or
authority, which, individually or in the aggregate, if determined
or resolved adversely to Sellers or the Corporation in accordance
with the plaintiff's demands, would reasonably be expected to
have a material adverse effect on Sellers or the Corporation or
which in any manner challenges or seeks to prevent, enjoin, alter
or materially delay the transactions contemplated by this
Agreement.
2.11 Material Contracts.
(a) Except as disclosed in Schedule 2.11(a) and
elsewhere in this Agreement, as of the date hereof the
Corporation is not a party to or subject to:
(i) Any lease of real or immovable property;
(ii) Any lease that is material to the Corporation
of personal or movable property as lessee;
(iii) Any contract for the purchase of materials,
supplies, goods, services, equipment or other
assets, other than in the ordinary course of
the Business;
(iv) Any sales, distribution or other similar
agreement providing for the sale by the
Corporation of materials, supplies, goods,
services, equipment or other assets, other
than to customers in the ordinary course of
the Business;
(v) Any lease of any item of tangible personal or
movable property or real or immovable
property as lessor other than to customers in
the ordinary course of the Business;
(vi) Any partnership, joint venture or other
similar contract, arrangement or agreement;
(vii) Any contract relating to indebtedness for
borrowed money (whether incurred, assumed,
guaranteed or secured by any asset);
(viii) Any license, franchise or similar agreement;
(ix) Any agency, dealer, sales representative or
other similar agreement;
(x) Any contract or commitment that substantially
limits the freedom of the Corporation to
compete in any line of business or with any
person or in any area or to own, operate,
sell, transfer, pledge or otherwise dispose
of or encumber any asset or which would so
limit the freedom of the Corporation after
the Closing;
(xi) Any consulting agreement;
(xii) Any contract relating to any guaranty or
indemnity issued by the Corporation;
(xiii) Any agreement relating to the acquisition or
disposition of any part of the Business; or
(xiv) Any other contract or commitment not made in
the ordinary course of the Business
consistent with past practice.
(b) Each contract disclosed in any schedule to this
Agreement or required to be disclosed pursuant to Section 2.11(a)
is a valid and binding agreement of the Corporation, and, to the
knowledge of Sellers, as of the date hereof is in full force and
effect, and neither the Corporation nor, to the knowledge of
Sellers, any other party thereto is in default or breach in any
material respect under the terms of any such Contract, nor, to
the knowledge of Sellers, has any event or circumstance occurred
that, with notice or lapse of time or both, would constitute any
such default or breach.
2.12 Licenses and Permits. Schedule 2.12 correctly
describes each material governmental license, permit,
authorization, consent or approval affecting, or relating in any
way to, the Corporation and its business, together with the name
of the governmental agency or entity issuing such license or
permit (the "Permits"). Except as set forth on Schedule 2.12,
such Permits are valid and in full force and effect and will not
be terminated or impaired or become terminable as a result of the
transactions contemplated hereby.
2.13 Ability to Conduct the Business. Except as set forth
in Schedule 2.13, as of the date hereof there is no contract, nor
any judgment, order, writ, injunction or decree that by its terms
prevents or would reasonably be expected to prevent the use by
the Corporation of the Assets or the conduct by the Corporation
of the Business after the Closing Date.
2.14 Material Suppliers. Schedule 2.14 lists the five
largest (in dollar value) suppliers of inventory to the
Corporation during each of the last two completed fiscal years
and through December 31, 1995. To the knowledge of Sellers,
since the Balance Sheet Date there has not been any adverse
change in the business relationship of the Corporation with any
such supplier or with any supplier that is otherwise material to
the Business or with any supplier as a result of the transactions
contemplated hereby, except as disclosed on Schedule 2.14.
2.15 Insurance Coverage. Sellers have furnished or provided
access to Purchaser to true and complete copies of, all insurance
policies currently in effect covering the assets, the Business
and the employees of the Corporation. Except as disclosed on
Schedule 2.15, as of the date hereof there is no claim by the
Corporation pending under any of such policies as to which
coverage has been questioned, denied or disputed by the
underwriters of such policies. All premiums payable under all
such policies have been paid and the Corporation is otherwise in
full compliance with the terms and conditions of all such
policies.
2.16 Compliance with Laws; No Defaults.
(a) As of the date hereof, the Corporation is not in
violation of, has not since December 31, 1995 violated, and to
Sellers' knowledge is not under investigation with respect to or
has not been threatened to be charged with or given notice of any
violation of, any law, rules, ordinances or regulations,
judgments, injunctions, orders or decrees binding upon or
applicable to the Corporation, except for any violations set
forth in Schedule 2.16(a) which would not, individually or in the
aggregate, if finally determined adversely, result in a material
adverse effect on the business of the Corporation.
(b) As of the date hereof, the Corporation is not in
default under, and no condition exists that with notice or lapse
of time or both would constitute a default under any contract or
other instrument binding upon the Corporation or affecting or
relating to its business or any license, authorization, permit,
consent or approval held by the Corporation or affecting or
relating to the Business, except as otherwise disclosed in this
Agreement or in Schedules attached hereto.
2.17 Inventories. The inventories set forth in the Balance
Sheet were properly stated therein at cost determined in
accordance with generally accepted accounting principles applied
on a consistent basis. Since the Balance Sheet Date, the
inventories related to the Business have been maintained in the
ordinary course of business. Except as set forth in Schedule
2.17, all such inventory is owned free and clear of all Liens,
except Permitted Liens. All of the inventory recorded on the
Balance Sheet consists of, and all inventory related to the
Business on the Closing Date will consist of, items of a quality
usable or saleable in the normal course of the Business
consistent with past practices and are and will be in quantities
sufficient for the normal operation of the Business in accordance
with past practice.
2.18 Receivables. All accounts, notes and other receivables
(other than receivables collected since December 31, 1995)
reflected on the Balance Sheet are, and all accounts, notes and
other receivables arising out of or otherwise relating to the
Corporation's business as of the Closing will be, valid, binding
and enforceable, subject to applicable laws governing bankruptcy,
moratorium or creditors' rights generally which may prevent their
enforcement. The dollar amount shown for all such accounts on
the Interim Financial Statements, less the allowance for doubtful
accounts shown thereon, is collectible in full. All accounts,
notes and other receivables arising out of or otherwise relating
to the Business at the Balance Sheet Date have been included in
the Balance Sheet, and all accounts, notes and other receivables
arising out of or otherwise relating to the Business at the
Closing Date will be reflected on the Corporation's financial
books and records.
2.19 Intellectual Property.
(a) Schedule 2.19(a) sets forth as of December 31,
1995 a list of all intellectual property rights (herein
"Intellectual Property Rights") used or held for use or otherwise
necessary in connection with the conduct of the Business,
specifying as to each, as applicable: (i) the nature of such
Intellectual Property Right; (ii) the owner of such Intellectual
Property Right and if Seller is not the owner, the rights held by
the Corporation; (iii) the jurisdictions by or in which such
Intellectual Property Right is recognized, issued or registered
or in which an application for such issuance or registration has
been filed, including the respective registration or application
numbers; and (iv) material licenses, sublicenses and other
agreements as to which the Corporation is a party and pursuant to
which any person is authorized to use such Intellectual Property
Right, including the identity of all parties thereto, a
description of the nature and subject matter thereof, the
applicable royalty and the term thereof.
(b) (i) Except as set forth in Schedule 2.19(b), the
Corporation has not since January 1, 1996 been sued or charged in
writing with or been a defendant in any claim, suit, action or
proceeding relating to its business that has not been finally
terminated prior to the date hereof and that involves a claim of
infringement by the Corporation of any intellectual property
rights of any other person, and (ii) the Corporation has no
knowledge of any basis for any such claim of infringement, and no
knowledge of any continuing infringement by any other person of
any intellectual property rights used or held for use or
otherwise necessary in connection with the conduct of the
Business. No such intellectual property right is subject to any
outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by the Corporation or restricting the
licensing thereof by the Corporation to any Person. The
Corporation has not entered into any agreement to indemnify any
other person against any charge of infringement of any
intellectual property rights.
(c) As used herein, the term "Intellectual Property
Right" means any trade name, trademark, service name, service
mark, copyright, invention, patent, trade secret, know-how
(including any registrations or applications for registration of
any of the foregoing) or any other similar type of proprietary
intellectual property right.
2.20 Employees. Schedule 2.20 identifies all of the
Corporation's officers and key employees as of December 31, 1995.
None of such key employees has indicated to the Corporation that
he or she intends to resign or retire as a result of the
transactions contemplated by this Agreement, except that E. M.
Dupaquier and R. H. Marmande shall retire from the Corporation's
employee on the Closing Date.
2.21 Fees. There is no investment banker, broker, financial
advisor, finder or other intermediary which has been retained by
or is authorized to act on behalf of Sellers who might be
entitled to any fee or commission from Purchaser upon
consummation of the transactions contemplated by this Agreement.
2.22 Environmental Matters.
(a) The following defined terms, as used herein, have
the following meanings:
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
"Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions,
whether now or hereafter in effect, relating to human health, the
environment or to emissions, discharges or releases of
pollutants, contaminants, hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any and all
liabilities of, or relating to, Seller (including any entity
which is, in whole or in part, a predecessor of Seller), whether
vested or unvested, contingent or fixed, actual or potential,
known or unknown, which (i) arise under or relate to matters
covered by Environmental Laws (including without limitation any
matters disclosed or required to be disclosed in Schedule 2.22
hereto) and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date.
"Environmental Permits" means all permits, licenses,
authorizations, certificates and approvals of governmental
authorities relating to or required by Environmental Laws and
necessary or proper for the business of Seller as currently
conducted.
"Hazardous Substance" means any toxic, radioactive,
caustic or otherwise hazardous substance, including petroleum,
its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the
foregoing characteristics, including, without limitation, any
substance regulated under Environmental Laws.
"Regulated Activity" means any generation, treatment,
storage, recycling, transportation or disposal of any Hazardous
Substance.
"Release" means any discharge, emission or release
including a Release as defined in CERCLA at 42 U.S.C. 9601 (22).
The term "Released" has a corresponding meaning.
(b) Except as disclosed on Schedule 2.22 as of the
date hereof:
(i) No notice, notification, demand, request for
information, citation, summons, complaint or
order has been issued, no complaint has been
filed, no penalty has been assessed and, to
Seller's knowledge, no investigation or
review is pending or threatened by any
governmental entity or other person with
respect to any (a) alleged violation by the
Corporation of any Environmental Law or
liability thereunder, (b) alleged failure by
the Corporation to have any Environmental
Permit, (c) Regulated Activity, or (d)
Release of Hazardous Substances;
(ii) Other than generation in compliance with all
applicable Environmental Laws, (a) the
Corporation has not engaged in any Regulated
Activity and (b) no Regulated Activity has
occurred at or on any property now or
previously owned, leased or operated by the
Corporation;
(iii) No polychlorinated biphenyls, radioactive
material, urea formaldehyde, lead, asbestos,
asbestos-containing material or underground
storage tank (active or abandoned) is or has
been present at any property now or
previously owned, leased or operated by the
Corporation;
(iv) No Hazardous Substance has been Released (and
no notification of such Release has been
filed or made) or is present (whether or not
in a reportable or threshold planning
quantity) at, on or under any property now or
previously owned, leased or operated by the
Corporation;
(v) No property now or previously owned, leased
or operated by the Corporation or any
property to which the Corporation has,
directly or indirectly, transported or
arranged for the transportation of any
Hazardous Substances is listed or, to
Seller's knowledge, proposed for listing, on
the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar federal, state or
foreign list of sites requiring investigation
or clean-up;
(vi) There are no liens under Environmental Laws
on any of the real property or other assets
owned, leased or operated by the Corporation,
no governmental actions have been taken or
are in process which could subject any of
such properties or assets to such liens and
the Corporation would not be required to
place any notice or restriction relating to
Hazardous Substances at any property owned by
it in any deed to such property;
(vii) There are no Environmental Permits that are
nontransferable or require consent,
notification or other action to remain in
full force and effect following the
consummation of the transactions contemplated
hereby; and
(viii) All Perchloroethylene and each other chemical
substance used by the Corporation in
connection with the business has been
disposed of in accordance with all applicable
laws, rules, regulations and pronouncements
of the United States, all applicable states
and all applicable boards, agencies,
departments and other divisions thereof.
(c) There has been no environmental investigation,
study, audit, test, review or other analysis conducted of which
the Corporation or Sellers has knowledge in relation to the
current or prior business of the Corporation or any property or
facility now or previously owned or leased by the Corporation
which has not been delivered to Purchaser at least five days
prior to the date hereof.
(d) For purposes of this Section 2.22, the term
"Corporation" shall include any entity which is, in whole or in
part, a predecessor of the Corporation.
2.23 Labor Matters. As of the date hereof, the Corporation
is in compliance with all currently applicable laws respecting
employment and employment practices (including terms and
conditions of employment, wages and hours) and is not engaged in
any unfair labor practice, the failure to comply with which or
engagement in which, as the case may be, would reasonably be
expected to have a material adverse effect on the Business. As
of the date hereof there is no unfair labor practice complaint
pending or, to the knowledge of Sellers, threatened against the
Corporation before the National Labor Relations Board or before
any other state or local board, agency or tribunal.
2.24 The Shares. (a) There are presently outstanding and
at the Closing there will be outstanding a total of One Thousand
(1,000) shares of no par value voting common stock of the
Corporation (the "Shares"). No other class of common, preferred
or other type of shares of stock is presently outstanding.
(b) The issuance of all of the Shares has been duly
authorized by all required action by the Corporation and all of
the Shares are fully paid and non-assessable.
(c) The Shares are registered in the names of the
persons and in the amounts set forth in Schedule 2.24(c). All of
the Shares registered in the names of the above persons may be
conveyed by them without the consent of an person, other than
Consents of the Corporation and the other Sellers which are
waivable by them at or prior to the Closing Date.
(d) None of the Shares is subject to any lien,
mortgage, pledge, security interest or other encumbrance and each
Seller has good and marketable title to all Shares registered in
his name.
2.25 Binding Agreement. This Agreement constitutes a valid
and binding obligation of Sellers.
2.26 Other Information. None of the documents or
information delivered to Purchaser in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers that:
3.01 Organization and Existence. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Louisiana.
3.02 Corporate Authorization. The execution, delivery and
performance by Purchaser of this Agreement and the consummation
by Purchaser of the transactions contemplated hereby or thereby
are within the powers of Purchaser and have been duly authorized
by all necessary action on the part of Purchaser. This Agreement
constitutes a valid and binding agreement of Purchaser.
3.03 Governmental Authorization. The execution, delivery
and performance by Purchaser of this Agreement requires no action
by or in respect of, or filing with, any governmental body,
agency, official or authority.
3.04 Non-Contravention. The execution, delivery and
performance by Purchaser of this Agreement does not and will not
(i) contravene or conflict with the Articles of Incorporation or
By-Laws of Purchaser or (ii) assuming compliance with the matters
referred to in Section 3.03, contravene or conflict with any
provision of any law, regulation, judgment, injunction, order or
decree binding upon Purchaser.
3.05 Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to
act on behalf of Purchaser who might be entitled to any fee or
commission from Sellers upon consummation of the transactions
contemplated by this Agreement.
3.06 Financing. Purchaser will have on the Closing Date
sufficient funds available to purchase the Shares, provided all
conditions set forth in Article IX are satisfied.
3.07 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Purchaser
threatened against or affecting, Purchaser before any court or
arbitrator or any governmental body, agency or official which in
any matter challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
ARTICLE IV
COVENANTS OF SELLERS
4.01 Conduct of the Business. From the date hereof until
the Closing Date, Sellers shall cause the Corporation to conduct
the Business in the ordinary course consistent with past practice
and cause the Corporation to exert its best efforts to preserve
intact its business organization and relationships with third
parties and to keep available the services of its present
officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, Sellers
shall not cause the Corporation to and the Corporation shall not:
(i) Merge or consolidate with any other person or
acquire a material amount of assets of any
other person, other than steel, tools and
equipment purchased in the ordinary course of
the Business;
(ii) Declare and/or pay any dividend or make any
other distribution or transfer of cash or
other assets to its shareholders in their
capacities as such;
(iii) Sell, lease, license or otherwise dispose of
any assets except (a) pursuant to existing
contracts or commitments and (b) in the
ordinary course of the Business consistent
with past practices; or
(iv) Agree or commit to do any of the foregoing.
Sellers shall not permit the Corporation to (a) take or agree or
commit to take any action that would make any representation and
warranty of Sellers hereunder inaccurate in any respect at, or as
of any time prior to, the Closing Date or (b) omit or agree to
commit or omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect
at any such time.
4.02 "S" Election. Sellers and their spouses shall execute
and cause the Corporation to execute Internal Revenue Service
forms 2553 so as to elect the provisions of Subchapter S of the
United States Internal Revenue Code, sections 1361, et seq.,
effective January 1, 1997 and shall deliver fully completed forms
2553 with all of their signatures to Purchaser on or before the
earlier of the Closing Date or January 15, 1997.
4.03 Access to Information. Sellers (i) will give
Purchaser, its counsel, financial advisors, auditors and other
authorized representatives reasonable access to the offices,
properties, books and records of the Corporation and will allow
Purchaser or its representatives access to conduct all reasonable
environmental tests and inspections, (ii) will furnish to
Purchaser, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and
other information relating to the Corporation as such persons may
reasonably request and (iii) will instruct its employees, counsel
and financial advisors to cooperate with Purchaser in its
investigation of the Corporation; provided, however, Purchaser
shall utilize the minimum number of personnel as will not
interfere with the conduct of the Corporation's business and
shall utilize them only at the times the Corporation is open for
business. No investigation by Purchaser or other information
received by Purchaser shall operate as a waiver or otherwise
affect any representation, warranty or agreement given or made by
Sellers hereunder.
4.04 Life Insurance Policies. Prior to the Closing, each
seller shall purchase all policies of life insurance on his life
owned by the Corporation for cash in the amount of the cash
surrender values of these policies.
4.05 Notices of Certain Events. Sellers shall promptly
notify Purchaser of:
(i) Any notice or other communication from any
person alleging that the consent of such
person is or may be required in connection
with the transactions contemplated by this
Agreement;
(ii) Any notice or other communication from any
governmental or regulatory agency or
authority in connection with the transactions
contemplated by this Agreement;
(iii) Any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge,
threatened against, relating to or involving
or otherwise affecting the Corporation or the
Business that, if pending on the date of this
Agreement, would have been required to have
been disclosed pursuant to Section 2.10 or
that relate to the consummation of the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser agrees that:
5.01 Confidentiality. Prior to the Closing Date and for a
period of one (1) year after any termination of this Agreement,
Purchaser will hold, and will use its best efforts to cause its
respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by
other requirements of law, all confidential documents and
information (including, without limitation, confidential
commercial information and information with respect to customers
and proprietary systems, technologies or processes) concerning
the Business or which the Corporation or Sellers furnished to
Purchaser in connection with the transactions contemplated by
this Agreement, except to the extent that such information can be
shown to have been (i) previously known on a non-confidential
basis by Purchaser, (ii) in the public domain through no fault of
Purchaser or (iii) later lawfully acquired by Purchaser from
sources other than the Corporation or Sellers; provided, that
Purchaser may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors
and agents in connection with the transactions contemplated by
this Agreement so long as such persons are informed by Purchaser
of the confidential nature of such information and are directed
by Purchaser to treat such information confidentially. This
obligation shall be satisfied if Purchaser exercises the same
reasonable and customary care, in light of the industry and its
past practices, with respect to such information as it would take
to preserve the confidentiality of its own confidential
information. If this Agreement is terminated, Purchaser will,
and will use its best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents
to, destroy or deliver to Sellers, upon request, all documents
and other materials, and all copies thereof, obtained by
Purchaser or on their behalf from Sellers or the Corporation in
connection with this Agreement that are subject to such
confidence. Purchaser agrees that it will retain all documents
and other materials obtained by Purchaser from Sellers or the
Corporation in connection with this Agreement and the
transactions contemplated hereby for a reasonable and customary
period of time and will not destroy any material documents during
such period without first providing Seller with the opportunity
of making copies thereof.
5.02 Access. On and after the Closing Date, Purchaser will
afford promptly to Sellers through their representatives, E. M.
Dupaquier and/or R. H. Marmande ("Sellers' Representatives"),
reasonable access to the Corporation's properties, books,
records, employees and auditors to the extent necessary to permit
Sellers to determine any matter relating to their rights and
obligations hereunder and Sellers' federal and state income and
other tax liabilities with respect to any period ending on or
before the Closing Date and shall maintain them for a period of
five (5) years following the Closing or for such longer period as
any audit (private, tax or other governmental) of those documents
is continuing; provided that any such access by Sellers shall not
unreasonably interfere with the conduct of the Business of the
Corporation or Purchaser. Sellers will hold, and will use their
best efforts to cause their officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning Purchaser or
the Business provided to them pursuant to this Section 5.02.
5.03 No Election Under Section 338. (a) Purchaser shall
not cause nor shall the Corporation make or file any election
under any provision of Section 338, including Section 338(h)(10),
of the United States Internal Revenue Code (the "Code") with
respect to the transactions contemplated by this Agreement.
(b) Purchaser shall take no action nor permit any
action or course of conduct to be taken by it or by the
Corporation, or permit the filing of any Section 338 election
with respect to any other stock acquisition by Purchaser of any
other corporation, if such filing would have the same effect as
if a formal election under any provision of Section 338,
including Section 338(h)(10), of the Code had been filed with
respect to the transaction contemplated hereby.
ARTICLE VI
COVENANTS OF SELLERS AND PURCHASER
Sellers and Purchaser hereto agree that:
6.01 Consulting Agreements. At the Closing, E. M.
Dupaquier, R. H. Marmande and the Company shall execute the
Consulting Agreements in the forms attached hereto as Schedule
6.01.
6.02 Best Efforts; Further Assurances. Subject to the terms
and conditions of this Agreement, each of Sellers and Purchaser
will use their and its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things
necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
Sellers and Purchaser each agree to execute and deliver such
other documents, certificates, agreements and other writings and
to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions
contemplated by this Agreement, but without expanding the
obligations and responsibilities of any party hereunder.
6.03 Certain Filings. Sellers and Purchaser shall cooperate
with one another (a) in determining whether any action by or in
respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to
any material contracts, in connection with the consummation of
the transactions contemplated by this Agreement, and (b) in
taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely
to obtain any such actions, consents, approvals or waivers.
6.04 Public Announcements. The parties agree to consult
with each other before issuing any press release or making any
public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be required
by applicable law, will not issue any such press release or make
any such public statement prior to such consultation.
ARTICLE VII
TAX MATTERS
7.01 Tax Definitions. The following terms, as used herein,
have the following meanings:
"Code" means the Internal Revenue Code of 1986, as
amended.
"Post-Closing Tax Period" means any tax period ending
after the Closing Date, except that with respect to a tax period
that commences before but ends after the Closing Date, the
portion of such period after the close of business on the Closing
Date.
"Pre-Closing Tax Period" means any tax period ending on
or before the close of business on the Closing Date and with
respect to a tax period that commences before but ends after the
Closing Date, the portion of such period up to the close of
business on the Closing Date.
"Tax" means (i) any net income, alternative or add-on
minimum, gross income, gross receipts, sales, use, ad valorem,
franchise, capital, paid-up capital, profits, greenmail, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the
imposition of any such tax (a "Taxing Authority") and (ii) any
liability to any person (including any applicable Taxing
Authority) in respect of any tax included in Clause (i) above by
reason of any indemnity, transferee liability, contractual or
legal obligation.
7.02 Tax Matters. Sellers hereby represent and warrant to
Purchaser as of the date hereof and as of the Closing Date that,
except as provided in Schedule 7.02, the Corporation has paid or
will timely pay all material taxes payable by the Corporation and
attributable to any Pre-Closing Tax Period which are required to
be paid on or prior to the Closing Date, the non-payment of which
would result in a lien on the Shares on or after the Closing
Date, would otherwise materially adversely affect the Business
after the Closing Date or would result in Purchaser becoming
liable therefor, except for taxes caused by an actual or deemed
election under Section 338 of the Code, which is Purchaser's
responsibility pursuant to Section 5.03. Sellers herewith
represent that the only Taxes which will be owed by the
Corporation as of the Closing Date are those which arise or have
arisen or have been incurred in the ordinary course of the
Corporation's Business. The Corporation has filed all required
income, franchise, sales, ad valorem, employment and other tax
returns and paid the total amount of Taxes due by it. The
provision for the corporate income and franchise tax liability of
the Corporation for all periods through the Closing Date as shown
on the Closing Balance Sheet will be adequate relative to the
Corporation's actual liability therefor as finally determined.
Sellers represent that the Corporation is not prohibited by any
law, rule or regulation from electing the provisions of
Subchapter S of the Code, sections 1361, et seq., commencing
January 1, 1997.
7.03 Tax Cooperation: Allocation of Taxes.
(a) Purchaser and Sellers agree to furnish or cause to
be furnished to each other, upon request, as promptly as
practicable, such information and assistance relating to the
Corporation, the non-compete covenant described in Section 4.01
and the Business as is reasonably necessary for the filing of all
tax returns, and making of any election related to taxes, the
preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating
to any tax return. Sellers and Purchaser shall cooperate with
each other in the conduct of any audit or other proceeding
related to taxes involving the Business and each shall execute
and deliver such powers of attorney and other documents as are
reasonably necessary to carry out the intent of this Paragraph
(a) of Section 7.03.
(b) Any transfer, documentary, sales, use or other
taxes arising in connection with the transactions contemplated by
this Agreement and any recording or filing fees with respect
thereto (each, a "Transfer Tax") shall be the responsibility of
Purchaser. (c) Each of Sellers and Purchaser shall execute all
required elections pursuant to section 1377(a)(2) of the Code to
terminate the Corporation's taxable year commencing January 1,
1997 and ending as of the close of business on the Closing Date
(as defined in Section 1.03 entitled "Closing"), and allocate all
of the Corporation's income or loss for that period to Sellers
and the Corporation's income or loss for the remainder of
calendar year 1997 to Purchaser.
ARTICLE VIII
EMPLOYEE BENEFITS
8.01 Employee Benefits Definitions. The following terms, as
used herein, shall have the following meanings:
"Benefit Arrangement" means any employment, severance
or similar contract, or any other contract, plan, policy or
arrangement (whether or not written) providing for compensation,
bonus, profit-sharing, stock option or other stock related rights
or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits,
workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life
insurance benefits) that (i) is not an Employee Plan, (ii) is
entered into, maintained, administered or contributed to, as the
case may be, by Seller and (iii) covers any employee or former
employee of the Corporation.
"Employee Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA, (ii) is maintained, administered or
contributed to by the Corporation and (iii) covers an employee or
former employee of the Corporation.
"ERISA Affiliate" of any entity means any other entity
which, together with such entity, would be treated as a single
employer under Section 414 of the Code.
"Multi-Employer Plan" means each Employee Plan that is
a multi-employer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Title IV Plan" means an Employee Plan, other than any
Multi-Employer Plan, subject to Title IV of ERISA.
8.02 Employee Matters. The Sellers hereby represent and
warrant to Purchaser as of the date hereof:
(a) Schedule 8.02(a) lists each Employee Plan.
Sellers have provided or allow Purchaser access to as a true and
complete copy of each such Plan (and, if applicable, related
trust documents) and all amendments thereto and written
interpretations thereof together with (i) the three most recent
annual reports prepared in connection with each such Employee
Plan (Form 5500 including, if applicable, Schedule B thereto) and
(ii) the most recent actuarial report, if any, prepared in
connection with each Employee Plan. Schedule 8.02(a) identifies
each person who is a participant or who is eligible to
participate in each Employee Plan who is not an active employee
of Seller. The term "active employee" shall mean any person who,
on the Closing Date, is actively employed by the Corporation or
who is on short-term disability leave, authorized leave of
absence, military service or lay-off with recall rights as of the
Closing Date.
(b) Schedule 8.02(b) sets forth all Benefit
Arrangements presently in place for all employees of the
Corporation.
(c) As of the date hereof, there is no litigation,
administrative or arbitration proceeding or other dispute pending
or threatened that involves any Employee Plan or Benefit
Arrangement which could reasonably be expected to result in a
liability to the Corporation or Purchaser.
(d) No Employee Plan is (i) a Multi-Employer Plan,
(ii) a Title IV Plan or (iii) is maintained in connection with
any trust described in Section 501(c)(9) of the Code. No
"prohibited transaction", as defined in Section 406 of ERISA or
Section 4975 of the Code, has occurred that could result in a
liability to the Corporation, Purchaser or any of its Affiliates.
As used herein the term "Affiliate" means any individual, group
of individuals, corporation, partnership or other entity
controlled by, controlling or under common control with the
person or entity with respect to which that term is used.
Neither the Corporation nor any of its current or former
Affiliates (while an Affiliate) has within the last five (5)
years engaged in or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Section
4069 of ERISA. Neither the Corporation nor any of its current or
former Affiliates has ever maintained or become obligated to
contribute to any employee benefit plan (i) that is subject to
Title IV of ERISA, (ii) to which Section 412 of the Code applies,
or (iii) that is a multi-employer plan under Title IV of ERISA.
The Corporation has not incurred, and does not reasonably expect
to incur, (a) any liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial
withdrawal from, any plan covered or previously covered by Title
V of ERISA or (b) any liability under Section 4971 of the Code
that in either case could become a liability of the Corporation
or any of its Affiliates after the Closing Date.
(e) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and no event has occurred since such adoption that would
adversely affect such qualification and each trust created in
connection with each such Employee Plan forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Sellers
have furnished to Purchaser copies of the most recent Internal
Revenue Service determination letters with respect to each such
Plan. Each Employee Plan has been maintained in compliance with
its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations including but
not limited to ERISA and the Code.
(f) Seller has furnished to Purchaser copies or
descriptions of each Benefit Arrangement. Each Benefit
Arrangement has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to
such Benefit Arrangement. Schedule 8.02(f) identifies each
individual eligible to receive a benefit under a Benefit
Arrangement who is not an active employee, as defined in Section
8.02(a), of the Corporation.
(g) The Corporation has no current or projected
liability in respect of post-retirement or post-employment
welfare benefits for retired, current or former employees, except
as required to avoid excise tax under Section 4980B of the Code.
(h) Except as disclosed in writing to Purchaser prior
to the date hereof, there has been no amendment to, written
interpretation of or announcement (whether written or not
written) by the Corporation or any of its Affiliates relating to,
or change in employee participation or coverage under, any
Employee Plan or Benefit Arrangement which would increase
materially the expense of maintaining such Employee Plan or
Benefit Arrangement above the level of the expense incurred in
respect thereof in connection with the Corporation's Employees
for the most recently completed fiscal year.
(i) No employee of the Corporation will become
entitled to any bonus, retirement, severance, job security or
similar benefit or enhanced such benefit (including acceleration
of an award, vesting or exercise of an incentive award) or any
fee or payment of any kind solely as a result of any of the
transactions contemplated hereby.
(j) There is no contract, plan or arrangement (written
or otherwise) covering any employee or former employee of the
Corporation or any of its Affiliates that, individually or
collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of
the Code.
(k) No tax under Section 4980B of the Code has been
incurred in respect of any Employee Plan that is a group health
plan, as defined in Section 5000(b)(1) of the Code.
ARTICLE IX
CONDITIONS TO CLOSING
9.01 Conditions to the Obligations of Each Party. The
obligations of Purchaser and Sellers to consummate the Closing
are subject to the satisfaction, or waiver by both parties, of
the following conditions:
(a) No provision of any applicable law or regulation
and no judgment, injunction, order or decree shall (i) prohibit
the consummation of the Closing or (ii) restrain, prohibit or
otherwise interfere with the effective operation or enjoyment by
Purchaser of the Shares.
(b) All actions by or in respect of or filings with
any governmental body, agency, official or authority required to
permit the consummation of the Closing, and all material third
party consents necessary in connection with the consummation of
the Closing, shall have been obtained.
(c) All waivers of applicable rights of first refusal
by the Corporation and the Sellers have been obtained to permit
consummation of the transactions contemplated herein.
9.02 Conditions to Obligations of Purchaser. The obligation
of Purchaser to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Sellers shall have performed in all material
respects all of their obligations hereunder required to be
performed by them at or prior to the Closing Date (including
their obligations set forth in Section 4.02), (ii) the
representations and warranties of Sellers contained in this
Agreement and in any certificate or other writing delivered by
Sellers pursuant thereto, disregarding all qualifications and
exceptions contained therein relating to materiality, shall be
true at and as of the respective dates applicable to each of them
as set forth herein, and (iii) Purchaser shall have received a
certificate signed by the President of the Corporation to the
foregoing effects.
(b) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any person before any court, arbitrator or
governmental body, agency or official nor shall they be pending.
(c) Purchaser shall have received all documents it may
reasonably request relating to the existence of and good standing
of the Corporation.
(d) The Corporation shall have been issued an owner's
title insurance policy with respect to all real or immovable
property in a form and only with such exceptions as are
reasonably acceptable to Purchaser. The cost of the owner's
title insurance policy shall be borne equally between Sellers and
Purchaser.
(e) Nothing has come to Purchaser's attention which
would indicate that any of the representations and warranties of
Sellers are untrue in any material respect or that Sellers have
failed to perform any of their covenants contained herein.
9.03 Conditions to Obligations of Sellers. The obligation
of Sellers to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Purchaser shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Closing Date and (ii) the
representations and warranties of Purchaser contained in this
Agreement and in any certificate or other writing delivered by
Purchaser pursuant hereto shall be true in all material respects
at and as of the Closing Date, as if made at and as of such date.
(b) Sellers shall have received all documents they may
reasonably request relating to the existence of Purchaser and the
authority of Purchaser to execute and consummate this Agreement,
all in form and substance reasonably satisfactory to Seller.
ARTICLE X
SURVIVAL; INDEMNIFICATION
10.01 Survival. The covenants, agreements, representations
and warranties of the parties hereto contained in this Agreement
or in any certificate or other writing delivered pursuant hereto
or in connection herewith shall survive the Closing.
10.02 Indemnification.
(a) Sellers ("Indemnifying Party" or "Indemnifying
Parties") jointly, severally and in solido hereby indemnify
Purchaser and all of Purchaser's officers, directors, employees
and shareholders (hereinafter "Indemnified Parties") against and
agree to defend and hold them harmless from and against any and
all damage, loss, liability and expense, including, without
limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit
or proceeding (collectively, "Loss") incurred or suffered by any
of the Indemnified Parties arising out of any willful
misrepresentation or breach of warranty, covenant or agreement
made or to be performed by Sellers pursuant to this Agreement,
including all of those made by Sellers in Articles I, II, IV, VI,
VII and VIII hereof. Sellers shall have no obligation with
respect to any loss, claim, demand, suit or action against the
Corporation or Purchaser notice of which is given to Sellers'
Representatives after December 31, 1998 as to all claims,
demands, suits or actions other than for the payment of any Tax
and after December 31, 2000 as to all claims, demands, suits or
actions for the payment of any Tax.
(b) Purchaser hereby agrees to defend and indemnify
Sellers against and to hold Sellers harmless from any and all
Loss incurred or suffered by Sellers arising out of any failure
to perform, misrepresentation or breach of any warranty, covenant
or agreement made or to be performed by Purchaser pursuant to
this Agreement. Purchaser shall have no obligation with respect
to any loss, claim, demand, suit or action against Sellers notice
of which is given to Purchaser (by Sellers or any other person or
governmental agency) after December 31, 1998.
(c) Except as otherwise provided in Section 10.03
hereof in respect of matters relating to Taxes, the following
provisions shall apply:
(i) Promptly after receipt by an Indemnified
Party of notice of the commencement of any action or proceeding
involving a claim in respect of which indemnification is being
sought, such Indemnified Party will, if a claim for
indemnification hereunder is to be made against the Indemnifying
Party, give written notice to the Indemnifying Parties (through
Sellers' Representatives) of the commencement of such action or
proceeding, the basis for such claim for indemnification and such
other information relating thereto as the Indemnifying Party may
reasonably request; provided, however, that failure to so notify
the Indemnifying Parties or to provide such information shall not
relieve such Indemnifying Parties from any liability which they
may have with respect to such claim, except to the extent that
they are actually materially prejudiced by such failure to give
notice.
(ii) In case any such action is brought against
an Indemnified Party, the Indemnified Party shall assume and
control the defense of such action with counsel selected by the
Indemnified Party. It is understood that the Indemnifying
Parties shall not, in connection with any action or related
actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such
jurisdiction to act as counsel for all Indemnified Parties,
unless in any such Indemnified Party's reasonable judgment (i) a
conflict of interest between such Indemnified Party and any other
Indemnified Party may exist in respect of such claim or (ii) such
Indemnified Party has available to it reasonable defenses which
are different from or additional to those available to other
Indemnified Parties. The Indemnifying Parties shall not be
liable for any settlement of any proceeding effected without
their written consent (given by Sellers' Representatives), but if
settled with such consent or if there shall be a final judgment
for the plaintiff, the Indemnifying Parties agree to indemnify
the Indemnified Party and hold the Indemnified Party harmless
from and against any Losses by reason of such settlement or
judgment (it being understood that if the Sellers are the
Indemnifying Party such indemnification obligation shall be joint
and several). The Indemnifying Parties shall not, without the
consent of the Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as
an unconditional term the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect
to such claim or litigation. Any dispute as to whether any
Indemnified Party is entitled to indemnification in connection
with any action or proceeding under Section 10.02(c), the defense
or settlement of such action or proceeding, or any other rights
or obligations of the parties hereto in connection with such
action or proceeding shall be submitted to arbitration in
accordance with Section 12.06 of this Agreement.
(iii) In the event that an Indemnified Party
shall claim a right to payment pursuant to this Agreement with
respect to which there has been no action or proceeding involving
such claim, such Indemnified Party shall send written notice of
such claim to the Indemnifying Parties. Such notice shall
specify the basis for such claim in reasonable detail. As
promptly as possible after the Indemnified Party has given such
notice, such Indemnified Party and the Indemnifying Parties
(acting through Sellers' Representatives) shall establish the
merits and amount of Losses, if any, to which the Indemnified
Party is entitled. If the parties do not agree with respect to
these matters within 30 days after the giving of such notice,
either party may submit the matter to arbitration in accordance
with Section 12.06 of this Agreement. In such arbitration, if
the arbitrator determines that a breach of a representation,
warranty, covenant or agreement in this Agreement by the
Indemnifying Parties occurred and that such breach caused Losses
to an Indemnified Party, the arbitrator will determine the amount
of any such Losses. Within ten business days after the final
determination of the merits of such claim and amount of such
Losses, each Indemnifying Party shall, subject to the limitations
set forth herein, deliver to the Indemnified Party an amount of
cash in immediately available funds sufficient to satisfy such
Losses or the portion of such Losses for which such Indemnifying
Party is obligated to provide indemnity hereunder.
(iv) If any Seller fails to timely deliver cash
in the amount of any Losses payable by such Seller under the
terms of this Agreement, Purchaser may withdraw from funds held
in the Escrow Account (as defined below) an amount of cash equal
to the amount of Losses which has not been paid by that Seller.
(d) Wherever this Agreement requires actions or
decisions of the Indemnifying Parties, those actions or decisions
shall be taken by either or both of Sellers' Representatives
acting on behalf of all Indemnifying Parties.
10.03 Covenants Regarding Tax Matters.
(a) Taxes attributable to the taxable period of the
Corporation beginning before and ending after the Closing Date
shall be allocated (i) to the Sellers for the period up to and
including the Closing Date to the extent such Taxes exceed the
reserve therefor on the Closing Balance Sheet and (ii) to
Purchaser for the period up to and including the Closing Date to
the extent such Taxes do not exceed the reserve therefor on the
Closing Date Balance Sheet and for the period subsequent to the
Closing Date. For purposes of this Section 10.03(a), Taxes for
the period up to and including the Closing Date and for the
period subsequent to the Closing Date shall be determined on the
basis of an interim closing of the books as of the Closing Date.
(b) The Sellers may not file any amended returns or
refund claims in respect of any taxable period of the Corporation
ending on or prior to the Closing Date.
(c) The Sellers shall cooperate fully with Purchaser
and make available to Purchaser in a timely fashion such Tax data
and other information as may be reasonably required for the
preparation by Purchaser of any returns of the Corporation
required to be prepared and filed by Purchaser hereunder. The
Sellers and Purchaser shall make available to the other, as
reasonably requested, all information, records or documents in
their possession relating to Tax liabilities of the Corporation
for all taxable periods of the Corporation ending on, prior to or
including the Closing Date and shall preserve all such
information, records and documents until the expiration of any
applicable Tax statute of limitations or extensions thereof or,
if a proceeding has been instituted for which the information,
records or documents is required, until there is a final
determination with respect to such proceeding.
(d)(i) Purchaser shall promptly notify the Sellers'
Representatives upon receipt by Purchaser or the Corporation of
written notice of any Tax audits or of proposed assessments
against the Corporation for taxable periods of the Corporation
ending on or prior to the Closing Date; provided, however, that
the failure of Purchaser to give Sellers' Representatives prompt
notice as required herein shall not relieve the Sellers of any of
their obligations hereunder, except to the extent that the
Sellers are actually and materially prejudiced thereby.
Purchaser shall have the right to represent the interests of the
Corporation in any such Tax audit or administrative or court
proceeding and to employ counsel of its choice; provided,
however, that Purchaser may not agree to a settlement or
compromise thereof without the prior written consent of Sellers'
Representatives, which consent may be withheld solely in the
event that Sellers' Representatives have been advised in writing
by counsel reasonably acceptable to Purchaser that it is more
likely than not that the issue under audit (or the proposed
assessment) would be decided favorably to the Corporation and
that written advice has been furnished to Purchaser. The Sellers
agree that they will cooperate fully with Purchaser and its
counsel in the defense against or compromise of any claim in any
said audit or proceeding.
(ii) The Sellers shall promptly notify Purchaser
upon receipt by the Sellers of written notice of any Tax audit or
proposed assessment or other proposed change or adjustment which
may affect the Corporation or its Tax attributes. The Sellers
shall keep Purchaser duly informed of the progress thereof and,
if the results of such Tax audit or proceeding may have an
adverse effect on the Corporation, Purchaser or its affiliates
for any taxable period including or ending after the Closing
Date, then the Sellers may not agree to a settlement or
compromise thereof without Purchaser's consent.
(e) Within ten (10) days after notice by Purchaser to
Sellers' Representatives of the total amount of additional taxes,
penalties and interest owed by the Corporation for periods prior
to the Closing, Sellers shall remit to Purchaser the entire
amount thereof less the future tax benefit attributable to the
increase in future depreciation deductions as a result of the
adjustment which caused those additional taxes. The future tax
benefit shall be deemed equal to forty (40%) percent of the total
additional depreciation which the Corporation would thereby be
able to deduct in future years provided the amount of this
reduction shall not exceed the amount of additional taxes (apart
from penalties and interest) then owed by the Corporation. If
any Seller fails to remit his entire proportionate share of the
amount due, Purchaser may withdraw said amount from the Escrow
Account, to the extent thereof, and if the Escrow Account is
insufficient, any one or more of the other Sellers shall pay
Purchaser the shortfall upon ten (10) days written notice.
(f) The Sellers and Purchaser agree to treat any
indemnity payment made pursuant to this Agreement as an
adjustment to the Purchase Price for federal, state, local and
foreign income tax purposes. If, notwithstanding such treatment
by the parties, any indemnity payment is determined to be taxable
to Purchaser or the Corporation by any taxing authority, the
Sellers shall indemnify Purchaser and its Affiliates for any
Taxes payable by reason of the receipt of such indemnity payment
(including any payments under this Section 10.03(f)).
ARTICLE XI
TERMINATION
11.01 Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of Sellers'
Representatives and Purchaser;
(ii) By Purchaser if the Closing shall not have
been consummated on or before January 15,
1997 unless extended by mutual agreement of
Sellers' Representatives and Purchaser;
(iii) By either Sellers' Representatives or
Purchaser if there shall be any law or
regulation that makes the consummation of the
transactions contemplated hereby illegal or
otherwise prohibited or if consummation of
the transactions contemplated hereby would
violate any nonappealable final order, decree
or judgment of any court or governmental body
having competent jurisdiction; or,
(iv) By Purchaser if anything has come to its
attention that any of Sellers'
representations or warranties are untrue in
any respect or Purchaser has discovered any
contamination or any Hazardous Substance on
the premises of the Corporation or any
violations of any Environmental Laws by the
Corporation which have not been remedied as
of the date of the discovery.
The party desiring to terminate this Agreement pursuant to
Clauses (ii), (iii) or (iv) shall give notice of such termination
to the other party.
11.02 Effect of Termination. If this Agreement is
terminated as permitted by Section 11.01, such termination shall
be without liability of any party (or of any shareholder,
director, officer, employee, agent, consultant or representative
of such party) to the other parties to this Agreement; provided
that if such termination shall result from the willful failure of
any party to fulfill a condition to the performance of the
obligations of another party or to perform a covenant of this
Agreement or from a willful breach by any party to this
Agreement, such party shall be fully liable for any and all
Losses incurred or suffered by any other party as a result of
such failure or breach. The provisions of Sections 5.01 and
12.03 shall survive any termination hereof pursuant to Section
11.01.
ARTICLE XII
MISCELLANEOUS
12.01 Notices. All notices, requests and other
communications to either party hereunder shall be in writing
(including facsimile, telecopy or similar writing) and shall be
deemed given when delivered:
If to Purchaser, to: Gulf Island Fabrication, Inc.
Attn: Kerry J. Chauvin, President
583 Thompson Road
Houma, LA 70361-0310
With a Copy to: Robert R. Casey, Esq.
Four United Plaza, 5th Floor
8555 United Plaza Boulevard
Baton Rouge, LA 70809-7000
If to Sellers or to
Indemnifying Parties,
to Sellers'
Representatives: E. M. Dupaquier
206 Maple Avenue
Houma, LA 70364
R. H. Marmande
1321 Dularge Road
Houma, LA 70397
With a Copy to: P. J. McMahon, Esq.
P. O. Box 1545
Houma, LA 70361
Each of the above persons may change their address or facsimile
number by notice to the other persons in the manner set forth
above.
12.02 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Purchaser and Seller,
or in the case of a waiver, by the party against whom the waiver
is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the existence of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12.03 Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense.
12.04 Successors and Assigns. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns;
provided that neither party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder.
12.05 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Louisiana
without regard to the conflicts of law rules of such state.
12.06 Jurisdiction and Forum: Arbitration. Any controversy
arising under, out of, in connection with, or relating to, this
Agreement, and any amendment hereof, or the breach hereof or
thereof, shall be determined and settled by arbitration in New
Orleans, Louisiana by an arbitrator or arbitrators mutually
agreed upon by Purchaser and the Sellers' Representatives or, if
Purchaser and Sellers' Representatives shall fail or be unable to
so agree within ten Business Days after the written request
therefor by Purchaser or the Representatives to the other, such
arbitrator or arbitrators as may be selected in accordance with
the rules of the American Arbitration Association. Any award
rendered therein shall specify the findings of fact of the
arbitrator or arbitrators and the reasons for such award, with
reference to and reliance on relevant law. Any such award shall
be final and binding on each and all of the parties thereto and
their personal representatives, and judgment may be entered
thereon in any court having jurisdiction thereof.
12.07 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received as a
counterpart hereof signed by the other party hereto.
12.08 Entire Agreement. This Agreement and any other
agreements referred to herein constitute the entire agreement
between the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect thereto.
No representation, inducement, promise, understanding, condition
or warranty not set forth herein has been made or relied upon by
either party hereto.
12.09 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
12.10 Severability. In the event any one or more of the
provisions of this Agreement shall be or become illegal or
unenforceable in any respect, the validity, legality, operation
and enforceability of the remaining provisions of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers effective as of the day and year first above written but
executed on the dates set forth below.
WITNESSES: GULF ISLAND FABRICATION, Purchaser
/s/ Elward Cunningham BY: /s/ Kerry J. Chauvin
------------------------- --------------------------------
Kerry J. Chauvin, President
/s/ John P. Laborde Date Executed: November 25,1996
------------------------- -------------
SELLERS:
/s/ Alden J. Laborde /s/ R. H. Marmande
------------------------- -----------------------------------
R. H. Marmande
/s/ John P. Laborde Date Executed: November 25, 1996
------------------------- ------------
/s/ Alden J. Laborde /s/ E.M. Dupaquier
------------------------- -----------------------------------
E. M. Dupaquier
/s/ John P. Laborde Date Executed: November 25, 1996
------------------------- ------------
All schedules have been intentionally omitted. A copy of any omitted
schedule will be furnished supplementally to the Commission upon request.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of
November 27, 1996 by, between and among Gulf Island
Fabrication, Inc., a Louisiana corporation (hereinafter referred
to as "Purchaser"), and E. M. Dupaquier and R. H. Marmande, the
holders of all of the outstanding shares of capital stock (the
"Sellers") of Dolphin Sales & Rentals, Inc. (the "Corporation" or
the "Company"). E. M Dupaquier and R. H. Marmande are also
referred to herein variously as the "Officers" or "Sellers'
Representatives".
W I T N E S S E T H :
WHEREAS, Sellers desire to sell and the Purchaser desire to
purchase all of the outstanding shares (the "Shares") of common
stock of the Corporation for the consideration and on the terms
and conditions set forth herein; and,
WHEREAS, Purchaser and certain of the Sellers desire to
enter into certain non-competition agreements (the "Non-
Competition Agreements") as provided in Section 4.01.
NOW, THEREFORE, the parties hereto hereby agree as follows:
I.
PURCHASE AND SALE OF ASSETS
1.01 Purchase and Sale.
At the closing of the transaction contemplated hereby
(the "Closing"), upon the terms and subject to the conditions
contained in this Agreement, Purchaser shall purchase from
Sellers and Sellers shall sell the Shares consisting of 1,000
shares of common stock, no par value per share, free and clear of
any and all liens, mortgages, encumbrances and security
interests.
1.02 Stock Purchase Price.
(a) The initial purchase price for the Shares
("Initial Purchase Price") shall be One Hundred Fifty-Two
Thousand, Two Hundred Eighty-Two ($152,282) Dollars which shall
be allocated among the Sellers in proportion to the Shares sold
by each of them to Purchaser.
(b)(1) The Initial Purchase Price shall be adjusted to
the final purchase price ("Final Purchase Price") by increasing
the Initial Purchase Price by the increase in the Net Book Value,
as hereinafter defined, or by decreasing the Initial Purchase
Price by the decrease in the Net Book Value of the Corporation
between September 30, 1996 and the Closing as reflected on the
Closing Balance Sheet (as hereinafter defined). However, the
Final Purchase Price shall not be less than $152,282.
(2) The term "Net Book Value" means the excess of (1)
the book value of all of the Corporation's assets over (2) the
book amounts of all the Corporation's current and long-term fixed
liabilities and accrued expenses, including all unpaid ad valorem
taxes prorated to the date of the Closing, whether or not any of
the Corporation's assets are then subject to a lien therefor as
of the Closing. All determinations of book value and book
amounts shall be made in accordance with the accounting
principles, methods and conventions employed in the preparation
of the Corporation's September 30, 1996 balance sheet, a copy of
which is attached as part of Schedule 1.02(b)(2) (hereinafter
"Interim Financial Statements"), but with all intercompany
payables, receivables and equity interests eliminated as among
Dolphin Services, Inc., Dolphin Steel Sales, Inc. and Dolphin
Sales & Rentals, Inc. as though they were members of a
consolidated group. Net Book Value at September 30, 1996 was
$152,282.
(3) The term "Closing Balance Sheet" means for
purposes of this Section 1.02(b) the balance sheet of the
Corporation as of December 31, 1996 unless such date precedes the
Closing by more than five (5) business days, in which case as of
the date of the Closing ("Closing Date"), prepared in accordance
with the same accounting principles, methods and conventions
employed in the preparation of the Corporation's Interim
Financial Statements. The Closing Balance Sheet shall be
prepared by a certified public accountant or certified public
accounting firm designated by Purchaser and shall be presented to
Sellers and Purchaser within forty-five (45) days following the
Closing. In the event either Sellers or Purchaser disagree with
any of the figures shown on the Closing Balance Sheet, they or it
shall notify the other parties hereto, within ten (10) days after
their receipt of the Closing Balance Sheet, and shall furnish the
reasons why that party is in disagreement. If the parties have
not resolved their disagreements with respect to the Closing
Balance Sheet within twenty (20) days after said notice, Sellers
and Purchaser shall submit the handling of any disputed items to
an independent nationally recognized accounting firm (other than
Price, Waterhouse & Co.) selected by Purchaser and Sellers. If
Purchaser and Sellers are unable to agree upon such a nationally
recognized independent accounting firm within ten (10) days after
expiration of said twenty (20) day period, such an independent
nationally recognized accounting firm ("Arbitrator") shall be
selected in accordance with the rules of the American Arbitration
Association. The Arbitrator shall submit the correct Closing
Balance Sheet to Purchaser and Sellers and shall certify the
increase or decrease in Net Book Value between the date of the
Interim Financial Statements and the close of business on the
Closing Date.
1.03 Closing. The closing (the "Closing") shall take place
at the offices of Messrs. Jones, Walker, Waechter, Poitevent,
Carrere and Denegre, Baton Rouge, Louisiana, on a mutually
agreeable date (the "Closing Date"), not later than ten (10) days
following satisfaction of all conditions to Closing set forth in
Article IX, but after January 1, 1997. Assuming the conditions
set forth in Article IX shall have been satisfied, the Closing
shall be deemed effective as of the close of business of the
Corporation on the date of the Closing. At the Closing:
(a) Purchaser shall deliver to Sellers by wire
transfer or certified funds cash in an amount equal to One
Hundred Two Thousand, Two Hundred Eighty-Two ($102,282) Dollars,
allocated among Sellers in proportion to their ownership of the
remaining outstanding shares of capital stock of the Corporation,
and shall deliver to Whitney National Bank Fifty Thousand and
No/100 ($50,000.00) Dollars to be held pursuant to the escrow
agreement (the "Escrow Agreement") in the form attached hereto as
Schedule 1.03(a), which shall also be executed at or prior to the
Closing.
(b) Sellers shall deliver to Purchaser certificates
representing in the aggregate One Thousand (1,000) shares of
capital stock of the Corporation with stock powers attached
executed in blank, with signature guaranteed, free and clear of
any and all liens, mortgages, security interests and
encumbrances.
(c) All officers and directors of the Corporation
shall tender their resignations from such positions, said tender
to occur simultaneously with the act of delivery of funds
described in Section 1.03(a).
1.04 Post-Closing. Within ten (10) days following the date
on which the Closing Balance Sheet has been agreed upon by the
parties or otherwise determined to be accurate, if the Net Book
Value of the Corporation as reflected on the Closing Balance
Sheet is more than or less than the Net Book Value as reflected
on the September 30, 1996 balance sheet of the Corporation,
attached as part of Schedule 1.02(b)(2), Purchaser shall pay to
or receive from, respectively, Sellers (in proportion to their
present ownership of the Shares) cash (by wire transfer or bank
cashier's check) equal to the difference. Failure by any Seller
to make a payment required pursuant to this Section 1.04 shall
constitute a breach of a covenant for which the remedies provided
in Section 10.02 are applicable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
For purposes of this Agreement the business (the "Business")
of the Company is the onshore and offshore oil and gas production
platform construction and maintenance business which consists of:
outfitting and interconnect piping, painting and maintenance of
onshore and offshore oil and gas production platforms; and the
construction (including interconnect piping and pile driving) of
shallow water and land platforms and pipeline installation. The
phrase "in the ordinary course" means in the course of performing
any one or more of those enumerated activities. Sellers herewith
represent and warrant to Purchaser as of the date hereof and as
of the Closing Date (unless another date is expressly set forth
below) that:
2.01 Corporate Existence and Power. The Corporation is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Louisiana, and the
Corporation has all corporate powers and all material
governmental licenses, permits, authorizations, consents and
approvals required to carry on the Business as now conducted.
Subject to the provisions of the following sentence, the
Corporation is duly qualified to conduct business as a foreign
corporation and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature
of its activities make such qualification necessary. Sellers
have heretofore delivered to Purchaser true and complete copies
of the Corporation's Articles of Incorporation and By-Laws as
currently in effect.
2.02 Governmental Authorization. The execution, delivery
and performance by Sellers of this Agreement and the consummation
by Sellers of the transactions contemplated hereby require no
action by or in respect of, or filing with, any governmental
body, agency, official or authority.
2.03 Non-Contravention. The execution, delivery and
performance by Sellers of this Agreement and the consummation by
Sellers of the transactions contemplated hereby do not and will
not (i) contravene or conflict with the Articles of Incorporation
or bylaws of the Corporation (other than any provision which may
be waived by the Corporation and/or Sellers), (ii) contravene or
conflict with or constitute a violation of any provision of law,
regulation, judgment, injunction, order or decree binding upon or
applicable to Sellers or the Corporation, or (iii) except as
disclosed in Schedule 2.03, require any consent, approval or
other action by any person or constitute a default under any
obligation of Sellers or the Corporation under any provision of
any contract or other instrument binding upon Sellers or the
Corporation other than contracts and obligations which may be
cancelled unilaterally upon notice to Sellers or the Corporation.
2.04 Subsidiaries. The Corporation does not own more than
fifty (50%) percent of all outstanding shares of capital stock
of, other ownership interests in, or other securities of any
corporation or other entity.
2.05 Financial Statements. The balance sheet of the
Corporation for the year ended December 31, 1995 (such date
referred to herein as the "Balance Sheet Date" and such balance
sheet the "Balance Sheet") and the related statements of income
for the year ended December 31, 1995 (collectively, the
"Financial Statements") have been previously delivered to
Purchaser and are attached as Schedule 2.05. In all material
respects, the Financial Statements fairly present the financial
position of the Corporation as of the date thereof and its
results of operations for the period then ended.
2.06 Absence of Certain Changes. Since the Balance Sheet
Date to the date hereof, the Corporation has conducted the
Business in the ordinary course consistent with past practice
and, except as set forth in Schedule 2.06 or otherwise
contemplated hereby, there has not been:
(a) Any event, occurrence, development or state of
circumstances or facts which has had or could reasonably be
expected to have a material adverse effect on the Corporation,
except to the extent the effect is reflected in the Interim
Financial Statements;
(b) Any incurrence, assumption or guarantee of any
indebtedness for borrowed money or any material obligation or
liability, except in the ordinary course of the Business
consistent with past practice and except as reflected on the
Interim Financial Statements;
(c) Any creation or other incurrence of any Lien (as
defined in Section 2.08) on any asset of the Corporation, except
in the ordinary course of the Business consistent with past
practice and except as reflected in the Interim Financial
Statements;
(d) Any making of any loan, advance or capital
contributions to or investment in any person, except as reflected
in the Interim Financial Statements;
(e) Any amendment of any material term of any
outstanding security of Seller;
(f) Any material damage, destruction or other casualty
loss affecting any of the assets of the Corporation, except those
covered by insurance and except as reflected in the Interim
Financial Statements;
(g) Any transaction or commitment made, or any
contract or agreement entered into, by the Corporation relating
to its assets or the Business or any relinquishment of any
contract or other right, in either case, material to the
Corporation, other than transactions and commitments (including
acquisitions and dispositions of steel and equipment) in the
ordinary course of the Business consistent with past practice and
except as reflected in the Interim Financial Statements;
(h) Any declaration or payment of any dividend or
other distribution by the Corporation or any repurchase,
redemption or other acquisition for value of any security or
other interest in the Corporation or any commitment to do any of
the foregoing;
(i) Any general or specific increase in the salary or
other compensation (including, without limitation, bonuses,
profit sharing or deferred compensation) payable or to become
payable to any employees of the Corporation, except in the
ordinary course of the Business consistent with past practice;
(j) Any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the
Corporation or any lockouts, strikes, slowdowns, work stoppages
or threats thereof by or with respect to any employees of the
Corporation; or
(k) Any agreement entered into to do any of the
foregoing.
2.07 Properties.
(a) The Corporation has good and marketable title to,
or in the case of leased property valid leasehold interests in,
all property and assets (whether real or personal, tangible or
intangible) reflected on the Balance Sheet or acquired after the
Balance Sheet Date, except for properties and assets sold since
the Balance Sheet Date in the ordinary course of business
consistent with past practice. None of such properties or assets
is subject to any liens, mortgages, security interests or other
encumbrances (herein "Liens") except:
(i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being
contested in good faith (and for which
adequate accruals or reserves have been
established on the Balance Sheet);
(iii) Liens disclosed in Schedule 2.07(a) or which
will be discharged at the Closing;
(iv) Liens which do not materially detract from
the value of such property or assets as now
used, or materially interfere with any
present or intended use of such property or
assets; or
(v) Liens in favor of vendors and lessors
incurred in the ordinary course of business.
Clauses (i), (ii), (iii) (iv) and (v) are, collectively, referred
to herein as "Permitted Liens".
(b) To the knowledge of Sellers and except as
reflected on the Interim Financial Statements, there are no
developments affecting any of such properties or assets pending
or threatened which could materially detract from the value of
such property or assets, materially interfere with any present or
intended use of any such property or assets or materially
adversely affect the marketability of such properties or assets.
(c) All such leases of real and personal property with
respect to which the Corporation is a lessee are as of the date
hereof and will be on the Closing Date valid, binding and
enforceable in accordance with their respective terms and there
does not exist under any such lease any material default or any
event which with notice or lapse of time or both would constitute
a material default.
(d) Schedule 2.07(d) identifies all real and personal
property used or held for use in connection with the Business as
of the date hereof (the "Property") and contains an accurate
balance sheet showing the adjusted tax basis of all of the
Corporation's assets for United States income tax purposes at
September 30, 1996. The plants, buildings, structures, tools,
steel inventory and equipment reflected on the Balance Sheet or
acquired after the Balance Sheet Date through the date hereof
have no material defects, are in good operating condition and
repair and have been reasonably maintained consistent with
standards generally followed in the industry (giving due account
to the age and length of use of same, ordinary wear and tear
excepted), are suitable for their present uses and, in the case
of plants, buildings and other structures (including without
limitation, the roofs thereof), are structurally sound, except as
set forth on Schedule 2.07(d). Such plants, buildings and
structures currently have access to (1) public roads or valid
easements over private streets or private property for such
ingress to and egress from all such plants, buildings and
structures and (2) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire
protection, drainage and other public utilities, as is necessary
for the conduct of the Business. None of the material structures
on the immovable or real property of the Corporation encroaches
upon real property of another person, and no structure of any
other person substantially encroaches upon any immovable or real
property of the Corporation. All items of equipment listed on
Schedule 2.07(d) are in the possession and control of the
Corporation and will be in the Corporation's possession and
control on the Closing Date and are in good operating condition
and are adequately performing the tasks which they are designed
to perform.
2.08 Sufficiency of and Title to the Purchased Assets.
(a) The assets (the "Assets") disclosed on the Balance
Sheet and in Schedule 2.07(d) constitute as of the date thereof
and hereof, respectively, all of the assets or property used or
held for use in the Business and are adequate to conduct the
Business as presently conducted.
(b) Upon consummation of the transactions contemplated
hereby, the Corporation will have good and marketable title in
and to each of the Assets, free and clear of all Liens, except
for Permitted Liens.
2.09 No Undisclosed Material Liabilities. Except as
disclosed on Schedule 2.09, as of the Closing there will be no
liabilities of the Corporation of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in
such a liability, other than:
(i) Liabilities disclosed or provided for in the
Interim Financial Statements;
(ii) Liabilities for which adequate insurance is
available; and,
(iii) Liabilities incurred in the ordinary course
of the Business, including tax liabilities
and liabilities for personal injuries and
property damage, which in the aggregate are
not material to the Business taken as a
whole.
2.10 Litigation. Except as set forth in Schedule 2.10, as
of the date hereof there is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or to the
knowledge of Sellers threatened against or affecting, Sellers,
the Corporation or any of their or its properties before any
court or arbitrator or any governmental body, agency, official or
authority, which, individually or in the aggregate, if determined
or resolved adversely to Sellers or the Corporation in accordance
with the plaintiff's demands, would reasonably be expected to
have a material adverse effect on Sellers or the Corporation or
which in any manner challenges or seeks to prevent, enjoin, alter
or materially delay the transactions contemplated by this
Agreement.
2.11 Material Contracts.
(a) Except as disclosed in Schedule 2.11(a) and
elsewhere in this Agreement, as of the date hereof the
Corporation is not a party to or subject to:
(i) Any lease of real or immovable property;
(ii) Any lease that is material to the Corporation
of personal or movable property as lessee;
(iii) Any contract for the purchase of materials,
supplies, goods, services, equipment or other
assets, other than in the ordinary course of
the Business;
(iv) Any sales, distribution or other similar
agreement providing for the sale by the
Corporation of materials, supplies, goods,
services, equipment or other assets, other
than to customers in the ordinary course of
the Business;
(v) Any lease of any item of tangible personal or
movable property or real or immovable
property as lessor other than to customers in
the ordinary course of the Business;
(vi) Any partnership, joint venture or other
similar contract, arrangement or agreement;
(vii) Any contract relating to indebtedness for
borrowed money (whether incurred, assumed,
guaranteed or secured by any asset);
(viii) Any license, franchise or similar agreement;
(ix) Any agency, dealer, sales representative or
other similar agreement;
(x) Any contract or commitment that substantially
limits the freedom of the Corporation to
compete in any line of business or with any
person or in any area or to own, operate,
sell, transfer, pledge or otherwise dispose
of or encumber any asset or which would so
limit the freedom of the Corporation after
the Closing;
(xi) Any consulting agreement;
(xii) Any contract relating to any guaranty or
indemnity issued by the Corporation;
(xiii) Any agreement relating to the acquisition or
disposition of any part of the Business; or
(xiv) Any other contract or commitment not made in
the ordinary course of the Business
consistent with past practice.
(b) Each contract disclosed in any schedule to this
Agreement or required to be disclosed pursuant to Section 2.11(a)
is a valid and binding agreement of the Corporation, and, to the
knowledge of Sellers, as of the date hereof is in full force and
effect, and neither the Corporation nor, to the knowledge of
Sellers, any other party thereto is in default or breach in any
material respect under the terms of any such Contract, nor, to
the knowledge of Sellers, has any event or circumstance occurred
that, with notice or lapse of time or both, would constitute any
such default or breach.
2.12 Licenses and Permits. Schedule 2.12 correctly
describes each material governmental license, permit,
authorization, consent or approval affecting, or relating in any
way to, the Corporation and its business, together with the name
of the governmental agency or entity issuing such license or
permit (the "Permits"). Except as set forth on Schedule 2.12,
such Permits are valid and in full force and effect and will not
be terminated or impaired or become terminable as a result of the
transactions contemplated hereby.
2.13 Ability to Conduct the Business. Except as set forth
in Schedule 2.13, as of the date hereof there is no contract, nor
any judgment, order, writ, injunction or decree that by its terms
prevents or would reasonably be expected to prevent the use by
the Corporation of the Assets or the conduct by the Corporation
of the Business after the Closing Date.
2.14 Material Suppliers. Schedule 2.14 lists the five
largest (in dollar value) suppliers of inventory to the
Corporation during each of the last two completed fiscal years
and through December 31, 1995. To the knowledge of Sellers,
since the Balance Sheet Date there has not been any adverse
change in the business relationship of the Corporation with any
such supplier or with any supplier that is otherwise material to
the Business or with any supplier as a result of the transactions
contemplated hereby, except as disclosed on Schedule 2.14.
2.15 Insurance Coverage. Sellers have furnished or provided
access to Purchaser to true and complete copies of, all insurance
policies currently in effect covering the assets, the Business
and the employees of the Corporation. Except as disclosed on
Schedule 2.15, as of the date hereof there is no claim by the
Corporation pending under any of such policies as to which
coverage has been questioned, denied or disputed by the
underwriters of such policies. All premiums payable under all
such policies have been paid and the Corporation is otherwise in
full compliance with the terms and conditions of all such
policies.
2.16 Compliance with Laws; No Defaults.
(a) As of the date hereof, the Corporation is not in
violation of, has not since December 31, 1995 violated, and to
Sellers' knowledge is not under investigation with respect to or
has not been threatened to be charged with or given notice of any
violation of, any law, rules, ordinances or regulations,
judgments, injunctions, orders or decrees binding upon or
applicable to the Corporation, except for any violations set
forth in Schedule 2.16(a) which would not, individually or in the
aggregate, if finally determined adversely, result in a material
adverse effect on the business of the Corporation.
(b) As of the date hereof, the Corporation is not in
default under, and no condition exists that with notice or lapse
of time or both would constitute a default under any contract or
other instrument binding upon the Corporation or affecting or
relating to its business or any license, authorization, permit,
consent or approval held by the Corporation or affecting or
relating to the Business, except as otherwise disclosed in this
Agreement or in Schedules attached hereto.
2.17 Inventories. The inventories set forth in the Balance
Sheet were properly stated therein at cost determined in
accordance with generally accepted accounting principles applied
on a consistent basis. Since the Balance Sheet Date, the
inventories related to the Business have been maintained in the
ordinary course of business. Except as set forth in Schedule
2.17, all such inventory is owned free and clear of all Liens,
except Permitted Liens. All of the inventory recorded on the
Balance Sheet consists of, and all inventory related to the
Business on the Closing Date will consist of, items of a quality
usable or saleable in the normal course of the Business
consistent with past practices and are and will be in quantities
sufficient for the normal operation of the Business in accordance
with past practice.
2.18 Receivables. All accounts, notes and other receivables
(other than receivables collected since December 31, 1995)
reflected on the Balance Sheet are, and all accounts, notes and
other receivables arising out of or otherwise relating to the
Corporation's business as of the Closing will be, valid, binding
and enforceable, subject to applicable laws governing bankruptcy,
moratorium or creditors' rights generally which may prevent their
enforcement. The dollar amount shown for all such accounts on
the Interim Financial Statements, less the allowance for doubtful
accounts shown thereon, is collectible in full. All accounts,
notes and other receivables arising out of or otherwise relating
to the Business at the Balance Sheet Date have been included in
the Balance Sheet, and all accounts, notes and other receivables
arising out of or otherwise relating to the Business at the
Closing Date will be reflected on the Corporation's financial
books and records.
2.19 Intellectual Property.
(a) Schedule 2.19(a) sets forth as of December 31,
1995 a list of all intellectual property rights (herein
"Intellectual Property Rights") used or held for use or otherwise
necessary in connection with the conduct of the Business,
specifying as to each, as applicable: (i) the nature of such
Intellectual Property Right; (ii) the owner of such Intellectual
Property Right and if Seller is not the owner, the rights held by
the Corporation; (iii) the jurisdictions by or in which such
Intellectual Property Right is recognized, issued or registered
or in which an application for such issuance or registration has
been filed, including the respective registration or application
numbers; and (iv) material licenses, sublicenses and other
agreements as to which the Corporation is a party and pursuant to
which any person is authorized to use such Intellectual Property
Right, including the identity of all parties thereto, a
description of the nature and subject matter thereof, the
applicable royalty and the term thereof.
(b) (i) Except as set forth in Schedule 2.19(b), the
Corporation has not since January 1, 1996 been sued or charged in
writing with or been a defendant in any claim, suit, action or
proceeding relating to its business that has not been finally
terminated prior to the date hereof and that involves a claim of
infringement by the Corporation of any intellectual property
rights of any other person, and (ii) the Corporation has no
knowledge of any basis for any such claim of infringement, and no
knowledge of any continuing infringement by any other person of
any intellectual property rights used or held for use or
otherwise necessary in connection with the conduct of the
Business. No such intellectual property right is subject to any
outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by the Corporation or restricting the
licensing thereof by the Corporation to any Person. The
Corporation has not entered into any agreement to indemnify any
other person against any charge of infringement of any
intellectual property rights.
(c) As used herein, the term "Intellectual Property
Right" means any trade name, trademark, service name, service
mark, copyright, invention, patent, trade secret, know-how
(including any registrations or applications for registration of
any of the foregoing) or any other similar type of proprietary
intellectual property right.
2.20 Employees. Schedule 2.20 identifies all of the
Corporation's officers and key employees as of December 31, 1995.
None of such key employees has indicated to the Corporation that
he or she intends to resign or retire as a result of the
transactions contemplated by this Agreement, except that E. M.
Dupaquier and R. H. Marmande shall retire from the Corporation's
employee on the Closing Date.
2.21 Fees. There is no investment banker, broker, financial
advisor, finder or other intermediary which has been retained by
or is authorized to act on behalf of Sellers who might be
entitled to any fee or commission from Purchaser upon
consummation of the transactions contemplated by this Agreement.
2.22 Environmental Matters.
(a) The following defined terms, as used herein, have
the following meanings:
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
"Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions,
whether now or hereafter in effect, relating to human health, the
environment or to emissions, discharges or releases of
pollutants, contaminants, hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any and all
liabilities of, or relating to, Seller (including any entity
which is, in whole or in part, a predecessor of Seller), whether
vested or unvested, contingent or fixed, actual or potential,
known or unknown, which (i) arise under or relate to matters
covered by Environmental Laws (including without limitation any
matters disclosed or required to be disclosed in Schedule 2.22
hereto) and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date.
"Environmental Permits" means all permits, licenses,
authorizations, certificates and approvals of governmental
authorities relating to or required by Environmental Laws and
necessary or proper for the business of Seller as currently
conducted.
"Hazardous Substance" means any toxic, radioactive,
caustic or otherwise hazardous substance, including petroleum,
its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the
foregoing characteristics, including, without limitation, any
substance regulated under Environmental Laws.
"Regulated Activity" means any generation, treatment,
storage, recycling, transportation or disposal of any Hazardous
Substance.
"Release" means any discharge, emission or release
including a Release as defined in CERCLA at 42 U.S.C. 9601 (22).
The term "Released" has a corresponding meaning.
(b) Except as disclosed on Schedule 2.22 as of the
date hereof:
(i) No notice, notification, demand, request for
information, citation, summons, complaint or
order has been issued, no complaint has been
filed, no penalty has been assessed and, to
Seller's knowledge, no investigation or
review is pending or threatened by any
governmental entity or other person with
respect to any (a) alleged violation by the
Corporation of any Environmental Law or
liability thereunder, (b) alleged failure by
the Corporation to have any Environmental
Permit, (c) Regulated Activity, or (d)
Release of Hazardous Substances;
(ii) Other than generation in compliance with all
applicable Environmental Laws, (a) the
Corporation has not engaged in any Regulated
Activity and (b) no Regulated Activity has
occurred at or on any property now or
previously owned, leased or operated by the
Corporation;
(iii) No polychlorinated biphenyls, radioactive
material, urea formaldehyde, lead, asbestos,
asbestos-containing material or underground
storage tank (active or abandoned) is or has
been present at any property now or
previously owned, leased or operated by the
Corporation;
(iv) No Hazardous Substance has been Released (and
no notification of such Release has been
filed or made) or is present (whether or not
in a reportable or threshold planning
quantity) at, on or under any property now or
previously owned, leased or operated by the
Corporation;
(v) No property now or previously owned, leased
or operated by the Corporation or any
property to which the Corporation has,
directly or indirectly, transported or
arranged for the transportation of any
Hazardous Substances is listed or, to
Seller's knowledge, proposed for listing, on
the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar federal, state or
foreign list of sites requiring investigation
or clean-up;
(vi) There are no liens under Environmental Laws
on any of the real property or other assets
owned, leased or operated by the Corporation,
no governmental actions have been taken or
are in process which could subject any of
such properties or assets to such liens and
the Corporation would not be required to
place any notice or restriction relating to
Hazardous Substances at any property owned by
it in any deed to such property;
(vii) There are no Environmental Permits that are
nontransferable or require consent,
notification or other action to remain in
full force and effect following the
consummation of the transactions contemplated
hereby; and
(viii) All Perchloroethylene and each other chemical
substance used by the Corporation in
connection with the business has been
disposed of in accordance with all applicable
laws, rules, regulations and pronouncements
of the United States, all applicable states
and all applicable boards, agencies,
departments and other divisions thereof.
(c) There has been no environmental investigation,
study, audit, test, review or other analysis conducted of which
the Corporation or Sellers has knowledge in relation to the
current or prior business of the Corporation or any property or
facility now or previously owned or leased by the Corporation
which has not been delivered to Purchaser at least five days
prior to the date hereof.
(d) For purposes of this Section 2.22, the term
"Corporation" shall include any entity which is, in whole or in
part, a predecessor of the Corporation.
2.23 Labor Matters. As of the date hereof, the Corporation
is in compliance with all currently applicable laws respecting
employment and employment practices (including terms and
conditions of employment, wages and hours) and is not engaged in
any unfair labor practice, the failure to comply with which or
engagement in which, as the case may be, would reasonably be
expected to have a material adverse effect on the Business. As
of the date hereof there is no unfair labor practice complaint
pending or, to the knowledge of Sellers, threatened against the
Corporation before the National Labor Relations Board or before
any other state or local board, agency or tribunal.
2.24 The Shares. (a) There are presently outstanding and
at the Closing there will be outstanding a total of One Thousand
(1,000) shares of no par value voting common stock of the
Corporation (the "Shares"). No other class of common, preferred
or other type of shares of stock is presently outstanding.
(b) The issuance of all of the Shares has been duly
authorized by all required action by the Corporation and all of
the Shares are fully paid and non-assessable.
(c) The Shares are registered in the names of the
persons and in the amounts set forth in Schedule 2.24(c). All of
the Shares registered in the names of the above persons may be
conveyed by them without the consent of an person, other than
Consents of the Corporation and the other Sellers which are
waivable by them at or prior to the Closing Date.
(d) None of the Shares is subject to any lien,
mortgage, pledge, security interest or other encumbrance and each
Seller has good and marketable title to all Shares registered in
his name.
2.25 Binding Agreement. This Agreement constitutes a valid
and binding obligation of Sellers.
2.26 Other Information. None of the documents or
information delivered to Purchaser in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers that:
3.01 Organization and Existence. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Louisiana.
3.02 Corporate Authorization. The execution, delivery and
performance by Purchaser of this Agreement and the consummation
by Purchaser of the transactions contemplated hereby or thereby
are within the powers of Purchaser and have been duly authorized
by all necessary action on the part of Purchaser. This Agreement
constitutes a valid and binding agreement of Purchaser.
3.03 Governmental Authorization. The execution, delivery
and performance by Purchaser of this Agreement requires no action
by or in respect of, or filing with, any governmental body,
agency, official or authority.
3.04 Non-Contravention. The execution, delivery and
performance by Purchaser of this Agreement does not and will not
(i) contravene or conflict with the Articles of Incorporation or
By-Laws of Purchaser or (ii) assuming compliance with the matters
referred to in Section 3.03, contravene or conflict with any
provision of any law, regulation, judgment, injunction, order or
decree binding upon Purchaser.
3.05 Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to
act on behalf of Purchaser who might be entitled to any fee or
commission from Sellers upon consummation of the transactions
contemplated by this Agreement.
3.06 Financing. Purchaser will have on the Closing Date
sufficient funds available to purchase the Shares, provided all
conditions set forth in Article IX are satisfied.
3.07 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Purchaser
threatened against or affecting, Purchaser before any court or
arbitrator or any governmental body, agency or official which in
any matter challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
ARTICLE IV
COVENANTS OF SELLERS
4.01 Conduct of the Business. From the date hereof until
the Closing Date, Sellers shall cause the Corporation to conduct
the Business in the ordinary course consistent with past practice
and cause the Corporation to exert its best efforts to preserve
intact its business organization and relationships with third
parties and to keep available the services of its present
officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, Sellers
shall not cause the Corporation to and the Corporation shall not:
(i) Merge or consolidate with any other person or
acquire a material amount of assets of any
other person, other than steel, tools and
equipment purchased in the ordinary course of
the Business;
(ii) Declare and/or pay any dividend or make any
other distribution or transfer of cash or
other assets to its shareholders in their
capacities as such;
(iii) Sell, lease, license or otherwise dispose of
any assets except (a) pursuant to existing
contracts or commitments and (b) in the
ordinary course of the Business consistent
with past practices; or
(iv) Agree or commit to do any of the foregoing.
Sellers shall not permit the Corporation to (a) take or agree or
commit to take any action that would make any representation and
warranty of Sellers hereunder inaccurate in any respect at, or as
of any time prior to, the Closing Date or (b) omit or agree to
commit or omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect
at any such time.
4.02 "S" Election. Sellers and their spouses shall execute
and cause the Corporation to execute Internal Revenue Service
forms 2553 so as to elect the provisions of Subchapter S of the
United States Internal Revenue Code, sections 1361, et seq.,
effective January 1, 1997 and shall deliver fully completed forms
2553 with all of their signatures to Purchaser on or before the
earlier of the Closing Date or January 15, 1997.
4.03 Access to Information. Sellers (i) will give
Purchaser, its counsel, financial advisors, auditors and other
authorized representatives reasonable access to the offices,
properties, books and records of the Corporation and will allow
Purchaser or its representatives access to conduct all reasonable
environmental tests and inspections, (ii) will furnish to
Purchaser, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and
other information relating to the Corporation as such persons may
reasonably request and (iii) will instruct its employees, counsel
and financial advisors to cooperate with Purchaser in its
investigation of the Corporation; provided, however, Purchaser
shall utilize the minimum number of personnel as will not
interfere with the conduct of the Corporation's business and
shall utilize them only at the times the Corporation is open for
business. No investigation by Purchaser or other information
received by Purchaser shall operate as a waiver or otherwise
affect any representation, warranty or agreement given or made by
Sellers hereunder.
4.04 Life Insurance Policies. Prior to the Closing, each
seller shall purchase all policies of life insurance on his life
owned by the Corporation for cash in the amount of the cash
surrender values of these policies.
4.05 Notices of Certain Events. Sellers shall promptly
notify Purchaser of:
(i) Any notice or other communication from any
person alleging that the consent of such
person is or may be required in connection
with the transactions contemplated by this
Agreement;
(ii) Any notice or other communication from any
governmental or regulatory agency or
authority in connection with the transactions
contemplated by this Agreement;
(iii) Any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge,
threatened against, relating to or involving
or otherwise affecting the Corporation or the
Business that, if pending on the date of this
Agreement, would have been required to have
been disclosed pursuant to Section 2.10 or
that relate to the consummation of the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser agrees that:
5.01 Confidentiality. Prior to the Closing Date and for a
period of one (1) year after any termination of this Agreement,
Purchaser will hold, and will use its best efforts to cause its
respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by
other requirements of law, all confidential documents and
information (including, without limitation, confidential
commercial information and information with respect to customers
and proprietary systems, technologies or processes) concerning
the Business or which the Corporation or Sellers furnished to
Purchaser in connection with the transactions contemplated by
this Agreement, except to the extent that such information can be
shown to have been (i) previously known on a non-confidential
basis by Purchaser, (ii) in the public domain through no fault of
Purchaser or (iii) later lawfully acquired by Purchaser from
sources other than the Corporation or Sellers; provided, that
Purchaser may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors
and agents in connection with the transactions contemplated by
this Agreement so long as such persons are informed by Purchaser
of the confidential nature of such information and are directed
by Purchaser to treat such information confidentially. This
obligation shall be satisfied if Purchaser exercises the same
reasonable and customary care, in light of the industry and its
past practices, with respect to such information as it would take
to preserve the confidentiality of its own confidential
information. If this Agreement is terminated, Purchaser will,
and will use its best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents
to, destroy or deliver to Sellers, upon request, all documents
and other materials, and all copies thereof, obtained by
Purchaser or on their behalf from Sellers or the Corporation in
connection with this Agreement that are subject to such
confidence. Purchaser agrees that it will retain all documents
and other materials obtained by Purchaser from Sellers or the
Corporation in connection with this Agreement and the
transactions contemplated hereby for a reasonable and customary
period of time and will not destroy any material documents during
such period without first providing Seller with the opportunity
of making copies thereof.
5.02 Access. On and after the Closing Date, Purchaser will
afford promptly to Sellers through their representatives, E. M.
Dupaquier and/or R. H. Marmande ("Sellers' Representatives"),
reasonable access to the Corporation's properties, books,
records, employees and auditors to the extent necessary to permit
Sellers to determine any matter relating to their rights and
obligations hereunder and Sellers' federal and state income and
other tax liabilities with respect to any period ending on or
before the Closing Date and shall maintain them for a period of
five (5) years following the Closing or for such longer period as
any audit (private, tax or other governmental) of those documents
is continuing; provided that any such access by Sellers shall not
unreasonably interfere with the conduct of the Business of the
Corporation or Purchaser. Sellers will hold, and will use their
best efforts to cause their officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning Purchaser or
the Business provided to them pursuant to this Section 5.02.
5.03 No Election Under Section 338. (a) Purchaser shall
not cause nor shall the Corporation make or file any election
under any provision of Section 338, including Section 338(h)(10),
of the United States Internal Revenue Code (the "Code") with
respect to the transactions contemplated by this Agreement.
(b) Purchaser shall take no action nor permit any
action or course of conduct to be taken by it or by the
Corporation, or permit the filing of any Section 338 election
with respect to any other stock acquisition by Purchaser of any
other corporation, if such filing would have the same effect as
if a formal election under any provision of Section 338,
including Section 338(h)(10), of the Code had been filed with
respect to the transaction contemplated hereby.
ARTICLE VI
COVENANTS OF SELLERS AND PURCHASER
Sellers and Purchaser hereto agree that:
6.01 Consulting Agreements. At the Closing, E. M.
Dupaquier, R. H. Marmande and the Company shall execute the
Consulting Agreements in the forms attached hereto as Schedule
6.01.
6.02 Best Efforts; Further Assurances. Subject to the terms
and conditions of this Agreement, each of Sellers and Purchaser
will use their and its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things
necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
Sellers and Purchaser each agree to execute and deliver such
other documents, certificates, agreements and other writings and
to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions
contemplated by this Agreement, but without expanding the
obligations and responsibilities of any party hereunder.
6.03 Certain Filings. Sellers and Purchaser shall cooperate
with one another (a) in determining whether any action by or in
respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to
any material contracts, in connection with the consummation of
the transactions contemplated by this Agreement, and (b) in
taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely
to obtain any such actions, consents, approvals or waivers.
6.04 Public Announcements. The parties agree to consult
with each other before issuing any press release or making any
public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be required
by applicable law, will not issue any such press release or make
any such public statement prior to such consultation.
ARTICLE VII
TAX MATTERS
7.01 Tax Definitions. The following terms, as used herein,
have the following meanings:
"Code" means the Internal Revenue Code of 1986, as
amended.
"Post-Closing Tax Period" means any tax period ending
after the Closing Date, except that with respect to a tax period
that commences before but ends after the Closing Date, the
portion of such period after the close of business on the Closing
Date.
"Pre-Closing Tax Period" means any tax period ending on
or before the close of business on the Closing Date and with
respect to a tax period that commences before but ends after the
Closing Date, the portion of such period up to the close of
business on the Closing Date.
"Tax" means (i) any net income, alternative or add-on
minimum, gross income, gross receipts, sales, use, ad valorem,
franchise, capital, paid-up capital, profits, greenmail, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the
imposition of any such tax (a "Taxing Authority") and (ii) any
liability to any person (including any applicable Taxing
Authority) in respect of any tax included in Clause (i) above by
reason of any indemnity, transferee liability, contractual or
legal obligation.
7.02 Tax Matters. Sellers hereby represent and warrant to
Purchaser as of the date hereof and as of the Closing Date that,
except as provided in Schedule 7.02, the Corporation has paid or
will timely pay all material taxes payable by the Corporation and
attributable to any Pre-Closing Tax Period which are required to
be paid on or prior to the Closing Date, the non-payment of which
would result in a lien on the Shares on or after the Closing
Date, would otherwise materially adversely affect the Business
after the Closing Date or would result in Purchaser becoming
liable therefor, except for taxes caused by an actual or deemed
election under Section 338 of the Code, which is Purchaser's
responsibility pursuant to Section 5.03. Sellers herewith
represent that the only Taxes which will be owed by the
Corporation as of the Closing Date are those which arise or have
arisen or have been incurred in the ordinary course of the
Corporation's Business. The Corporation has filed all required
income, franchise, sales, ad valorem, employment and other tax
returns and paid the total amount of Taxes due by it. The
provision for the corporate income and franchise tax liability of
the Corporation for all periods through the Closing Date as shown
on the Closing Balance Sheet will be adequate relative to the
Corporation's actual liability therefor as finally determined.
Sellers represent that the Corporation is not prohibited by any
law, rule or regulation from electing the provisions of
Subchapter S of the Code, sections 1361, et seq., commencing
January 1, 1997.
7.03 Tax Cooperation: Allocation of Taxes.
(a) Purchaser and Sellers agree to furnish or cause to
be furnished to each other, upon request, as promptly as
practicable, such information and assistance relating to the
Corporation, the non-compete covenant described in Section 4.01
and the Business as is reasonably necessary for the filing of all
tax returns, and making of any election related to taxes, the
preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating
to any tax return. Sellers and Purchaser shall cooperate with
each other in the conduct of any audit or other proceeding
related to taxes involving the Business and each shall execute
and deliver such powers of attorney and other documents as are
reasonably necessary to carry out the intent of this Paragraph
(a) of Section 7.03.
(b) Any transfer, documentary, sales, use or other
taxes arising in connection with the transactions contemplated by
this Agreement and any recording or filing fees with respect
thereto (each, a "Transfer Tax") shall be the responsibility of
Purchaser.
(c) Each of Sellers and Purchaser shall execute all
required elections pursuant to section 1377(a)(2) of the Code to
terminate the Corporation's taxable year commencing January 1,
1997 and ending as of the close of business on the Closing Date
(as defined in Section 1.03 entitled "Closing"), and allocate all
of the Corporation's income or loss for that period to Sellers
and the Corporation's income or loss for the remainder of
calendar year 1997 to Purchaser.
ARTICLE VIII
EMPLOYEE BENEFITS
8.01 Employee Benefits Definitions. The following terms, as
used herein, shall have the following meanings:
"Benefit Arrangement" means any employment, severance
or similar contract, or any other contract, plan, policy or
arrangement (whether or not written) providing for compensation,
bonus, profit-sharing, stock option or other stock related rights
or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits,
workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life
insurance benefits) that (i) is not an Employee Plan, (ii) is
entered into, maintained, administered or contributed to, as the
case may be, by Seller and (iii) covers any employee or former
employee of the Corporation.
"Employee Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA, (ii) is maintained, administered or
contributed to by the Corporation and (iii) covers an employee or
former employee of the Corporation.
"ERISA Affiliate" of any entity means any other entity
which, together with such entity, would be treated as a single
employer under Section 414 of the Code.
"Multi-Employer Plan" means each Employee Plan that is
a multi-employer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Title IV Plan" means an Employee Plan, other than any
Multi-Employer Plan, subject to Title IV of ERISA.
8.02 Employee Matters. The Sellers hereby represent and
warrant to Purchaser as of the date hereof:
(a) Schedule 8.02(a) lists each Employee Plan.
Sellers have provided or allow Purchaser access to as a true and
complete copy of each such Plan (and, if applicable, related
trust documents) and all amendments thereto and written
interpretations thereof together with (i) the three most recent
annual reports prepared in connection with each such Employee
Plan (Form 5500 including, if applicable, Schedule B thereto) and
(ii) the most recent actuarial report, if any, prepared in
connection with each Employee Plan. Schedule 8.02(a) identifies
each person who is a participant or who is eligible to
participate in each Employee Plan who is not an active employee
of Seller. The term "active employee" shall mean any person who,
on the Closing Date, is actively employed by the Corporation or
who is on short-term disability leave, authorized leave of
absence, military service or lay-off with recall rights as of the
Closing Date.
(b) Schedule 8.02(b) sets forth all Benefit
Arrangements presently in place for all employees of the
Corporation.
(c) As of the date hereof, there is no litigation,
administrative or arbitration proceeding or other dispute pending
or threatened that involves any Employee Plan or Benefit
Arrangement which could reasonably be expected to result in a
liability to the Corporation or Purchaser.
(d) No Employee Plan is (i) a Multi-Employer Plan,
(ii) a Title IV Plan or (iii) is maintained in connection with
any trust described in Section 501(c)(9) of the Code. No
"prohibited transaction", as defined in Section 406 of ERISA or
Section 4975 of the Code, has occurred that could result in a
liability to the Corporation, Purchaser or any of its Affiliates.
As used herein the term "Affiliate" means any individual, group
of individuals, corporation, partnership or other entity
controlled by, controlling or under common control with the
person or entity with respect to which that term is used.
Neither the Corporation nor any of its current or former
Affiliates (while an Affiliate) has within the last five (5)
years engaged in or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Section
4069 of ERISA. Neither the Corporation nor any of its current or
former Affiliates has ever maintained or become obligated to
contribute to any employee benefit plan (i) that is subject to
Title IV of ERISA, (ii) to which Section 412 of the Code applies,
or (iii) that is a multi-employer plan under Title IV of ERISA.
The Corporation has not incurred, and does not reasonably expect
to incur, (a) any liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial
withdrawal from, any plan covered or previously covered by Title
V of ERISA or (b) any liability under Section 4971 of the Code
that in either case could become a liability of the Corporation
or any of its Affiliates after the Closing Date.
(e) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and no event has occurred since such adoption that would
adversely affect such qualification and each trust created in
connection with each such Employee Plan forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Sellers
have furnished to Purchaser copies of the most recent Internal
Revenue Service determination letters with respect to each such
Plan. Each Employee Plan has been maintained in compliance with
its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations including but
not limited to ERISA and the Code.
(f) Seller has furnished to Purchaser copies or
descriptions of each Benefit Arrangement. Each Benefit
Arrangement has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to
such Benefit Arrangement. Schedule 8.02(f) identifies each
individual eligible to receive a benefit under a Benefit
Arrangement who is not an active employee, as defined in Section
8.02(a), of the Corporation.
(g) The Corporation has no current or projected
liability in respect of post-retirement or post-employment
welfare benefits for retired, current or former employees, except
as required to avoid excise tax under Section 4980B of the Code.
(h) Except as disclosed in writing to Purchaser prior
to the date hereof, there has been no amendment to, written
interpretation of or announcement (whether written or not
written) by the Corporation or any of its Affiliates relating to,
or change in employee participation or coverage under, any
Employee Plan or Benefit Arrangement which would increase
materially the expense of maintaining such Employee Plan or
Benefit Arrangement above the level of the expense incurred in
respect thereof in connection with the Corporation's Employees
for the most recently completed fiscal year.
(i) No employee of the Corporation will become
entitled to any bonus, retirement, severance, job security or
similar benefit or enhanced such benefit (including acceleration
of an award, vesting or exercise of an incentive award) or any
fee or payment of any kind solely as a result of any of the
transactions contemplated hereby.
(j) There is no contract, plan or arrangement (written
or otherwise) covering any employee or former employee of the
Corporation or any of its Affiliates that, individually or
collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of
the Code.
(k) No tax under Section 4980B of the Code has been
incurred in respect of any Employee Plan that is a group health
plan, as defined in Section 5000(b)(1) of the Code.
ARTICLE IX
CONDITIONS TO CLOSING
9.01 Conditions to the Obligations of Each Party. The
obligations of Purchaser and Sellers to consummate the Closing
are subject to the satisfaction, or waiver by both parties, of
the following conditions:
(a) No provision of any applicable law or regulation
and no judgment, injunction, order or decree shall (i) prohibit
the consummation of the Closing or (ii) restrain, prohibit or
otherwise interfere with the effective operation or enjoyment by
Purchaser of the Shares.
(b) All actions by or in respect of or filings with
any governmental body, agency, official or authority required to
permit the consummation of the Closing, and all material third
party consents necessary in connection with the consummation of
the Closing, shall have been obtained.
(c) All waivers of applicable rights of first refusal
by the Corporation and the Sellers have been obtained to permit
consummation of the transactions contemplated herein.
9.02 Conditions to Obligations of Purchaser. The obligation
of Purchaser to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Sellers shall have performed in all material
respects all of their obligations hereunder required to be
performed by them at or prior to the Closing Date (including
their obligations set forth in Section 4.02), (ii) the
representations and warranties of Sellers contained in this
Agreement and in any certificate or other writing delivered by
Sellers pursuant thereto, disregarding all qualifications and
exceptions contained therein relating to materiality, shall be
true at and as of the respective dates applicable to each of them
as set forth herein, and (iii) Purchaser shall have received a
certificate signed by the President of the Corporation to the
foregoing effects.
(b) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any person before any court, arbitrator or
governmental body, agency or official nor shall they be pending.
(c) Purchaser shall have received all documents it may
reasonably request relating to the existence of and good standing
of the Corporation.
(d) The Corporation shall have been issued an owner's
title insurance policy with respect to all real or immovable
property in a form and only with such exceptions as are
reasonably acceptable to Purchaser. The cost of the owner's
title insurance policy shall be borne equally between Sellers and
Purchaser.
(e) Nothing has come to Purchaser's attention which
would indicate that any of the representations and warranties of
Sellers are untrue in any material respect or that Sellers have
failed to perform any of their covenants contained herein.
9.03 Conditions to Obligations of Sellers. The obligation
of Sellers to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Purchaser shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Closing Date and (ii) the
representations and warranties of Purchaser contained in this
Agreement and in any certificate or other writing delivered by
Purchaser pursuant hereto shall be true in all material respects
at and as of the Closing Date, as if made at and as of such date.
(b) Sellers shall have received all documents they may
reasonably request relating to the existence of Purchaser and the
authority of Purchaser to execute and consummate this Agreement,
all in form and substance reasonably satisfactory to Seller.
ARTICLE X
SURVIVAL; INDEMNIFICATION
10.01 Survival. The covenants, agreements, representations
and warranties of the parties hereto contained in this Agreement
or in any certificate or other writing delivered pursuant hereto
or in connection herewith shall survive the Closing.
10.02 Indemnification.
(a) Sellers ("Indemnifying Party" or "Indemnifying
Parties") jointly, severally and in solido hereby indemnify
Purchaser and all of Purchaser's officers, directors, employees
and shareholders (hereinafter "Indemnified Parties") against and
agree to defend and hold them harmless from and against any and
all damage, loss, liability and expense, including, without
limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit
or proceeding (collectively, "Loss") incurred or suffered by any
of the Indemnified Parties arising out of any willful
misrepresentation or breach of warranty, covenant or agreement
made or to be performed by Sellers pursuant to this Agreement,
including all of those made by Sellers in Articles I, II, IV, VI,
VII and VIII hereof. Sellers shall have no obligation with
respect to any loss, claim, demand, suit or action against the
Corporation or Purchaser notice of which is given to Sellers'
Representatives after December 31, 1998 as to all claims,
demands, suits or actions other than for the payment of any Tax
and after December 31, 2000 as to all claims, demands, suits or
actions for the payment of any Tax.
(b) Purchaser hereby agrees to defend and indemnify
Sellers against and to hold Sellers harmless from any and all
Loss incurred or suffered by Sellers arising out of any failure
to perform, misrepresentation or breach of any warranty, covenant
or agreement made or to be performed by Purchaser pursuant to
this Agreement. Purchaser shall have no obligation with respect
to any loss, claim, demand, suit or action against Sellers notice
of which is given to Purchaser (by Sellers or any other person or
governmental agency) after December 31, 1998.
(c) Except as otherwise provided in Section 10.03
hereof in respect of matters relating to Taxes, the following
provisions shall apply:
(i) Promptly after receipt by an Indemnified
Party of notice of the commencement of any action or proceeding
involving a claim in respect of which indemnification is being
sought, such Indemnified Party will, if a claim for
indemnification hereunder is to be made against the Indemnifying
Party, give written notice to the Indemnifying Parties (through
Sellers' Representatives) of the commencement of such action or
proceeding, the basis for such claim for indemnification and such
other information relating thereto as the Indemnifying Party may
reasonably request; provided, however, that failure to so notify
the Indemnifying Parties or to provide such information shall not
relieve such Indemnifying Parties from any liability which they
may have with respect to such claim, except to the extent that
they are actually materially prejudiced by such failure to give
notice.
(ii) In case any such action is brought against
an Indemnified Party, the Indemnified Party shall assume and
control the defense of such action with counsel selected by the
Indemnified Party. It is understood that the Indemnifying
Parties shall not, in connection with any action or related
actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such
jurisdiction to act as counsel for all Indemnified Parties,
unless in any such Indemnified Party's reasonable judgment (i) a
conflict of interest between such Indemnified Party and any other
Indemnified Party may exist in respect of such claim or (ii) such
Indemnified Party has available to it reasonable defenses which
are different from or additional to those available to other
Indemnified Parties. The Indemnifying Parties shall not be
liable for any settlement of any proceeding effected without
their written consent (given by Sellers' Representatives), but if
settled with such consent or if there shall be a final judgment
for the plaintiff, the Indemnifying Parties agree to indemnify
the Indemnified Party and hold the Indemnified Party harmless
from and against any Losses by reason of such settlement or
judgment (it being understood that if the Sellers are the
Indemnifying Party such indemnification obligation shall be joint
and several). The Indemnifying Parties shall not, without the
consent of the Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as
an unconditional term the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect
to such claim or litigation. Any dispute as to whether any
Indemnified Party is entitled to indemnification in connection
with any action or proceeding under Section 10.02(c), the defense
or settlement of such action or proceeding, or any other rights
or obligations of the parties hereto in connection with such
action or proceeding shall be submitted to arbitration in
accordance with Section 12.06 of this Agreement.
(iii) In the event that an Indemnified Party
shall claim a right to payment pursuant to this Agreement with
respect to which there has been no action or proceeding involving
such claim, such Indemnified Party shall send written notice of
such claim to the Indemnifying Parties. Such notice shall
specify the basis for such claim in reasonable detail. As
promptly as possible after the Indemnified Party has given such
notice, such Indemnified Party and the Indemnifying Parties
(acting through Sellers' Representatives) shall establish the
merits and amount of Losses, if any, to which the Indemnified
Party is entitled. If the parties do not agree with respect to
these matters within 30 days after the giving of such notice,
either party may submit the matter to arbitration in accordance
with Section 12.06 of this Agreement. In such arbitration, if
the arbitrator determines that a breach of a representation,
warranty, covenant or agreement in this Agreement by the
Indemnifying Parties occurred and that such breach caused Losses
to an Indemnified Party, the arbitrator will determine the amount
of any such Losses. Within ten business days after the final
determination of the merits of such claim and amount of such
Losses, each Indemnifying Party shall, subject to the limitations
set forth herein, deliver to the Indemnified Party an amount of
cash in immediately available funds sufficient to satisfy such
Losses or the portion of such Losses for which such Indemnifying
Party is obligated to provide indemnity hereunder.
(iv) If any Seller fails to timely deliver cash
in the amount of any Losses payable by such Seller under the
terms of this Agreement, Purchaser may withdraw from funds held
in the Escrow Account (as defined below) an amount of cash equal
to the amount of Losses which has not been paid by that Seller.
(d) Wherever this Agreement requires actions or
decisions of the Indemnifying Parties, those actions or decisions
shall be taken by either or both of Sellers' Representatives
acting on behalf of all Indemnifying Parties.
10.03 Covenants Regarding Tax Matters.
(a) Taxes attributable to the taxable period of the
Corporation beginning before and ending after the Closing Date
shall be allocated (i) to the Sellers for the period up to and
including the Closing Date to the extent such Taxes exceed the
reserve therefor on the Closing Balance Sheet and (ii) to
Purchaser for the period up to and including the Closing Date to
the extent such Taxes do not exceed the reserve therefor on the
Closing Date Balance Sheet and for the period subsequent to the
Closing Date. For purposes of this Section 10.03(a), Taxes for
the period up to and including the Closing Date and for the
period subsequent to the Closing Date shall be determined on the
basis of an interim closing of the books as of the Closing Date.
(b) The Sellers may not file any amended returns or
refund claims in respect of any taxable period of the Corporation
ending on or prior to the Closing Date.
(c) The Sellers shall cooperate fully with Purchaser
and make available to Purchaser in a timely fashion such Tax data
and other information as may be reasonably required for the
preparation by Purchaser of any returns of the Corporation
required to be prepared and filed by Purchaser hereunder. The
Sellers and Purchaser shall make available to the other, as
reasonably requested, all information, records or documents in
their possession relating to Tax liabilities of the Corporation
for all taxable periods of the Corporation ending on, prior to or
including the Closing Date and shall preserve all such
information, records and documents until the expiration of any
applicable Tax statute of limitations or extensions thereof or,
if a proceeding has been instituted for which the information,
records or documents is required, until there is a final
determination with respect to such proceeding.
(d)(i) Purchaser shall promptly notify the Sellers'
Representatives upon receipt by Purchaser or the Corporation of
written notice of any Tax audits or of proposed assessments
against the Corporation for taxable periods of the Corporation
ending on or prior to the Closing Date; provided, however, that
the failure of Purchaser to give Sellers' Representatives prompt
notice as required herein shall not relieve the Sellers of any of
their obligations hereunder, except to the extent that the
Sellers are actually and materially prejudiced thereby.
Purchaser shall have the right to represent the interests of the
Corporation in any such Tax audit or administrative or court
proceeding and to employ counsel of its choice; provided,
however, that Purchaser may not agree to a settlement or
compromise thereof without the prior written consent of Sellers'
Representatives, which consent may be withheld solely in the
event that Sellers' Representatives have been advised in writing
by counsel reasonably acceptable to Purchaser that it is more
likely than not that the issue under audit (or the proposed
assessment) would be decided favorably to the Corporation and
that written advice has been furnished to Purchaser. The Sellers
agree that they will cooperate fully with Purchaser and its
counsel in the defense against or compromise of any claim in any
said audit or proceeding.
(ii) The Sellers shall promptly notify Purchaser
upon receipt by the Sellers of written notice of any Tax audit or
proposed assessment or other proposed change or adjustment which
may affect the Corporation or its Tax attributes. The Sellers
shall keep Purchaser duly informed of the progress thereof and,
if the results of such Tax audit or proceeding may have an
adverse effect on the Corporation, Purchaser or its affiliates
for any taxable period including or ending after the Closing
Date, then the Sellers may not agree to a settlement or
compromise thereof without Purchaser's consent.
(e) Within ten (10) days after notice by Purchaser to
Sellers' Representatives of the total amount of additional taxes,
penalties and interest owed by the Corporation for periods prior
to the Closing, Sellers shall remit to Purchaser the entire
amount thereof less the future tax benefit attributable to the
increase in future depreciation deductions as a result of the
adjustment which caused those additional taxes. The future tax
benefit shall be deemed equal to forty (40%) percent of the total
additional depreciation which the Corporation would thereby be
able to deduct in future years provided the amount of this
reduction shall not exceed the amount of additional taxes (apart
from penalties and interest) then owed by the Corporation. If
any Seller fails to remit his entire proportionate share of the
amount due, Purchaser may withdraw said amount from the Escrow
Account, to the extent thereof, and if the Escrow Account is
insufficient, any one or more of the other Sellers shall pay
Purchaser the shortfall upon ten (10) days written notice.
(f) The Sellers and Purchaser agree to treat any
indemnity payment made pursuant to this Agreement as an
adjustment to the Purchase Price for federal, state, local and
foreign income tax purposes. If, notwithstanding such treatment
by the parties, any indemnity payment is determined to be taxable
to Purchaser or the Corporation by any taxing authority, the
Sellers shall indemnify Purchaser and its Affiliates for any
Taxes payable by reason of the receipt of such indemnity payment
(including any payments under this Section 10.03(f)).
ARTICLE XI
TERMINATION
11.01 Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of Sellers'
Representatives and Purchaser;
(ii) By Purchaser if the Closing shall not have
been consummated on or before January 15,
1997 unless extended by mutual agreement of
Sellers' Representatives and Purchaser;
(iii) By either Sellers' Representatives or
Purchaser if there shall be any law or
regulation that makes the consummation of the
transactions contemplated hereby illegal or
otherwise prohibited or if consummation of
the transactions contemplated hereby would
violate any nonappealable final order, decree
or judgment of any court or governmental body
having competent jurisdiction; or,
(iv) By Purchaser if anything has come to its
attention that any of Sellers'
representations or warranties are untrue in
any respect or Purchaser has discovered any
contamination or any Hazardous Substance on
the premises of the Corporation or any
violations of any Environmental Laws by the
Corporation which have not been remedied as
of the date of the discovery.
The party desiring to terminate this Agreement pursuant to
Clauses (ii), (iii) or (iv) shall give notice of such termination
to the other party.
11.02 Effect of Termination. If this Agreement is
terminated as permitted by Section 11.01, such termination shall
be without liability of any party (or of any shareholder,
director, officer, employee, agent, consultant or representative
of such party) to the other parties to this Agreement; provided
that if such termination shall result from the willful failure of
any party to fulfill a condition to the performance of the
obligations of another party or to perform a covenant of this
Agreement or from a willful breach by any party to this
Agreement, such party shall be fully liable for any and all
Losses incurred or suffered by any other party as a result of
such failure or breach. The provisions of Sections 5.01 and
12.03 shall survive any termination hereof pursuant to Section
11.01.
ARTICLE XII
MISCELLANEOUS
12.01 Notices. All notices, requests and other
communications to either party hereunder shall be in writing
(including facsimile, telecopy or similar writing) and shall be
deemed given when delivered:
If to Purchaser, to: Gulf Island Fabrication, Inc.
Attn: Kerry J. Chauvin, President
583 Thompson Road
Houma, LA 70361-0310
With a Copy to: Robert R. Casey, Esq.
Four United Plaza, 5th Floor
8555 United Plaza Boulevard
Baton Rouge, LA 70809-7000
If to Sellers or to
Indemnifying Parties,
to Sellers'
Representatives: E. M. Dupaquier
206 Maple Avenue
Houma, LA 70364
R. H. Marmande
1321 Dularge Road
With a Copy to: P. J. McMahon, Esq.
P. O. Box 1545
Houma, LA 70361
Each of the above persons may change their address or facsimile
number by notice to the other persons in the manner set forth
above.
12.02 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Purchaser and Seller,
or in the case of a waiver, by the party against whom the waiver
is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the existence of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12.03 Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense.
12.04 Successors and Assigns. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns;
provided that neither party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder.
12.05 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Louisiana
without regard to the conflicts of law rules of such state.
12.06 Jurisdiction and Forum: Arbitration. Any controversy
arising under, out of, in connection with, or relating to, this
Agreement, and any amendment hereof, or the breach hereof or
thereof, shall be determined and settled by arbitration in New
Orleans, Louisiana by an arbitrator or arbitrators mutually
agreed upon by Purchaser and the Sellers' Representatives or, if
Purchaser and Sellers' Representatives shall fail or be unable to
so agree within ten Business Days after the written request
therefor by Purchaser or the Representatives to the other, such
arbitrator or arbitrators as may be selected in accordance with
the rules of the American Arbitration Association. Any award
rendered therein shall specify the findings of fact of the
arbitrator or arbitrators and the reasons for such award, with
reference to and reliance on relevant law. Any such award shall
be final and binding on each and all of the parties thereto and
their personal representatives, and judgment may be entered
thereon in any court having jurisdiction thereof.
12.07 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received as a
counterpart hereof signed by the other party hereto.
12.08 Entire Agreement. This Agreement and any other
agreements referred to herein constitute the entire agreement
between the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect thereto.
No representation, inducement, promise, understanding, condition
or warranty not set forth herein has been made or relied upon by
either party hereto.
12.09 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
12.10 Severability. In the event any one or more of the
provisions of this Agreement shall be or become illegal or
unenforceable in any respect, the validity, legality, operation
and enforceability of the remaining provisions of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers effective as of the day and year first above written but
executed on the dates set forth below.
WITNESSES: GULF ISLAND FABRICATION, Purchaser
/s/ Elward Cunningham BY: /s/ Kerry J. Chauvin
------------------------- -------------------------------
Kerry J. Chauvin, President
/s/ John P. Laborde Date Executed: November 25,1996
------------------------- -------------
SELLERS:
/s/ Elward Cunningham /s/ R.H. Marmande
-------------------------- -----------------------------------
R. H. Marmande
/s/ John P. Laborde Date Executed: November 25, 1996
-------------------------- -------------
/s/ Elward Cunningham /s/ E. M. Dupaquier
-------------------------- -----------------------------------
E. M. Dupaquier
/s/ John P. Laborde Date Executed: November 25, 1996
-------------------------- ------------
All schedules have been intentionally omitted. A copy of any omitted
schedule will be furnished supplementally to the Commission upon request.
REGISTRATION RIGHTS AGREEMENT
This registration rights agreement (this "Agreement") is
entered into this 6th day of March, 1997 by and between the
undersigned and Gulf Island Fabrication, Inc. (the "Company").
WHEREAS, the undersigned was a founder of the Company and
holds 1,416,100 shares of common stock, no par value per share
(the "Common Stock"), of the Company.
WHEREAS, the Company desires to grant certain registration
rights to the undersigned;
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the undersigned and the Company agree
as follows:
1. Certain Defined Terms. Certain terms used in this
Agreement are defined as follows:
"Holder" means anyone holding Registrable Securities.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"Qualified Public Offering" means the closing of an
underwritten public offering by the Company pursuant to a
Registration Statement filed and declared effective under the
Securities Act covering the offer and sale of Common Stock for
the account of the Company in which the aggregate gross proceeds
to the Company equal at least fifteen million dollars
($15,000,000).
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration
Statement with the SEC in compliance with the Securities Act for
the purpose of effecting a public sale of securities.
"Registrable Securities" means (a) all shares of Common
Stock held by the undersigned as of the date hereof and (b) any
other securities issued by the Company after the date hereof with
respect to such shares (and with respect to the Common Stock
generally) by means of exchange, reclassification, dividend,
distribution, split up, combination, subdivision,
recapitalization, merger, spin-off, reorganization or otherwise;
provided, however, that as to any Registrable Securities, such
securities shall cease to constitute Registrable Securities for
the purposes of this Agreement if and when (i) a Registration
Statement with respect to the sale of such securities shall have
been declared effective by the SEC and such securities shall have
been sold pursuant thereto in accordance with the intended plan
and method of distribution therefor set forth in the final
prospectus forming a part of such Registration Statement; (ii)
such securities shall have been sold in satisfaction of all
applicable resale provisions of Rule 144 under the Securities
Act; (iii) as expressed in an opinion of counsel delivered to and
satisfactory to the Company and the transfer agent for the Common
Stock, such securities no longer constitute "restricted
securities" within the meaning of Rule 144 under the Securities
Act and the transfer of such securities neither requires
registration under the Securities Act or qualification under any
state securities or "blue sky" laws then in effect, or (iv) such
securities cease to be issued and outstanding for any reason.
"Registration Statement" means a registration statement
filed by the Company with the SEC for a public offering and sale
of securities of the Company (other than a registration statement
on Form S-8 or Form S-4 or their successors or any other form for
a limited purpose or any registration statement covering only
securities proposed to be issued in exchange for securities or
assets of another Person).
"Securities Act" means the Securities Act of 1933, as
amended.
2. Representations and Warranties of the Company. The
Company hereby represents and warrants to the undersigned as
follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Louisiana;
(b) The Company has the full legal right, power and
authority to enter into and perform this Agreement, and this
Agreement has been duly authorized, executed and delivered
by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its
terms; subject, however, to any approvals that may be
required under the Securities Act of 1933, as amended (the
"Securities Act") and under state securities laws in
connection with the registration and sale of any Registrable
Securities; and
(c) The execution, delivery and performance of this
Agreement by the Company will not violate any provision of
law, any order of any court or agency of government, the
Articles of Incorporation or By-laws of the Company, each as
amended through the date hereof, or any provision of any
indenture or other agreement to which it or any of its
properties or assets is bound, or conflict with, result in a
breach or constitute (with due notice or lapse of time or
both) a default under any such indenture or other agreement,
result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon the properties or
assets of the Company.
3. Registration Rights
(a) Demand Registration Rights. (i) After the date on
which the Company has first effected a Qualified Public Offering,
the Holders of 50% or more of the Registrable Securities may
request in writing that the Company register all or any portion
of the Registrable Securities held by such requesting Holder or
Holders (the "Initiating Holders") for sale in the manner
specified in such request. The Company shall promptly and in any
event not later than ten days after such request, notify in
writing all other Holders of such request and thereupon the
Company will, at its sole cost and expense as provided in Section
4 below, use its best efforts to register (on the appropriate
registration form reasonably acceptable to the Initiating
Holders) that number of Registrable Securities specified in such
request and all other Registrable Securities that the Company has
been requested to register by such other Holder or Holders in a
written response given to the Company by such other Holder or
Holders (who, together with the Initiating Holders, are
hereinafter referred to as the "Requesting Holders") within 30
days after receipt of the written notice of the proposed
registration from the Company. The Company agrees to include in
any such Registration Statement all information which, the
opinion of counsel to the Requesting Holders, is required to be
included.
(ii) The Company shall be obligated to effect two
registrations of the Registrable Securities pursuant to this
Section 3(a). The obligation of the Company under this Section
3(a) shall be deemed satisfied only if a Registration Statement
registering all Registrable Securities specified in the requests
received pursuant to subsection 3(a)(i) for sale in accordance
with the method of disposition specified by the Initiating
Holders shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering,
all such Registrable Securities included therein have been sold
pursuant thereto.
(iii) The Company shall be entitled to include in
any Registration Statement referred to in this Section 3(a), for
sale in accordance with the methods of disposition specified by
the Initiating Holders, securities to be sold by the Company for
its own account, except as and to the extent that, in the opinion
of the managing underwriter or underwriters (if the method of
disposition requested by the Initiating Holders is an
underwritten public offering), such inclusion would have a
material adverse effect on the efforts to sell the Registrable
Securities included in the Registration Statement pursuant to
Section 3(a)(i).
(iv) If the managing underwriter shall (A) certify
in writing that the inclusion of some or all of the Registrable
Securities would materially and adversely affect the market for
the Company's securities, (B) state the basis of such opinion and
(C) state the maximum number of Registrable Securities, if any,
that may be distributed without such adverse effect, then the
Company may, upon written notice to the Requesting Holders
allocate such an offering pro rata among the Requesting Holders.
(v) If at the time of any request to register
Registrable Securities pursuant to this Section 3(a), the Company
is engaged (or its Board of Directors has made a determination to
engage within ninety days of the time of such request) in a
registered public offering of securities for its own account in
which the Requesting Holders may include Registrable Securities
pursuant to Section 3(b) hereof, or is engaged in any other
activity which, in the good faith determination of the Company's
Board of Directors, would be adversely affected by the requested
registration to the material detriment of the Company, then the
Company may at its option direct that the filing of a
Registration Statement pursuant to such a request be delayed for
a period not in excess of 90 days from the effective date of such
offering or the date of commencement of such other material
activity, as the case may be.
(vi) If requested by the underwriters for any
underwritten offering by the Requesting Holders pursuant to a
registration requested under this Section 3(a), the Company shall
enter into an underwriting agreement with such underwriters in a
form reasonably satisfactory in substance and form to each
Requesting Holder and the underwriters that shall contain such
representations and warranties by the Company and such other
terms as are generally prevailing in an agreement of this type,
including, without limitation, indemnities to the effect and to
the extent provided in Section 8 hereof. The Requesting Holders
will cooperate with the Company in the negotiation of the
underwriting agreement and shall give consideration to the
reasonable suggestions of the Company regarding the form thereof.
The Requesting Holders shall be parties to such underwriting
agreement and may, in their discretion, require that any or all
of the representations and warranties by, and other agreements on
the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such
Requesting Holders and that any or all of the conditions
precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations
of such Requesting Holders. In the case of a firm commitment
public offering pursuant to this Section 3(a), the Initiating
Holders shall choose the managing underwriter or underwriters;
provided that this selection shall be subject to the approval of
the Company, which approval shall not be unreasonably withheld.
(vii) The Holders' rights under this Section 3(a)
are in addition to registration rights of the Holders under
Section 3(b) hereof.
(b) Piggy-back Registration
(i) If the Company proposes to file a
Registration Statement, whether or not for its own account (other
than pursuant to Section 3(a)), it will, at least thirty days
prior to such a filing, give written notice to all Holders of its
intention to do so and, upon the written request of any Holder or
Holders given within fifteen days of the receipt of such notice
(which request shall state the intended method of disposition of
such Registrable Securities), the Company will use its best
efforts to cause all Registrable Securities that the Holder or
Holders requested the Company to register to be registered under
the Securities Act to the extent necessary to permit their sale
or other disposition in accordance with the intended methods of
distribution specified in the request of the Holder or Holders;
provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 3(b)
without obligation to the Holders.
(ii) In connection with any offering under this
Section 3(b) involving an underwriting, the Company shall not be
required to include any Registrable Securities in such
underwriting unless the Holders accept the terms of the
underwriting as agreed upon between the Company and the managing
underwriter or underwriters, selected by the Company, and then
only in such quantity as will not, in the written opinion of the
managing underwriter or underwriters, jeopardize the success of
the offering by the Company. Each Holder that has requested that
Registrable Securities held by him be included in such
Registration Statement shall (together with the Company and the
other Holders distributing the securities through such
underwriting) enter into such underwriting agreement as agreed
upon between the Company and the managing underwriter or
underwriters. If in the written opinion of the managing
underwriter or underwriters the registration of all, or part of,
the Registrable Securities that the Holders have requested to be
included would materially and adversely affect such public
offering, the Company shall be required to include in the
underwriting only that number of Registrable Securities, if any,
that the managing underwriter or underwriters believes may be
sold without causing such adverse effect. If the number of
Registrable Securities to be included in the registration in
accordance with the foregoing is less than the total number of
securities that the Holders have requested to be included, then
the number of Registrable Securities to be included in the
registration shall be reduced pro rata among the requesting
Holders based upon the number of Registrable Securities so
requested to be registered. If any Holder disapproves of the
terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the managing
underwriter.
4. Registration Procedures. If and whenever the Company
is required by the provisions of this Agreement to use its best
efforts to effect the registration of any of the Registrable
Securities under the Securities Act, the Company shall as
expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange
Commission (the "SEC") a Registration Statement and otherwise
comply with the provisions of the Securities Act with respect to
such Registrable Securities and use its best efforts to cause
that Registration Statement to become effective;
(b) Prepare and file with the SEC any amendments and
supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until the earlier of
(i) the date on which all Registrable Securities included therein
have been sold pursuant to the plan of distribution included in
such Registration Statement and (ii) the thirtieth day from the
effective date of the Registration Statement;
(c) Furnish to the Holders whose Registrable
Securities have been included in such Registration Statement such
numbers of copies of the prospectus, including preliminary
prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Holders may reasonably
request in order to facilitate the public sale or other
disposition of the Registrable Securities;
(d) Use its best efforts to register or qualify the
Registrable Securities covered by the Registration Statement
under the securities or blue sky laws of such jurisdictions as
the Holders whose Registrable Securities have been included in
such Registration Statement shall reasonably request, and do any
and all other acts and things that may be necessary or advisable
to enable such Holders to consummate the public sale or other
disposition of such Registrable Securities in such jurisdictions;
provided, however, that the Company shall not be required to
qualify to do business as a foreign corporation or consent to
general service of process in any such jurisdiction;
(e) Before filing the Registration Statement or
prospectus or amendments or supplements thereto, furnish the
Holders whose Registrable Securities have been included in such
Registration Statement with copies of all such documents proposed
to be filed, which shall be subject to reasonable approval of
counsel designated by such Holders;
(f) Furnish to each Holder whose Registrable
Securities have been included in such Registration Statement a
signed counterpart, addressed to such Holder (and the
underwriters, if any), of (i) an opinion of the Company's legal
counsel dated the effective date of such Registration Statement
(and, if such registration includes an underwritten public
offering, dated the date of the closing under the underwriting
agreement), and (ii) a "comfort" letter dated the effective date
of such Registration Statement (and, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), signed by the
independent public accountants who certified the Company's
financial statements included in such Registration Statement,
covering substantially the same matters with respect to such
Registration Statement (and the prospectus included therein, and
in the case of the accountants' letter with respect to events
subsequent to the date of such financial statements), as are
customarily included in opinions of issuer's counsel and an
accountant's letter delivered to the underwriters in underwritten
public offerings of securities, and in the case of the
accountant's letter, such other financial matters as such Holder
(or the underwriters, if any) may reasonably request; and
(g) At any time when a prospectus relating to the
Registrable Securities is required to be delivered under the
Securities Act, notify each Holder whose Registrable Securities
have been included in such Registration Statement upon discovery
of, or upon the happening of any event as a result of which, the
prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances under which they were made.
If the Company has delivered preliminary or final prospectuses to
the Holders whose Registrable Securities have been included in
such Registration Statement, and after having done so the
prospectus is amended to comply with the requirements of the
Securities Act, the Company shall promptly notify such Holders
and, if requested, such Holders shall immediately cease making
offers of Registrable Securities and return all prospectuses to
the Company. The Company shall promptly provide such Holders
with a revised prospectuses and following receipt of the revised
prospectuses such Holders shall be free to resume making offers
of the Registrable Securities.
5. Expenses of Registration. The costs and expenses
incurred in connection with any registration, qualification or
compliance pursuant to this Agreement, including, without
limitation, all registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the
Company and the expenses of any special accounting services and
audits incidental to or required by such registration, shall be
paid by the Company; provided, however, the Company shall not be
required to pay legal fees of the Holders, or underwriters' fees,
discounts, commissions and broker-dealer charges relating to
Registrable Securities. All such expenses relating to the
Registrable Securities or to Holders' legal counsel shall be paid
by Holders.
6. Information by Holders. The Holders will furnish the
Company, upon the written request of the Company, all information
in their possession necessary to effect the registration and
qualifications under the Securities Act and the blue sky laws in
connection with any registration and will otherwise cooperate
with the Company in effecting such registration and
qualifications.
7. Rule 144 Requirements. After the date on which the
Company has effected a Qualified Public Offering, the Company
shall:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144 under the
Securities Act;
(b) use its best efforts to file with the SEC in a
timely manner all reports and other documents required of
the Company under the Securities Act and Securities Exchange
Act of 1934, as amended (the "Exchange Act") (and any time
after it has become subject to such reporting requirements);
and
(c) furnish to any Holder upon request a written
statement by the Company as to its compliance with the
reporting requirements of Rule 144 (at any time after ninety
days following the closing of the first sale of securities
by the Company pursuant to a Registration Statement), and of
the Securities Act and the Exchange Act (at any time after
it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the
Company and such other reports and documents of the Company
as such Holder may reasonably request to avail itself of any
similar rule or regulation of the SEC allowing itself any
such securities without registration.
8. Indemnification.
(a) In the event of any registration of any of the
Registrable Securities under the Securities Act pursuant to this
Agreement, the Company shall indemnify and hold harmless the
Holders whose Registrable Securities have been included in such
registration and each underwriter of such Registrable Securities
and each other Person, if any, who controls such persons within
the meaning of the Securities Act or the Exchange Act, against
any losses, claims, damages or liabilities (including reasonable
legal and other expenses incurred in investigating and defending
against the same), joint or several, to which the Holders or such
underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities laws or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon
(1) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (2) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, if used prior to the effective date of the
Registration Statement, or contained in the prospectus (as
amended or supplemented if the Company files any amendment
thereof or supplement thereto with the SEC), if used within the
period during which the Company is required to keep the
Registration Statement to which such prospectus relates current
pursuant to the terms hereof, or the omission or alleged omission
to state therein (if so used) a material fact necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however,
that (A) the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectuses,
or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing,
by or on behalf of such Holders, underwriter or controlling
person specifically for use in the preparation thereof or (B) the
Company shall not be required to indemnify any underwriter from
whom the Person asserting any such losses, claims, damages,
expenses or liabilities purchased the Registrable Securities that
are the subject thereof or to the benefit of any person
controlling such underwriter, if such underwriter failed to send
or give a copy of the prospectus or any amendment thereof or
supplement thereto to such person at or prior to the written
confirmation of the sale of such Registrable Securities to such
person.
(b) In the event of any registration of any of the
Registrable Securities under the Securities Act pursuant to this
Agreement, the Holders whose Registrable Securities have been
included in such registration shall indemnify and hold harmless
the Company, each of its directors and officers and each
underwriter (if any) and each person who controls the Company or
any such underwriter within the meaning of the Securities Act or
the Exchange Act, if any, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may
become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws, or otherwise, insofar as such
losses, claims, damages, liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of material fact contained in any
Registration Statement under which such Registrable Securities
were registered under the Securities Act, any preliminary
prospectus or final prospectus or prospectuses contained in the
Registration Statement, or an amendment or supplement to the
Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if the statement or omission was made in reliance
upon and in conformity with information furnished in writing to
the Company by or on behalf of such Holders specifically for use
in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement.
(c) Each party entitled to indemnification under this
Agreement (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any
such claim or litigation resulting therefrom; provided, that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld); and,
provided further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Agreement. The Indemnified
Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such
expenses if (1) representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential different interests between the
Indemnified Party and any other party represented by such counsel
in such proceeding, (2) the employment of counsel by the
Indemnified Party has been authorized by the Indemnifying Party,
or (3) the Indemnifying Party has not, in fact, employed counsel
to assume the defense of such action. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with
the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemni-
fied Party shall consent to entry of any judgment or settle such
claim or litigation without the prior written consent of the
Indemnifying Party.
9. Miscellaneous.
(a) Notices. Any notice or other communication
required or permitted hereunder shall be in writing or by telex,
telephone or facsimile transmission with subsequent written
confirmation, and may be personally served or sent by United
States mail and shall be deemed to have been given upon receipt
by the party notified. For purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as
provided in this Section 9) shall be as set forth opposite each
party's name on the signature page hereof.
(b) Transfer of Registration Rights. The rights to
cause the Company to register securities granted to Holders by
the Company under Section 3 hereof may be assigned by Holders to
a transferee or assignee of any Registrable Securities, provided,
that the Company is given written notice at the time of or within
a reasonable time after said transfer, stating the name and
address of such transferee or assignee and identifying the
securities with respect to which such registration rights are
being assigned.
(c) Waivers and Amendments; Noncontractual Remedies;
Preservation of Remedies. This Agreement may be amended, super-
seded, cancelled, renewed or extended, and the terms hereof may
be waived, only by a written instrument signed by the Company and
each of the Holders or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in
exercising a right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude a
further exercise thereof or the exercise of any other such right,
power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that
any party may otherwise have at law or in equity. The rights and
remedies of any party based upon, arising out of or otherwise in
respect of any breach of any provision of this Agreement shall in
no way be limited by the fact that the act, omission, occurrence
or other state of facts upon which any claim of any such breach
is based may also be the subject matter of any other provision of
this Agreement (or of any other Agreement between the parties) as
to which there is no breach.
(d) Severability. If any provision of this Agreement
or the applicability of any such provision to a person or circum-
stances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement or the application of such provision
to persons or circumstances other than those for which it is so
determined to be invalid and unenforceable, shall not be affected
thereby, and each provision of this Agreement shall be valid and
shall be enforced to the fullest extent permitted by law. To the
extent permitted by applicable law each party hereto hereby
waives any provision or provisions of law which would otherwise
render any provision of this Agreement invalid, illegal or
unenforceable in any respect.
(e) Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts and when so executed
shall constitute one Agreement, notwithstanding that all parties
are not signatories to the same counterpart.
(f) Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of
Louisiana applicable to agreements made and to be performed
entirely within such state.
(g) Termination. This Agreement will terminate upon
the earlier of (i) the date upon which the Company and each
Holder existing on that date mutually agree in writing to
terminate this Agreement and (ii) the first date on which there
ceases to be any Registrable Securities.
IN WITNESS WHEREOF, this Agreement has been executed as of
the date first above written.
Address: GULF ISLAND FABRICATION, INC.
583 Thompson Road
Houma, Louisiana 70363 By: /s/ Kerry J. Chauvin
______________________________
Kerry J. Chauvin, President
Address:
/s/ Alden J. Laborde
210 Baronne Street ______________________________
New Orleans, Louisiana 70112 Alden J. Laborde
REGISTRATION RIGHTS AGREEMENT
This registration rights agreement (this "Agreement") is
entered into this 6th day of March, 1997 by and between the
undersigned and Gulf Island Fabrication, Inc. (the "Company").
WHEREAS, the undersigned was a founder of the Company and
holds 1,725,500 shares of common stock, no par value per share
(the "Common Stock"), of the Company.
WHEREAS, the Company desires to grant certain registration
rights to the undersigned;
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the undersigned and the Company agree
as follows:
1. Certain Defined Terms. Certain terms used in this
Agreement are defined as follows:
"Holder" means anyone holding Registrable Securities.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"Qualified Public Offering" means the closing of an
underwritten public offering by the Company pursuant to a
Registration Statement filed and declared effective under the
Securities Act covering the offer and sale of Common Stock for
the account of the Company in which the aggregate gross proceeds
to the Company equal at least fifteen million dollars
($15,000,000).
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration
Statement with the SEC in compliance with the Securities Act for
the purpose of effecting a public sale of securities.
"Registrable Securities" means (a) all shares of Common
Stock held by the undersigned as of the date hereof and (b) any
other securities issued by the Company after the date hereof with
respect to such shares (and with respect to the Common Stock
generally) by means of exchange, reclassification, dividend,
distribution, split up, combination, subdivision,
recapitalization, merger, spin-off, reorganization or otherwise;
provided, however, that as to any Registrable Securities, such
securities shall cease to constitute Registrable Securities for
the purposes of this Agreement if and when (i) a Registration
Statement with respect to the sale of such securities shall have
been declared effective by the SEC and such securities shall have
been sold pursuant thereto in accordance with the intended plan
and method of distribution therefor set forth in the final
prospectus forming a part of such Registration Statement; (ii)
such securities shall have been sold in satisfaction of all
applicable resale provisions of Rule 144 under the Securities
Act; (iii) as expressed in an opinion of counsel delivered to and
satisfactory to the Company and the transfer agent for the Common
Stock, such securities no longer constitute "restricted
securities" within the meaning of Rule 144 under the Securities
Act and the transfer of such securities neither requires
registration under the Securities Act or qualification under any
state securities or "blue sky" laws then in effect, or (iv) such
securities cease to be issued and outstanding for any reason.
"Registration Statement" means a registration statement
filed by the Company with the SEC for a public offering and sale
of securities of the Company (other than a registration statement
on Form S-8 or Form S-4 or their successors or any other form for
a limited purpose or any registration statement covering only
securities proposed to be issued in exchange for securities or
assets of another Person).
"Securities Act" means the Securities Act of 1933, as
amended.
2. Representations and Warranties of the Company. The
Company hereby represents and warrants to the undersigned as
follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Louisiana;
(b) The Company has the full legal right, power and
authority to enter into and perform this Agreement, and this
Agreement has been duly authorized, executed and delivered
by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its
terms; subject, however, to any approvals that may be
required under the Securities Act of 1933, as amended (the
"Securities Act") and under state securities laws in
connection with the registration and sale of any Registrable
Securities; and
(c) The execution, delivery and performance of this
Agreement by the Company will not violate any provision of
law, any order of any court or agency of government, the
Articles of Incorporation or By-laws of the Company, each as
amended through the date hereof, or any provision of any
indenture or other agreement to which it or any of its
properties or assets is bound, or conflict with, result in a
breach or constitute (with due notice or lapse of time or
both) a default under any such indenture or other agreement,
result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon the properties or
assets of the Company.
3. Registration Rights
(a) Demand Registration Rights. (i) After the date on
which the Company has first effected a Qualified Public Offering,
the Holders of 50% or more of the Registrable Securities may
request in writing that the Company register all or any portion
of the Registrable Securities held by such requesting Holder or
Holders (the "Initiating Holders") for sale in the manner
specified in such request. The Company shall promptly and in any
event not later than ten days after such request, notify in
writing all other Holders of such request and thereupon the
Company will, at its sole cost and expense as provided in Section
4 below, use its best efforts to register (on the appropriate
registration form reasonably acceptable to the Initiating
Holders) that number of Registrable Securities specified in such
request and all other Registrable Securities that the Company has
been requested to register by such other Holder or Holders in a
written response given to the Company by such other Holder or
Holders (who, together with the Initiating Holders, are
hereinafter referred to as the "Requesting Holders") within 30
days after receipt of the written notice of the proposed
registration from the Company. The Company agrees to include in
any such Registration Statement all information which, the
opinion of counsel to the Requesting Holders, is required to be
included.
(ii) The Company shall be obligated to effect two
registrations of the Registrable Securities pursuant to this
Section 3(a). The obligation of the Company under this Section
3(a) shall be deemed satisfied only if a Registration Statement
registering all Registrable Securities specified in the requests
received pursuant to subsection 3(a)(i) for sale in accordance
with the method of disposition specified by the Initiating
Holders shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering,
all such Registrable Securities included therein have been sold
pursuant thereto.
(iii) The Company shall be entitled to include in
any Registration Statement referred to in this Section 3(a), for
sale in accordance with the methods of disposition specified by
the Initiating Holders, securities to be sold by the Company for
its own account, except as and to the extent that, in the opinion
of the managing underwriter or underwriters (if the method of
disposition requested by the Initiating Holders is an
underwritten public offering), such inclusion would have a
material adverse effect on the efforts to sell the Registrable
Securities included in the Registration Statement pursuant to
Section 3(a)(i).
(iv) If the managing underwriter shall (A) certify
in writing that the inclusion of some or all of the Registrable
Securities would materially and adversely affect the market for
the Company's securities, (B) state the basis of such opinion and
(C) state the maximum number of Registrable Securities, if any,
that may be distributed without such adverse effect, then the
Company may, upon written notice to the Requesting Holders
allocate such an offering pro rata among the Requesting Holders.
(v) If at the time of any request to register
Registrable Securities pursuant to this Section 3(a), the Company
is engaged (or its Board of Directors has made a determination to
engage within ninety days of the time of such request) in a
registered public offering of securities for its own account in
which the Requesting Holders may include Registrable Securities
pursuant to Section 3(b) hereof, or is engaged in any other
activity which, in the good faith determination of the Company's
Board of Directors, would be adversely affected by the requested
registration to the material detriment of the Company, then the
Company may at its option direct that the filing of a
Registration Statement pursuant to such a request be delayed for
a period not in excess of 90 days from the effective date of such
offering or the date of commencement of such other material
activity, as the case may be.
(vi) If requested by the underwriters for any
underwritten offering by the Requesting Holders pursuant to a
registration requested under this Section 3(a), the Company shall
enter into an underwriting agreement with such underwriters in a
form reasonably satisfactory in substance and form to each
Requesting Holder and the underwriters that shall contain such
representations and warranties by the Company and such other
terms as are generally prevailing in an agreement of this type,
including, without limitation, indemnities to the effect and to
the extent provided in Section 8 hereof. The Requesting Holders
will cooperate with the Company in the negotiation of the
underwriting agreement and shall give consideration to the
reasonable suggestions of the Company regarding the form thereof.
The Requesting Holders shall be parties to such underwriting
agreement and may, in their discretion, require that any or all
of the representations and warranties by, and other agreements on
the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such
Requesting Holders and that any or all of the conditions
precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations
of such Requesting Holders. In the case of a firm commitment
public offering pursuant to this Section 3(a), the Initiating
Holders shall choose the managing underwriter or underwriters;
provided that this selection shall be subject to the approval of
the Company, which approval shall not be unreasonably withheld.
(vii) The Holders' rights under this Section 3(a)
are in addition to registration rights of the Holders under
Section 3(b) hereof.
(b) Piggy-back Registration
(i) If the Company proposes to file a
Registration Statement, whether or not for its own account (other
than pursuant to Section 3(a)), it will, at least thirty days
prior to such a filing, give written notice to all Holders of its
intention to do so and, upon the written request of any Holder or
Holders given within fifteen days of the receipt of such notice
(which request shall state the intended method of disposition of
such Registrable Securities), the Company will use its best
efforts to cause all Registrable Securities that the Holder or
Holders requested the Company to register to be registered under
the Securities Act to the extent necessary to permit their sale
or other disposition in accordance with the intended methods of
distribution specified in the request of the Holder or Holders;
provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 3(b)
without obligation to the Holders.
(ii) In connection with any offering under this
Section 3(b) involving an underwriting, the Company shall not be
required to include any Registrable Securities in such
underwriting unless the Holders accept the terms of the
underwriting as agreed upon between the Company and the managing
underwriter or underwriters, selected by the Company, and then
only in such quantity as will not, in the written opinion of the
managing underwriter or underwriters, jeopardize the success of
the offering by the Company. Each Holder that has requested that
Registrable Securities held by him be included in such
Registration Statement shall (together with the Company and the
other Holders distributing the securities through such
underwriting) enter into such underwriting agreement as agreed
upon between the Company and the managing underwriter or
underwriters. If in the written opinion of the managing
underwriter or underwriters the registration of all, or part of,
the Registrable Securities that the Holders have requested to be
included would materially and adversely affect such public
offering, the Company shall be required to include in the
underwriting only that number of Registrable Securities, if any,
that the managing underwriter or underwriters believes may be
sold without causing such adverse effect. If the number of
Registrable Securities to be included in the registration in
accordance with the foregoing is less than the total number of
securities that the Holders have requested to be included, then
the number of Registrable Securities to be included in the
registration shall be reduced pro rata among the requesting
Holders based upon the number of Registrable Securities so
requested to be registered. If any Holder disapproves of the
terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the managing
underwriter.
4. Registration Procedures. If and whenever the Company
is required by the provisions of this Agreement to use its best
efforts to effect the registration of any of the Registrable
Securities under the Securities Act, the Company shall as
expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange
Commission (the "SEC") a Registration Statement and otherwise
comply with the provisions of the Securities Act with respect to
such Registrable Securities and use its best efforts to cause
that Registration Statement to become effective;
(b) Prepare and file with the SEC any amendments and
supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until the earlier of
(i) the date on which all Registrable Securities included therein
have been sold pursuant to the plan of distribution included in
such Registration Statement and (ii) the thirtieth day from the
effective date of the Registration Statement;
(c) Furnish to the Holders whose Registrable
Securities have been included in such Registration Statement such
numbers of copies of the prospectus, including preliminary
prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Holders may reasonably
request in order to facilitate the public sale or other
disposition of the Registrable Securities;
(d) Use its best efforts to register or qualify the
Registrable Securities covered by the Registration Statement
under the securities or blue sky laws of such jurisdictions as
the Holders whose Registrable Securities have been included in
such Registration Statement shall reasonably request, and do any
and all other acts and things that may be necessary or advisable
to enable such Holders to consummate the public sale or other
disposition of such Registrable Securities in such jurisdictions;
provided, however, that the Company shall not be required to
qualify to do business as a foreign corporation or consent to
general service of process in any such jurisdiction;
(e) Before filing the Registration Statement or
prospectus or amendments or supplements thereto, furnish the
Holders whose Registrable Securities have been included in such
Registration Statement with copies of all such documents proposed
to be filed, which shall be subject to reasonable approval of
counsel designated by such Holders;
(f) Furnish to each Holder whose Registrable
Securities have been included in such Registration Statement a
signed counterpart, addressed to such Holder (and the
underwriters, if any), of (i) an opinion of the Company's legal
counsel dated the effective date of such Registration Statement
(and, if such registration includes an underwritten public
offering, dated the date of the closing under the underwriting
agreement), and (ii) a "comfort" letter dated the effective date
of such Registration Statement (and, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), signed by the
independent public accountants who certified the Company's
financial statements included in such Registration Statement,
covering substantially the same matters with respect to such
Registration Statement (and the prospectus included therein, and
in the case of the accountants' letter with respect to events
subsequent to the date of such financial statements), as are
customarily included in opinions of issuer's counsel and an
accountant's letter delivered to the underwriters in underwritten
public offerings of securities, and in the case of the
accountant's letter, such other financial matters as such Holder
(or the underwriters, if any) may reasonably request; and
(g) At any time when a prospectus relating to the
Registrable Securities is required to be delivered under the
Securities Act, notify each Holder whose Registrable Securities
have been included in such Registration Statement upon discovery
of, or upon the happening of any event as a result of which, the
prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances under which they were made.
If the Company has delivered preliminary or final prospectuses to
the Holders whose Registrable Securities have been included in
such Registration Statement, and after having done so the
prospectus is amended to comply with the requirements of the
Securities Act, the Company shall promptly notify such Holders
and, if requested, such Holders shall immediately cease making
offers of Registrable Securities and return all prospectuses to
the Company. The Company shall promptly provide such Holders
with a revised prospectuses and following receipt of the revised
prospectuses such Holders shall be free to resume making offers
of the Registrable Securities.
5. Expenses of Registration. The costs and expenses
incurred in connection with any registration, qualification or
compliance pursuant to this Agreement, including, without
limitation, all registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the
Company and the expenses of any special accounting services and
audits incidental to or required by such registration, shall be
paid by the Company; provided, however, the Company shall not be
required to pay legal fees of the Holders, or underwriters' fees,
discounts, commissions and broker-dealer charges relating to
Registrable Securities. All such expenses relating to the
Registrable Securities or to Holders' legal counsel shall be paid
by Holders.
6. Information by Holders. The Holders will furnish the
Company, upon the written request of the Company, all information
in their possession necessary to effect the registration and
qualifications under the Securities Act and the blue sky laws in
connection with any registration and will otherwise cooperate
with the Company in effecting such registration and
qualifications.
7. Rule 144 Requirements. After the date on which the
Company has effected a Qualified Public Offering, the Company
shall:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144 under the
Securities Act;
(b) use its best efforts to file with the SEC in a
timely manner all reports and other documents required of
the Company under the Securities Act and Securities Exchange
Act of 1934, as amended (the "Exchange Act") (and any time
after it has become subject to such reporting requirements);
and
(c) furnish to any Holder upon request a written
statement by the Company as to its compliance with the
reporting requirements of Rule 144 (at any time after ninety
days following the closing of the first sale of securities
by the Company pursuant to a Registration Statement), and of
the Securities Act and the Exchange Act (at any time after
it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the
Company and such other reports and documents of the Company
as such Holder may reasonably request to avail itself of any
similar rule or regulation of the SEC allowing itself any
such securities without registration.
8. Indemnification.
(a) In the event of any registration of any of the
Registrable Securities under the Securities Act pursuant to this
Agreement, the Company shall indemnify and hold harmless the
Holders whose Registrable Securities have been included in such
registration and each underwriter of such Registrable Securities
and each other Person, if any, who controls such persons within
the meaning of the Securities Act or the Exchange Act, against
any losses, claims, damages or liabilities (including reasonable
legal and other expenses incurred in investigating and defending
against the same), joint or several, to which the Holders or such
underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities laws or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon
(1) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (2) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, if used prior to the effective date of the
Registration Statement, or contained in the prospectus (as
amended or supplemented if the Company files any amendment
thereof or supplement thereto with the SEC), if used within the
period during which the Company is required to keep the
Registration Statement to which such prospectus relates current
pursuant to the terms hereof, or the omission or alleged omission
to state therein (if so used) a material fact necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however,
that (A) the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectuses,
or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing,
by or on behalf of such Holders, underwriter or controlling
person specifically for use in the preparation thereof or (B) the
Company shall not be required to indemnify any underwriter from
whom the Person asserting any such losses, claims, damages,
expenses or liabilities purchased the Registrable Securities that
are the subject thereof or to the benefit of any person
controlling such underwriter, if such underwriter failed to send
or give a copy of the prospectus or any amendment thereof or
supplement thereto to such person at or prior to the written
confirmation of the sale of such Registrable Securities to such
person.
(b) In the event of any registration of any of the
Registrable Securities under the Securities Act pursuant to this
Agreement, the Holders whose Registrable Securities have been
included in such registration shall indemnify and hold harmless
the Company, each of its directors and officers and each
underwriter (if any) and each person who controls the Company or
any such underwriter within the meaning of the Securities Act or
the Exchange Act, if any, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may
become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws, or otherwise, insofar as such
losses, claims, damages, liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of material fact contained in any
Registration Statement under which such Registrable Securities
were registered under the Securities Act, any preliminary
prospectus or final prospectus or prospectuses contained in the
Registration Statement, or an amendment or supplement to the
Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if the statement or omission was made in reliance
upon and in conformity with information furnished in writing to
the Company by or on behalf of such Holders specifically for use
in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement.
(c) Each party entitled to indemnification under this
Agreement (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any
such claim or litigation resulting therefrom; provided, that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld); and,
provided further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Agreement. The Indemnified
Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such
expenses if (1) representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential different interests between the
Indemnified Party and any other party represented by such counsel
in such proceeding, (2) the employment of counsel by the
Indemnified Party has been authorized by the Indemnifying Party,
or (3) the Indemnifying Party has not, in fact, employed counsel
to assume the defense of such action. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with
the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemni-
fied Party shall consent to entry of any judgment or settle such
claim or litigation without the prior written consent of the
Indemnifying Party.
9. Miscellaneous.
(a) Notices. Any notice or other communication
required or permitted hereunder shall be in writing or by telex,
telephone or facsimile transmission with subsequent written
confirmation, and may be personally served or sent by United
States mail and shall be deemed to have been given upon receipt
by the party notified. For purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as
provided in this Section 9) shall be as set forth opposite each
party's name on the signature page hereof.
(b) Transfer of Registration Rights. The rights to
cause the Company to register securities granted to Holders by
the Company under Section 3 hereof may be assigned by Holders to
a transferee or assignee of any Registrable Securities, provided,
that the Company is given written notice at the time of or within
a reasonable time after said transfer, stating the name and
address of such transferee or assignee and identifying the
securities with respect to which such registration rights are
being assigned.
(c) Waivers and Amendments; Noncontractual Remedies;
Preservation of Remedies. This Agreement may be amended, super-
seded, cancelled, renewed or extended, and the terms hereof may
be waived, only by a written instrument signed by the Company and
each of the Holders or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in
exercising a right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude a
further exercise thereof or the exercise of any other such right,
power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that
any party may otherwise have at law or in equity. The rights and
remedies of any party based upon, arising out of or otherwise in
respect of any breach of any provision of this Agreement shall in
no way be limited by the fact that the act, omission, occurrence
or other state of facts upon which any claim of any such breach
is based may also be the subject matter of any other provision of
this Agreement (or of any other Agreement between the parties) as
to which there is no breach.
(d) Severability. If any provision of this Agreement
or the applicability of any such provision to a person or circum-
stances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement or the application of such provision
to persons or circumstances other than those for which it is so
determined to be invalid and unenforceable, shall not be affected
thereby, and each provision of this Agreement shall be valid and
shall be enforced to the fullest extent permitted by law. To the
extent permitted by applicable law each party hereto hereby
waives any provision or provisions of law which would otherwise
render any provision of this Agreement invalid, illegal or
unenforceable in any respect.
(e) Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts and when so executed
shall constitute one Agreement, notwithstanding that all parties
are not signatories to the same counterpart.
(f) Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of
Louisiana applicable to agreements made and to be performed
entirely within such state.
(g) Termination. This Agreement will terminate upon
the earlier of (i) the date upon which the Company and each
Holder existing on that date mutually agree in writing to
terminate this Agreement and (ii) the first date on which there
ceases to be any Registrable Securities.
IN WITNESS WHEREOF, this Agreement has been executed as of
the date first above written.
Address: GULF ISLAND FABRICATION, INC.
583 Thompson Road
Houma, Louisiana 70363 By: /s/ Kerry J. Chauvin
______________________________
Kerry J. Chauvin, President
Address:
/s/ Huey J. Wilson
Suite 650 ______________________________
3636 South Sherwood Forest Blvd. Huey J. Wilson
Baton Rouge, Louisiana 70816
FIFTH AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT
Among
GULF ISLAND FABRICATION, INC.,
As Borrower,
FIRST NATIONAL BANK OF COMMERCE
AND
WHITNEY NATIONAL BANK,
As Banks,
AND
FIRST NATIONAL BANK OF COMMERCE,
As Agent
Dated effective as of October 24, 1996
TABLE OF CONTENTS
Section 1. Commitment of Banks to Renew Indebtedness..............5
1.1 Term Credit Facility................................. 6
1.2 Revolving Credit Facility............................ 7
1.3 Borrowing Procedure Under the Credit Facilities...... 8
1.4 Terms and Conditions Governing Letters of Credit..... 8
Section 2. Notes Evidencing Borrowings............................9
2.1 Term Notes........................................... 9
2.2 Revolving Notes..................................... 10
2.3 No Novation......................................... 10
Section 3. Interest and Fees.....................................10
3.1 Interest -- Term Credit Facility.................... 10
3.2 Interest -- Revolving Credit Facility............... 11
3.3 Default Rate........................................ 11
3.4 Prime Rate ..........................................12
3.5 Commitment Fee...................................... 12
3.6 Method of Calculating Interest and Fees .............12
3.7 Interest Rate Options............................... 12
Section 4. Payments, Prepayments, and Reduction or Termination
of the Credit Facility..............................17
4.1 Method of Payment................................... 17
4.2 Sharing of Payments................................. 18
4.3 Payments Without Deduction ..........................19
4.4 Prepayments -- Term Credit Facility................. 19
4.5 Borrowing Base for Revolving Credit Facility; Mandatory
Prepayments..........................................19
4.6 Reduction of Credit................................. 20
Section 5. Collateral...........................................21
5.1 Security for the Credit Facility 21
Section 6. Representations and Warranties of Borrower...........26
6.1 Corporate Existence .................................26
6.2 Authorization; Validity .............................26
6.3 No Conflicts ........................................26
6.4 Financial Statements ................................27
6.5 Litigation.......................................... 27
6.6 Liens ...............................................27
6.7 Subsidiaries........................................ 27
6.8 Purpose .............................................27
6.9 Use of Proceeds; Margin Securities ..................28
6.10 Compliance with ERISA............................... 28
6.11 Consents ............................................28
6.12 Tax Returns .........................................28
6.13 Ownership of Borrower............................... 29
6.14 Operation of Business............................... 29
6.15 Rights in Properties; Liens......................... 29
6.16 Debt ................................................29
6.17 Disclosure ..........................................29
6.18 Registered Office; Principal Place of Business;
Location of Collateral...............................29
6.19 Investment Company Act.............................. 30
6.20 Other Agreements.................................... 30
6.21 Compliance with Law .................................30
6.22 Corporate Name...................................... 31
6.23 Collateral ..........................................32
6.24 Taxpayer I.D. Number ................................32
Section 7. Borrower's Covenants..................................32
7.1 Financial Statements................................ 32
7.2 Access.............................................. 33
7.3 Insurance ...........................................33
7.4 Repair.............................................. 33
7.5 Taxes ...............................................34
7.6 Corporate Existence................................. 34
7.7 Merger.............................................. 34
7.8 Compliance ..........................................34
7.9 Use of Proceeds .....................................35
7.10 Financial Covenants .................................36
7.11 Liens ...............................................36
7.12 Debt ................................................37
7.13 Redemptions, etc. ...................................37
7.14 Capital Expenditures................................ 38
7.15 Dividends ...........................................38
7.16 Shareholder or Employee Loans .......................38
7.17 Change in Business.................................. 39
7.18 Accounts Receivable................................. 39
7.19 Compliance with Agreements ..........................39
7.20 Further Assurances.................................. 39
7.21 Disposition of Assets ...............................39
7.22 Change Tax I.D. Number.............................. 39
7.23 Indemnity ...........................................39
7.24 GIFI Property .......................................40
Section 8. Conditions Precedent to Extensions of Credit..........40
8.1 Borrower's Resolutions.............................. 41
8.2 Notes............................................... 41
8.3 Incumbency ..........................................41
8.4 Certification .......................................41
8.5 GIF Collateral Mortgage .............................41
8.6 GIF Collateral Chattel Mortgages ....................41
8.7 Lease Assignment ....................................41
8.8 GIFI Collateral Chattel Mortgage ....................41
8.9 Real Property Collateral Mortgage ...................41
8.10 Security Agreement.................................. 42
8.11 Financing Statement .................................42
8.12 Other Documents .....................................42
8.13 Opinion .............................................42
8.14 Real Property Title Insurance .......................42
Section 9. Additional Conditions Precedent to Advances and/or
Letters of Credit....................................42
9.1 Default............................................. 43
9.2 Warranties.......................................... 43
Section 10. Events of Default....................................43
10.1 Payment............................................. 43
10.2 Other Indebtedness ..................................43
10.3 Other Default .......................................44
10.4 Insolvency.......................................... 44
10.5 ERISA ...............................................44
10.6 Agreements.......................................... 45
10.7 Representation or Warranty.......................... 45
10.8 Change in Ownership of Borrower .....................45
Section 11. Agent................................................46
11.1 Authorization and Action............................ 46
11.2 Agent's Reliance, Etc............................... 47
11.3 First NBC and Affiliates ............................48
11.4 Bank Credit Decision................................ 48
11.5 Indemnification .....................................49
11.6 Successor Agent .....................................49
11.7 Benefits of Section .................................50
11.8 Change in Specified Percentage ......................50
Section 12. General..............................................50
12.1 Definitions .........................................50
12.2 Financial Terms..................................... 59
12.3 Delay ...............................................60
12.4 Notices .............................................60
12.5 Expenses ............................................61
12.6 Severability........................................ 62
12.7 Counterparts........................................ 62
12.8 Law .................................................62
12.9 Successors ..........................................62
12.10 Amendments .........................................63
12.11 Entire Agreement................................... 63
12.12 Conflicts ..........................................63
FIFTH AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT
THIS FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM
LOAN AGREEMENT (the "Agreement") dated effective as of the 24th
day of October, 1996, by and among GULF ISLAND FABRICATION, INC.,
a Louisiana corporation ("Borrower") (formerly known as GIFI,
Inc. ("GIFI"), successor by merger to Gulf Island Fabrication,
Inc., a Louisiana corporation ("GIF")), WHITNEY NATIONAL BANK, a
national banking association ("Whitney"), FIRST NATIONAL BANK OF
COMMERCE, a national banking association, in its individual
capacity ("First NBC") (each of Whitney and First NBC being
sometimes referred to individually as a "Bank" and collectively
as the "Banks"), and FIRST NATIONAL BANK OF COMMERCE, a national
banking association, in its capacity as agent for Banks as set
forth hereinafter (the "Agent").
W I T N E S S E T H:
WHEREAS, GIF and First NBC entered into that certain
Revolving Credit and Term Loan Agreement dated December 17, 1986
(the "Original Loan Agreement");
WHEREAS, GIF and First NBC entered into that certain First
Amendment to Revolving Credit and Term Loan Agreement dated as of
November 3, 1987 (the "First Loan Agreement Amendment"), whereby
Borrower and First NBC amended certain terms and conditions of
the Original Loan Agreement;
WHEREAS, GIF and First NBC entered into that certain Second
Amendment to Revolving Credit and Term Loan Agreement, dated
effective as of December 21, 1987 (the "Second Loan Agreement
Amendment"), whereby GIF and First NBC amended certain terms and
conditions of the Original Loan Agreement, as amended by the
First Loan Agreement Amendment;
WHEREAS, GIF and First NBC entered into that certain Third
Amendment to Revolving Credit and Term Loan Agreement dated
effective as of September 13, 1988 (the "Third Loan Agreement
Amendment"), whereby GIF and First NBC amended certain terms and
conditions of the Original Loan Agreement, as amended by the
First Loan Agreement Amendment and the Second Loan Agreement
Amendment (the Original Loan Agreement, as amended by the First
Loan Agreement Amendment, the Second Loan Agreement Amendment and
the Third Loan Agreement Amendment being hereinafter referred to
as the "Loan Agreement");
WHEREAS, GIF and First NBC entered into that certain First
Amended and Restated Revolving Credit and Term Loan Agreement
dated July 27, 1989, whereby GIF and First NBC further amended
certain terms and conditions of the Loan Agreement and restated
the Loan Agreement in its entirety (the "First Amended and
Restated Loan Agreement");
WHEREAS, GIFI and GIF entered into that certain Merger
Agreement dated effective as of March 1, 1990 (the "Merger
Agreement"), whereby GIF was merged into GIFI, and, contempora-
neously therewith, GIFI changed its corporate name to Gulf Island
Fabrication, Inc. (the "Merger");
WHEREAS, Borrower and First NBC entered into that certain
Second Amended and Restated Revolving Credit and Term Loan
Agreement dated effective as of March 1, 1990, in order to
reflect the Merger, to set forth further changes in their
understanding concerning certain terms and conditions of the loan
made pursuant to the First Amended and Restated Loan Agreement
and to restate same in its entirety (the "Second Amended and
Restated Loan Agreement");
WHEREAS, pursuant to the terms of that certain Partial
Assignment of Notes and Security Therefor dated October 29, 1991,
(as amended or modified from time to time, the "Assignment"),
First NBC assigned to Whitney an undivided one-half(1/2) interest
in and to the Second Amended and Restated Loan Agreement, all
notes executed by Borrower payable to the order of First NBC
pursuant to the Second Amended and Restated Loan Agreement (the
"Second Loan Agreement Notes") and all security for the repayment
of the Second Loan Agreement Notes, as described in the Second
Amended and Restated Loan Agreement (the "Second Loan Agreement
Security");
WHEREAS, as a result of the Assignment, each Bank now holds
an undivided one-half (1/2) interest in and to the Second Amended
and Restated Loan Agreement and all rights and obligations
described therein or emanating therefrom, including, without
limitation, the Second Loan Agreement Notes and the Second Loan
Agreement Security;
WHEREAS, Borrower, Banks and Agent entered into that certain
Third Amended and Restated Revolving Credit and Term Loan
Agreement, dated effective as of October 29, 1991 (the "Third
Amended and Restated Loan Agreement"), whereby Borrower, Banks
and Agent amended and restated the Second Amended and Restated
Loan Agreement in order (a) to more fully reflect the agreement
among the parties regarding the continuation of the loans made
pursuant thereto, (b) to extend, modify and renew the obligations
evidenced by the Second Amended and Restated Loan Agreement and
the Second Loan Agreement Notes, (c) to reaffirm the existence
and priority of the Second Loan Agreement Security and (d) to
provide new security described therein (the "Third Loan Agreement
Security");
WHEREAS, Borrower, Banks and Agent entered into that certain
First Amendment to Third Amended and Restated Revolving Credit
and Term Loan Agreement dated effective as of July 20, 1992 (the
"Third Amended and Restated Loan Agreement Amendment"), whereby
Borrower and First NBC amended certain terms and conditions of
the Third Amended and Restated Loan Agreement (the Third Amended
and Restated Loan Agreement, as amended by the Third Amended and
Restated Loan Agreement Amendment, being hereinafter referred to
as the "Third Loan Agreement");
WHEREAS, Borrower, Banks and Agent entered into that certain
Fourth Amended and Restated Revolving Credit Agreement, dated
effective as of February 25, 1993 (the "Fourth Amended and
Restated Loan Agreement"), whereby Borrower, Banks and Agent
amended and restated the Third Amended and Restated Loan
Agreement in order to more fully reflect the agreement among the
parties regarding the continuation of the loans made pursuant
thereto;
WHEREAS, Borrower, Banks and Agent entered into that certain
First Amendment to Fourth Amended and Restated Revolving Credit
Agreement, dated effective as of February 25, 1993 (the "First
Fourth Amended and Restated Loan Agreement Amendment"), whereby
Borrower, Banks and Agent amended certain terms and conditions of
the Fourth Amended and Restated Loan Agreement;
WHEREAS, Borrower, Banks and Agent entered into that certain
Second Amendment to Fourth Amended and Restated Revolving Credit
Agreement, dated effective as of April 20, 1994 (the "Second
Fourth Amended and Restated Loan Agreement Amendment"), whereby
Borrower, Banks and Agent further amended certain terms and
conditions of the Fourth Amended and Restated Loan Agreement;
WHEREAS, Borrower, Banks and Agent entered into that certain
Third Amendment to Fourth Amended and Restated Revolving Credit
Agreement, dated effective as of June 26, 1995 (the "Third Fourth
Amended and Restated Loan Agreement Amendment"), whereby
Borrower, Banks and Agent further amended certain terms and
conditions of the Fourth Amended and Restated Loan Agreement;
WHEREAS, Borrower, Banks and Agent entered into that certain
Fourth Amendment to Fourth Amended and Restated Revolving Credit
Agreement, dated effective as of May 1, 1996 (the "Fourth Fourth
Amended and Restated Loan Agreement Amendment"), whereby
Borrower, Banks and Agent further amended certain terms and
conditions of the Fourth Amended and Restated Loan Agreement (the
Fourth Amended and Restated Loan Agreement, as amended by the
First Fourth Amended and Restated Loan Agreement Amendment, the
Second Fourth Amended and Restated Loan Agreement Amendment, the
Third Fourth Amended and Restated Loan Agreement Amendment and
the Fourth Fourth Amended and Restated Loan Agreement Amendment
being hereinafter referred to as the "Fourth Loan Agreement");
WHEREAS, Borrower, Banks and Agent desire to amend and
restate the Fourth Loan Agreement in order to more fully reflect
the agreement among the parties regarding the continuation of the
loans made pursuant thereto; and
WHEREAS, the execution of this Agreement does not constitute
a novation, prepayment or payment of the loans described in the
Fourth Loan Agreement, but is an extension, modification and
renewal thereof;
NOW, THEREFORE, for and in consideration of the mutual cove-
nants, agreements and undertakings herein contained, Banks and
Borrower hereby agree as follows:
Section 1. Commitment of Banks to Renew Indebtedness.
Subject to the terms and conditions hereof, each Bank severally
agrees that Borrower's obligations as evidenced by the Fourth
Loan Agreement and the Prior Notes shall be renewed, extended,
modified and restated in their entirety on the terms and
conditions set forth herein. To the extent there is any conflict
between the Fourth Loan Agreement and this Agreement or the Prior
Notes and the Notes, the provisions of this Agreement and the
Notes shall govern. To the extent this Agreement or the Notes is
silent on any matter or provision contained in the Fourth Loan
Agreement or the Prior Notes, such matter or provision of the
Fourth Loan Agreement or the Prior Notes shall be deemed to be
revoked. Borrower and Banks acknowledge and agree that (i) the
renewal, extension, modification and restatement of the Loans
under the terms and conditions set forth herein do not constitute
a payment, prepayment or novation of the loans evidenced by the
Fourth Loan Agreement and the Prior Notes and (ii) the Loans
continue to be secured by the Existing Security with the original
rank and priority thereof, as well as the other Collateral and
Collateral Documents described herein or hereafter granted or
executed, as appropriate. Subject to the terms and conditions
contained herein, the maximum principal amount of the Loans
evidenced by this Agreement and the Notes is TWENTY-TWO MILLION
AND NO/100 DOLLARS ($22,000,000.00).
1.1 Term Credit Facility. Banks shall make available to
Borrower a non-revolving line of credit in the maximum aggregate
principal amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) (the "Non-Revolving Line of Credit"), which Non-
Revolving Line of Credit may be drawn upon by Borrower on any
Business Day of Banks during the period from the date hereof
until and including March 31, 1997, or such earlier date as may
be fixed by Borrower on at least one (1) Business Day's
telephonic notice to Agent, to be confirmed in writing by
Borrower, in the form of actual fundings to Borrower by Banks in
such amounts as Borrower may from time to time request (each such
funding being hereinafter referred to individually as a "Non-
Revolving Advance" and collectively as the "Non-Revolving
Advances"), so long as the aggregate principal amount of all
outstanding Non-Revolving Advances at any one time does not
exceed the Non-Revolving Commitment. On April 1, 1997, all of
Banks' obligations to make Non-Revolving Advances on the Non-
Revolving Line of Credit shall cease, and shall automatically,
without the necessity of any further act on the part of Banks,
Agent or Borrower, convert to a term loan in a principal amount
equal to the aggregate amount of all Non-Revolving Advances made
by Banks to Borrower during the period from the date hereof until
and including March 31, 1997. All Non-Revolving Advances repaid
on the Non-Revolving Line of Credit shall not be reborrowed but
shall reduce the Non-Revolving Commitment on a dollar-for-dollar
basis. The credit facility described in this Section 1.1 is
hereinafter referred to as the "Term Credit Facility".
1.2 Revolving Credit Facility. Banks shall make
available to Borrower a revolving line of credit (the "Revolving
Credit Facility"; each of the Term Credit Facility and the
Revolving Credit Facility being hereinafter sometimes referred to
individually as a "Credit Facility" and collectively as the
"Credit Facilities"), which Revolving Credit Facility may be
drawn upon by Borrower on any Business Day of Banks during the
period from the date hereof until and including December 31,
1998, or such earlier date as may be fixed by Borrower on at
least one (1) Business Day's telephonic notice to Agent, to be
confirmed in writing by Borrower, in the form of the issuance by
Banks on behalf of and for the account of Borrower of irrevocable
stand-by letters of credit in the form provided for by, and
containing such terms and conditions as are acceptable to, Banks
and in such amounts as Borrower may from time to time request
(each such letter of credit, as well as any letters of credit
issued pursuant to and in accordance with the Fourth Loan
Agreement which remain outstanding on the date hereof, being
hereinafter referred to individually as a "Letter of Credit" and
collectively as the "Letters of Credit") or in the form of actual
fundings to Borrower by Banks in such amounts as Borrower may
from time to time request (each such funding, as well as the
aggregate amount of the Prior Notes previously funded by Banks
and outstanding on the date hereof, being hereinafter referred to
individually as a "Revolving Advance" and collectively as the
"Revolving Advances"), so long as (a) the aggregate principal
amount of all Letters of Credit outstanding at any one time does
not exceed the LC Commitment and (b) the aggregate principal
amount of all Letters of Credit and of all Revolving Advances
outstanding at any one time does not exceed the Revolving
Commitment then in effect. The Revolving Commitment available to
Borrower from time to time under the Revolving Credit Facility
shall be reduced by the aggregate of the face amount of any
outstanding Letters of Credit and of all unpaid Revolving
Advances made by Banks to Borrower pursuant to this Agreement and
shall constitute the "Unused Commitment". Any draws made under
the Letters of Credit by the beneficiaries thereof shall
constitute Revolving Advances as defined in this Agreement. The
Unused Commitment available under the Revolving Credit Facility
shall be restored but simultaneously reduced by the amount of any
Revolving Advances which are made to Borrower to reimburse Banks
for draws under the Letters of Credit.
1.3 Borrowing Procedure Under the Credit Facilities.
Agent shall receive at least one (1) Business Day's prior tele-
phonic notice from Borrower (to be confirmed in writing by
Borrower) of each proposed Letter of Credit and of each Revolving
Advance to be issued under the Revolving Credit Facility, and of
each Non-Revolving Advance to be issued under the Term Credit
Facility. If all conditions precedent to the issuance of any
such Letter of Credit, any such Revolving Advance or any such
Non-Revolving Advance have been met, Agent will, without any
further consent or approval from Banks, or either one of them, on
the date requested make each Letter of Credit, Revolving Advance
or Non-Revolving Advance available to Borrower at Agent's office
at 210 Baronne Street, New Orleans, Louisiana 70112, and each
Letter of Credit, Revolving Advance and Non-Revolving Advance
shall be shared equally by Banks.
1.4 Terms and Conditions Governing Letters of Credit.
The terms and conditions governing the issuance of Letters of
Credit by Banks on behalf of and for the account of Borrower
shall be provided for by Agent in its standard form of
Application for Stand-By Letter of Credit, a copy of which is
attached hereto as Exhibit "A", with appropriate insertions and
such additional terms and conditions governing the issuance of
specific Letters of Credit as may be agreed upon by Borrower and
Agent at the time of Borrower's request to Agent for the issuance
thereof. Upon Agent's issuance of a Letter of Credit, one-half
(1/2) of the amount of such Letter of Credit shall automatically be
deemed to have been provided by Whitney, and, without the
necessity of further documentation transferring an interest in
the Letter of Credit to Whitney, Whitney shall possess a one-half
(1/2) interest in all rights and obligations accruing to and
incurred by Agent with respect to such Letter of Credit. Whitney
shall record its one-half(1/2) share of any draws on the Letter of
Credit on the schedule attached to its Revolving Note as provided
in Section 2.2 below.
Section 2. Notes Evidencing Borrowings.
2.1 Term Notes. The Non-Revolving Advances shall be
evidenced by two (2) promissory notes of Borrower payable to the
order of First NBC and Whitney, respectively, each in the
original principal amount of FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00) and in the forms set forth as Exhibits "B" and
"C" to this Agreement (each such note, together with any and all
renewals, modifications, extensions, amendments, supplements
and/or substitutions therefor, being sometimes referred to herein
individually as a "Term Note" and collectively as the "Term
Notes"), with appropriate insertions, each of which shall be
dated the date hereof and shall be payable in full on March 31,
2004. All Non-Revolving Advances made by Banks to Borrower
pursuant to this Agreement and all payments of principal shall be
recorded by Banks on the schedule attached to each Term Note, but
Banks' failure to record or to record correctly such Non-
Revolving Advances shall in no way affect Borrower's obligation
to repay same. Each Term Note shall provide for payment of
quarterly installments of principal commencing June 30, 1997,
each in an amount equal to one-twenty-eighth (1/28) of the
aggregate amount of all Non-Revolving Advances made by Banks to
Borrower during the period from the date hereof until and
including March 31, 1997.
2.2 Revolving Notes. The Revolving Advances (including,
without limitation, the outstanding indebtedness of Borrower to
Banks under the Prior Notes which, as provided in Section 1.2,
shall be deemed a "Revolving Advance" hereunder) shall be
evidenced by two (2) promissory notes of Borrower payable to the
order of First NBC and Whitney, respectively, each in the
original principal amount of SIX MILLION AND NO/100 DOLLARS
($6,000,000.00) and in the forms set forth as Exhibits "D" and
"E" to this Agreement (each such note, together with any and all
renewals, modifications, extensions, amendments, supplements
and/or substitutions therefor, being sometimes referred to herein
individually as a "Revolving Note" and collectively as the
"Revolving Notes"), with appropriate insertions, each of which
shall be dated the date hereof and shall be payable in full on
December 31, 1998. All Revolving Advances made by Banks to
Borrower pursuant to this Agreement and all payments of principal
shall be recorded by Banks on the schedule attached to each
Revolving Note, but Banks' failure to record or to record
correctly such Revolving Advances shall in no way affect
Borrower's obligation to repay same.
2.3 No Novation. The execution and delivery of the Notes
shall not constitute a payment, prepayment or novation of the
obligations of Borrower heretofore evidenced by the Prior Notes,
but does constitute a renewal and restatement of the Prior Notes
in their entirety.
Section 3. Interest and Fees.
3.1 Interest -- Term Credit Facility. In the absence of
an Event of Default, during the period from the date hereof
until, but not including, the Conversion Date, the Term Notes
shall bear interest at the Prime Rate, adjusted daily, or the
LIBO Rate, or some combination thereof, as specified in
Section 3.7 below. Thereafter, in the absence of an Event of
Default, the unpaid principal of the Term Notes shall bear
interest until paid at the Term Rate. Interest on the Term Notes
shall be paid quarterly in arrears on the last day of each March,
June, September and December commencing December 31, 1996, and
continuing until maturity. Borrower shall pay a fee of three-
eighths (3/8) of one percent (1%) per annum on the difference
between the maximum amount of the Term Credit Facility and the
aggregate amount of all outstanding Non-Revolving Advances
quarterly in arrears on December 31, 1996 and March 31, 1996. No
such fee shall thereafter be payable on the Term Credit Facility.
3.2 Interest -- Revolving Credit Facility. In the
absence of an Event of Default, the unpaid principal of the
Revolving Notes shall bear interest until paid at the Prime Rate,
adjusted daily, or the LIBO Rate, or some combination thereof, as
specified in Section 3.7 below. Interest prior to maturity shall
be payable quarterly in arrears on the last day of each March,
June, September and December commencing December 31, 1996, and
continuing until maturity. Interest after maturity of the
Revolving Notes for any reason whatsoever shall be increased to
the Prime Rate plus three percent (3%) and shall be payable on
demand. Upon the issuance of a Letter of Credit by Agent on
behalf of and for the account of Borrower, a fee of one percent
(1%) per annum on the principal amount of such Letter of Credit
shall be payable by Borrower for the number of days such Letter
of Credit is to remain outstanding. A fee on the Unused
Commitment of three-eighths (3/8) of one percent (1%) per annum
shall be payable by Borrower quarterly in arrears on the last day
of each March, June, September and December commencing December
31, 1996, and continuing until maturity.
3.3 Default Rate. If an Event of Default shall occur in
the payment on or before the due date of any principal or
interest due hereunder or under any of the other Loan Documents,
including, without limitation, the Notes, Borrower will pay
interest thereon (retroactively) from the date of the Event of
Default on such payment up to the date of the actual payment (as
well after as before judgment) at the Prime Rate plus three
percent (3%) (the "Default Rate"), irrespective of whether there
has been an acceleration of the payment of principal. Such
interest at the Default Rate shall be payable on demand.
3.4 Prime Rate. "Prime Rate" shall mean that index which
shall be established by Citibank, N.A. at New York, New York as
its "prime rate". Each change in the interest rate on each Note
shall take effect on the effective date of the change in the
Prime Rate.
3.5 Commitment Fee. No commitment fee shall be payable
by Borrower.
3.6 Method of Calculating Interest and Fees. Interest at
the Prime Rate and the Term Rate and any fee shall be computed on
the basis of a year consisting of 365 days and paid for actual
days elapsed, and interest at the LIBO Rate shall be computed on
the basis of a year consisting of 360 days.
3.7 Interest Rate Options. Until an Event of Default
occurs, Borrower shall have the following interest rate options:
(a) Advances to Borrower under the Revolving Credit
Facility or, until but not including the Conversion Date,
the Term Credit Facility may from time to time be (i) LIBO
Rate Advances, (ii) Prime Rate Advances, or (iii) any
combination thereof, as determined by Borrower with respect
to its Advances and noticed to Agent in accordance with
paragraphs (b), (c), and (d) below; provided that (x) no
Advance shall be made to Borrower as a LIBO Rate Advance
under the Term Credit Facility after the day that is one
month prior to the Conversion Date and (y) no Advance shall
be made to Borrower as a LIBO Rate Advance under the
Revolving Credit Facility after the day that is one month
prior to the Termination Date. For purposes of this
paragraph (a), an Advance shall be deemed "made" upon an
initial borrowing by Borrower under paragraph (b) below, any
conversion of such Advance under paragraph (c) below, and
upon any continuation of such Advance under paragraph (d)
below.
(b) With respect to any new Advance, Borrower shall
provide Agent with telephonic notice of its intended
borrowing, which notice must be received by Agent prior to
10:00 A.M., New Orleans time, at least one (1) Business Day
prior to the requested Borrowing Date, which notice shall
specify (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of LIBO
Rate Advances or Prime Rate Advances or a combination
thereof, (iv) the respective amounts of each such type of
Advance, and (v) if the borrowing is to be entirely or
partly of LIBO Rate Advances, the respective lengths of the
Interest Periods therefor.
(c) Borrower may elect from time to time to convert
any of its LIBO Rate Advances to Prime Rate Advances by
giving Agent telephonic notice of such election, which
notice must be received by Agent prior to 10:00 A.M., New
Orleans time, at least one (1) Business Day prior to the
requested conversion; provided that any such conversion, of
LIBO Rate Advances shall only be made on the last day of an
Interest Period with respect thereto. Borrower may elect
from time to time to convert any of its Prime Rate Advances
to LIBO Rate Advances by giving Agent telephonic notice of
such election, which notice must be received by Agent prior
to 10:00 A.M., New Orleans time, at least one (1) Business
Day prior to the requested conversion. Any such notice of
conversion to LIBO Rate Advances shall specify the length of
the initial Interest Period thereof and the amount of the
Prime Rate Advance to be converted. All or any part of
Borrower's outstanding LIBO Rate Advances and Prime Rate
Advances may be converted as provided herein; provided that
(i) no Prime Rate Advance may be converted into a LIBO Rate
Advance when any Event of Default has occurred and is
continuing, (ii) partial conversions of Prime Rate Advances
to LIBO Rate Advances shall be in an aggregate principal
amount of $500,000 or a whole multiple of $100,000 in excess
thereof, (iii) partial conversions of LIBO Rate Advances to
Prime Rate Advances shall be in an aggregate principal
amount of $500,000 or a whole multiple of $100,000 in excess
thereof, (iv) no Prime Rate Advance under the Term Credit
Facility may be converted into a LIBO Rate Advance after the
date that is one month prior to the Conversion Date, (v) no
Prime Rate Advance under the Revolving Credit Facility may
be converted into a LIBO Rate Advance after the date that is
one month prior to the Termination Date, and (vi) any such
conversion may only be made if, after giving effect thereto,
paragraph (e) shall not have been contravened.
(d) Any LIBO Rate Advances may be continued as such
upon the expiration of an Interest Period with respect
thereto by Borrower giving Agent telephonic notice, which
notice must be received by Agent prior to 10:00 A.M., New
Orleans time, at least one (1) Business Day prior to the
requested continuation; provided, that (i) no LIBO Rate
Advance may be continued as such when any Event of Default
has occurred and is continuing, (ii) no LIBO Rate Advances
under the Term Credit Facility may be continued as such
after the date that is one month prior to the Conversion
Date, (iii) no LIBO Rate Advances under the Revolving Credit
Facility may be continued as such after the date which is
one month prior to the Termination Date, and (iv) any such
continuation shall be made only if, after giving effect
thereto, paragraph (e) shall not be contravened. If
Borrower shall fail to give such notice or if such
continuation is not permitted, then Borrower shall be deemed
to have requested that the LIBO Rate Advance be converted
automatically to a Prime Rate Advance on the last day of the
then current Interest Period with respect thereto.
(e) All borrowings, conversions and continuations of
Advances hereunder by Borrower and all selections of
Interest Periods hereunder by Borrower shall be in such
amounts and be made pursuant to such elections so that,
after giving effect thereto, the aggregate principal amount
of the Advances to Borrower constituting each LIBO Rate
tranche (i.e., LIBO Rate Advances under the same Credit
Facility, made on the same day, and having the same Interest
Period) shall be equal to $500,000 or a whole multiple of
$100,000 in excess thereof. If Borrower has no Prime Rate
Advances outstanding, Borrower may have a maximum of five
(5) LIBO Rate tranches in aggregate in effect at any one
time under both Credit Facilities, and, if Borrower has
Prime Rate Advances outstanding, Borrower may have a maximum
of four (4) LIBO Rate tranches in aggregate in effect at any
one time under both Credit Facilities.
(f) Each determination of an interest rate by Agent
pursuant to any provision of this Agreement shall be
conclusive and binding on Borrower in the absence of
manifest error. Agent shall, at the request of Borrower,
deliver to Borrower a statement showing the quotations used
by Agent in determining the LIBO Rate.
(g) If prior to the first day of any Interest Period,
Agent shall have determined (which determination shall be
conclusive and binding upon Borrower) that either:
(i) adequate and reasonable means do not exist
for ascertaining the LIBO Rate for such Interest
Period; or
(ii) the interest rate determined for such
Interest Period does not adequately and fairly
reflect the cost to Banks (as conclusively certified
by Agent) of making, maintaining or funding their
LIBO Rate Advances during such Interest Period, in
either case with respect to (i) proposed Advances
that Borrower has requested be made as LIBO Rate
Advances, (ii) LIBO Rate Advances that will result
from the requested conversion of Prime Rate Advances
into LIBO Rate Advances, or (iii) the continuation of
LIBO Rate Advances beyond the expiration of the then
current Interest Period with respect thereto;
Agent shall give telephonic notice thereof to Borrower as
soon as practicable thereafter. Unless Borrower notifies
Agent upon receipt of such notice that it wishes to rescind
or modify its request, Agent shall arrange that (x) any
affected LIBO Rate Advances requested by Borrower shall be
made as Prime Rate Advances, (y) any Prime Rate Advances to
Borrower that were to have been converted to LIBO Rate
Advances shall be continued as, or converted to, Prime Rate
Advances, and (z) all outstanding LIBO Rate Advances to
Borrower shall be converted, on the last day of the then
current Interest Period with respect thereto, to Prime Rate
Advances. Until such notice has been withdrawn by Agent, no
further LIBO Rate Advances shall be made to Borrower, nor
shall Borrower have the right to convert Prime Rate Advances
to LIBO Rate Advances.
(h) Notwithstanding any other provision in this
Agreement, if the adoption of or any change in any law or
regulation or in the interpretation or application thereof
(whether or not having the force of law) shall make it
unlawful or impossible for Bank to make, maintain or fund
LIBO Rate Advances as contemplated by this Agreement: (a)
the commitment of Banks hereunder to make LIBO Rate
Advances, continue LIBO Rate Advances as such and convert
Prime Rate Advances to LIBO Rate Advances shall forthwith be
cancelled; (b) the Advances then outstanding as LIBO Rate
Advances, if any, shall be converted automatically to Prime
Rate Advances on the respective last days of the then
current Interest Periods with respect to such Advances or
within such earlier period as required by law; and (c)
Borrower shall pay Banks such amounts, if any, as may be
required pursuant to paragraph (i) below.
(i) Borrower agrees to indemnify Banks and to hold
Banks harmless from any loss or expense which Banks may
sustain or incur as a consequence of (a) the making by
Borrower of a prepayment (whether mandatory or optional) or
any other payment of a LIBO Rate Advance on a day which is
not the last day of the Interest Period with respect
thereto, and/or (b) the conversion, whether voluntary or
involuntary, of a LIBO Rate Advance into a Prime Rate
Advance pursuant to this Section 3.7 or otherwise on a day
which is not the last day of an Interest Period with respect
thereto, including, without limitation, in each case any
such loss or expense arising from the reemployment of funds
obtained by it to maintain its LIBO Rate Advances hereunder
or from fees payable to terminate the deposits from which
such funds were obtained. This covenant shall survive the
termination of this Agreement and the payment of the
Advances and all other obligations hereunder.
Section 4. Payments, Prepayments, and Reduction or
Termination of the Credit Facility.
4.1 Method of Payment. All payments of principal,
interest and other amounts to be made by Borrower under this
Agreement or any of the Notes or other Loan Documents shall be
made to Agent for the account of Banks at Agent's office at
210 Baronne Street, New Orleans, Louisiana 70112 (or at such
other address as Agent or either of Banks may notify Borrower in
writing), in immediately available funds, without setoff,
deduction or counterclaim, not later than 2:00 p.m. (New Orleans,
Louisiana time) on the date on which such payment shall become
due (each such payment made after such time on such due date to
be deemed to have been made on the next succeeding Business Day)
and, in the case of payments of principal under the Revolving
Credit Facility, in an amount of at least $100,000.00, or an
integral multiple thereof. Borrower shall, at the time of making
each such payment, specify to Agent the sums payable by Borrower
under this Agreement, the Notes or other Loan Documents to which
such payment is to be applied. Notwithstanding the foregoing
sentence, unless and until an Event of Default shall have
occurred and be continuing (in which event such payments shall be
applied by Agent as Banks in their sole discretion shall
determine), all payments received by Agent shall be applied first
to the payment of all amounts (except principal and interest) at
the time due and unpaid hereunder or under any of the other Loan
Documents, then to interest hereon or thereon accrued to the date
of payment and finally to the unpaid principal hereunder or
thereunder. Whenever any payment under this Agreement, the Notes
or any other Loan Document shall be stated to be due on a day
that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such
case be included in the computation of the payment of interest.
Upon receipt of each such payment, Agent shall make prompt
payment within three (3) Business Days to each Bank in like funds
of all amounts received by Agent for the account of such Bank.
4.2 Sharing of Payments. Banks shall share equally all
payments made pursuant to this Agreement and the benefits of and
from the Collateral and all proceeds from the sale thereof. If
either Bank shall receive at any time any payment hereunder, or
interest thereon, or receive any Collateral (or proceeds thereof)
in respect thereof (whether voluntarily or involuntarily, by
setoff or otherwise), or interest in any of the foregoing, in a
greater proportion than the other Bank (such Bank receiving the
greater proportion being referred to herein as the "Benefitted
Bank"), such Benefitted Bank shall purchase for cash from the
other Bank such portion of such other Bank's Notes, Letters of
Credit or Revolving Commitment, or shall provide such other Bank
with the benefit of any such Collateral or the proceeds thereof,
as the case may be, as shall be necessary to cause such
Benefitted Bank to share the excess payment or benefits of such
Collateral or proceeds equally with the other Bank; provided,
however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefitted Bank, such
purchases shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery. Borrower agrees that
each Bank so purchasing a portion of another Bank's Notes,
Letters of Credit or Revolving Commitment, as the case may be,
may exercise all rights of payment (including, without
limitation, rights of setoff) with respect to such portion as
fully as if such Bank were the direct holder of such portion.
4.3 Payments Without Deduction. Borrower shall pay
principal, interest and other amounts under, and in accordance
with the terms of, this Agreement, the Notes and the other Loan
Documents free and clear of and without deduction for any and all
present and future taxes, levies, imposts, deductions, charges,
withholdings and all other liabilities whatsoever.
4.4 Prepayments -- Term Credit Facility. Borrower may
from time to time, upon at least one (1) Business Day's prior
telephonic notice (confirmed in writing) received by Agent,
prepay the principal of the Term Notes in whole or in part
without premium; provided, however, (a) any partial prepayment of
principal shall be in an amount of $1,000.00 or an integral
multiple thereof,(b) such prepayments shall be applied to the
unpaid installments of the Term Notes in the inverse order of
their maturity and (c) Borrower may not make any prepayment of
one Term Note unless it makes an equal prepayment of the other
Term Note. Any prepayment of the principal of the Term Notes
shall include accrued interest and other charges to the date of
prepayment on the principal amount being prepaid.
4.5 Borrowing Base for Revolving Credit Facility;
Mandatory Prepayments. Notwithstanding anything contained herein
or in any of the Loan Documents to the contrary, it is expressly
understood and agreed that Banks shall not be obligated to make
Revolving Advances to Borrower, or permit any Revolving Advances
to Borrower to remain outstanding, or to issue Letters of Credit
to Borrower, to the extent that the aggregate outstanding
principal amount under the Revolving Notes, together with the
aggregate principal amount of any Letters of Credit outstanding
at any time, exceeds or (after the making of any requested
Revolving Advance or issuance of any requested Letter of Credit)
would exceed the Revolving Commitment. If at any time the
aggregate outstanding principal amount under the Revolving Notes,
together with the aggregate principal amount of any Letters of
Credit outstanding, exceeds the Revolving Commitment, Borrower
shall promptly, and in any event within five (5) days thereafter,
(a) prepay a principal amount outstanding under the Revolving
Notes equal to such excess or (b) provide Banks with additional
collateral sufficient to bring the principal amount of the
Revolving Credit Facility within the Revolving Commitment, such
sufficiency of the additional collateral to be determined by
Banks in each Bank's sole discretion.
4.6 Reduction of Credit. Borrower may from time to time,
upon at least three (3) Business Day's prior telephonic notice
(confirmed in writing) to Agent, (a) permanently reduce the
amount of the maximum Non-Revolving Commitment under the Term
Credit Facility, but only upon payment of the outstanding
principal amount of each Term Note in excess of the then reduced
amount of the maximum Non-Revolving Commitment available under
the Term Credit Facility and/or (b) permanently reduce the amount
of the maximum Revolving Commitment available under the
Revolving Credit Facility, but only upon payment of the
outstanding principal amount of each Revolving Note in excess of
the then reduced amount of the maximum Revolving Commitment
available under the Revolving Credit Facility. Any such
reduction of the Revolving Commitment shall be in an amount of
$100,000.00 or an integral multiple thereof. Borrower may at any
time on like notice (x) terminate the maximum Non-Revolving
Commitment available under the Term Credit Facility upon payment
in full of the Term Notes and other liabilities of Borrower
relating to the Term Credit Facility and/or (y) terminate the
maximum Revolving Commitment available under the Revolving Credit
Facility upon payment in full of the Revolving Notes and other
liabilities of Borrower relating to the Revolving Credit
Facility.
Section 5. Collateral.
5.1 Security for the Credit Facility. As security for
the Credit Facility and the borrowings under this Agreement with
respect thereto: (a) Borrower has granted unto and in favor of
Banks a first mortgage lien upon certain real property situated
in Houma, Terrebonne Parish, Louisiana, evidenced by:
(i) That certain Collateral Mortgage Note of GIF, dated
December 17, 1986, in the principal sum of
$6,500,000.00, bearing interest at the rate of
eighteen percent (18%), per annum, from date until
paid, and payable to the order of Bearer, as
corrected by that certain Act of Correction of
Collateral Mortgage Note by GIF, First NBC and
William H. Hines, dated July 27, 1989 (the "GIF
Property Collateral Note Act of Correction"), a copy
of which Collateral Mortgage Note, together with the
Act of Correction, is annexed to the Fourth Loan
Agreement (such Collateral Mortgage Note, as
corrected by the GIF Property Collateral Note Act of
Correction, as further amended, extended and renewed
from time to time, hereinafter referred to as the
"GIF Property Collateral Note");
(ii) That certain Act of Collateral Mortgage of GIF, dated
December 17, 1986, in favor of Mortgagee and any and
all future holders, recorded in the mortgage records
of Terrebonne Parish, Louisiana, in Mortgage Book
No. 728, folio 323, under Entry No. 794226, which
mortgage secures the GIF Property Collateral Note, as
supplemented and amended by that certain Act of
Supplement and Amendment to Act of Collateral
Mortgage by GIF in favor of Mortgagee and any and all
future holders, dated July 27, 1989, recorded in the
mortgage records of Terrebonne Parish, Louisiana, in
Mortgage Book No. 811, folio 143, under Entry
No. 850040 (the "GIF Property Collateral Mortgage
Supplement and Amendment"), a copy of which Act of
Collateral Mortgage, together with the GIF Property
Collateral Mortgage Supplement and Amendment, is
annexed to the Fourth Loan Agreement (such Act of
Collateral Mortgage, as supplemented and amended by
the GIF Property Collateral Mortgage Supplement and
Amendment, and as further supplemented, amended and
reinscribed from time to time, hereinafter referred
to as the "GIF Property Collateral Mortgage");
(iii) That certain Collateral Pledge Agreement and Receipt
No. 32070, dated December 17, 1986, by GIF to First
NBC, with respect to the GIF Property Collateral
Note, as amended by that certain First Amendment to
Collateral Pledge Agreement, dated as of November 3,
1987, by and between GIF and First NBC (the "GIF
Property First Pledge Amendment"), as further amended
by that certain Second Amendment to Collateral Pledge
Agreement, dated July 27, 1989, by and between GIF
and First NBC (the "GIF Property Second Pledge
Amendment"), a copy of which Collateral Pledge
Agreement and Receipt No. 32070, together with the
GIF Property First Pledge Amendment and the GIF
Property Second Pledge Amendment, is annexed to the
Fourth Loan Agreement (such Collateral Pledge
Agreement, as amended by the GIF Property First
Pledge Amendment, the GIF Property Second Pledge
Amendment, and as further supplemented and amended
from time to time, hereinafter referred to as the
"GIF Property Pledge Agreement");
(iv) That certain Collateral Pledge Agreement and Receipt
(Possessory Collateral Security Agreement)
No. 1000107, dated March 1, 1990, by Borrower to
First NBC, with respect to the GIF Property
Collateral Note, a copy of which Collateral Pledge
Agreement (Possessory Collateral Security Agreement)
No. 1000107 is annexed to the Fourth Loan Agreement
(such Collateral Pledge Agreement and Receipt
(Possessory Collateral Security Agreement), as
supplemented and amended from time to time,
hereinafter referred to as the "GIF Property First
Additional Pledge Agreement");
(v) That certain Collateral Mortgage Note of Borrower
dated October 29, 1991 in the principal sum of TEN
MILLION AND NO/100 DOLLARS ($10,000,000.00) bearing
interest at the rate of eighteen percent (18%) per
annum from date until paid and payable to the order
of Bearer, a copy of which Collateral Mortgage Note
is annexed to the Fourth Loan Agreement (as amended,
extended and renewed from time to time, hereinafter
referred to as the "Real Property Collateral Note");
(vi) That certain Act of Collateral Mortgage of Borrower
dated October 29, 1991 in favor of Mortgagee and any
and all future holders, which mortgage secures the
Real Property Collateral Note, a copy of which Act of
Collateral Mortgage is annexed to the Fourth Loan
Agreement (such Act of Collateral Mortgage, as
supplemented, amended and reinscribed from time to
time, hereinafter referred to as the "Real Property
Collateral Mortgage");
(vii) That certain Collateral Pledge Agreement and Receipt
(Possessory Collateral Security Agreement)
No. 1000760, dated October 29, 1991, by Borrower to
Agent with respect to the GIF Property Collateral
Note and the Real Property Collateral Note, as
amended by that certain First Amendment to Collateral
Pledge Agreement and Receipt (Possessory Collateral
Security Agreement), dated February 25, 1993, by and
among Borrower, Banks and Agent (the "Property First
Additional Pledge Amendment"), as further amended by
that certain Second Amendment to Collateral Pledge
Agreement and Receipt (Possessory Collateral Security
Agreement), dated of even date herewith, by and among
Borrower, Banks and Agent (the "Property Second
Additional Pledge Amendment") a copy of which
Collateral Pledge Agreement (Possessory Collateral
Security Agreement) No. 1000760, together with the
Property First Additional Pledge Amendment is annexed
to the Fourth Loan Agreement and a copy of the
Property Second Additional Pledge Amendment, is
annexed hereto as Exhibit "F" (such Collateral Pledge
Agreement (Possessory Collateral Security Agreement),
as amended by the Property First Additional Pledge
Amendment, the Property Second Additional Pledge
Amendment, and as further supplemented and amended
from time to time, hereinafter referred to as the
"Property Additional Pledge Agreement"); and
(viii) That certain Collateral Assignment of Leases and
Rents by Borrower dated October 29, 1991, with
respect to the Real Property, as amended by that
certain First Amendment to Collateral Assignment of
Leases and Rents, dated February 25, 1993 by and
among Borrower, Banks and Agent (the "First Lease
Assignment Amendment"), as further amended by that
certain Second Amendment to Collateral Assignment of
Leases and Rents of even date herewith by and among
Borrower, Banks and Agent (the "Second Lease
Assignment Amendment") a copy of which Lease
Assignment, together with the First Lease Assignment
Amendment, is annexed to the Fourth Loan Agreement
and a copy of the Second Lease Assignment Amendment,
is annexed hereto as Exhibit "G" (the Lease
Assignment, as amended by the First Lease Assignment
Amendment, the Second Lease Assignment Amendment, and
as further supplemented and amended from time to
time, hereinafter referred to as the "Lease
Assignment"); and
(b) Borrower has granted unto and in favor of Banks a first
mortgage lien upon the Original GIF Equipment, the New GIF
Equipment and the GIFI Equipment, as well as a second mortgage
lien on the Original GIF Equipment and a security interest in the
Equipment. The mortgage creating a first mortgage lien on the
Original GIF Equipment contemplated hereby has been evidenced by:
(i) That certain Collateral Chattel Mortgage Note of GIF
dated December 17, 1986, in the principal sum of
$3,000,000.00, bearing interest at the rate of
eighteen percent (18%), per annum, from date until
paid, and payable to the order of Bearer, a copy of
which Collateral Mortgage Note is annexed to the
Fourth Loan Agreement (the "Original GIF Equipment
Collateral Note");
(ii) That certain Act of Collateral Chattel Mortgage of
GIF, dated December 17, 1986, in favor of Bearer of
Collateral Chattel Mortgage Note, recorded in the
chattel mortgage records of Terrebonne Parish,
Louisiana, in Chattel Mortgage Book, Entry
No. 794225, which mortgage secures the Original GIF
Equipment Collateral Note, as amended by that certain
Partial Release of Collateral Chattel Mortgage, dated
February 4, 1987, by First NBC in favor of GIF (the
"First Partial Release"), a copy of which Act of
Collateral Chattel Mortgage, together with the First
Partial Release, is annexed to the Fourth Loan
Agreement (such Act of Collateral Chattel Mortgage,
as amended by the First Partial Release, and as
further supplemented, amended and reinscribed from
time to time, hereinafter referred to as the
"Original GIF Equipment Collateral Chattel
Mortgage"); and
(iii) That certain Collateral Pledge Agreement and Receipt
No. 32069, dated December 17, 1986, by GIF to First
NBC, with respect to the Original GIF Equipment
Collateral Note, as amended by that certain First
Amendment to Collateral Pledge Agreement, dated as of
November 3, 1987, by and between GIF and First NBC
(the "Original GIF Equipment First Pledge
Amendment"), and as further amended by that certain
Second Amendment to Collateral Pledge Agreement,
dated July 27, 1989, by and between GIF and First NBC
(the "Original GIF Equipment Second Pledge
Amendment"), a copy of which Collateral Pledge
Agreement and Receipt No. 32069, together with the
Original GIF Equipment First Pledge Amendment and the
Original GIF Equipment Second Pledge Amendment is
annexed to the Fourth Loan Agreement (such Collateral
Pledge Agreement, as amended by the Original GIF
Equipment First Pledge Amendment and the Original GIF
Equipment Second Pledge Amendment, and as further
supplemented and amended from time to time,
hereinafter referred to as the "Original GIF
Equipment Pledge Agreement").
The mortgage creating a first mortgage lien on the
New GIF Equipment and a second mortgage lien on the Original
GIF Equipment contemplated hereby has been evidenced by:
(i) That certain Collateral Chattel Mortgage Note of GIF
dated July 27, 1989, in the principal sum of
$8,000,000.00, bearing interest at the rate of
eighteen percent (18%), per annum, from date until
paid and payable to the order of Bearer, a copy of
which Collateral Chattel Mortgage Note is annexed to
the Fourth Loan Agreement (the "Second GIF Equipment
Collateral Note");
(ii) That certain Act of Collateral Chattel Mortgage of
GIF dated July 27, 1989, in favor of Bearer of
Collateral Chattel Mortgage Note, recorded in the
chattel mortgage records of Terrebonne Parish,
Louisiana, in Chattel Mortgage Book, Entry
No. 850041, which mortgage secures the Second GIF
Equipment Collateral Note, a copy of which Act of
Collateral Chattel Mortgage is annexed to the Fourth
Loan Agreement (such Act of Collateral Chattel
Mortgage, as supplemented, amended and reinscribed
from time to time, hereinafter referred to as the
"Second GIF Equipment Collateral Chattel Mortgage");
and
(iii) That certain Collateral Pledge Agreement and Receipt
No. 37588, dated July 27, 1989, by GIF to First NBC,
with respect to the Second GIF Equipment Collateral
Note, a copy of which Collateral Pledge Agreement and
Receipt No. 37588 is annexed to the Fourth Loan
Agreement (such Collateral Pledge Agreement and
Receipt No. 37588, as supplemented and amended from
time to time, hereinafter referred to as the "Second
GIF Equipment Pledge Agreement").
The mortgage creating a first mortgage lien on the
GIFI Equipment contemplated hereby has been evidenced by:
(i) That certain Collateral Chattel Mortgage Note of
GIFI, dated July 27, 1989, in the principal sum of
$8,000,000.00, bearing interest at the rate of
eighteen percent (18%), per annum, from date until
paid and payable to the order of Bearer, a copy of
which Collateral Chattel Mortgage Note is annexed to
the Fourth Loan Agreement (the "GIFI Equipment
Collateral Note");
(ii) That certain Act of Collateral Chattel Mortgage of
GIFI, dated July 27, 1989, in favor of Bearer of
Collateral Chattel Mortgage Note, recorded in the
chattel mortgage records of East Baton Rouge Parish,
Louisiana, under Chattel No. 1046292, which mortgage
secures the GIFI Equipment Collateral Note, a copy of
which Act of Collateral Chattel Mortgage is annexed
to the Fourth Loan Agreement (such Act of Collateral
Chattel Mortgage, as supplemented, amended and re-
inscribed from time to time, hereinafter referred to
as the "GIFI Equipment Collateral Chattel Mortgage");
and
(iii) That certain Collateral Pledge Agreement and Receipt
No. 37596, dated July 27, 1989, by GIFI to First NBC
with respect to the GIFI Equipment Collateral Note, a
copy of which Collateral Pledge Agreement and Receipt
No. 37596 is annexed to the Fourth Loan Agreement
(such Collateral Pledge Agreement and Receipt No.
37596, as supplemented and amended from time to time,
hereinafter sometimes referred to as the "GIFI
Equipment Pledge Agreement").
The first security interest in the Equipment contemplated
hereby has been evidenced by:
(i) That certain Commercial Security Agreement (Multi-
Purpose) dated October 29, 1991 by and among
Borrower, Banks and Agent, and creating a security
interest in the Equipment and the Fixtures, as
amended by that certain First Amendment to Commercial
Security Agreement, dated February 25, 1993, by and
among Borrower, Banks and Agent (the "First Security
Agreement Amendment"), as further amended by that
certain Second Amendment to Commercial Security
Agreement, of even date herewith, by and among
Borrower, Banks and Agent (the "Second Security
Agreement Amendment"), a copy of which Security
Agreement, together with the First Security Agreement
Amendment, is attached to the Fourth Loan Agreement,
and a copy of the Second Security Agreement Amendment
is annexed hereto as Exhibit "H" (such Security
Agreement, as amended by the First Security Agreement
Amendment, the Second Security Agreement Amendment
and as further supplemented and amended from time to
time, hereinafter sometimes referred to as the
"Security Agreement"); and
(ii) A UCC-1 Financing Statement executed by Borrower and
Agent, a copy of which UCC-1 Financing Statement is
annexed to the Fourth Loan Agreement (such UCC-1
Financing Statement, as supplemented and amended from
time to time, hereinafter sometimes referred to as
the "Financing Statement").
Section 6. Representations and Warranties of Borrower.
Borrower represents and warrants to Banks and Agent that:
6.1 Corporate Existence. Borrower is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Louisiana; and Borrower has all necessary cor-
porate power and authority to acquire, own and hold the property
and all other properties it purports to own and hold and to carry
on its business as now conducted.
6.2 Authorization; Validity. Borrower is and/or has been
duly authorized to execute and deliver this Agreement, the Notes
and all other Loan Documents to which Borrower is a party and is
and will continue to be duly authorized to borrow monies
hereunder and to perform its obligations under this Agreement,
the Notes and all other Loan Documents to which Borrower is a
party. Each of this Agreement, the Notes, and each of the other
Loan Documents to which Borrower is a party, as executed and
delivered, constitutes the legal, valid and binding obligation of
Borrower, enforceable in accordance with the respective terms
thereof.
6.3 No Conflicts. The execution and delivery of the Loan
Documents and the performance by Borrower of its obligations
thereunder do not and will not conflict with any provision of law
or of the charter or by-laws of Borrower or of any agreement
binding upon Borrower, as the case may be.
6.4 Financial Statements. Borrower's audited financial
statement as of December 31, 1995, a copy of which has been
furnished to Banks, has been prepared in conformity with GAAP
applied on a basis consistent with that of the preceding fiscal
year and period, presents fairly the financial condition of
Borrower as of such date and the results of its operations for
the periods then ended. Borrower's unaudited financial statement
as of September 30, 1996, a copy of which has been previously
furnished to Banks, except for the absence of footnotes normally
associated with financial statements prepared in accordance with
GAAP, has been prepared in conformity with GAAP and presents
fairly the financial condition of Borrower as of such date and
the results of its operations for the periods then ended. Since
December 31, 1995, there has been no material adverse change in
Borrower's financial condition.
6.5 Litigation. To the best of Borrower's knowledge,
after due inquiry, no litigation or governmental proceedings are
pending or threatened against Borrower, the results of which
might materially affect its financial condition or operations,
except those referred to in a schedule furnished contemporaneous-
ly herewith and attached hereto as Schedule 1. Other than any
liability incident to such litigation or proceedings or provided
for or disclosed in the financial statements referred to in
Section 6.4, Borrower does not have any material contingent
liabilities.
6.6 Liens. None of the assets of Borrower with a net
book value of greater than $25,000.00 is subject to any Lien,
except for the Liens created pursuant to the Collateral Documents
and Permitted Liens.
6.7 Subsidiaries. Borrower has no subsidiaries.
6.8 Purpose. The proceeds of the Revolving Credit
Facility shall be used by Borrower only for the support of work-
ing capital and for other general corporate purposes. The
proceeds of the Term Credit Facility shall be used by Borrower
only to make capital improvements to the Real Property and to
acquire additional Equipment to be located on the Real Property.
6.9 Use of Proceeds; Margin Securities. Borrower is not
engaged in the business of purchasing or selling margin stock (as
defined in Regulation U of the Board of Governors of the Federal
Reserve System) or extending credit to others for the purpose of
purchasing or carrying margin stock and, without limiting the
generality of Section 6.8 hereof, no part of the proceeds of any
borrowing hereunder will be used to purchase or carry any margin
stock or for any other purpose which would violate any of the
margin regulations of such Board of Governors.
6.10 Compliance with ERISA. Borrower is in compliance
with all statutes and governmental rules and regulations applica-
ble to it, including, without limitation, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). No condition
exists or event or transaction has occurred in connection with
any plan, as defined in Sections 3(3) and 3(37) of ERISA,
maintained by Borrower (any such plan being hereinafter called
the "Plan"), which could result in Borrower's incurring any
material liability, fine or penalty. No Reportable Event (as
defined in ERISA) has occurred with respect to any such Plan.
Borrower has not withdrawn from any such Plan or initiated steps
to do so and no steps have been taken to terminate any such Plan.
6.11 Consents. No consent, approval or authorization of,
or registration or declaration with, any federal or state govern-
mental authority or other regulatory agent for the validity of
the execution and delivery or for the performance by Borrower of
the Loan Documents is required.
6.12 Tax Returns. Borrower has filed all tax returns
which are required to be filed by any jurisdiction, and has paid
all taxes which have become due pursuant to said returns or
pursuant to any assessments.
6.13 Ownership of Borrower. Fifty percent (50%) of the
issued and outstanding stock of Borrower is owned by the Labordes
and (50%) of the issued and outstanding stock of Borrower is
owned by the Wilsons.
6.14 Operation of Business. Borrower possesses all
licenses, permits, franchises, patents, copyrights, trademarks
and trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be
conducted, and Borrower is not in violation of any valid rights
of others with respect to any of the foregoing.
6.15 Rights in Properties; Liens. Borrower has good and
indefeasible title to its properties and assets, real and
personal, including the properties and assets reflected in the
financial statements described in Section 6.4 hereof, and none of
the properties, assets or leasehold interests of Borrower is
subject to any Lien, except as permitted by Section 7.11 hereof.
6.16 Debt. Borrower has no Debt, except as disclosed in
the financial statements described in Section 6.4 hereof and as
otherwise permitted by this Agreement.
6.17 Disclosure. No statement, information, report,
representation or warranty made by Borrower in this Agreement or
in any of the other Loan Documents or furnished by Borrower to
Banks or Agent in connection with the negotiation or preparation
of this Agreement contains any untrue statement of a material
fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact
known to Borrower that has not been disclosed in writing to Banks
which has a material adverse effect, or which might in the future
have a material adverse effect, on the business, assets,
financial condition or operations of Borrower or on the
Collateral.
6.18 Registered Office; Principal Place of Business;
Location of Collateral. The principal place of business, chief
executive office and registered office of Borrower and the place
where Borrower keeps its books and records and all Collateral is
located on the Real Property. Borrower has always maintained its
registered office in either Terrebonne or East Baton Rouge
Parish, Louisiana. Borrower does not do, and has never done, any
business in any location other than as set forth in this Section.
No persons other than Borrower, Agent and Banks have possession
of any of the Collateral.
6.19 Investment Company Act. Borrower is not an
"Investment Company" within the meaning of the Investment Company
Act of 1940, as amended.
6.20 Other Agreements. With the exception of construction
contracts entered into by Borrower in the ordinary course of
Borrower's business, Borrower is not a party to any indenture,
loan or credit agreement, or to any lease or other agreement or
instrument, or subject to any charter of corporate restriction
which could have a material adverse effect on the business,
properties, assets, operations or conditions, financial or
otherwise, of Borrower, or the ability of Borrower to pay and
perform its obligations under the Loan Documents to which it is a
party. Borrower is not in default in any respect in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument
material to its business to which it is a party.
6.21 Compliance with Law. Borrower is in compliance with
all laws, rules, regulations, orders and decrees which are
applicable to Borrower or any of its properties. Without
limiting the generality of the foregoing:
(a) Employment Matters. Borrower is in full
compliance with all applicable laws, rules, regulations and
governmental standards regarding employment, including,
without limitation, the minimum wage and overtime provisions
of the Fair Labor Standards Act, as amended (29 U.S.C.
Sections 201-219), and the regulations promulgated thereunder.
(b) Environmental Matters.
(i) Borrower and all of its properties, assets and
operations are in full compliance with all
Environmental Laws. Borrower is not aware of,
nor has Borrower received notice of, any past,
present or future conditions, events,
activities, practices or incidents which may
interfere with or prevent the compliance or
continued compliance of Borrower with all
Environmental Laws.
(ii) With the exception of the permits specifically
referred to in Section 7.8 hereof, each of
which Borrower shall obtain and/or file, as the
case may be, in accordance with the terms of
Section 7.8, Borrower has obtained all permits,
licenses and authorizations and has filed all
plans which are required under Environmental
Laws in order to conduct its business and/or
own its properties and assets including without
limitation all Louisiana air emission permits
required under any Environmental Law in order
to conduct Borrower's business and/or own its
assets or properties.
(iii) Borrower has on file an SPCC Plan as required
under applicable Environmental Laws in
connection with Borrower's storage of petroleum
on the Real Property.
(iv) No Hazardous Substances or Solid Wastes exist
on, about or within or have been used,
generated, stored, transported, disposed of on,
or released from any of the properties or
assets of Borrower except in compliance with
Environmental Laws.
(v) There is no action, suit, proceeding,
investigation or inquiry before any court,
administrative agency or other governmental
authority pending or, to the knowledge of
Borrower, threatened against Borrower relating
in any way to any Environmental Law. Borrower
has not (A) been notified of any liability for
remedial action under any Environmental Law,
(B) received any request for information by any
governmental authority with respect to the
condition, use or operation of any of its
properties or assets, or (C) received any
notice from any governmental authority or other
Person with respect to any violation of or
liability under any Environmental Law.
6.22 Corporate Name. The exact corporate name of Borrower
as it appears in its articles of incorporation is as set forth in
the introduction of this Agreement and, with the exception of
doing business under the name GIFI, Inc., Borrower has never done
any business in any location under any other name.
6.23 Collateral. The Collateral Documents create in favor
of Banks, and/or Agent for the benefit of Banks, valid,
enforceable and perfected Liens on the properties described
therein, which Liens secure the payment and performance of the
obligations of Borrower to Banks described in the Collateral
Documents, and which Liens are superior to the rights of all
third Persons, whether now existing or hereafter arising.
6.24 Taxpayer I.D. Number. Borrower's Federal Taxpayer
Identification Number is 72-1147390.
Section 7. Borrower's Covenants.
From the date of this Agreement and thereafter until the
expiration or termination of the Commitments, and until the Notes
and other liabilities of Borrower hereunder are paid in full and
all other obligations and liabilities under the Loan Documents
are performed and paid in full, Borrower agrees that it will:
7.1 Financial Statements. Furnish to Agent:
(a) within one hundred twenty (120) days after the
end of each fiscal year, a copy of Borrower's
financial statements, audited by independent
certified public accountants of nationally
recognized standing selected by Borrower and
reasonably satisfactory to Banks, prepared in
conformity with GAAP;
(b) within forty-five (45) days after the end of
each month, a copy of Borrower's unaudited
financial statements prepared in conformity
with GAAP, except for the absence of footnotes
normally associated with financial statements
prepared in accordance with GAAP;
(c) together with the financial statements
furnished by Borrower under preceding clause
(a), a certificate of the president or chief
financial officer of Borrower to the effect
that no Event of Default with respect to
Borrower, or event which might mature into an
Event of Default with respect to Borrower, has
occurred and is continuing;
(d) forthwith upon the occurrence of an Event of
Default, a certificate of the president or
chief financial officer of Borrower specifying
the nature and the period of existence thereof
and what action Borrower proposes to take with
respect thereto;
(e) written notice of any and all litigation
affecting Borrower, directly or indirectly;
provided, however, this requirement shall not
apply to litigation involving Borrower and any
other party if such litigation involves, in the
aggregate, less than $100,000.00;
(f) prompt notice of any change in the present
officers, directors and/or stockholders of
Borrower; and
(g) from time to time, such other information as
Banks may reasonably request.
7.2 Access. Permit access by Banks and Agent to the
books and records and other property of Borrower during normal
business hours and upon reasonable notice and permit Banks to
make copies of said books and records.
7.3 Insurance. Maintain with financially sound and
reputable insurance companies workmen's compensation insurance,
liability insurance and insurance on its property, assets and
business at least to such extent and against such hazards and
liabilities as is commonly maintained by similar companies and,
in addition to the foregoing insurance, such insurance as may be
required in the Collateral Documents. In the case of property in
which Banks or Agent has a Lien, Borrower shall provide Agent
with duplicate originals or certified copies of such policies of
insurance in such forms and amounts, and containing such terms
and conditions, as are satisfactory to Banks, naming Banks as
additional loss payees and as additional insureds as their
interests may appear and providing that such policies will not be
canceled without thirty (30) days' prior written notice to Banks.
7.4 Repair. Maintain, preserve and keep Borrower's pro-
perties in good repair, working order and condition, and make
necessary and proper repairs, renewals and replacements so that
its business carried on in connection therewith may be properly
conducted at all times.
7.5 Taxes. Pay or discharge at or before maturity or
before becoming delinquent (a) all taxes, levies, assessments and
governmental charges imposed on Borrower or its income or profits
or any of its property, and (b) all lawful claims for labor,
materials and supplies which, if unpaid, might become a Lien upon
any of Borrower's property; provided, however, that Borrower
shall not be required to pay or discharge any tax, levy,
assessment or governmental charge which is being contested in
good faith by appropriate proceedings diligently pursued.
7.6 Corporate Existence. Maintain its corporate
existence in good standing.
7.7 Merger. Without the prior written consent of Banks,
not:
(a) be a party to any merger or consolidation;
(b) except in the normal course of its business,
sell, transfer, convey, or lease all or any
substantial part of Borrower's assets;
(c) sell or assign, except in the normal course of
its business, with or without recourse, any
accounts receivable or chattel paper.
7.8 Compliance. Comply with all statutes, laws, ordi-
nances, orders, rules and regulations applicable to Borrower,
including, without limitation, all Environmental Laws and ERISA;
provided, however, Borrower shall be deemed to be in compliance
with this requirement for such time as it may be contesting, in
good faith and with diligence by appropriate proceedings, any
alleged violation of any statute, rule or regulation. Borrower
shall not permit any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to institute
proceedings to have such Plan terminated or a trustee appointed
to administer such Plan, and Borrower shall not engage in, or
permit to exist or occur any other condition, event or
transaction with respect to, any such Plan which could result in
Borrower's incurring any material liability, fine or penalty.
Without limiting the generality of the foregoing, Borrower
shall comply fully with and maintain in effect any and all
environmental permits and licenses required under any
Environmental Law in order to conduct Borrower's business. To
the extent such permits are required but have not been obtained,
or to the extent such existing permits must be modified or
renewed, Borrower shall make timely application for and obtain
all such permits, modifications or renewals thereof, as the case
may be, including, but not limited to, necessary federal and/or
state water discharge, air emission and waste management permits.
Without limiting the generality of the foregoing, Borrower
warrants that it has filed applications with the appropriate
regulatory agencies for all federal NPDES water discharge permits
and Louisiana LWDPS water discharge permits required under any
Environmental Law in order to conduct Borrower's business and/or
own its assets or properties. Borrower shall comply with all
appropriate information requests by, and otherwise assist as
appropriate, each regulatory agency processing Borrower's permit
applications so as to ensure timely and uninterrupted review of
each permit application.
As often as Banks or Agent may require, Borrower shall
submit to Agent written progress reports addressing the status of
environmental permits and plans required of Borrower, including
pending permit applications. All permits required hereunder
shall be obtained and/or filed, as the case may be, within six
(6) months from the effective date hereof.
Anything contained herein to the contrary notwithstanding,
Borrower shall not use any of its properties or allow such
properties to be used for the storage, treatment or disposal of
Solid Waste or Hazardous Substances if such storage, treatment or
disposal would require a permit under any Environmental Laws.
7.9 Use of Proceeds. Not use or permit any proceeds of
the Loans to be used, either directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of
"purchasing or carrying any margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System, as amended from time to time, and furnish to Banks, upon
either of their requests, a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in
Regulation U of the Board of Governors of the Federal Reserve
System.
7.10 Financial Covenants. Maintain:
(a) a ratio of current assets to current
liabilities, as determined in accordance with
GAAP, in excess of 1.33 to 1;
(b) a minimum Net Worth of NINETEEN MILLION AND
NO/100 DOLLARS ($19,000,000.00) for the period
commencing September 30, 1996 and ending
December 31, 1997; a minimum Net Worth of
TWENTY-ONE MILLION AND NO/100 DOLLARS
($21,000,000.00) for the period January 1, 1998
through December 31, 1998, and a minimum Net
Worth of TWENTY-THREE MILLION AND NO/100
DOLLARS ($23,000,000.00) from and including
January 1, 1999 and thereafter;
(c) a ratio of Debt to Net Worth no greater than
1.1 to 1; and
(d) a ratio of Cash Flow to Debt Service of at
least 1.5 to 1, such ratio to be determined as
of the end of each fiscal quarter by giving
effect to such fiscal quarter and the three (3)
immediately preceding fiscal quarters; provided
that there shall be no Event of Default under
this Section 7.10(d) unless Borrower fails to
meet the ratio described in this
Section 7.10(d) for three (3) successive fiscal
quarters.
7.11 Liens. Not create, incur, or suffer to exist any
Lien except ((a) through (g) of this Section being referred to
collectively as the "Permitted Liens"):
(a) those for taxes, assessments or governmental
charges or levies on its property if the same
shall not at the time be delinquent or
thereafter can be paid without penalty, or are
being contested in good faith and by
appropriate proceedings;
(b) those imposed by law, such as carriers',
warehousemen's and mechanics' liens and other
similar liens arising in the ordinary course of
business which secure payment of obligations
not more than sixty (60) days past due;
(c) those arising out of pledges or deposits under
workmen's compensation laws, unemployment
insurance, old age pensions, or other social
security or retirement benefits, or similar
legislation;
(d) utility easements, building restrictions and
such other encumbrances or charges against real
property as are of a nature generally existing
with respect to properties of a similar
character and which do not in any material way
affect the marketability of the same or
interfere with the use thereof in the business
of Borrower;
(e) lessors' interests under financing leases;
(f) liens on assets of Borrower not covered by the
Loan Documents which liens secure obligations
of Borrower in the ordinary course of business
which in the aggregate for all such obligations
of Borrower do not exceed $250,000.00; and
(g) the Liens created pursuant to the Loan
Documents.
7.12 Debt. Not create or permit to exist any Debt without
the prior written consent of Banks, if, as a result thereof,
exclusive of the indebtedness contemplated by this Agreement, the
aggregate amount of Debt of Borrower would exceed the sum of
$250,000.00.
7.13 Redemptions, etc. Not, without the prior written
approval of Banks: (1) redeem, purchase or acquire, directly or
indirectly, any of its stock; (2) authorize or issue additional
stock of any class; (3) authorize any new class of stock;
(4) authorize any currently existing or new classes of stock to
become voting stock; or (5) sell or transfer any treasury shares
of stock. Provided, however, subparts (2) through (5) of this
Section 7.13 shall not apply except to the extent that as a
result thereof either (a) the Labordes would fail to retain at
least forty-five percent (45%) of the issued and outstanding
stock of Borrower, or (b) the Wilsons would fail to retain at
least forty-five percent (45%) of the issued and outstanding
stock of Borrower. For purposes of this Section 7.13, the
Labordes and the Wilsons shall be deemed owners of the issued and
outstanding stock of Borrower with respect to any issued and
outstanding stock that is owned either by the Labordes or the
Wilsons, any descendant of the Labordes or the Wilsons, any trust
for the exclusive benefit of the Labordes or the Wilsons or any
descendant of the Labordes or the Wilsons, or the respective
estates of the Labordes or the Wilsons or any descendant of the
Labordes or the Wilsons if said stock will ultimately pass from
the respective estates of the Labordes or the Wilsons to a
descendant or a trust for the exclusive benefit of a descendant
of the Labordes or the Wilsons.
7.14 Capital Expenditures. Not make capital expenditures
which would exceed $9,000,000.00 in calendar year 1996;
$8,000,000.00 in calendar year 1997; or $2,000,000.00 per
calendar year thereafter.
7.15 Dividends. Not declare or pay any dividends or make
any other distribution on account of, or purchase, acquire,
redeem or retire any capital stock of, Borrower, whether now or
hereafter outstanding, provided that, so long as there is no
Event of Default hereunder and Borrower continues as an
S Corporation, Borrower shall be permitted to pay the following
cash dividends on a cumulative basis, to-wit:
(a) commencing with Borrower's first fiscal quarter
1996 and with respect to each fiscal quarter
thereafter, regular dividends not to exceed 40%
of Borrower's pretax income earned in the
fiscal quarter immediately prior to the fiscal
quarter in question, as determined in
accordance with GAAP; and
(b) commencing annually in 1996, special dividends
not to exceed 65% of Borrower's pretax income
earned in the fiscal year of Borrower
immediately prior to the fiscal year in
question, as determined in accordance with GAAP
and as provided in the audited financial
statements furnished to Agent pursuant to
Section 7.1(a) hereof, less the sum of
dividends paid in the 2nd, 3rd, and 4th fiscal
quarters of such prior fiscal year and
dividends paid in the 1st fiscal quarter of the
fiscal year in question.
7.16 Shareholder or Employee Loans. Not make advances or
loans to Borrower's employees or shareholders which exceed the
aggregate amount of $100,000.00.
7.17 Change in Business. Carry on and conduct its
business in substantially the same manner and in substantially
the same fields of enterprise as it is presently conducted;
provided, however, that the foregoing shall not prevent Borrower
from engaging in new and additional activities as long as said
activities are in substantially the same fields of enterprise as
are currently being engaged in by Borrower.
7.18 Accounts Receivable. Provide Banks with aging
reports of Borrower's accounts receivable on a monthly basis.
7.19 Compliance with Agreements. Comply with all
indentures, mortgages, deeds of trust and other agreements
binding on it or affecting its properties or business.
7.20 Further Assurances. Execute and deliver such further
documentation as may be requested by Banks or Agent to carry out
the provisions and purposes of this Agreement and the other Loan
Documents and to preserve and perfect the Liens of Banks or Agent
for the benefit of Banks, as the case may be, in the Collateral.
7.21 Disposition of Assets. Not sell, lease, assign,
transfer or otherwise dispose of any of its assets, except
dispositions of inventory and equipment in the ordinary course of
business and as otherwise provided in this Agreement.
7.22 Change Tax I.D. Number. Not change its Federal
Taxpayer Identification Number as set forth in Section 6.24
hereof without giving Agent at least sixty (60) days' prior
written notice.
7.23 Indemnity. Indemnify, defend and hold Agent and
Banks and their respective directors, officers, agents, attorneys
and employees harmless from and against all claims, demands,
causes of action, liabilities, losses, costs and expenses
(including, without limitation, costs of suit, reasonable legal
fees and fees of expert witnesses) arising from or in connection
with (a) the presence in, on or under any property of Borrower
(including, without limitation, the Real Property and the GIFI
Property) of any Hazardous Substance or Solid Waste, or any
releases or discharges (as the terms "release" and "discharge"
are defined under any applicable Environmental Law) of any
Hazardous Substance or Solid Waste on, under or from such
property, (b) any activity carried on or undertaken on or off
such property of Borrower, whether prior to or during the term of
this Agreement, and whether by Borrower or any predecessor in
title to Borrower's property or any officers, employees, agents,
contractors or subcontractors of Borrower or any predecessor in
title to Borrower's property, or any third persons at any time
occupying or present on such property, in connection with the
handling, use, generation, manufacture, treatment, removal,
storage, decontamination, clean-up, transportation or disposal of
any Hazardous Substance or Solid Waste at any time located or
present on or under any of the aforedescribed property, or
(c) any breach of any representation, warranty or covenant under
the terms of this Agreement. The foregoing indemnity shall
further apply to any residual contamination on or under any or
all of the aforedescribed property, or affecting any natural
resources, and to any contamination of any property or natural
resources arising in connection with the use, handling, storage,
transportation or disposal of any Hazardous Substance or Solid
Waste, and irrespective of whether any of such activities were or
will be undertaken in accordance with applicable laws,
regulations, codes and ordinances. The indemnity described in
this Section shall survive the termination of this Agreement for
any reason whatsoever.
7.24 GIFI Property. Not create a Lien on the GIFI
Property in favor of, or otherwise convey the GIFI Property to,
any Person without the prior written consent of Banks.
Section 8. Conditions Precedent to Extensions of Credit.
The obligation of Banks to extend credit to Borrower under
this Agreement is subject to the satisfaction of the conditions
precedent, in addition to the applicable conditions precedent set
forth in Section 9 below with respect to Advances and/or Letters
of Credit, that Borrower shall have delivered, or caused to be
delivered, to Banks in form and substance satisfactory to Banks:
8.1 Borrower's Resolutions. Copies, duly certified by
the secretary or assistant secretary of Borrower, of (a) the
resolutions of Borrower's Board of Directors authorizing the
borrowings hereunder and the execution and delivery of all of the
Loan Documents to which Borrower is a party, (b) all documents
evidencing other necessary corporate action and (c) all approvals
or consents, if any, with respect to the Loan Documents.
8.2 Notes. Its duly executed Notes payable to the order
of Banks.
8.3 Incumbency. Certificates of Borrower's secretary or
assistant secretary, substantially in the form of Exhibit "I"
hereto, certifying the name of the officers of Borrower
authorized to execute the Loan Documents, and all other documents
or certificates to be delivered hereunder, together with the true
signatures of such officers.
8.4 Certification. A certificate, substantially in the
form of Exhibit "J" hereto, of the president or chief financial
officer of Borrower as to the matters set out in Sections 9.1 and
9.2 hereof.
8.5 GIF Collateral Mortgage. The duly executed GIF
Collateral Mortgage.
8.6 GIF Collateral Chattel Mortgages. The duly executed
GIF Collateral Chattel Mortgages.
8.7 Lease Assignment. The duly executed Lease
Assignment.
8.8 GIFI Collateral Chattel Mortgage. The duly executed
GIFI Collateral Chattel Mortgage.
8.9 Real Property Collateral Mortgage. The duly executed
Real Property Collateral Mortgage.
8.10 Security Agreement. The duly executed Security
Agreement.
8.11 Financing Statement. The duly executed Financing
Statement.
8.12 Other Documents. Any and all other documents,
agreements and/or instruments reasonably requested by Bank.
8.13 Opinion. The opinion of Jones, Walker, Waechter,
Poitevent, Carrere & Denegre, counsel to Banks and Agent,
addressed to Banks and Agent, to the effect that (a) Borrower is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Louisiana; (b) Borrower
has full power to execute, deliver and perform its obligations
under this Agreement, the Notes and the Collateral Documents;
(c) such actions have been duly authorized by all necessary
corporate action, and are not in conflict with any provision of
law or of the charter or by-laws of Borrower, nor to the best of
counsel's knowledge, in conflict with any agreement binding upon
Borrower; and (d) this Agreement, the Notes, the Real Property
Collateral Mortgage, the Lease Assignment, the Security Agreement
and the Financing Statement are the legal and binding obligations
of Borrower enforceable in accordance with their respective
terms, except as enforcement may be limited by applicable bank-
ruptcy, reorganization, moratorium or similar laws.
8.14 Real Property Title Insurance. A mortgagee's title
policy in the amount of $3,000,000.00 with respect to the Real
Property Collateral Mortgage, in form and substance satisfactory
to Banks.
Section 9. Additional Conditions Precedent to Advances
and/or Letters of Credit.
The obligation of Banks to make any Advance and/or issue any
Letter of Credit under the Credit Facilities is subject to, in
addition to the satisfaction of all other conditions precedent
applicable to the Credit Facilities and set forth in Section 8
above, the satisfaction of each of the following conditions
precedent:
9.1 Default. Before and after giving effect to such
Advance and/or Letter of Credit under the Credit Facility in
question, no Event of Default shall have occurred and be con-
tinuing.
9.2 Warranties. Before and after giving effect to such
Advance and/or Letter of Credit under the Credit Facility in
question, the representations and warranties in Section 6 hereof
shall be true and correct as though made on the date of such
Advance and/or Letter of Credit under the Credit Facility in
question, except for such changes as are specifically permitted
hereunder. With respect to such changes, the Banks hereby
specifically permit the Wilsons and the Labordes to reduce their
respective ownership interests in Borrower to forty-five percent
(45%) of Borrower's issued and outstanding stock in order to
permit employees of Borrower to acquire up to ten percent (10%)
of Borrower's issued and outstanding stock, and upon such
reduction, the representation and warranty in Section 6.13 shall
be automatically deemed to reflect the Labordes' and Wilsons' new
ownership percentages.
Section 10. Events of Default.
The following events shall constitute Events of Default
hereunder and under the Credit Facilities, individually and
collectively, and under all other Loan Documents:
10.1 Payment. Default in the payment of principal on any
one or more of the Notes when due, or default in the payment of
any interest on any one or more of the Notes or any expense or
fee hereunder or under any of the other Loan Documents, which
default shall continue for a period of five (5) days following
written notice thereof to Borrower from Banks or Agent;
10.2 Other Indebtedness. Any other indebtedness of
Borrower is not paid at maturity or becomes due and payable prior
to its expressed maturity by reason of any default by Borrower in
the performance or observance of any obligation or condition
thereunder which default shall continue for a period of thirty
(30) days following written notice thereof to Borrower from Banks
or Agent;
10.3 Other Default. Any default of any other obligation
of Borrower under the terms of any note or notes, mortgage,
indenture, loan agreement or security document of Borrower,
including, without limitation, any of the Loan Documents, which
default shall continue for a period of thirty (30) days following
written notice thereof to Borrower from Banks or Agent, it being
expressly understood and agreed that a default under any note,
mortgage, indenture, loan agreement or security document of
Borrower, including, without limitation, any of the Loan
Documents, shall constitute a default under all other notes,
mortgages, indentures, loan agreements and security documents
held by Banks or Agent, including, without limitation, the Loan
Documents;
10.4 Insolvency. Borrower becomes insolvent or admits in
writing its inability to pay its debts as they mature or applies
for, consents to, or acquiesces in the appointment of a trustee
or receiver for Borrower or any of its property; or, in the
absence of such application, consent or acquiescence, a trustee
or receiver is appointed for Borrower or for a substantial part
of any of its property and is not discharged within thirty (30)
days; or any bankruptcy, reorganization, debt arrangement, or
other proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding is instituted by or against
Borrower, and if instituted against Borrower, it is consented to
or acquiesced in by Borrower, or remains for thirty (30) days
undismissed; or any warrant of attachment is issued against any
substantial portion of the property of Borrower which is not
released within thirty (30) days of service;
10.5 ERISA. The PBGC applies to a United States District
Court for the appointment of a trustee to administer any Plan
adopted, established or maintained by Borrower, or for a decree
adjudicating that any such Plan must be terminated; a trustee is
appointed pursuant to ERISA to administer any such Plan; any
action is taken to terminate any such Plan or any such Plan is
permitted or caused to be terminated if, at the time such action
is taken or such termination of such Plan occurs, the Plan's
"vested liabilities," as defined in Section 3(25) of ERISA,
exceed the then value of its assets at the time of such
termination;
10.6 Agreements. Default in the performance of any of
Borrower's covenants and/or agreements set forth in this
Agreement and/or any of the other Loan Documents (and not
constituting an Event of Default under any of the preceding
subsections of this Section 10), which default shall continue for
a period of thirty (30) days after written notice thereof to
Borrower from Banks or Agent;
10.7 Representation or Warranty. Any representation or
warranty made by Borrower herein is untrue in any material
respect, or any schedule, statement, report, notice or writing
furnished by Borrower or any of the Owners to Banks is untrue in
any material respect on the date as of which the facts set forth
are stated or certified which default shall continue for a period
of thirty (30) days after written notice thereof to Borrower from
Banks or Agent;
10.8 Change in Ownership of Borrower. Either: (a) the
Labordes fail to retain ownership of at least forty-five percent
(45%) of the issued and outstanding stock of Borrower (provided,
however, that no Event of Default shall occur under this
Agreement so long as at least forty-five percent (45%) of the
issued and outstanding stock of Borrower is owned by the
Labordes, any descendant of the Labordes, any trust for the
exclusive benefit of the Labordes or any descendant of the
Labordes, or the respective estates of the Labordes or any
descendant of the Labordes if said stock will ultimately pass
from the respective estates of the Labordes to a descendant or a
trust for the exclusive benefit of a descendant of the Labordes);
or (b) the Wilsons fail to retain ownership of at least forty-
five percent (45%) of the issued and outstanding stock of
Borrower (provided, however, that no Event of Default shall occur
under this Agreement so long as at least forty-five percent (45%)
of the issued and outstanding stock of Borrower is owned by the
Wilsons, any descendant of the Wilsons, any trust for the
exclusive benefit of the Wilsons or any descendant of the
Wilsons, or the respective estates of the Wilsons or any
descendant of the Wilsons if said stock will ultimately pass from
the respective estates of the Wilsons to a descendant or a trust
for the exclusive benefit of a descendant of the Wilsons).
Upon the occurrence of any Event of Default, Banks, or Agent
upon the direction of Banks, in addition to all of the remedies
conferred upon Agent and/or Banks under law, in equity or under
any of the Loan Documents, may declare the Commitments to be
terminated and the Notes to be due and payable, whereupon the
Commitments shall immediately terminate, and the Notes shall
become immediately due and payable, without notice of any kind,
except that if an event described in Section 10.4 occurs, the
Commitments shall immediately terminate, and the Notes shall
become immediately due and payable without declaration or notice
of any kind.
Section 11. Agent.
11.1 Authorization and Action. Each Bank hereby appoints
and authorizes Agent to execute the Collateral Documents on
behalf of each such Bank and to take such action as Agent on such
Bank's behalf, and to exercise such powers under the Loan
Documents, as are delegated to Agent by the terms thereof,
together with such other powers as are reasonably incidental
thereto, including, without limitation, the enforcement of the
Loan Documents in accordance with the terms thereof (including,
without limitation, the collection of the Notes), and Agent
hereby accepts such appointment. As to any matters not expressly
provided for by the Loan Documents (including, without
limitation, enforcement or collection of the Notes), Agent shall
not be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall
be fully protected in so acting or refraining from acting) upon
the instructions of Banks and such instructions shall be binding
upon Banks; provided, however, that Agent shall not be required
to take any action which exposes Agent to personal liability or
which is contrary to any of the Loan Documents or applicable law.
Agent shall not consent to any amendment of this Agreement or any
of the other Loan Documents (and no amendment by Banks shall be
effective without consent of Agent), the effect of which would be
to increase the amount of the Loans or extend the maturity of any
obligation, reduce the bases on which any interest is computed,
release any Collateral, waive any provision regarding covenants
or obligations of Borrower or the Owners or Events of Default,
without the express written consent of all Banks.
11.2 Agent's Reliance, Etc. Neither Agent nor any of its
directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in
connection with any of the Loan Documents except for its or their
own gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, Agent: (i) may treat the
payee of any Note as the holder thereof until Agent receives
written notice of the assignment or transfer thereof signed by
such payee and in form satisfactory to Agent; (ii) may consult
with legal counsel (including counsel for Borrower), independent
public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation
to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations made in or in
connection with any of the Loan Documents; (iv) shall not have
any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of any of
the Loan Documents on the part of Borrower or to inspect the
property (including the books and records) of Borrower; (v) shall
not be responsible to any Bank for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of
any of the Loan Documents or any other instruments or document
furnished pursuant hereto; and (vi) shall incur no liability
under or in respect of any of the Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing
(which may be by telegram, cable or telex) believed by it to be
genuine and signed by the proper party or parties.
11.3 First NBC and Affiliates. With respect to the Notes
payable to the order of First NBC and the portion of the
Commitments applicable to First NBC, First NBC shall have the
same rights and powers under the Loan Documents as the other Bank
and may exercise the same as though it were not Agent; and the
term "Bank" or "Banks" shall, unless otherwise expressly
indicated, include First NBC in its individual capacity. Without
limiting the generality of the foregoing, First NBC and its
affiliates may accept deposits from, and generally engage in any
kind of business with, Borrower, and any person, firm or
corporation who may do business with or own securities of
Borrower, all as if First NBC were not Agent and without any duty
to account therefor to Banks.
11.4 Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon Agent or any other
Bank and based on the financial statements furnished by Borrower
and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon Agent or any other Bank
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan
Documents. Each Bank acknowledges that a copy of this Agreement
has been made available to it and each Bank acknowledges that it
is satisfied with the form and substance of this Agreement.
11.5 Indemnification. Banks agree to indemnify and hold
Agent harmless (to the extent not reimbursed by Borrower),
ratably according to the respective principal amounts of the
Notes then held by each of them (or if no Notes are at the time
outstanding, ratably according to the respective amounts of their
commitments hereunder), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of any of the
Loan Documents or any action taken or omitted by Agent under any
of the Loan Documents (including, without limitation, attorneys'
fees and other costs associated with defending Agent against any
of the foregoing), provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or wilful
misconduct. Without limitation of the foregoing, each Bank
agrees to reimburse Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including attorneys' fees)
incurred by Agent in connection with the preparation, execution,
administration, or enforcement of, or the preservation of any
rights under, the Loan Documents, to the extent that Agent is not
reimbursed for such expenses by Borrower.
11.6 Successor Agent. Agent may resign at any time by
giving written notice thereof to Banks and Borrower and may be
removed at any time with or without cause by Banks by notice to
Borrower. Upon any such resignation or removal, Banks shall have
the right to appoint a successor agent by notice to Borrower. If
no successor agent shall have been so appointed by Banks, and
shall have accepted such appointment, within thirty (30) days
after Agent's giving of notice of its resignation, then Agent
may, on behalf of Banks, appoint a successor agent, by notice to
Borrower and Banks, which successor agent shall be a commercial
bank organized under the laws of the United States of America or
any state thereof having a combined capital and surplus of at
least $5,000,000. Upon the acceptance of any appointment as
Agent by a successor agent, such successor agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of Agent, and Agent shall be discharged
from its duties and obligations under the Loan Documents. After
Agent's resignation or removal hereunder as Agent, the provisions
of this Section 11 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under the
Loan Documents.
11.7 Benefits of Section. None of the provisions of this
Section shall inure to the benefit of Borrower or any Person
other than Banks; consequently, neither Borrower nor any other
Person shall be entitled to rely upon, or to raise as a defense,
in any manner whatsoever, the failure of any Bank to comply with
such provisions.
11.8 Change in Specified Percentage. No Bank shall assign
outright its entire interest in the Credit Facilities or the
Commitments or make any participation without the consent of the
other Bank and Agent.
Section 12. General.
12.1 Definitions. As used in this Agreement, terms used
herein with initial capital letters shall have the following
meanings, unless defined elsewhere in this Agreement or unless
the context clearly indicates otherwise:
"Advance" means a sum advanced by Banks to Borrower
pursuant to either of the Credit Facilities.
"Agent" has the meaning ascribed to the term on the
first page hereof.
"Agreement" means this Fifth Amended and Restated
Revolving Credit and Term Loan Agreement, as it has been and
may be amended, restated, modified and/or supplemented from
time to time.
"Assignment" has the meaning ascribed to the term in
the recitals to this Agreement.
"Bank" and "Banks" have the meanings ascribed to the
terms on the first page hereof.
"Benefitted Bank" has the meaning ascribed to the
term in Section 4.2 hereof.
"Borrower" has the meaning ascribed to the term on
the first page hereof.
"Borrowing Base" means an amount equal to eighty
percent (80%) of the Eligible Receivables at the time in
question.
"Borrowing Date" means any Business Day specified in
a notice pursuant to Section 3.7 as a date on which Borrower
requests Banks to make Advances hereunder.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a legal holiday for
commercial banks in the State of Louisiana.
"Capitalized Leases" means capital leases and
subleases, as defined in the Financial Accounting Standards
Board Statement of Financial Accounting Standard No. 13,
dated November 1976, as amended.
"Cash Flow" means, for any period in question,
(a) the net income of Borrower plus depreciation and
interest, each determined in accordance with GAAP, less
(b) dividends and other distributions made by Borrower to
its shareholders during such period.
"Collateral" means all property described in and
subject to the Collateral Documents and any and all other
property hereafter made subject to a Lien to secure the
payment and performance of the Obligations.
"Collateral Documents" means the GIF Collateral
Mortgage, the GIF Collateral Chattel Mortgages, the GIFI
Collateral Chattel Mortgage, the Lease Assignment, the Real
Property Collateral Mortgage, the Security Agreement, the
Financing Statement and any and all other documents,
instruments and agreements delivered to Agent or Banks to
secure the Loans and/or any other obligations described in
this Agreement, as the foregoing may be amended, modified or
supplemented from time to time.
"Commitments" means, collectively, the Non-Revolving
Commitment and the Revolving Commitment.
"Conversion Date" means April 1, 1997, the date on
which all previously made Non-Revolving Advances shall
automatically convert to a term loan in accordance with
Section 1.1 hereof.
"Credit Facilities" has the meaning ascribed to the
term in Section 1.2 hereof.
"Debt" means: (a) all obligations of Borrower for
borrowed money, (b) all obligations of Borrower evidenced by
bonds, notes, debentures or other similar instruments,
(c) all obligations of Borrower to pay the deferred purchase
price of property or services, except trade accounts payable
by Borrower arising in the ordinary course of business which
are not past due by more than sixty (60) days unless such
trade accounts payable are being contested in good faith by
appropriate proceedings, (d) all obligations of Borrower
under any Capitalized Leases, (e) all obligations of
Borrower under guaranties, endorsements (other than for
collection or deposit in the ordinary course of business),
assumptions or other contingent obligations, in respect of,
or to purchaser or otherwise acquire, any obligation or
indebtedness of Borrower, or any other obligations,
contingent or otherwise, (f) all obligations secured by a
Lien (except trade accounts payable by Borrower arising in
the ordinary course of business which are not past due by
more than sixty (60) days unless such trade accounts payable
are being contested in good faith by appropriate proceedings
secured by a vendor's lien) existing on property owned by
Borrower, whether or not the obligations secured thereby
have been assumed by Borrower or are non-recourse to the
credit of Borrower, (g) all reimbursement obligations of
Borrower, other than performance bonds of Borrower (whether
contingent or otherwise), relating to letters of credit,
bankers' acceptances and similar instruments, and (h) all
liabilities of Borrower in respect of unfunded vested
benefits under any Plan; provided, however, the term "Debt"
shall not include money borrowed by Borrower to pay premiums
on insurance policies obtained by Borrower in the ordinary
course of Borrower's business.
"Debt Service" means, for any period in question, the
sum of (a) all interest due and payable by Borrower to any
Person during such period and (b) the aggregate amount of
all principal due and payable during such period under this
Agreement and any of the other Loan Documents.
"Default Rate" has the meaning ascribed to the term
in Section 3.2 hereof.
"Eligible Receivables" shall mean, as of any date, an
amount equal to the aggregate invoice amount owing on all
trade accounts receivable of Borrower for goods sold, after
deducting each such account that is unpaid ninety (90) days
after the original invoice date thereof.
"Environmental Laws" means any and all federal, state
and local laws, regulations, ordinances, orders and require-
ments pertaining to health, safety or the environment,
including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901 et seq., the Clean Air Act, 42 U.S.C. Section 7401
et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq., the Louisiana Environmental
Quality Act, La. R.S. 30:2001, et seq., and all similar
laws, regulations and requirements of any governmental
authority or agency having jurisdiction over Borrower or any
of its properties or assets, as such laws, regulations and
requirements may be amended or supplemented from time to
time.
"Equipment" means all machinery, equipment, furniture
and furnishings and other property described as "General
Equipment" in the Security Agreement, now or hereafter owned
by Borrower.
"Event of Default" means the occurrence of any event
described in Section 10 hereof or the occurrence of any
other event which with the lapse of time, or lapse of time
and notice to Borrower would constitute an Event of Default.
"Existing Security" means all security granted by
Borrower to Banks pursuant to the Collateral Documents and
other Loan Documents including, without limitation, the
Second Loan Agreement Security and the Third Loan Agreement
Security.
"Financing Statement" means the UCC-1 Financing
Statement referred to in Section 5.1 hereof, as such
instrument may be modified, supplemented and/or amended from
time to time.
"First Amended and Restated Loan Agreement" has the
meaning ascribed to the term in the recitals to this
Agreement.
"First NBC" has the meaning ascribed to the term in
the recitals to this Agreement.
"Fixtures" means any and all goods and other property
that, after placement on the Real Property and/or the GIFI
Property, become component parts thereof.
"FNBC LIBO Rate": with respect to each Interest
Period pertaining to a LIBO Rate Advance, the rate per annum
equal to the rate quoted on page 16 of the Telerate screen
(or such other page as may replace the LIBO page on that
service for displaying London interbank offered rates of
major banks) at approximately 11:00 a.m. New Orleans,
Louisiana time (or as soon thereafter as is practicable) on
the day that is one Business Day prior to the beginning of
such Interest Period for Eurodollar deposit instruments
issued on the first day of such Interest Period for the
number of months comprised therein and in an amount
comparable to the amount of the LIBO Rate Advance to which
such Interest Period applies. The FNBC LIBO Rate determined
by Agent with respect to a particular Interest Period shall
be fixed at such rate for the duration of such Interest
Period.
"Fourth Amended and Restated Loan Agreement" has the
meaning ascribed to the term in the recitals to this
Agreement.
"Fourth Loan Agreement" has the meaning ascribed to
the term in the recitals to this Agreement.
"GAAP" means generally accepted accounting
principles, applied on a consistent basis, as set forth in
Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and/or in
statements of the Financial Accounting Standards Board
and/or their respective successors and which are applicable
in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the
accounting principles observed in a current period are
comparable in all material respects to those accounting
principles applied in a preceding period.
"GIF" has the meaning ascribed to the term on the
first page hereof.
"GIF Collateral Chattel Mortgages" means,
collectively, the Original GIF Collateral Chattel Mortgage
and the Second GIF Collateral Chattel Mortgage.
"GIF Collateral Mortgage" means, collectively, the
GIF Property Collateral Note, the GIF Property Collateral
Mortgage, the GIF Property Pledge Agreement and the GIF
Property First Additional Pledge Agreement referred to in
Section 5.1 hereof, as such instruments may be modified,
supplemented and/or amended from time to time.
"GIF Equipment" means all equipment and other
property described in and subject to the GIF Collateral
Chattel Mortgages.
"GIF Property" means the land, improvements and other
property described in and subject to the GIF Collateral
Mortgage and the Real Property Collateral Mortgage.
"GIFI" has the meaning ascribed to the term on the
first page hereof.
"GIFI Collateral Chattel Mortgage" means collectively
the GIFI Equipment Collateral Note, the GIFI Equipment
Collateral Chattel Mortgage and the GIFI Equipment Pledge
Agreement referred to in Section 5.1 hereof as creating a
first mortgage lien on the GIFI Equipment, as such instru-
ments may be modified, supplemented and/or amended from time
to time.
"GIFI Collateral Mortgage" means that certain Act of
Collateral Mortgage of Borrower, dated July 27, 1989, in
favor of Mortgagee and any and all future holders, recorded
in the mortgage records of Terrebonne Parish, Louisiana, in
Mortgage Book No. 811, folio 158, under Entry No. 850042,
which mortgage has been released by First NBC.
"GIFI Equipment" means the equipment and other
property described in and subject to the GIFI Collateral
Chattel Mortgage and the Security Agreement.
"GIFI Property" means the property heretofore subject
to the GIFI Collateral Mortgage and the property described
on Exhibit "K" hereto.
"Hazardous Substance" has the meaning specified in
any applicable Environmental Law and means any substance,
product, waste, pollutant, material, chemical, contaminant,
constituent or other material which is or becomes listed,
regulated or addressed under any Environmental Law,
including, without limitation, asbestos, petroleum and
polychlorinated biphenyls.
"Interest Period" means with respect to any LIBO Rate
Advance:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be,
with respect to such LIBO Rate Advance and ending
one, two, or three months thereafter, as selected by
Borrower in its notice to Agent of borrowing or
notice of conversion, as the case may be, given with
respect thereto; and
(ii) thereafter, each period commencing on the
day immediately following the last day of the next
preceding Interest Period applicable to such LIBO
Rate Advance and ending one, two or three months
thereafter, as selected by Borrower by notice to
Agent not less than one (1) Business Day prior to the
last day of the then current Interest Period with
respect thereto; and
provided, that:
(x) if any Interest Period would otherwise end
on a day which is not a Business Day, that Interest
Period shall be extended to the next succeeding
Business Day unless the result of such extension
would be to carry such Interest Period into another
calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(y) any Interest Period which, with respect to
a LIBO Rate Advance under the Revolving Credit
Facility, would otherwise extend beyond the
Termination Date shall end on the Termination Date
and any Interest Period which, with respect to a LIBO
Rate Advance under the Term Credit Facility, would
extend beyond the Conversion Date shall end on the
Conversion Date; and
(z) any Interest Period that begins on the
last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a
calendar month.
"Labordes" means, jointly, severally and solidarily,
Margaret Bienvenu, wife of/and Alden J. LaBorde.
"LC Commitment" means the lesser of (a) FIVE MILLION
AND NO/100 DOLLARS ($5,000,000.00) or (b) the Revolving
Commitment at the time in question.
"Lease Assignment" has the meaning ascribed to the
term in Section 5.1 hereof.
"Letters of Credit" has the meaning ascribed to the
term in Section 1.2 hereof.
"LIBO Rate": shall mean with respect to each day
during an Interest Period for a LIBO Rate Advance, an
interest rate per annum equal to the sum of (a) two percent
(2.00%) plus (b) the FNBC LIBO Rate.
"LIBO Rate Advance" means an Advance made under the
Revolving Credit Facility or, until the Conversion Date, the
Term Credit Facility which bears interest at the LIBO Rate.
"Lien" means any lien, judgment, mortgage, deed of
trust, security interest, tax lien, financing statement,
pledge, charge, hypothecation, assignment, preference,
priority or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional
sale or title retention agreement), whether arising by
contract, operation of law or otherwise.
"Loan Agreement" has the meaning ascribed to this
term in the recitals to this Agreement.
"Loan Documents" means collectively this Agreement,
the Notes, the GIF Collateral Mortgage, the GIF Collateral
Chattel Mortgages, the GIFI Collateral Chattel Mortgage, the
Lease Assignment, the Real Property Collateral Mortgage, the
Security Agreement, the Financing Statement and any and all
other documents, instruments and agreements executed in
connection with the Loans, as the foregoing may be modified,
supplemented and/or amended from time to time.
"Loans" means the loans under the Credit Facilities
and "Loan" means any one of the Loans.
"Net Worth" means the sum of the common stock, addi-
tional paid-in capital and retained earnings accounts of
Borrower, as shown in conformity with GAAP on its balance
sheet at the time of such determination, less the amount of
any treasury stock shown thereon and less the amount of any
intangible assets (such as patents, trademarks, copyrights
or goodwill) shown thereon.
"New GIF Equipment" means the equipment and other
property described in and subject to the Second GIF
Collateral Chattel Mortgage.
"Non-Revolving Advance" has the meaning ascribed to
the term in Section 1.1 hereof.
"Non-Revolving Commitment" means $10,000,000.
"Non-Revolving Line of Credit" has the meaning
ascribed to the term in Section 1.1 hereof.
"Notes" means, collectively, the Term Notes and the
Revolving Notes.
"Obligations" means all obligations, indebtedness and
liabilities of Borrower to Agent and/or either or both of
Banks, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several,
including, without limitation, the obligations,
indebtedness, and liabilities of Borrower under this
Agreement, the Notes and the other Loan Documents, and all
interest accruing thereon and all attorneys' fees and other
expenses incurred in the enforcement or collection thereof.
"Original GIF Collateral Chattel Mortgage" means
collectively the Original GIF Equipment Collateral Note, the
Original GIF Equipment Collateral Chattel Mortgage and the
Original GIF Equipment Pledge Agreement referred to in
Section 5.1 hereof as creating a first mortgage lien on the
Original GIF Equipment, as such instruments may be modified,
supplemented and/or amended from time to time.
"Original GIF Equipment" means the equipment and
other property described in and subject to the Original GIF
Collateral Chattel Mortgage and the Second GIF Collateral
Chattel Mortgage.
"Owners" means, collectively, the Labordes and the
Wilsons.
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to all or any of its functions
under ERISA.
"Permitted Liens" has the meaning ascribed to the
term in Section 7.11 hereof.
"Person" means any individual, corporation, business,
trust, association, company, partnership, joint venture,
governmental authority or other entity.
"Plan" has the meaning ascribed to the term in
Section 6.10 hereof.
"Prime Rate" has the meaning ascribed to the term in
Section 3.4 hereof.
"Prime Rate Advance" means an Advance made under the
Revolving Credit Facility or, until the Conversion Date, the
Term Credit Facility which bears interest at the Prime Rate.
"Prior Notes" means, collectively, the promissory
notes executed by Borrower in favor of Banks executed
pursuant to the Fourth Loan Agreement.
"Real Property" means the property described in and
encumbered by the Real Property Collateral Mortgage.
"Real Property Collateral Mortgage" means
collectively the Real Property Collateral Note, the Real
Property Collateral Mortgage and the Property Additional
Pledge Agreement referred to in Section 5.1 hereof, as such
instruments may be modified, supplemented and/or amended
from time to time.
"Revolving Advance" has the meaning ascribed to the
term in Section 1.2 of this Agreement.
"Revolving Commitment" means the lesser of (a) TWELVE
MILLION AND NO/100 DOLLARS ($12,000,000.00) or (b) FOUR
MILLION AND NO/100 DOLLARS ($4,000,000.00) plus the
Borrowing Base at the time in question.
"Revolving Credit Facility" has the meaning ascribed
to the term in Section 1.2 of this Agreement.
"Revolving Notes" has the meaning ascribed to the
term in Section 2.2 of this Agreement.
"Second Amended and Restated Loan Agreement" has the
meaning ascribed to the term in the recitals to this
Agreement.
"Second Loan Agreement Security" has the meaning
ascribed to the term in the recitals of this Agreement.
"Second GIF Collateral Chattel Mortgage" means
collectively the Second GIF Equipment Collateral Note, the
Second GIF Equipment Collateral Chattel Mortgage and the
Second GIF Equipment Pledge Agreement referred to in Section
5.1 hereof as creating a first mortgage lien on the New GIF
Equipment and a second mortgage lien on the Original GIF
Equipment, as such instruments may be modified, supplemented
and/or amended from time to time.
"Security Agreement" means the Security Agreement
referred to in Section 5.1 hereof, as such instrument may be
modified, supplemented and/or amended from time to time.
"Solid Waste" has the meaning specified in any
applicable Environmental Law.
"Term Credit Facility" has the meaning ascribed to
the term in Section 1.1 of this Agreement.
"Term Notes" has the meaning ascribed to the term in
Section 2.1 of this Agreement.
"Term Rate" means the sum of (a) two percent (2.00%)
per annum plus (b) the "ask yield" on United States Treasury
Notes with a maturity of April, 2002 as reported in
Section C of the Wall Street Journal on March 31, 1997 (or,
if the Wall Street Journal does not report the "ask yield"
on such instruments on March 31, 1997, then the "ask yield"
on United States Treasury Notes with a maturity in the next
earlier month which is reported in the Wall Street Journal
on March 31, 1997). The Term Rate shall be determined only
once and, as determined, shall apply throughout the
remaining term of this Agreement.
"Termination Date" means December 31, 1998.
"Third Amended and Restated Loan Agreement" has the
meaning ascribed to the term in the recitals to this
Agreement.
"Third Loan Agreement" has the meaning ascribed to
the term in the recitals to this Agreement.
"Third Loan Agreement Security" has the meaning
ascribed to this term in the recitals to this Agreement.
"UCC" means the Uniform Commercial Code, as in effect
from time to time in each state where any of the Collateral
is located or otherwise has a situs; provided, however, if
the Uniform Commercial Code in no particular state is
ascertainable or applicable, UCC shall mean the Uniform
Commercial Code, as in effect from time to time in the State
of Louisiana.
"Unused Commitment" has the meaning ascribed to the
term in Section 1.2 hereof.
"Whitney" has the meaning ascribed to the term in the
recitals to this Agreement.
"Wilsons" means, jointly, severally and solidarily,
Angelina Mumphrey, wife of/and Huey J. Wilson.
All definitions contained in this Agreement are equally
applicable to the singular and plural forms of the terms defined.
The words "hereof," "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement.
Unless otherwise specified, all Section references pertain to
this Agreement.
12.2 Financial Terms. Unless otherwise defined or the
context otherwise requires, all financial and accounting terms
shall be defined under GAAP.
12.3 Delay. No delay on the part of Banks, Agent or any
holder of any one or more of the Notes, in the exercise of any
power or right shall operate as a waiver thereof, nor shall any
single or partial exercise of any power or right preclude other
or further exercise thereof, or the exercise of any other power
or right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
12.4 Notices. All notices, statements, requests and
demands given to or made under any party hereto in accordance
with the provisions of this Agreement shall be deemed to have
been given or made when deposited in the mail, postage pre-paid,
registered or certified mail return receipt requested, or in the
case of telegraphic notice, when delivered to the telegraph
company, charges prepaid, addressed:
If to Banks:
First National Bank of Commerce
210 Baronne Street
New Orleans, Louisiana 70112
Attention: Mr. J. Charles Freel, Jr.
Vice President
and
Whitney National Bank
228 St. Charles Avenue
New Orleans, Louisiana 70130
Attention: Harry C. Stahel
Senior Vice President
With a copy to:
William H. Hines, Esq.
Jones, Walker, Waechter, Poitevent,
Carrere & Denegre
Place St. Charles
201 St. Charles Avenue
New Orleans, Louisiana 70170
If to Agent:
First National Bank of Commerce
210 Baronne Street
New Orleans, Louisiana 70112
Attention: Mr. J. Charles Freel, Jr.
Vice President
With a copy to:
William H. Hines, Esq.
Jones, Walker, Waechter, Poitevent,
Carrere & Denegre
Place St. Charles
201 St. Charles Avenue
New Orleans, Louisiana 70170
If to Borrower:
Gulf Island Fabrication, Inc.
583 Thompson Road
Houma, Louisiana 70363
Attention: Kerry J. Chauvin, President
or
Gulf Island Fabrication, Inc.
P.O. Box 310
Houma, Louisiana 70361
Attention: Kerry J. Chauvin, President
With respect to notices to Borrower, such notices shall, if
sent by overnight courier or other means requiring a street
address, be sent to the first address provided above. If such
notices are sent by means not requiring a street address, such
notices shall be sent to the second address provided above.
12.5 Expenses. Whether or not the Loans are advanced,
Borrower agrees to reimburse Banks and Agent, upon demand, for
all expenses (including reasonable attorneys' fees and legal
expenses incurred by Banks and/or Agent) incurred by Banks and/or
Agent in the preparation, negotiation and/or execution of the
Loan Documents, and in enforcing the obligations of Borrower
hereunder or under any of the other Loan Documents, and to pay,
and save Banks and Agent harmless from all liability for, any
stamp or other taxes which may be payable with respect to the
execution or delivery of this Agreement, the execution, delivery
or issuance of the Notes, and/or the execution, delivery and
recordation of the other Loan Documents, which obligations of
Borrower shall survive any termination of this Agreement.
12.6 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.7 Counterparts. This Agreement may be executed in as
many counterparts as may be deemed necessary or convenient, and
by the different parties hereto on separate counterparts, each of
which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same instrument.
12.8 Law. The Loan Documents, and each of them, shall be
contracts made under and governed by the laws of the State of
Louisiana.
12.9 Successors. This Agreement shall be binding upon
Borrower, Banks, Agent and their respective successors and
assigns, and shall inure to the benefit of Borrower, Banks and
the successors and assigns of Banks and Agent. Borrower shall
not assign its rights, obligations or duties hereunder or under
any of the Loan Documents without the prior written consent of
Banks. Banks shall give Borrower written notice of any assign-
ment of its interests hereunder to any other Person, upon which
assignment Borrower shall perform all of its respective
obligations under the Loan Documents in favor of Banks'
assignee(s) as though such assignee(s) were originally a party or
parties to this Agreement.
12.10 Amendments. No amendment or waiver of any provision
of this Agreement or consent to any departure therefrom by
Borrower, Banks or Agent shall be effective unless the same shall
be in writing and signed by Borrower, Banks and Agent and, in the
case of a waiver or consent, such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
12.11 Entire Agreement. This Agreement constitutes the en-
tire agreement between the parties and supersedes any and all
prior agreements with respect to the transactions contemplated
hereby.
12.12 Conflicts. This Agreement is in addition to and
supplements the provisions of the other Loan Documents. To the
extent that the provisions of this Agreement are in conflict
with, and not merely in addition to, the provisions of the other
Collateral Documents, the provisions of this Agreement shall
govern.
IN WITNESS WHEREOF, the parties hereto and intervenors
herein have caused this Agreement to be executed by their
respective officers thereunto duly authorized effective as of the
date first written above.
BORROWER:
GULF ISLAND FABRICATION, INC.
By: /s/ Kerry J. Chauvin
------------------------------
Kerry J. Chauvin, President
BANKS:
FIRST NATIONAL BANK OF COMMERCE
By: /s/ J. Charles Freel, Jr.
------------------------------
J. Charles Freel, Jr.,
Vice President
WHITNEY NATIONAL BANK
By: /s/ Harry C. Stahel
-------------------------------
Harry C. Stahel, Senior Vice
President
AGENT:
FIRST NATIONAL BANK OF COMMERCE
By: /s/ J. Charles Freel, Jr.
-------------------------------
J. Charles Freel, Jr.,
Vice President
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 23rd day of October, 1996, before
me, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid, personally
came and appeared KERRY J. CHAUVIN, appearing herein in his
capacity as President of Gulf Island Fabrication, Inc., to me
personally known to be the identical person whose name is
subscribed to the foregoing Fifth Amended and Restated Revolving
Credit and Term Loan Agreement, who declared and acknowledged to
me, Notary, in the presence of the undersigned competent
witnesses, that he executed the same on behalf of said
corporation with full authority of its Board of Directors, and
that the same instrument is the free act and deed of the said
corporation and was executed for the uses, purposes and benefits
therein expressed.
WITNESSES:
/s/ Witness /s/ Kerry J. Chauvin
---------------------------- ---------------------------
KERRY J. CHAUVIN
/s/ Joseph P. Gallagher, III
----------------------------
/s/ Notary Public
----------------------------------
NOTARY PUBLIC
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 24th day of October, 1996, before
me, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid, personally
came and appeared J. CHARLES FREEL, JR., appearing herein in his
capacity as Vice President of First National Bank of Commerce, to
me personally known to be the identical person whose name is sub-
scribed to the foregoing Fifth Amended and Restated Revolving
Credit and Term Loan Agreement, who declared and acknowledged to
me, Notary, in the presence of the undersigned competent
witnesses, that he executed the same on behalf of said national
banking association, appearing in said agreement in its
individual capacity and its capacity as Agent, with full
authority of its Board of Directors, and that the same instrument
is the free act and deed of the said national bank association
and was executed for the uses, purposes and benefits therein
expressed.
WITNESSES:
/s/ Patsy G. Holwadel /s/ J. Charles Freel, Jr.
------------------------- ----------------------------
J. CHARLES FREEL, JR.
/s/ Pamela B. Poteet
-------------------------
/s/ F. Rivers Lelong, Jr.
-------------------------------
NOTARY PUBLIC
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 24th day of October, 1996,
before me, the undersigned authority, duly commissioned,
qualified and sworn within and for the State and Parish
aforesaid, personally came and appeared HARRY C. STAHEL,
appearing herein in his capacity as Senior Vice President of
Whitney National Bank, to me personally known to be the identical
person whose name is subscribed to the foregoing Fifth Amended
and Restated Revolving Credit and Term Loan Agreement, who
declared and acknowledged to me, Notary, in the presence of the
undersigned competent witnesses, that he executed the same on
behalf of said national banking association, appearing in said
agreement in its individual capacity, with full authority of its
Board of Directors, and that the same instrument is the free act
and deed of the said national bank association and was executed
for the uses, purposes and benefits therein expressed.
WITNESSES:
/s/ Patsy G. Holwadel /s/ Harry C. Stahel
-------------------------- ----------------------------
HARRY C. STAHEL
/s/ Pamela B. Poteet
--------------------------
/s/ F. Rivers Lelong, Jr.
---------------------------------
NOTARY PUBLIC
EXHIBITS
A. First NBC's form of Application for Stand-By Letter of
Credit
B. $5,000,000.00 Term Promissory Note made payable to the order
of First NBC
C. $5,000,000.00 Term Promissory Note made payable to the order
of Whitney
D. $6,000,000.00 Revolving Promissory Note made payable to the
order of First NBC
E. $6,000,000.00 Revolving Promissory Note made payable to the
order of Whitney
F. Second Amendment to Collateral Pledge Agreement and Receipt
No. 1000760 (Possessory Collateral Security Agreement) by
and among Borrower, Banks and Agent
G. Second Amendment to Collateral Assignment of Leases and
Rents by Borrower
H. Second Amendment to Security Agreement by and among
Borrower, Banks and Agent
I. Incumbency Certificate
J. Borrower's Default and Warranty Certificate
K. GIFI Property
SCHEDULES
1. List of Borrower's Litigation
FIRST AMENDMENT TO
FIFTH AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT
THIS FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT (this "First Amendment"), dated
effective as of the 2nd day of January, 1997, by and among GULF
ISLAND FABRICATION, INC., a Louisiana corporation ("Borrower"),
WHITNEY NATIONAL BANK, a national banking association
("Whitney"), FIRST NATIONAL BANK OF COMMERCE, a national banking
association, in its individual capacity ("First NBC") (each of
Whitney and First NBC being sometimes referred to individually as
a "Bank" and collectively as the "Banks"), and FIRST NATIONAL
BANK OF COMMERCE, a national banking association, in its capacity
as agent for the Banks as set forth hereinafter (the "Agent").
W I T N E S S E T H:
WHEREAS, Borrower and First NBC entered into that
certain Revolving Credit and Term Loan Agreement dated December 17,
1986 (the "Original Loan Agreement");
WHEREAS, Borrower and First NBC entered into that certain
First Amendment to Revolving Credit and Term Loan Agreement dated
as of November 3, 1987 (the "First Loan Agreement Amendment"),
whereby Borrower and First NBC amended certain terms and
conditions of the Original Loan Agreement;
WHEREAS, Borrower and First NBC entered into that certain
Second Amendment to Revolving Credit and Term Loan Agreement,
dated effective as of December 21, 1987 (the "Second Loan
Agreement Amendment"), whereby Borrower and First NBC further
amended certain terms and conditions of the Original Loan
Agreement;
WHEREAS, Borrower and First NBC entered into that certain
Third Amendment to Revolving Credit and Term Loan Agreement dated
effective as of September 13, 1988 (the "Third Loan Agreement
Amendment"), whereby Borrower and First NBC further amended
certain terms and conditions of the Original Loan Agreement(the
Original Loan Agreement as amended by the First Loan Agreement
Amendment, the Second Loan Agreement Amendment and the Third Loan
Agreement Amendment, the "Loan Agreement");
WHEREAS, Borrower and First NBC entered into that certain
First Amended and Restated Revolving Credit and Term Loan
Agreement dated July 27, 1989, whereby Borrower and First NBC
further amended certain terms and conditions of the Loan
Agreement and restated the Loan Agreement in its entirety (the
"First Amended and Restated Loan Agreement");
WHEREAS, Borrower and First NBC entered into that certain
Second Amended and Restated Revolving Credit and Term Loan
Agreement dated effective as of March 1, 1990, to set forth
further changes in their understanding concerning certain terms
and conditions of the loan made pursuant to the First Amended and
Restated Loan Agreement and to restate the same in its entirety
(the "Second Amended and Restated Loan Agreement");
WHEREAS, pursuant to the terms of that certain Partial
Assignment of Notes and Security Therefor, dated October 29, 1991
(as amended or modified from time to time, the "Assignment"),
First NBC assigned to Whitney an undivided one-half(1/2) interest
in and to the Second Amended and Restated Loan Agreement, all
notes executed by Borrower payable to the order of First NBC
pursuant to the Second Amended and Restated Loan Agreement and
all security for the repayment of such notes, as described in the
Second Amended and Restated Loan Agreement;
WHEREAS, as a result of the Assignment, each Bank acquired
an undivided one-half (1/2) interest in and to the Second Amended
and Restated Loan Agreement and all rights and obligations
described therein or emanating therefrom;
WHEREAS, Borrower, Banks and Agent entered into that certain
Third Amended and Restated Revolving Credit and Term Loan
Agreement, dated effective as of October 29, 1991 (the "Third
Amended and Restated Loan Agreement"), whereby Borrower, Banks
and Agent amended and restated the Second Amended and Restated
Loan Agreement in order to reflect more fully the agreement among
the parties regarding the continuation of the loans made pursuant
thereto;
WHEREAS, Borrower, Banks and Agent entered into that certain
First Amendment to Third Amended and Restated Revolving Credit
and Term Loan Agreement (the "Third Amended and Restated Loan
Agreement Amendment"), whereby Borrower, Banks and Agent amended
certain terms and conditions of the Third Amended and Restated
Loan Agreement;
WHEREAS, Borrower, Banks and Agent entered into that certain
Fourth Amended and Restated Revolving Credit Agreement, dated
effective as of February 25, 1993 (the "Fourth Amended and
Restated Credit Agreement"), whereby Borrower, Banks and Agent
amended and restated the Third Amended and Restated Loan
Agreement, as amended by the Third Amended and Restated Loan
Agreement Amendment, in order to reflect more fully the agreement
among the parties regarding the continuation of the loans made
pursuant thereto;
WHEREAS, Borrower, Banks and Agent entered into four subse-
quent amendments to the Fourth Amended and Restated Revolving
Credit Agreement, dated respectively effective as of February 25,
1993, April 20, 1994, June 26, 1995 and May 1, 1996
(collectively, the "Amendments to the Fourth Amended and Restated
Credit Agreement");
WHEREAS, Borrower, Banks and Agent entered into that certain
Fifth Amended and Restated Revolving Credit and Term Loan
Agreement, dated effective as of October 24, 1996 (the "Fifth
Amended and Restated Credit Agreement"), whereby Borrower, Banks
and Agent amended and restated the Fourth Amended and Restated
Loan Agreement, as previously amended by the Amendments to the
Fourth Amended and Restated Credit Agreement, and added a
$10,000,000 term loan facility;
WHEREAS, Borrower, Banks and Agent desire to amend the Fifth
Amended and Restated Credit Agreement to increase the term loan
facility by $5,000,000, to permit Borrower to acquire Dolphin
Services, Inc., Dolphin Steel Sales, Inc., and Dolphin Sales &
Rentals, Inc., and to extend the maturity date of the Term Credit
Facility under the Fifth Amended and Restated Credit Agreement;
NOW, THEREFORE, for and in consideration of the mutual cove-
nants, agreements and undertakings herein contained, Banks, Agent
and Borrower hereby agree as follows:
ARTICLE I
AMENDMENTS TO FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
1. Section 1. Section 1 of the Fifth Amended and Restated
Credit Agreement is hereby amended by deleting the amount
"TWENTY-TWO MILLION AND NO/100 DOLLARS ($22,000,000.00)" from the
final sentence thereof and inserting in its place the amount
"TWENTY-SEVEN MILLION AND NO/100 DOLLARS ($27,000,000.00)".
2. Section 1.1. Section 1.1 of the Fifth Amended and
Restated Credit Agreement is hereby amended in its entirety to
state:
1.1 Term Credit Facility. Banks shall
make available to Borrower a non-revolving
line of credit in the maximum aggregate
principal amount of FIFTEEN MILLION AND
NO/100 DOLLARS ($15,000,000.00) (the "Non-
Revolving Line of Credit"), which Non-
Revolving Line of Credit may be drawn upon by
Borrower on any Business Day of Banks during
the period from the date hereof until and
including June 30, 1997, or such earlier date
as may be fixed by Borrower on at least one
(1) Business Day's telephonic notice to
Agent, to be confirmed in writing by
Borrower, in the form of actual fundings to
Borrower by Banks in such amounts as Borrower
may from time to time request (each such
funding being hereinafter referred to
individually as a "Non-Revolving Advance" and
collectively as the "Non-Revolving
Advances"), so long as the aggregate
principal amount of all outstanding Non-
Revolving Advances at any one time does not
exceed the Non-Revolving Commitment. On
July 1, 1997, all of Banks' obligations to
make Non-Revolving Advances on the Non-
Revolving Line of Credit shall cease, and
shall automatically, without the necessity of
any further act on the part of Banks, Agent
or Borrower, convert to a term loan in a
principal amount equal to the aggregate
amount of all Non-Revolving Advances made by
Banks to Borrower during the period from
October 24, 1996 until and including June 30,
1997. All Non-Revolving Advances repaid on
the Non-Revolving Line of Credit shall not
be reborrowed but shall reduce the Non-
Revolving Commitment on a dollar-for-dollar
basis. The credit facility described in this
Section 1.1 is hereinafter referred to as the
"Term Credit Facility".
3. Section 2.1. Section 2.1 of the Fifth Amended and
Restated Credit Agreement is hereby amended in its entirety to
state:
2.1 Term Notes. The Non-Revolving Advances
shall be evidenced by two (2) promissory notes of Bor-
rower payable to the order of First NBC and Whitney,
respectively, each in the original principal amount of
SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($7,500,000.00) and in the forms set forth as Exhibits
"B" and "C" to this Agreement (each such note, together
with any and all renewals, modifications, extensions,
amendments, supplements and/or substitutions therefor,
being sometimes referred to herein individually as a
"Term Note" and collectively as the "Term Notes"), with
appropriate insertions, each of which shall be dated
January 2, 1997 and shall be payable in full on June
30, 2004. All Non-Revolving Advances made by Banks to
Borrower pursuant to this Agreement and all payments of
principal shall be recorded by Banks on the schedule
attached to each Term Note, but Banks' failure to
record or to record correctly such Non-Revolving
Advances shall in no way affect Borrower's obligation
to repay same. Each Term Note shall provide for
quarterly installments of principal commencing
September 30, 1997, each in an amount equal to one-
twenty-eighth (1/28th) of the aggregate amount of all
Non-Revolving Advances made by Banks to Borrower during
the period from October 24, 1996 through and including
June 30, 1997.
4. Section 3.1. The penultimate sentence of Section 3.1
of the Fifth Amended and Restated Credit Agreement is hereby
amended by replacing "December 31, 1996 and March 31, 1996" with
the phrase "December 31, 1996, March 31, 1997, and June 30,
1997".
5. Section 5.1. New Sections 5.1(c) and 5.1(d) are hereby
added to the Fifth Amended and Restated Credit Agreement to
state:
(c) As of January 2, 1997, Borrower has granted to
First NBC, as Agent for Banks, as security for the
Notes and other Obligations, a first priority security
interest in all capital stock of Dolphin Sales &
Rentals, Inc. ("Dolphin Sales"), Dolphin Steel Sales,
Inc. ("Dolphin Steel"), and Dolphin Services, Inc.
("Dolphin Services"), as evidenced by (i) that certain
Commercial Pledge and Security Agreement, dated
January 2, 1997, by Borrower, as pledgor, in favor of
First NBC, as Agent for Banks, as pledgee (the "Stock
Pledge") and (ii) that certain UCC-1 Financing
Statement by Borrower (the "Stock Pledge Financing
Statement"). Dolphin Sales, Dolphin Steel, and Dolphin
Services shall be referred to collectively as the
"Dolphin Companies", and each such company may be
referred to generically as a "Dolphin Company".
(d) As of January 2, 1997, Borrower has caused the
Dolphin Companies to guarantee the Notes and Borrower's
other Obligations to Banks and to grant mortgages on
their respective immovable properties (collectively,
the "Dolphin Real Estate") and a security interest in
their respective Equipment and Fixtures as security for
the aforesaid guaranties and as direct security for the
Notes and Borrower's other Obligations to Banks, as
evidenced by:
(i) That certain Commercial Guaranty by Dolphin
Sales, dated January 2, 1997, in favor of
First NBC, as Agent for Banks, which secures
the Notes and Borrower's other Obligations to
Banks (the "Dolphin Sales Guaranty");
(ii) That certain Commercial Guaranty by Dolphin
Steel, dated January 2, 1997, in favor of
First NBC, as Agent for Banks, which secures
the Notes and Borrower's other Obligations to
Banks (the "Dolphin Steel Guaranty");
(iii) That certain Commercial Guaranty by Dolphin
Services, dated January 2, 1997, in favor of
First NBC, as Agent for Banks, which secures
the Notes and Borrower's other Obligations to
Banks (the "Dolphin Services Guaranty");
(iv) That certain Collateral Mortgage Note by
Dolphin Sales, dated January 2, 1997, in the
principal sum of $3,000,000.00, bearing
interest at the rate of eighteen percent
(18%) per annum, from date until paid, and
payable to the order of Bearer (the "Dolphin
Sales Note");
(v) That certain Collateral Mortgage by Dolphin
Sales, dated January 2, 1997, in favor of
First NBC, as Agent for Banks, and any and
all future holders, which mortgage encumbers
Dolphin Sales' immovable property in
Terrebonne Parish, Louisiana more fully
described on Exhibit "L" to this Agreement
(the "Dolphin Sales Real Estate") and secures
the Dolphin Sales Note (the "Dolphin Sales
Mortgage");
(vi) That certain Pledge of Collateral Mortgage
Note, dated January 2, 1997, by Dolphin
Sales to First NBC, as Agent for Banks, with
respect to the Dolphin Sales Note, which
secures the Notes, Borrower's other
Obligations to Banks, and the Dolphin Sales
Guaranty (the "Dolphin Sales Pledge");
(vii) That certain Collateral Mortgage Note by
Dolphin Services, dated January 2, 1997, in
the principal sum of $3,000,000.00, bearing
interest at the rate of eighteen percent
(18%) per annum, from date until paid, and
payable to the order of Bearer (the "Dolphin
Services Note");
(viii) That certain Collateral Mortgage by Dolphin
Services, dated January 2, 1997, in favor of
First NBC, as Agent for Banks, and any and
all future holders, which mortgage encumbers
Dolphin Services' immovable property in
Terrebonne Parish, Louisiana more fully
described on Exhibit "M" to this Agreement
(the "Dolphin Services Real Estate") and
secures the Dolphin Services Note (the
"Dolphin Services Mortgage");
(ix) That certain Pledge of Collateral Mortgage
Note, dated January 2, 1997, by Dolphin
Services to First NBC, as Agent for Banks,
with respect to the Dolphin Services Note,
which secures the Notes, Borrower's other
Obligations to Banks, and the Dolphin
Services Guaranty (the "Dolphin Services
Pledge");
(x) That certain Commercial Security Agreement,
dated January 2, 1997, by Dolphin Sales, as
grantor, in favor of First NBC, as Agent for
Banks, creating a security interest in
Dolphin Sales' Equipment and Fixtures, as
security for the Notes, Borrower's other
Obligations to Banks, and the Dolphin Sales
Guaranty (the "Dolphin Sales Security
Agreement");
(xi) A UCC-1 Financing Statement executed by
Dolphin Sales in connection with the Dolphin
Sales Security Agreement;
(xii) That certain Commercial Security Agreement,
dated January 2, 1997, by Dolphin Steel, as
grantor, in favor of First NBC, as Agent for
Banks, creating a security interest in
Dolphin Steel's Equipment and Fixtures, as
security for the Notes, Borrower's other
Obligations to Banks, and the Dolphin Steel
Guaranty (the "Dolphin Steel Security
Agreement");
(xiii) A UCC-1 Financing Statement executed by
Dolphin Steel in connection with the Dolphin
Steel Security Agreement;
(xiv) That certain Commercial Security Agreement,
dated January 2, 1997, by Dolphin Services,
as grantor, in favor of First NBC, as Agent
for Banks, creating a security interest in
Dolphin Services' Equipment and Fixtures, as
security for the Notes, Borrower's other
Obligations to Banks, and the Dolphin
Services Guaranty (the "Dolphin Services
Security Agreement"); and
(xv) A UCC-1 Financing Statement executed by
Dolphin Services in connection with the
Dolphin Services Security Agreement.
6. Section 6. Section 6 of the Fifth Amended and Restated
Credit Agreement is hereby amended in its entirety to state:
Section 6.Representations and Warranties of Borrower.
Borrower represents and warrants to Banks and Agent
that:
6.1 Corporate Existence. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Louisiana; and each of Borrower and its
Subsidiaries has all necessary corporate power and
authority to acquire, own and hold the property and all
other properties it purports to own and hold and to
carry on its business as now conducted.
6.2 Authorization; Validity. Each of Borrower and
its Subsidiaries is and/or has been duly authorized to
execute and deliver this Agreement and all other Loan
Documents to which such Borrower or Subsidiary is a
party and to perform its obligations under this
Agreement and all other Loan Documents to which such
Borrower or Subsidiary is a party. Borrower is duly
authorized and will continue to be duly authorized to
borrow money hereunder. Each of this Agreement and the
other Loan Documents to which Borrower or one of its
Subsidiaries is a party, as executed and delivered,
constitutes the legal, valid and binding obligation of
Borrower and/or such Subsidiary, enforceable in
accordance with the respective terms thereof.
6.3 No Conflicts. The execution and delivery of
the Loan Documents and the performance by each of
Borrower and its Subsidiaries of its obligations there-
under do not and will not conflict with any provision
of law or of the charter or by-laws of Borrower or such
Subsidiary or of any agreement binding upon Borrower or
such Subsidiary, as the case may be.
6.4 Financial Statements. Borrower's audited
financial statement as of December 31, 1995, a copy of
which has been furnished to Banks, has been prepared in
conformity with GAAP applied on a basis consistent with
that of the preceding fiscal year and period, presents
fairly the financial condition of Borrower as of such
date and the results of its operations for the periods
then ended. Borrower's unaudited financial statement
as of September 30, 1996, a copy of which has been
previously furnished to Banks, except for the absence
of footnotes normally associated with financial
statements prepared in accordance with GAAP, has been
prepared in conformity with GAAP and presents fairly
the financial condition of Borrower as of such date and
the results of its operations for the periods then
ended. Since December 31, 1995, there has been no
material adverse change in Borrower's financial
condition. Since December 31, 1996, there has been no
material adverse change in the financial condition of
any of Borrower's Subsidiaries.
6.5 Litigation. To the best of Borrower's
knowledge, after due inquiry, no litigation or
governmental proceedings are pending or threatened
against Borrower or any of its Subsidiaries, the
results of which might materially affect Borrower's or
such Subsidiary's financial condition or operations,
except those referred to in a schedule furnished
contemporaneously herewith and attached hereto as
Schedule 1. Other than any liability incident to such
litigation or proceedings or provided for or disclosed
in the financial statements referred to in Section 6.4,
Borrower does not have any material contingent
liabilities. No Subsidiary has any material contingent
liability other than those imposed by the Dolphin
Guaranties and the other Dolphin Security Instruments.
6.6 Liens. None of the assets of Borrower or any
of its Subsidiaries with a net book value of greater
than $25,000.00 is subject to any Lien, except for the
Liens created pursuant to the Collateral Documents and
Permitted Liens.
6.7 Subsidiaries. Borrower has no Subsidiaries
other than the Dolphin Companies, and no Dolphin
Company has any Subsidiaries.
6.8 Purpose. The proceeds of the Revolving Credit
Facility shall be used by Borrower only for the support
of working capital and for other general corporate
purposes. The proceeds of the Term Credit Facility
shall be used by Borrower only to make capital
improvements to the Real Property, to acquire
additional Equipment to be located on the Real Property
or on the Dolphin Real Estate, and to fund Borrower's
acquisition of the Dolphin Companies.
6.9 Use of Proceeds; Margin Securities. Borrower
is not engaged in the business of purchasing or selling
margin stock (as defined in Regulation U of the Board
of Governors of the Federal Reserve System) or
extending credit to others for the purpose of purchas-
ing or carrying margin stock and, without limiting the
generality of Section 6.8 hereof, no part of the
proceeds of any borrowing hereunder will be used to
purchase or carry any margin stock or for any other
purpose which would violate any of the margin
regulations of such Board of Governors.
6.10 Compliance with ERISA. Each of Borrower and
its Subsidiaries is in compliance with all statutes and
governmental rules and regulations applicable to it,
including, without limitation, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). No
condition exists or event or transaction has occurred
in connection with any plan, as defined in Sections
3(3) and 3(37) of ERISA, maintained by Borrower or any
of its Subsidiaries (any such plan being hereinafter
called the "Plan"), which could result in Borrower's or
such Subsidiary's incurring any material liability,
fine or penalty. No Reportable Event (as defined in
ERISA) has occurred with respect to any such Plan.
Neither Borrower nor any of its Subsidiaries has
withdrawn from any such Plan or initiated steps to do
so and no steps have been taken to terminate any such
Plan.
6.11 Consents. No consent, approval or
authorization of, or registration or declaration with,
any federal or state governmental authority or other
regulatory agent for the validity of the execution and
delivery or for the performance by Borrower or any of
its Subsidiaries of the Loan Documents is required.
6.12 Tax Returns. Each of Borrower and its
Subsidiaries has filed all tax returns which are
required to be filed by any jurisdiction, and has paid
all taxes which have become due pursuant to said
returns or pursuant to any assessments.
6.13 Ownership of Borrower and Subsidiaries. No
less than forty-five percent (45%) of the issued and
outstanding stock of Borrower is owned by the Labordes
and no less than forty-five percent (45%) of the issued
and outstanding stock of Borrower is owned by the
Wilsons. Borrower owns one hundred percent (100%) of
the issued and outstanding stock of each Dolphin
Company.
6.14 Operation of Business. Each of Borrower and
its Subsidiaries possesses all licenses, permits,
franchises, patents, copyrights, trademarks and trade
names, or rights thereto, to conduct its business
substantially as now conducted and as presently
proposed to be conducted, and neither Borrower nor any
of its Subsidiaries is in violation of any valid
rights of others with respect to any of the foregoing.
6.15 Rights in Properties; Liens. Each of
Borrower and its Subsidiaries has good and indefeasible
title to its properties and assets, real and personal,
including the properties and assets reflected in the
financial statements described in Section 6.4 hereof,
and none of the properties, assets or leasehold
interests of Borrower or any Subsidiary is subject to
any Lien, except as permitted by Section 7.11 hereof.
6.16 Debt. Borrower has no Debt, except as
disclosed in the financial statements described in
Section 6.4 hereof and as otherwise permitted by this
Agreement. No Subsidiary of Borrower has any Debt
except as owed to Borrower or as otherwise permitted by
this Agreement.
6.17 Disclosure. No statement, information,
report, representation or warranty made by Borrower or
any of its Subsidiaries in this Agreement or in any of
the other Loan Documents or furnished by Borrower or
any of its Subsidiaries to Banks or Agent in connection
with the negotiation or preparation of this Agreement,
or any amendment hereto, contains any untrue statement
of a material fact or omits to state any material fact
necessary to make the statements herein or therein not
misleading. There is no fact known to Borrower or to
any of its Subsidiaries that has not been disclosed in
writing to Banks which has a material adverse effect,
or which might in the future have a material adverse
effect, on the business, assets, financial condition or
operations of Borrower, any of its Subsidiaries or on
the Collateral.
6.18 Registered Office; Principal Place of
Business; Location of Collateral. The principal place
of business, chief executive office and registered
office of Borrower and the place where Borrower keeps
its books and records and all Collateral is located on
the Real Property. The principal place of business,
chief executive office and registered office of each of
the Dolphin Companies and the place where each of the
Dolphin Companies keeps its books and records and all
collateral encumbered by the Dolphin Security
Agreements is located in Terrebonne Parish, Louisiana
(with the exception of certain collateral encumbered by
the Dolphin Security Agreements which is, from time to
time and in the ordinary course of the Dolphin
Companies' businesses, temporarily located at job sites
outside of Terrebonne Parish). Borrower has always
maintained its registered office in either Terrebonne
or East Baton Rouge Parish, Louisiana, and each of the
Dolphin Companies has always maintained its registered
office in Terrebonne Parish, Louisiana. Neither
Borrower nor any of its Subsidiaries does, or has ever
done, any business from any location other than as set
forth in this Section. No Person other than Borrower,
the Dolphin Companies, Agent and Banks has possession
of any of the Collateral.
6.19 Investment Company Act. Neither Borrower nor
any of its Subsidiaries is an "Investment Company"
within the meaning of the Investment Company Act of
1940, as amended.
6.20 Other Agreements. With the exception of
construction contracts entered into by Borrower or one
of its Subsidiaries in the ordinary course of
Borrower's or such Subsidiary's business, neither
Borrower nor any of its Subsidiaries is a party to any
indenture, loan or credit agreement, or to any lease or
other agreement or instrument, or subject to any
charter of corporate restriction which could have a
material adverse effect on the business, properties,
assets, operations or conditions, financial or
otherwise, of Borrower or such Subsidiary, or the
ability of Borrower or such Subsidiary to pay and
perform its obligations under the Loan Documents to
which it is a party. Neither Borrower nor any of its
Subsidiaries is in default in any respect in the
performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any
agreement or instrument material to its business to
which it is a party.
6.21 Compliance with Law. Each of Borrower and
its Subsidiaries is in compliance with all laws, rules,
regulations, orders and decrees which are applicable to
Borrower, its Subsidiaries or any of their respective
properties. Without limiting the generality of the
foregoing:
(a) Employment Matters. Each of Borrower and its
Subsidiaries is in full compliance with all
applicable laws, rules, regulations and
governmental standards regarding employment,
including, without limitation, the minimum
wage and overtime provisions of the Fair
Labor Standards Act, as amended (29 U.S.C.
Sections 201 - 219 ), and the regulations
promulgated thereunder.
(b) Environmental Matters.
(i) Each of Borrower and its Subsidiaries and
all of their respective properties, assets
and operations are in full compliance with
all Environmental Laws. Neither Borrower nor
any of its Subsidiaries is aware of or has
received notice of, any past, present or
future conditions, events, activities,
practices or incidents which may interfere
with or prevent the compliance or continued
compliance of Borrower or any of its
Subsidiaries with all Environmental Laws.
(ii) With the exception of the permits
specifically referred to in Section 7.8
hereof, each of which Borrower or its
Subsidiaries shall obtain and/or file, as the
case may be, in accordance with the terms of
Section 7.8, each of Borrower and its
Subsidiaries has obtained all permits, licen-
ses and authorizations and has filed all
plans which are required under Environmental
Laws in order to conduct its business and/or
own its properties and assets including
without limitation all Louisiana air emission
permits required under any Environmental Law
in order to conduct Borrower's or such
Subsidiary's business and/or own its assets
or properties.
(iii) Each of Borrower and its Subsidiaries has on
file an SPCC Plan as required under
applicable Environmental Laws in connection
with Borrower's storage of petroleum on the
Real Property or, if applicable, in
connection with a Subsidiary's storage of
petroleum on its immovable property.
(iv) No Hazardous Substances or Solid Wastes exist
on, about or within or have been used,
generated, stored, transported, disposed of
on, or released from any of the properties or
assets of Borrower or any of its Subsidiaries
except in compliance with Environmental Laws.
(v) There is no action, suit, proceeding,
investigation or inquiry before any court,
administrative agency or other governmental
authority pending or, to the knowledge of
Borrower or any of its Subsidiaries,
threatened against Borrower or any of its
Subsidiaries relating in any way to any
Environmental Law. Neither Borrower nor any
of its Subsidiaries has (A) been notified of
any liability for remedial action under any
Environmental Law, (B) received any request
for information by any governmental authority
with respect to the condition, use or
operation of any of its properties or assets,
or (C) received any notice from any
governmental authority or other Person with
respect to any violation of or liability
under any Environmental Law.
6.22 Corporate Name. The exact corporate name of
Borrower as it appears in its articles of incorporation
is as set forth in the introduction of this Agreement
and, with the exception of doing business under the
name GIFI, Inc., Borrower has never done any business
in any location under any other name. The exact
corporate name of each Dolphin Company as it appears in
its articles of incorporation is as set forth in
Section 5.1(c) of this Agreement, and no Dolphin
Company has ever done any business in any location
under any other name.
6.23 Collateral. The Collateral Documents create
in favor of Banks, and/or Agent for the benefit of
Banks, valid, enforceable and perfected Liens on the
properties described therein, which Liens secure the
payment and performance of the obligations of Borrower
and its Subsidiaries to Banks described in the
Collateral Documents, and which Liens are superior to
the rights of all third Persons, whether now existing
or hereafter arising.
6.24 Taxpayer I.D. Numbers. Borrower's Federal
Taxpayer Identification Number is 72-1147390. Dolphin
Services' Federal Taxpayer Identification Number is 72-
0890896; Dolphin Sales' Federal Taxpayer Identification
Number is 72-1092285; and Dolphin Steel's Federal
Taxpayer Identification Number is 72-1092757.
7. Section 7. Section 7 of the Fifth Amended and Restated
Credit Agreement is hereby amended in its entirety to state:
Section 7. Borrower's Covenants.
From the date of this Agreement and thereafter
until the expiration or termination of the Commitments,
and until the Notes and other liabilities of Borrower
hereunder are paid in full and all other obligations
and liabilities under the Loan Documents are performed
and paid in full, Borrower agrees that it will:
7.1 Financial Statements. Furnish to Agent:
(a) within one hundred twenty (120) days
after the end of each fiscal year, a
copy of Borrower's financial statements
(describing assets, liabilities, and
results of operations both for Borrower
individually and for Borrower and its
Subsidiaries on a consolidated basis),
audited by independent certified public
accountants of nationally recognized
standing selected by Borrower and
reasonably satisfactory to Banks,
prepared in conformity with GAAP;
(b) within forty-five (45) days after the
end of each month, a copy of Borrower's
unaudited financial statements
(describing assets, liabilities, and
results of operations both for Borrower
individually and for Borrower and its
Subsidiaries on a consolidated basis)
prepared in conformity with GAAP, except
for the absence of footnotes normally
associated with financial statements
prepared in accordance with GAAP;
(c) together with the financial statements
furnished by Borrower under preceding
clause (a), a certificate of the
president or chief financial officer of
Borrower to the effect that no Event of
Default with respect to Borrower, or
event which might mature into an Event
of Default with respect to Borrower, has
occurred and is continuing;
(d) forthwith upon the occurrence of an
Event of Default, a certificate of the
president or chief financial officer of
Borrower specifying the nature and the
period of existence thereof and what
action Borrower proposes to take with
respect thereto;
(e) written notice of any and all litigation
affecting Borrower or any of its
Subsidiaries, directly or indirectly;
provided, however, this requirement
shall not apply to litigation involving
Borrower or one of its Subsidiaries and
any other party if such litigation
involves, in the aggregate, less than
$100,000.00;
(f) prompt notice of any change in the
present officers, directors and/or
stockholders of Borrower or any of its
Subsidiaries; and
(g) from time to time, such other
information as Banks may reasonably
request.
7.2 Access. Permit access, and cause its
Subsidiaries to permit access, by Banks and Agent to
the books and records and other property of Borrower
and its Subsidiaries during normal business hours and
upon reasonable notice and permit, and cause its
Subsidiaries to permit, Banks to make copies of said
books and records.
7.3 Insurance. Maintain, and cause its
Subsidiaries to maintain, with financially sound and
reputable insurance companies workmen's compensation
insurance, liability insurance and insurance on
Borrower's and its Subsidiaries' property, assets and
business at least to such extent and against such
hazards and liabilities as is commonly maintained by
similar companies and, in addition to the foregoing
insurance, such insurance as may be required in the
Collateral Documents. In the case of property (whether
owned by Borrower or by one of its Subsidiaries) in
which Banks or Agent has a Lien, Borrower shall
provide, and shall cause its Subsidiaries to provide,
Agent with duplicate originals or certified copies of
such policies of insurance in such forms and amounts,
and containing such terms and conditions, as are
satisfactory to Banks, naming Banks as additional loss
payees and as additional insureds as their interests
may appear and providing that such policies will not be
canceled without thirty (30) days' prior written notice
to Banks.
7.4 Repair. Maintain, preserve and keep, and
cause its Subsidiaries to maintain, preserve, and keep,
Borrower's and such Subsidiaries' properties in good
repair, working order and condition, and make, and
cause its Subsidiaries to make, necessary and proper
repairs, renewals and replacements so that Borrower's
and its Subsidiaries' business carried on in connection
therewith may be properly conducted at all times.
7.5 Taxes. Pay or discharge, and cause its
Subsidiaries to pay and discharge, at or before
maturity or before becoming delinquent (a) all taxes,
levies, assessments and governmental charges imposed on
Borrower or any of its Subsidiaries or its income or
profits or any of its property, and (b) all lawful
claims for labor, materials and supplies which, if
unpaid, might become a Lien upon any of Borrower's
property or the property of any of its Subsidiaries;
provided, however, that neither Borrower nor any
Subsidiary shall be required to pay or discharge any
tax, levy, assessment or governmental charge which is
being contested in good faith by appropriate
proceedings diligently pursued.
7.6 Corporate Existence. Maintain its corporate
existence in good standing and cause its Subsidiaries
to maintain their respective corporate existences in
good standing.
7.7 Merger. Without the prior written consent of
Banks, not, and cause each of its Subsidiaries not to:
(a) be a party to any merger or
consolidation (other than a merger of
one or more of the Dolphin Companies
into another Dolphin Company or a merger
of one or more of the Dolphin Companies
into Borrower, in either event followed
by notice to Banks of the merger
delivered within ten (10) days after the
merger becomes effective);
(b) except in the normal course of its
business, sell, transfer, convey, or
lease all or any substantial part of
Borrower's or a Subsidiary's assets;
(c) sell or assign, except in the normal
course of Borrower's business or the
business of one of its Subsidiaries,
with or without recourse, any accounts
receivable or chattel paper.
7.8 Compliance. Comply, and cause its
Subsidiaries to comply, with all statutes, laws, ordi-
nances, orders, rules and regulations applicable to
Borrower or such Subsidiary, including, without
limitation, all Environmental Laws and ERISA; provided,
however, Borrower and its Subsidiaries shall be deemed
to be in compliance with this requirement for such time
as Borrower or one of its Subsidiaries may be
contesting, in good faith and with diligence by
appropriate proceedings, any alleged violation of any
statute, rule or regulation. Borrower shall not
permit, and shall cause each of its Subsidiaries not to
permit, any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to
institute proceedings to have such Plan terminated or a
trustee appointed to administer such Plan, and Borrower
shall not engage in, or permit to exist or occur, and
shall cause its Subsidiaries not to engage in or permit
to occur or exist, any other condition, event or
transaction with respect to, any such Plan which could
result in Borrower or one of its Subsidiaries incurring
any material liability, fine or penalty.
Without limiting the generality of the foregoing,
Borrower shall comply, and shall cause each of its
Subsidiaries to comply, fully with and maintain in
effect any and all environmental permits and licenses
required under any Environmental Law in order to
conduct Borrower's or such Subsidiary's business. To
the extent such permits are required but have not been
obtained, or to the extent such existing permits must
be modified or renewed, Borrower shall make, and shall
cause its Subsidiaries to make, timely application for
and obtain all such permits, modifications or renewals
thereof, as the case may be, including, but not limited
to, necessary federal and/or state water discharge, air
emission and waste management permits.
As often as Banks or Agent may require, Borrower
shall submit to Agent written progress reports
addressing the status of environmental permits and
plans required of Borrower or any of its Subsidiaries,
including pending permit applications. All permits
required hereunder shall be obtained and/or filed, as
the case may be, within six (6) months from the
effective date hereof.
Anything contained herein to the contrary
notwithstanding, Borrower shall not use, or permit any
of its Subsidiaries to use, any of the properties of
Borrower or of one of Borrower's Subsidiaries or allow
such properties to be used for the storage, treatment
or disposal of Solid Waste or Hazardous Substances
except in the ordinary course of Borrower's or such
Subsidiary's business and in compliance with the terms
or any applicable Environmental Law or permit.
7.9 Use of Proceeds. Not use or permit any
proceeds of the Loans to be used, either directly or
indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any
margin stock" within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System, as
amended from time to time, and furnish to Banks, upon
either of their requests, a statement in conformity
with the requirements of Federal Reserve Form U-1
referred to in Regulation U of the Board of Governors
of the Federal Reserve System.
7.10 Financial Covenants. Maintain, on a
consolidated basis with all of its Subsidiaries,
(a) a ratio of current assets to current
liabilities, as determined in accordance
with GAAP, in excess of 1.33 to 1;
(b) a minimum Net Worth of NINETEEN MILLION
AND NO/100 DOLLARS ($19,000,000.00) for
the period commencing September 30, 1996
and ending December 31, 1997; a minimum
Net Worth of TWENTY-ONE MILLION AND
NO/100 DOLLARS ($21,000,000.00) for the
period January 1, 1998 through
December 31, 1998, and a minimum Net
Worth of TWENTY-THREE MILLION AND NO/100
DOLLARS ($23,000,000.00) from and
including January 1, 1999 and
thereafter;
(c) a ratio of Debt to Net Worth no greater
than 1.1 to 1; and
(d) a ratio of Cash Flow to Debt Service of
at least 1.5 to 1, such ratio to be
determined as of the end of each fiscal
quarter by giving effect to such fiscal
quarter and the three (3) immediately
preceding fiscal quarters; provided that
there shall be no Event of Default under
this Section 7.10(d) unless Borrower
fails to meet the ratio described in
this Section 7.10(d) for three (3)
successive fiscal quarters.
7.11 Liens. Not create, incur, or suffer to
exist, and not permit any of Borrower's Subsidiaries to
create, incur or suffer to exist, any Lien on any of
Borrower's property or on the property of Borrower's
Subsidiaries except ((a) through (g) of this Section
being referred to collectively as the "Permitted
Liens"):
(a) those for taxes, assessments or
governmental charges or levies if the
same shall not at the time be delinquent
or thereafter can be paid without
penalty, or are being contested in good
faith and by appropriate proceedings;
(b) those imposed by law, such as carriers',
warehousemen's and mechanics' liens and
other similar liens arising in the
ordinary course of business which secure
payment of obligations not more than
sixty (60) days past due;
(c) those arising out of pledges or deposits
under workmen's compensation laws,
unemployment insurance, old age
pensions, or other social security or
retirement benefits, or similar
legislation;
(d) utility easements, building restrictions
and such other encumbrances or charges
against real property as are of a nature
generally existing with respect to
properties of a similar character and
which do not in any material way affect
the marketability of the same or
interfere with the use thereof in the
business of Borrower or of any of
Borrower's Subsidiaries;
(e) lessors' interests under financing
leases;
(f) liens on assets of Borrower and its
Subsidiaries not covered by the Loan
Documents which liens secure obligations
of Borrower or its Subsidiaries in the
ordinary course of business which in the
aggregate for all such obligations of
Borrower and its Subsidiaries do not
exceed $250,000.00; and
(g) the Liens created pursuant to the Loan
Documents.
7.12 Debt. Not create or permit to exist, and not
allow any of Borrower's Subsidiaries to create or
permit to exist, any Debt without the prior written
consent of Banks, if, as a result thereof, exclusive of
the indebtedness contemplated by this Agreement, the
aggregate amount of Debt of Borrower and its
Subsidiaries would exceed the sum of $250,000.00;
provided, however, that any Subsidiary may incur Debt
owed to Borrower and such Debt owed to Borrower shall
not be included in the $250,000.00 limit.
7.13 Redemptions, etc. Not, without the prior
written approval of Banks: (1) redeem, purchase or
acquire, directly or indirectly, any of Borrower's
stock; (2) authorize or issue additional stock in
Borrower of any class; (3) authorize any new class of
stock in Borrower; (4) authorize any currently existing
or new classes of stock in Borrower to become voting
stock; or (5) sell or transfer any treasury shares of
stock in Borrower. Provided, however, subparts (2)
through (5) of this Section 7.13 shall not apply except
to the extent that as a result thereof either (a) the
Labordes would fail to retain at least forty-five
percent (45%) of the issued and outstanding stock of
Borrower, or (b) the Wilsons would fail to retain at
least forty-five percent (45%) of the issued and
outstanding stock of Borrower. For purposes of this
Section 7.13, the Labordes and the Wilsons shall be
deemed owners of the issued and outstanding stock of
Borrower with respect to any issued and outstanding
stock that is owned either by the Labordes or the
Wilsons, any descendant of the Labordes or the Wilsons,
any trust for the exclusive benefit of the Labordes or
the Wilsons or any descendant of the Labordes or the
Wilsons, or the respective estates of the Labordes or
the Wilsons or any descendant of the Labordes or the
Wilsons if said stock will ultimately pass from the
respective estates of the Labordes or the Wilsons to a
descendant or a trust for the exclusive benefit of a
descendant of the Labordes or the Wilsons.
7.14 Capital Expenditures. Not make capital
expenditures, directly or through a Subsidiary, which
would exceed $9,000,000.00 in calendar year 1996;
$8,000,000.00 in calendar year 1997 (in addition to and
excluding the purchase price paid by Borrower for the
Dolphin Companies); or $2,000,000.00 per calendar year
thereafter.
7.15 Dividends. Not declare or pay any dividends
or make any other distribution on account of, or
purchase, acquire, redeem or retire any capital stock
of, Borrower, whether now or hereafter outstanding,
provided that, so long as there is no Event of Default
hereunder and Borrower continues as an S Corporation,
Borrower shall be permitted to pay the following cash
dividends on a cumulative basis, to-wit:
(a) commencing with Borrower's first fiscal
quarter 1996 and with respect to each
fiscal quarter thereafter, regular
dividends not to exceed 40% of
Borrower's pretax income earned in the
fiscal quarter immediately prior to the
fiscal quarter in question, as
determined in accordance with GAAP; and
(b) commencing annually in 1996, special
dividends not to exceed 65% of
Borrower's pretax income earned in the
fiscal year of Borrower immediately
prior to the fiscal year in question, as
determined in accordance with GAAP and
as provided in the audited financial
statements furnished to Agent pursuant
to Section 7.1(a) hereof, less the sum
of dividends paid in the 2nd, 3rd, and
4th fiscal quarters of such prior fiscal
year and dividends paid in the 1st
fiscal quarter of the fiscal year in
question.
7.16 Shareholder or Employee Loans. Not make, and
not permit any Subsidiary to make, advances or loans to
employees of Borrower or any Subsidiary or shareholders
of Borrower which exceed the aggregate amount of
$100,000.00.
7.17 Change in Business. Carry on and conduct,
and cause its Subsidiaries to carry on and conduct, the
business of Borrower and each of its Subsidiaries in
substantially the same manner and in substantially the
same fields of enterprise as such businesses are
presently conducted; provided, however, that the
foregoing shall not prevent Borrower or one of its
Subsidiaries from engaging in new and additional
activities as long as said activities are in
substantially the same fields of enterprise as are
currently being engaged in by Borrower and the Dolphin
Companies.
7.18 Accounts Receivable. Provide, and cause
Dolphin Services to provide, Banks with aging reports
of Borrower's and Dolphin Services' accounts receivable
on a monthly basis.
7.19 Compliance with Agreements. Comply with, and
cause each of its Subsidiaries to comply with, all
indentures, mortgages, deeds of trust and other
agreements binding on Borrower or any Subsidiary or
affecting its properties or business.
7.20 Further Assurances. Execute and deliver, and
cause its Subsidiaries to execute and deliver, such
further documentation as may be requested by Banks or
Agent to carry out the provisions and purposes of this
Agreement and the other Loan Documents and to preserve
and perfect the Liens of Banks or Agent for the benefit
of Banks, as the case may be, in the Collateral.
7.21 Disposition of Assets. Not sell, lease,
assign, transfer or otherwise dispose of, and shall
cause each of its Subsidiaries not to sell, lease,
assign, transfer or otherwise dispose of, any of its
assets, except dispositions of inventory and equipment
in the ordinary course of business and as otherwise
provided in this Agreement.
7.22 Change Tax I.D. Number. Not change, and
cause its Subsidiaries not to change, any of the
Federal Taxpayer Identification Numbers set forth in
Section 6.24 hereof without giving Agent at least sixty
(60) days' prior written notice.
7.23 Indemnity. Indemnify, defend and hold Agent
and Banks and their respective directors, officers,
agents, attorneys and employees harmless from and
against all claims, demands, causes of action,
liabilities, losses, costs and expenses (including,
without limitation, costs of suit, reasonable legal
fees and fees of expert witnesses) arising from or in
connection with (a) the presence in, on or under any
property of Borrower or of any Subsidiary of Borrower
(including, without limitation, the Real Property, the
GIFI Property, and the Dolphin Real Estate) of any
Hazardous Substance or Solid Waste, or any releases or
discharges (as the terms "release" and "discharge" are
defined under any applicable Environmental Law) of any
Hazardous Substance or Solid Waste on, under or from
such property, (b) any activity carried on or
undertaken on or off such property of Borrower or of
any of its Subsidiaries, whether prior to or during the
term of this Agreement, and whether by Borrower, any of
its Subsidiaries or any predecessor in title to
Borrower's or such Subsidiary's property or any
officers, employees, agents, contractors or
subcontractors of Borrower, any Subsidiary of Borrower
or any predecessor in title to the property of Borrower
or such Subsidiary, or any third persons at any time
occupying or present on such property, in connection
with the handling, use, generation, manufacture,
treatment, removal, storage, decontamination, clean-up,
transportation or disposal of any Hazardous Substance
or Solid Waste at any time located or present on or
under any of the aforedescribed property, or (c) any
breach of any representation, warranty or covenant
under the terms of this Agreement. The foregoing
indemnity shall further apply to any residual conta-
mination on or under any or all of the aforedescribed
property, or affecting any natural resources, and to
any contamination of any property or natural resources
arising in connection with the use, handling, storage,
transportation or disposal of any Hazardous Substance
or Solid Waste, and irrespective of whether any of such
activities were or will be undertaken in accordance
with applicable laws, regulations, codes and
ordinances. The indemnity described in this Section
shall survive the termination of this Agreement for any
reason whatsoever.
7.24 GIFI Property and Dolphin Real Estate. Not
create a Lien on the GIFI Property, or permit any
Subsidiary to create a Lien on the Dolphin Real Estate,
in favor of, or otherwise convey, or permit a
Subsidiary to convey, the GIFI Property or the Dolphin
Real Estate to any Person without the prior written
consent of Banks.
8. Section 10.4. Section 10.4 of the Fifth Amended and
Restated Credit Agreement is hereby amended in its entirety to
state:
10.4 Insolvency. Borrower or any Subsidiary of
Borrower becomes insolvent or admits in writing its
inability to pay its debts as they mature or applies
for, consents to, or acquiesces in the appointment of a
trustee or receiver for Borrower, such Subsidiary or
any property of Borrower or of such Subsidiary; or, in
the absence of such application, consent or
acquiescence, a trustee or receiver is appointed for
Borrower, for any Subsidiary of Borrower or for a
substantial part of any property of either Borrower or
of any of its Subsidiaries and is not discharged within
thirty (30) days; or any bankruptcy, reorganization,
debt arrangement, or other proceeding under any
bankruptcy or insolvency law, or any dissolution or
liquidation proceeding is instituted by or against
Borrower or any of Borrower's Subsidiaries, and if
instituted against Borrower or one of Borrower's
Subsidiaries, it is consented to or acquiesced in by
Borrower or such Subsidiary, or remains for thirty (30)
days undismissed; or any warrant of attachment is
issued against any substantial portion of the property
of Borrower or of any Subsidiary of Borrower which is
not released within thirty (30) days of service;
9. Section 10.5. Section 10.5 of the Fifth Amended and
Restated Credit Agreement is hereby amended to insert the phrase
"....or by any Subsidiary of Borrower...." immediately following
the word "Borrower" in the second line thereof.
10. Section 10.9. A new section 10.9 is hereby added to
the Fifth Amended and Restated Credit Agreement to state:
10.9 Subsidiary Default. Any Subsidiary of
Borrower defaults on the payment of any amount due
Banks under any Loan Document to which such Subsidiary
is a party, which default shall continue for a period
of five (5) days following written notice thereof to
Borrower from Banks or Agent; any representation or
warranty made by a Subsidiary of Borrower under any
Loan Document is untrue in any material respect as of
the date made, or any schedule, statement, report,
notice or writing furnished by a Subsidiary of Borrower
to Banks is untrue in any material respect on the date
as of which the facts set forth are stated or
certified, which default shall continue for a period of
thirty (30) days after written notice thereof to
Borrower from Banks or Agent; or any Subsidiary of
Borrower defaults in the performance of any other
covenant and/or agreement set forth in any Loan
Document to which such Subsidiary is a party, which
default shall continue for a period of thirty (30) days
after written notice thereof to Borrower from Banks or
Agent.
11. Section 12.1. Section 12.1 of the Fifth Amended and
Restated Credit Agreement is hereby amended to include the
following substituted or additional definitions:
"Agreement" means this Fifth Amended and Restated
Revolving Credit and Term Loan Agreement, as it has
been amended by that certain First Amendment to Fifth
Amended and Restated Revolving Credit and Term Loan
Agreement and as it may be further amended, restated,
modified and/or supplemented from time to time in the
future.
"Collateral Documents" means the GIF Collateral
Mortgage, the GIF Collateral Chattel Mortgages, the
GIFI Collateral Chattel Mortgage, the Lease Assignment,
the Real Property Collateral Mortgage, the Security
Agreement, the Financing Statement, the Stock Pledge,
the Stock Pledge Financing Statement, the Dolphin
Security Instruments and any and all other documents,
instruments and agreements delivered to Agent or Banks
to secure the Loans and/or any other obligations
described in this Agreement, as the foregoing may be
amended, modified or supplemented from time to time.
"Conversion Date" means June 30, 1997, the date on
which all previously made Non-Revolving Advances shall
automatically convert to a term loan in accordance with
Section 1.1 hereof.
"Debt" means: (a) all obligations of Borrower or
of any of Borrower's Subsidiaries for borrowed money,
(b) all obligations of Borrower or of any of Borrower's
Subsidiaries evidenced by bonds, notes, debentures or
other similar instruments, (c) all obligations of
Borrower or of any of Borrower's Subsidiaries to pay
the deferred purchase price of property or services,
except trade accounts payable by Borrower or by any of
Borrower's Subsidiaries arising in the ordinary course
of business which are not past due by more than sixty
(60) days unless such trade accounts payable are being
contested in good faith by appropriate proceedings,
(d) all obligations of Borrower or of any of
Borrower's Subsidiaries under any Capitalized Leases,
(e) all obligations of Borrower or of any of
Borrower's Subsidiaries under guaranties, endorsements
(other than for collection or deposit in the ordinary
course of business), assumptions or other contingent
obligations, in respect of, or to purchaser or
otherwise acquire, any obligation or indebtedness of
Borrower or of any of Borrower's Subsidiaries, or any
other obligations, contingent or otherwise, (f) all
obligations secured by a Lien (except trade accounts
payable by Borrower or by any of Borrower's
Subsidiaries arising in the ordinary course of business
which are not past due by more than sixty (60) days
unless such trade accounts payable are being contested
in good faith by appropriate proceedings secured by a
vendor's lien) existing on property owned by Borrower
or by any of Borrower's Subsidiaries, whether or not
the obligations secured thereby have been assumed by
Borrower or by any of Borrower's Subsidiaries or are
non-recourse to the credit of Borrower or of any of
Borrower's Subsidiaries, (g) all reimbursement
obligations of Borrower or of any of Borrower's
Subsidiaries, other than performance bonds of Borrower
or of any of Borrower's Subsidiaries (whether
contingent or otherwise), relating to letters of
credit, bankers' acceptances and similar instruments,
and (h) all liabilities of Borrower or of any of
Borrower's Subsidiaries in respect of unfunded vested
benefits under any Plan; provided, however, the term
"Debt" shall not include money borrowed by Borrower or
by any of Borrower's Subsidiaries to pay premiums on
insurance policies obtained by Borrower or by any of
Borrower's Subsidiaries in the ordinary course of
Borrower's or of any of Borrower's Subsidiaries'
business.
"Debt Service" means, for any period in question,
the sum of (a) all interest due and payable by Borrower
or by any of Borrower's Subsidiaries to any Person
during such period and (b) the aggregate amount of all
principal due and payable during such period under this
Agreement and any of the other Loan Documents.
"Eligible Receivables" shall mean, as of any date,
an amount equal to the aggregate invoice amount owing
on all trade accounts receivable of Borrower or of any
of Borrower's Subsidiaries for goods sold, after
deducting each such account that is unpaid ninety (90)
days after the original invoice date thereof.
"Dolphin Companies" has the meaning ascribed in
Section 5.1(c) above, and "Dolphin Company" likewise
has the meaning ascribed in Section 5.1(c) above.
"Dolphin Guaranties" means, collectively, the
Dolphin Sales Guaranty, the Dolphin Services Guaranty,
and the Dolphin Steel Guaranty, and each of such
guaranties may be referred to generically as a "Dolphin
Guaranty".
"Dolphin Mortgage Instruments" means,
collectively, the Dolphin Sales Note, the Dolphin Sales
Mortgage, the Dolphin Sales Pledge, the Dolphin
Services Note, the Dolphin Services Mortgage, and the
Dolphin Services Pledge, and each of such instruments
may be referred to generically as a "Dolphin Mortgage
Instrument".
"Dolphin Real Estate" has the meaning ascribed in
Section 5.1(d) above.
"Dolphin Sales" has the meaning ascribed in
Section 5.1(c) above.
"Dolphin Sales Guaranty" has the meaning ascribed
in Section 5.1(d) above.
"Dolphin Sales Mortgage" has the meaning ascribed
in Section 5.1(d) above.
"Dolphin Sales Note" has the meaning ascribed in
Section 5.1(d) above.
"Dolphin Sales Pledge" has the meaning ascribed in
Section 5.1(d) above.
"Dolphin Sales Real Estate" has the meaning
ascribed in Section 5.1(d) above.
"Dolphin Sales Security Agreement" has the meaning
ascribed in Section 5.1(d) above.
"Dolphin Security Agreements" means, collectively,
the Dolphin Sales Security Agreement, the Dolphin
Services Security Agreement, and the Dolphin Steel
Security Agreement, together with any associated UCC-1
financing statements, and each of such instruments may
be referred to generically as a "Dolphin Security
Agreement".
"Dolphin Security Instruments" means,
collectively, the Dolphin Guaranties, the Dolphin
Mortgage Instruments, and the Dolphin Security
Agreements, and each of such instruments may be
referred to generically as a "Dolphin Security
Instrument".
"Dolphin Services" has the meaning ascribed in
Section 5.1(c) above.
"Dolphin Services Guaranty" has the meaning
ascribed in Section 5.1(d) above.
"Dolphin Services Mortgage" has the meaning
ascribed in Section 5.1(d) above.
"Dolphin Services Note" has the meaning ascribed
in Section 5.1(d) above.
"Dolphin Services Pledge" has the meaning ascribed
in Section 5.1(d) above.
"Dolphin Services Real Estate" has the meaning
ascribed in Section 5.1(d) above.
"Dolphin Services Security Agreement" has the
meaning ascribed in Section 5.1(d) above.
"Dolphin Steel" has the meaning provided in
Section 5.1(c) above.
"Dolphin Steel Guaranty" has the meaning ascribed
in Section 5.1(d) above.
"Dolphin Steel Security Agreement" has the meaning
ascribed in Section 5.1(d) above.
"Environmental Laws" means any and all federal,
state and local laws, regulations, ordinances, orders
and requirements pertaining to health, safety or the
environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 et
seq., the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section 6901 et seq., the Clean Air
Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act,
33 U.S.C. Section 1251 et seq., the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., the
Louisiana Environmental Quality Act, La. R.S. 30:2001,
et seq., and all similar laws, regulations and
requirements of any governmental authority or agency
having jurisdiction over Borrower, any of its Subsidiaries
or any of the property or assets of Borrower or of
any of its Subsidiaries, as such laws, regulations and
requirements may be amended or supplemented from time
to time.
"Equipment" means all machinery, equipment,
furniture and furnishings and other property described
as "General Equipment" in the Security Agreement or as
"equipment" under any of the Dolphin Security
Agreements, now or hereafter owned by Borrower or by
one of Borrower's Subsidiaries.
"Fixtures" means any and all goods and other
property that, after placement on the Real Property,
the GIFI Property, and/or the Dolphin Real Estate,
become component parts thereof.
"Loan Documents" means, collectively, this
Agreement, the Notes, the Collateral Documents, and any
and all other documents, instruments and agreements
executed in connection with the Loans, as the foregoing
may be modified, supplemented and/or amended from time
to time.
"Non-Revolving Commitment" means $15,000,000.
"Stock Pledge" has the meaning ascribed in Section
5.2(c) above.
"Stock Pledge Financing Statement" has the meaning
ascribed in Section 5.2(c) above.
"Subsidiary" means, as to any Person, a
corporation, partnership or other entity of which
shares of stock or other ownership interests having
ordinary voting power (other than stock or such other
ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of
the board of directors or other managers of such
corporation, partnership or other entity, or the
management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or
both, by such Person.
ARTICLE II
SPECIAL REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THIS FIRST AMENDMENT
In order to induce Banks and Agent to enter into this First
Amendment, Borrower represents and warrants to Banks that:
1. Borrower Authorization. Borrower is duly authorized to
execute, deliver and perform its obligations under this First
Amendment and is and will continue to be duly authorized to
borrow monies under and to perform its obligations under the
Fifth Amended and Restated Credit Agreement, as amended by this
First Amendment and as it may be further amended from time to
time.
2. Enforceability Against Borrower. This First Amendment
shall, upon execution and delivery, constitute the legal, valid
and binding obligation of Borrower, enforceable in accordance
with its terms.
3. Dolphin Companies Authorization. Each of the Dolphin
Companies is duly authorized to execute, deliver and perform its
obligations under any Dolphin Security Instrument to which it is
a party.
4. Enforceability Against Dolphin Companies. Upon
execution and delivery, each Dolphin Security Instrument shall
constitute the legal, valid and binding obligation of the Dolphin
Company which is a party thereto, enforceable against such
Dolphin Company in accordance with its terms.
5. No Conflicts. The execution and delivery of the
Dolphin Security Instruments and the performance by each of the
Dolphin Companies of their respective obligations thereunder do
not and will not conflict with any provision of law or of the
charter or by-laws of such Dolphin Company or of any agreement
binding upon such Dolphin Company, as the case may be.
ARTICLE III
CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS
FIRST AMENDMENT
This First Amendment shall become effective as of the date
first above written when and only when (i) Agent shall have
received at the offices of Agent, a counterpart of this First
Amendment executed and delivered by Borrower, the Dolphin
Companies, and Banks and (ii) Agent shall have additionally
received all of the following documents, each document (unless
otherwise indicated) being dated the date of receipt thereof by
Agent, duly authorized, executed and delivered, and in form and
substance satisfactory to Agent and each of the Banks:
(a) Borrower's Resolutions. Copies, duly certified by the
Secretary or Assistant Secretary of Borrower, of the resolutions
of Borrower's Board of Directors authorizing the borrowings under
the Fifth Amended and Restated Credit Agreement, as amended
hereby, and the execution and delivery of this First Amendment
and the Notes.
(b) Term Notes. Borrower's duly executed Term Notes
payable to the order of Banks, in the form attached as Exhibits
"B" and "C" hereto, with appropriate insertions.
(c) Borrower Incumbency Certificate. Certificates of
Borrower's Secretary or Assistant Secretary, substantially in the
form of Exhibit "I" to the Fifth Amended and Restated Credit
Agreement, certifying the names of the officers of Borrower
authorized to execute the Loan Documents, and all other documents
or certificates to be delivered hereunder by Borrower, together
with the true signatures of such officers.
(d) Dolphin Companies' Resolutions. Copies, duly certified
by the Secretary or Assistant Secretary of each of the Dolphin
Companies, of the resolutions of the respective Dolphin
Companies' Boards of Directors, authorizing the execution and
delivery of this Agreement and the Dolphin Security Instruments.
(e) Dolphin Companies' Incumbency Certificates.
Certificate of the Secretaries or Assistant Secretaries of each
of the Dolphin Companies, substantially in the form of
Exhibit "A" to this First Amendment, certifying the names of the
officers of each Dolphin Company authorized to execute this
Agreement and the Dolphin Security Instruments, and all other
documents or certificates to be delivered hereunder by the
Dolphin Companies, together with true signatures of such
officers.
(f) Title Insurance. Mortgagee's title insurance
commitments issued by Lawyers Title Insurance Corporation to
First NBC, as Agent for Banks, in form and substance satisfactory
to Banks and containing such endorsements as are required by
Banks and, with respect to the Dolphin Sales Property, with
coverage in the amount of $250,000 and with respect to the
Dolphin Services Property, with coverage in the amount of
$1,750,000.
(g) Environmental Report. A Phase I environmental report
prepared by Walk, Haydel & Associates, Inc., dated December,
1996, certified to each Bank, reporting the current environmental
condition of the Dolphin Sales Property and the Dolphin Services
Property.
(h) Dolphin Security Instruments. Duly authorized and
executed originals of each of the Dolphin Security Instruments.
(i) Lien Searches. Uniform Commercial Code and chattel
mortgage searches in the name of Borrower and each Dolphin
Company which confirm that the Liens granted to Banks by Borrower
and the Dolphin Companies are first priority liens.
(j) Delivery of Stock Certificates. The stock
certificates, registered in Borrower's name and subject to no
transfer or pledge restrictions, representing the shares pledged
to Banks pursuant to the Stock Pledge, together with blank stock
powers executed by Borrower and in form and substance acceptable
to Banks.
(k) Proof of Flood Insurance. Proof, in form and substance
acceptable to Banks, that Dolphin Sales and Dolphin Services
maintain all flood insurance with respect to the Dolphin Real
Estate which they are legally required to maintain as a
condition to the use of such Dolphin Real Estate to collateralize
their respective Dolphin Guaranties, the Notes, and Borrower's
other Obligations to Banks.
ARTICLE IV
MISCELLANEOUS
1. Definitions. All terms used herein with initial
capital letters and not otherwise defined herein shall have the
meanings ascribed to such terms in the Fifth Amended and Restated
Credit Agreement.
2. No Other Changes. The Fifth Amended and Restated
Credit Agreement as hereby amended is hereby ratified and
confirmed in all respects. Any reference to the Fifth Amended
and Restated Credit Agreement in any Loan Document shall be
deemed to refer to the Fifth Amended and Restated Credit
Agreement as amended hereby. Any reference to the Term Notes in
any Loan Document shall be deemed to refer to the Term Notes
executed of even date herewith in the forms of Exhibits "B" and
"C" attached hereto. The execution, delivery and effectiveness
of this First Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of
Banks under the Fifth Amended and Restated Credit Agreement or
any other Loan Document. Except as amended by this First
Amendment, the Fifth Amended and Restated Credit Agreement shall
remain in full force and effect. Nothing contained herein or in
any other documents contemplated hereby shall be considered a
novation or discharge of the debt of Borrower to Banks under the
Fifth Amended and Restated Credit Agreement.
3. Ratification of Notes and Liens. Borrower does hereby
ratify, reaffirm and acknowledge its obligations under the
Revolving Notes, and Borrower does hereby further ratify,
reaffirm and acknowledge its mortgage, pledge and/or assignment
of, and/or grant of a security interest in, all Collateral
heretofore provided by Borrower as security for the Notes and the
other Obligations under the Fifth Amended and Restated Credit
Agreement. Borrower does hereby further ratify, confirm and
acknowledge to Agent and Banks that: (a) the mortgage, pledge
and/or assignment of, and/or grant of a security interest in, all
such Collateral is and shall remain in full force and effect; (b)
the Collateral Documents to which Borrower is a party are and
shall continue to be valid, binding and enforceable obligations
of Borrower; and (c) the Collateral Documents and the Collateral
shall continue to secure, with retroactive priority to the extent
permitted by law, the Notes and the other Obligations of Borrower
as continued pursuant to the Revolving Notes and as renewed,
rearranged, extended and now evidenced by, and as the amount
thereof has been increased by, the Term Notes executed of even
date herewith in the forms attached hereto as Exhibits "B" and
"C".
4. Substitution and Addition of Exhibits and Schedule.
Exhibits "B" and "C" of the Fifth Amended and Restated Credit
Agreement are hereby deleted, and Exhibits "B" and "C" attached
hereto are hereby substituted in place thereof. New Exhibits "L"
(describing the Dolphin Sales Real Estate) and "M" (describing
the Dolphin Services Real Estate) are hereby added to the Fifth
Amended and Restated Credit Agreement. Schedule 1 of the Fifth
Amended and Restated Credit Agreement is hereby deleted, and
Schedule 1 attached hereto is hereby substituted in place
thereof.
5. Counterparts. This First Amendment may be executed in
as many counterparts as may be deemed necessary or convenient,
and by the different parties hereto in separate counterparts,
each of which, when so executed, shall be deemed an original, but
all of which counterparts shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to be executed by their respective officers
thereunto duly authorized, effective as of the date first written
above.
BORROWER:
GULF ISLAND FABRICATION, INC.
By: /s/ Kerry J. Chauvin
--------------------------------
Kerry J. Chauvin, President
BANKS:
FIRST NATIONAL BANK OF COMMERCE
By: /s/ J. Charles Freel, Jr.
--------------------------------
J. Charles Freel, Jr.,
Vice President
WHITNEY NATIONAL BANK
By: /s/ Harry C. Stahel
--------------------------------
Harry C. Stahel,
Senior Vice President
AGENT:
FIRST NATIONAL BANK OF COMMERCE
By: /s/ J. Charles Freel, Jr.
--------------------------------
J. Charles Freel, Jr.,
Vice President
INTERVENTION
NOW INTO THESE PRESENTS COMES Dolphin Sales & Rentals, Inc.,
Dolphin Steel Sales, Inc., and Dolphin Services, Inc., who hereby
bind themselves in solido with each other and with Borrower with
respect to all representations and warranties contained
Article I, Section 8 and Article II, Sections 3, 4, and 5 of
this First Amendment to Fifth Amended and Restated Credit
Agreement and who, in order to induce Banks to enter into this
First Amendment to Fifth Amended and Restated Credit Agreement,
agree to execute and deliver to Banks the Dolphin Security
Instruments as defined herein.
DOLPHIN SALES & RENTALS, INC.
By: /s/ Kerry J. Chauvin
-------------------------------
Kerry J. Chauvin, President
DOLPHIN STEEL SALES, INC.
By: /s/ Kerry J. Chauvin
-------------------------------
Kerry J. Chauvin, President
DOLPHIN SERVICES, INC.
By: /s/ Kerry J. Chauvin
-------------------------------
Kerry J. Chauvin, President
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 2nd day of January, 1997, before
me, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid, personally
came and appeared KERRY J. CHAUVIN, appearing herein in his
capacity as President of Gulf Island Fabrication, Inc., to me
personally known to be the identical person whose name is
subscribed to the foregoing First Amendment to Fifth Amended and
Restated Revolving Credit and Term Loan Agreement, who declared
and acknowledged to me, Notary, in the presence of the
undersigned competent witnesses, that he executed the same on
behalf of said corporation with full authority of its Board of
Directors, and that the same instrument is the free act and deed
of the said corporation and was executed for the uses, purposes
and benefits therein expressed.
WITNESSES:
/s/ Patsy G. Holwadel /s/ Kerry J. Chauvin
------------------------- --------------------------
KERRY J. CHAUVIN
/s/ Scott D. Morgan
-------------------------
/s/ F. Rivers Lelong, Jr.
---------------------------------
NOTARY PUBLIC
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 2nd day of January, 1997, before
me, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid, personally
came and appeared J. CHARLES FREEL, JR., appearing herein in his
capacity as Vice President of First National Bank of Commerce, to
me personally known to be the identical person whose name is sub-
scribed to the foregoing First Amendment to Fifth Amended and
Restated Revolving Credit and Term Loan Agreement, who declared
and acknowledged to me, Notary, in the presence of the
undersigned competent witnesses, that he executed the same on
behalf of said national banking association, appearing in said
agreement in its individual capacity and its capacity as Agent,
with full authority of its Board of Directors, and that the same
instrument is the free act and deed of the said national bank
association and was executed for the uses, purposes and benefits
therein expressed.
WITNESSES:
/s/ Patsy G. Holwadel /s/ J. Charles Freel, Jr.
-------------------------- ----------------------------
J. CHARLES FREEL, JR.
/s/ Scott D. Morgan
--------------------------
/s/ F. Rivers Lelong, Jr.
------------------------------
NOTARY PUBLIC
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 2nd day of January, 1997, before
me, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid, personally
came and appeared HARRY C. STAHEL, appearing herein in his
capacity as Senior Vice President of Whitney National Bank, to me
personally known to be the identical person whose name is sub-
scribed to the foregoing First Amendment to Fifth Amended and
Restated Revolving Credit and Term Loan Agreement, who declared
and acknowledged to me, Notary, in the presence of the
undersigned competent witnesses, that he executed the same on
behalf of said national banking association, appearing in said
agreement in its individual capacity, with full authority of its
Board of Directors, and that the same instrument is the free act
and deed of the said national bank association and was executed
for the uses, purposes and benefits therein expressed.
WITNESSES:
/s/ Patsy G. Holwadel /s/ Harry C. Stahel
------------------------ ---------------------------
HARRY C. STAHEL
/s/ Scott D. Morgan
------------------------
/s/ F. Rivers Lelong, Jr.
---------------------------------
NOTARY PUBLIC
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 2nd day of January, 1997, before
me, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid, personally
came and appeared KERRY J. CHAUVIN, appearing herein in his
capacity as President of Dolphin Sales & Rentals, Inc., to me
personally known to be the identical person whose name is
subscribed to the foregoing First Amendment to Fifth Amended and
Restated Revolving Credit and Term Loan Agreement, who declared
and acknowledged to me, Notary, in the presence of the
undersigned competent witnesses, that he executed the same on
behalf of said corporation with full authority of its Board of
Directors, and that the same instrument is the free act and deed
of the said corporation and was executed for the uses, purposes
and benefits therein expressed.
WITNESSES:
/s/ Patsy G. Holwadel /s/ Kerry J. Chauvin
-------------------------- --------------------------
KERRY J. CHAUVIN
/s/ Scott D. Morgan
--------------------------
/s/ F. Rivers Lelong, Jr.
---------------------------------
NOTARY PUBLIC
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 2nd day of January, 1997, before
me, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid, personally
came and appeared KERRY J. CHAUVIN, appearing herein in his
capacity as President of Dolphin Steel Sales, Inc., to me
personally known to be the identical person whose name is
subscribed to the foregoing First Amendment to Fifth Amended and
Restated Revolving Credit and Term Loan Agreement, who declared
and acknowledged to me, Notary, in the presence of the
undersigned competent witnesses, that he executed the same on
behalf of said corporation with full authority of its Board of
Directors, and that the same instrument is the free act and deed
of the said corporation and was executed for the uses, purposes
and benefits therein expressed.
WITNESSES:
/s/ Patsy G. Holwadel /s/ Kerry J. Chauvin
--------------------------- ----------------------------
KERRY J. CHAUVIN
/s/ Scott D. Morgan
---------------------------
/s/ F. Rivers Lelong, Jr.
------------------------------------
NOTARY PUBLIC
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 2nd day of January, 1997, before
me, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid, personally
came and appeared KERRY J. CHAUVIN, appearing herein in his
capacity as President of Dolphin Services, Inc., to me personally
known to be the identical person whose name is subscribed to the
foregoing First Amendment to Fifth Amended and Restated Revolving
Credit and Term Loan Agreement, who declared and acknowledged to
me, Notary, in the presence of the undersigned competent
witnesses, that he executed the same on behalf of said
corporation with full authority of its Board of Directors, and
that the same instrument is the free act and deed of the said
corporation and was executed for the uses, purposes and benefits
therein expressed.
WITNESSES:
/s/ Patsy G. Holwadel /s/ Kerry J. Chauvin
------------------------- --------------------------
KERRY J. CHAUVIN
/s/ Scott D. Morgan
-------------------------
/s/ F. Rivers Lelong, Jr.
---------------------------------------
NOTARY PUBLIC
