AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (this
"Amendment"), dated as of June 30, 1999, is by and among Superior Energy
Services, Inc., a Delaware corporation ("SESI"), Superior Cardinal
Acquisition Company, Inc., a Delaware corporation and a wholly-owned
subsidiary of SESI ("Sub"), Cardinal Holding Corp., a Delaware corporation
("Cardinal"), First Reserve Fund VII, Limited Partnership and First Reserve
Fund VIII, L.P., each of which is a Delaware limited partnership (together,
the "Funds").
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain Agreement
and Plan of Merger dated as of April 20, 1999 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement in the manner
provided below;
NOW, THEREFORE, the parties agree as follows:
1. Section 1.1 is amended to add the following defined terms:
"Capital Contribution" shall have the meaning ascribed to it
in Section 6.19(a) hereof.
"Contributing Stockholders" shall have the meaning ascribed
to it in Section 6.19(a) hereof.
"EBITDA" shall have the meaning ascribed to it in Section
6.19(a) hereof.
"EBITDA Notice" shall have the meaning ascribed to it in
Section 6.19(d) hereof.
"Neutral Auditors" shall have the meaning ascribed to it in
Section 6.19(f) hereof.
2. The second sentence of Section 6.4(a) is amended to change the
amount specified therein from "$45 million" to "$50 million."
3. A new Section 6.19 shall be added to the Agreement to read in its
entirety as follows:
Section 6.19 POST-CLOSING CAPITAL CONTRIBUTION. (a) The
Cardinal Stockholders listed on Section 6.19 of the Disclosure
Schedule, a copy of which is attached hereto, (the "Contributing
Stockholders") shall make a contribution to SESI's capital (the
"Capital Contribution") if the EBITDA (earnings before interest,
taxes, depreciation and amortization determined in accordance
with generally accepted accounting principles as of the Closing
Date, applied on a basis consistent with the practices of
Cardinal for prior periods) generated by Cardinal and its direct
or indirect subsidiaries during the fiscal year ending December
31, 2000 is less than $20 million.
(b) If EBITDA generated during such fiscal year is less than
$20 million, the amount of the Capital Contribution shall be $2
million plus (i) $1.50 for every $1.00 that EBITDA is less than
$19 million but more than $16 million, (ii) $1.00 for every $1.00
that EBITDA is less than $16 million but more than $13 million,
and (iii) $0.50 for every $1.00 that EBITDA is less than $13
million; provided however, that in no event shall the amount of
the Capital Contribution exceed $10 million. If EBITDA generated
during such fiscal year equals or exceeds $20 million, no Capital
Contribution shall be made.
(c) For purposes of determining EBITDA hereunder: (i) no
expenses (including any general overhead expenses or any other
expense or allocated charge of SESI or any other parent company
of Cardinal or its affiliates) other than those actually incurred
by Cardinal for goods and services provided at the request or
with the approval of Cardinal's management for the operations of
Cardinal shall be included for purposes of calculating EBITDA and
(ii) to the extent that SESI or any parent company of Cardinal or
its affiliates invest in, advance or contribute to Cardinal
amounts in excess of Cardinal's net income after taxes plus
depreciation and amortization for that period there shall be
included an imputed interest expense to Cardinal equal to the
average blended interest rate incurred during the period by SESI
under its credit facilities.
(d) Within 90 days following the close of the fiscal year
ending December 31, 2000, SESI shall deliver to the Contributing
Stockholders a consolidated income statement of Cardinal and its
subsidiaries for such fiscal year accompanied by (i) a
certification thereof by SESI's Chief Financial Officer to the
effect that such income statement (A) has been prepared in
conformity with generally accepted accounting principles as of
the Closing Date, applied on a basis consistent with the
practices of Cardinal for prior periods, and (B) fairly presents
the results of Cardinal and its subsidiaries for the period then
ended, (ii) a notice specifying the EBITDA for such fiscal year
(the "EBITDA Notice") showing in reasonable detail the
computation thereof to be accompanied by a certification by
SESI's Chief Financial Officer that such computation was
performed in a manner consistent with this Section 6.19 and with
the preparation of Cardinal's consolidated financial statements
and based on Cardinal's books and records, and (iii) a
certification by SESI's Chief Financial Officer that the
covenants of SESI set forth in subparagraph (i) below have been
fulfilled.
(e) During the preparation of the EBITDA Notice and the
period of any review contemplated by this Section 6.19, SESI
shall (i) provide the Contributing Stockholders and their
authorized representatives, upon reasonable notice, full access
during normal business hours to the books, records, facilities
and employees of Cardinal and its subsidiaries and their
independent accountants and their respective work papers to
review the preparation of the EBITDA Notice and (ii) cooperate
with the Contributing Stockholders and their authorized
representatives, including the provision on a timely basis of all
information reasonably requested by the Contributing Stockholders
or their authorized representatives and necessary or useful in
reviewing the preparation of the EBITDA Notice.
(f) After receipt of the EBITDA Notice, the Contributing
Stockholders shall have 30 days to review the EBITDA Notice,
together with all the work papers used in the preparation
thereof. Unless the Contributing Stockholders deliver a written
notice to SESI on or before the 30th day after the Contributing
Stockholders' receipt of the EBITDA Notice specifying in
reasonable detail, all disputed items and the basis therefor, the
Contributing Stockholders shall be deemed to have accepted and
agreed to the EBITDA Notice. If the Contributing Stockholders so
notify SESI of their objection to the EBITDA Notice, the
Contributing Stockholders and SESI shall, within 30 days
following such notice, attempt to resolve their differences and
any resolution by them as to any disputed amounts shall be final,
binding and conclusive. If at the end of such 30-day period, any
amounts shall remain in dispute, then all amounts remaining in
dispute and any dispute as to exclusions of or additions to
revenue and any allocations of expenses contemplated by the
definition of EBITDA shall be submitted to a firm of nationally
recognized, independent public accountants selected (the "Neutral
Auditors") by the Contributing Stockholders and SESI within ten
days after the expiration of the 30-day period. If the
Contributing Stockholders and SESI are unable to agree on the
Neutral Auditors, then the Contributing Stockholders and SESI
shall each have the right to request the American Arbitration
Association to appoint the Neutral Auditor who shall not have had
a material business relationship with the Contributing
Stockholders, SESI or any of their respective Affiliates within
the past two years. The parties hereto agree to execute, if
requested by the Neutral Auditors, a reasonable engagement
letter. All fees and expenses relating to the work, if any, to
be performed by the Neutral Auditors shall be borne 50% by the
Contributing Stockholders and 50% by SESI. The Neutral Auditors
shall act as arbitrators to determine only those issues still in
dispute between the Contributing Stockholders and SESI. The
Neutral Auditors' determination shall be made within 30 days of
their selection, shall be set forth in a written statement
delivered to the Contributing Stockholders and SESI and shall be
final, binding and conclusive.
(g) The payment of the Capital Contribution, if any, shall
be paid by wire transfer of immediately available federal funds
to such account or accounts designated by SESI within 30 days
following the later to occur of (i) the deliveries required by
Section 6.19(d) and (ii) the resolution of any disputes pursuant
to Section 6.19(f). Any payment of the Capital Contribution
shall be allocated among the Contributing Stockholders in
accordance with Section 6.19 of the Disclosure Schedule; and the
obligation of each Contributing Stockholder to pay its percentage
of the Capital Contribution shall be a several, and not joint,
obligation, and in no event shall any Contributing Stockholder be
liable for any other Contributing Stockholder's percentage of any
Capital Contribution required to be paid hereunder.
(h) Any action or notice required under this Section 6.19 to
be taken or given by the Contributing Stockholders shall be
deemed taken or given if taken or given by those Contributing
Stockholders having at least 51% of the allocated percentages set
forth in Section 6.19 of the Disclosure Schedule.
(i) Superior covenants and agrees for the benefit of the
Contributing Stockholders that following the Closing Date, it
will use its reasonable best efforts to (A) cause Cardinal and
its subsidiaries and their businesses to continue to be operated
in the same manner as they were operated prior to the Closing
Date, as if Cardinal continued to be a stand-alone business
following the Closing Date, and, except with the approval of the
Contributing Stockholders or with respect to any such businesses
that have suffered a net loss for the most recent two consecutive
fiscal quarters, not to discontinue, in whole or in part, any of
their businesses as conducted as of the Closing Date; provided
however, that Superior may combine Cardinal's P&A operations with
those of Superior as long as in connection therewith, the EBITDA
target set forth in subparagraph (a) above is modified to such
number as may be mutually agreed to by SESI and the Contributing
Stockholders to appropriately reflect such action; and (B)
conduct its other operations and activities in the ordinary
course consistent with past practices and not to take any actions
inconsistent with such past practices that would interfere with
the ability of Cardinal to achieve the EBITDA target set forth in
subparagraph (a) above.
5. Section 7.1(m) is amended to change the share number specified
therein from "892,000" to "818,182."
6. Section 9.4(b) is amended to read in its entirety as follows:
"except as provided in Sections 6.16 and 6.19 hereof, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder."
7. Except as expressly set forth herein, the terms and provisions of
the Agreement are hereby ratified and confirmed.
8. This Amendment shall be governed by, and shall be construed and
enforced in accordance with, the substantive laws of the State of Delaware.
9. Capitalized terms used but not defined herein shall have the
respective meanings ascribed to such terms in the Agreement. From and
after the effectiveness of this Amendment, the terms "this Agreement",
"hereof", "herein", "hereunder" and terms of like import, when used herein
or in the Agreement shall, except where the context otherwise requires,
refer to the Agreement, as amended by this Amendment.
10. This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which shall
constitute one and the same Amendment.
SUPERIOR ENERGY SERVICES, INC.
By: /S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
Vice President and Chief Financial Officer
SUPERIOR CARDINAL ACQUISITION
COMPANY, INC.
By: /S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
Treasurer
CARDINAL HOLDING CORP.
By: /S/ XXX X. XXXXX
Xxx X. Xxxxx
Interim Chief Executive Officer
FIRST RESERVE FUND VII,
LIMITED PARTNERSHIP
By: FIRST RESERVE GP VII, LIMITED
PARTNERSHIP, its General Partner
By: FIRST RESERVE CORPORATION,
its General Partner
By: /S/ XXX X. XXXXX
Xxx X. Xxxxx
President
FIRST RESERVE FUND VIII, L.P.
By: FIRST RESERVE GP VIII, L.P.,
its General Partner
By: FIRST RESERVE CORPORATION,
its General Partner
By: /S/ XXX X XXXXX
Xxx X. Xxxxx
President
SCHEDULE 6.19
MAXIMUM POTENTIAL
POST-CLOSING
CAPITAL
CONTRIBUTING STOCKHOLDER CONTRIBUTION PERCENTAGE
---------------------------- ----------------- ------------
First Reserve Fund VII, LP $ 3,802,810 38.0%
First Reserve Fund VIII, LP 2,535,206 25.4%
Xxxxx Capital Holdings, LP 2,093,147 20.9%
GE Capital Corporation 826,899 8.3%
DLJ Investment Partners, L.P. 450,206 4.5%
DLJ Investment Funding, Inc. 64,125 0.6%
DLJ ESC, L.P. 42,812 0.4%
Hibernia Corporation 9,627 0.1%
Hibernia Capital Corporation 17,260 0.2%
Xxxxx Xxxxx 38,237 0.4%
Xxxx X. Xxxx 39,890 0.4%
Xxxxxx X. Xxxx 39,890 0.4%
Xxxx X. Xxxxxx 39,890 0.4%
---------------- -----------
Total $ 10,000,000 $ 100.0%
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