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EXHIBIT 10.16
PURCHASE AGREEMENT
BETWEEN
XXXXXX PRODUCTION SERVICES, INC., PURCHASER
AND
PRIDE PETROLEUM SERVICES, INC., SELLER
THIS AGREEMENT CONTAINS IMPORTANT INDEMNITY PROVISIONS.
SEE PARTICULARLY ARTICLE VI.
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TABLE OF CONTENTS
ARTICLE I - PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Agreement to Sell . . . . . . . . . . . . . . . . . . . . . 1
(a) Included Assets . . . . . . . . . . . . . . . . . . 2
(b) Excluded Assets . . . . . . . . . . . . . . . . . . 3
1.2 Agreement to Purchase . . . . . . . . . . . . . . . . . . . 4
1.3 The Purchase Price . . . . . . . . . . . . . . . . . . . . . 4
(a) Purchase Price . . . . . . . . . . . . . . . . . . 4
(b) Fair Market Value . . . . . . . . . . . . . . . . . 4
(c) Federal Income Tax Elections . . . . . . . . . . . 4
1.4 Assumption of Liabilities . . . . . . . . . . . . . . . . . 4
1.5 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Transfer Taxes; Recording Fees . . . . . . . . . . . . . . . 5
1.7 Certain Environmental Matters. . . . . . . . . . . . . . . . 6
1.8 Adjustment for Certain Liabilities. . . . . . . . . . . . . 6
ARTICLE II - CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY CONSENTS
AND FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . 6
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Items to be Delivered at Closing . . . . . . . . . . . . . . 7
2.3 Third Party Consents . . . . . . . . . . . . . . . . . . . . 7
2.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . 8
2.5 Conditions of Assets. . . . . . . . . . . . . . . . . . . . 8
ARTICLE III - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 8
3.1 Representations and Warranties of Seller . . . . . . . . . . 8
(a) Corporate Existence . . . . . . . . . . . . . . . . 8
(b) Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . 9
(c) Validity of Contemplated Transactions, Etc . . . . 9
(d) No Third Party Options . . . . . . . . . . . . . . 10
(e) Financial Statements . . . . . . . . . . . . . . . 10
(f) Taxes; Tax and Other Returns and Reports . . . . . 10
(g) Books of Account . . . . . . . . . . . . . . . . . 11
(h) Existing Condition . . . . . . . . . . . . . . . . 11
(i) Title to Properties . . . . . . . . . . . . . . . . 11
(j) Compliance with Laws; Authorizations . . . . . . . 12
(k) Transactions With Affiliates . . . . . . . . . . . 12
(l) Litigation . . . . . . . . . . . . . . . . . . . . 12
(m) Contracts and Commitments . . . . . . . . . . . . . 12
(n) Environmental Matters . . . . . . . . . . . . . . . 13
(o) Real Properties . . . . . . . . . . . . . . . . . . 13
(p) Availability of Documents . . . . . . . . . . . . . 15
(q) Assets . . . . . . . . . . . . . . . . . . . . . . 15
(r) Restrictions . . . . . . . . . . . . . . . . . . . 15
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(s) Conditions Affecting the Business . . . . . . . . . 15
(t) Employee Benefit Plans . . . . . . . . . . . . . . 15
(u) Personnel. . . . . . . . . . . . . . . . . . . . . 20
(v) Condition of Rigs . . . . . . . . . . . . . . . . . 21
3.2 Representations and Warranties of Purchaser . . . . . . . . 21
(a) Corporation . . . . . . . . . . . . . . . . . . . . 21
(b) Corporate Power and Authorization . . . . . . . . . 21
(c) Validity of Contemplated Transactions, Etc . . . . 21
(d) Financing . . . . . . . . . . . . . . . . . . . . . 22
3.3 Survival of Representations and Warranties and Covenants . . 22
3.4 Representations by Seller Refer to the Business. . . . . . . 22
ARTICLE IV - AGREEMENTS PENDING CLOSING . . . . . . . . . . . . . . . . . . . 22
4.1 Agreements of Seller Pending the Closing . . . . . . . . . . 22
(a) Business in the Ordinary Course . . . . . . . . . . 22
(b) Conduct of Business . . . . . . . . . . . . . . . . 22
(c) Litigation . . . . . . . . . . . . . . . . . . . . 23
(d) Access . . . . . . . . . . . . . . . . . . . . . . 23
(e) Press Release . . . . . . . . . . . . . . . . . . . 23
(f) Actions of Directors and Shareholders . . . . . . . 23
(g) Xxxx-Xxxxx-Xxxxxx . . . . . . . . . . . . . . . . . 24
(h) Employee Matters. . . . . . . . . . . . . . . . . 24
(i) Actions of Seller . . . . . . . . . . . . . . . . . 24
4.2 Agreements of Purchaser Pending the Closing . . . . . . . . 24
(a) Confidentiality . . . . . . . . . . . . . . . . . . 24
(b) Press Release . . . . . . . . . . . . . . . . . . . 24
(c) Xxxx-Xxxxx-Xxxxxx . . . . . . . . . . . . . . . . . 24
(d) Actions of Purchaser . . . . . . . . . . . . . . . 25
ARTICLE V - CONDITIONS PRECEDENT TO THE CLOSING . . . . . . . . . . . . . . . 25
5.1 Conditions Precedent to Purchaser's Obligations . . . . . . 25
(a) Representations and Warranties True as of the
Closing Date . . . . . . . . . . . . . . . . . . . 25
(b) Compliance with this Agreement . . . . . . . . . . 25
(c) Closing Certificate . . . . . . . . . . . . . . . . 25
(d) Opinion of Counsel for Seller . . . . . . . . . . . 25
(e) Good Standing. . . . . . . . . . . . . . . . . . . 25
(f) No Threatened or Pending Litigation . . . . . . . . 25
(g) Consents and Approvals . . . . . . . . . . . . . . 26
(h) Material Adverse Changes . . . . . . . . . . . . . 26
(i) Approval of Counsel; Corporate Matters . . . . . . 26
(j) Xxxx-Xxxxx-Xxxxxx Approval. . . . . . . . . . . . . 26
(k) Financing . . . . . . . . . . . . . . . . . . . . . 26
(l) Securities Filings. . . . . . . . . . . . . . . . . 26
5.2 Conditions Precedent to the Obligations of Seller . . . . . 26
(a) Representations and Warranties True as of the
Closing Date . . . . . . . . . . . . . . . . . . . 27
(b) Compliance with this Agreement . . . . . . . . . . 27
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(c) Closing Certificates . . . . . . . . . . . . . . . 27
(d) No Threatened or Pending Litigation . . . . . . . . 27
(e) Consent of Shareholders . . . . . . . . . . . . . . 27
(f) Opinion of Counsel for Purchaser. . . . . . . . . . 27
(g) Xxxx-Xxxxx-Xxxxxx Approval . . . . . . . . . . . . 27
ARTICLE VI - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 Indemnification by Seller . . . . . . . . . . . . . . . . . 28
6.3 Indemnification by Purchaser . . . . . . . . . . . . . . . . 29
6.4 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.5 Failure to Pay Indemnification . . . . . . . . . . . . . . . 30
6.6 Adjustment of Liability . . . . . . . . . . . . . . . . . . 30
6.7 Express Negligence . . . . . . . . . . . . . . . . . . . . . 30
6.8 DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . . . 30
6.9 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Negotiation Period . . . . . . . . . . . . . . . . 31
(b) Commencement of Arbitration . . . . . . . . . . . . 31
(c) Consolidation of Hearings . . . . . . . . . . . . . 31
(d) Discovery . . . . . . . . . . . . . . . . . . . . . 31
(e) Conclusion of Arbitration . . . . . . . . . . . . . 32
(f) Expenses of Arbitrators . . . . . . . . . . . . . . 32
6.10 Other Rights and Remedies Not Affected . . . . . . . . . . . 32
ARTICLE VII - POST CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . 32
7.1 Seller's Affected Employees. . . . . . . . . . . . . . . . 32
7.2 Discharge of Business Obligations. . . . . . . . . . . . . . 34
7.3 Maintenance of Books and Records . . . . . . . . . . . . . . 34
7.4 Payments Received . . . . . . . . . . . . . . . . . . . . . 35
7.5 Use of Name . . . . . . . . . . . . . . . . . . . . . . . . 35
7.6 Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.7 Covenant Not to Compete . . . . . . . . . . . . . . . . . . 35
7.8 Subsequent Acquisitions by Seller. . . . . . . . . . . . . . 36
7.9 Transition Period . . . . . . . . . . . . . . . . . . . . . 36
(a) Collections . . . . . . . . . . . . . . . . . . . . 36
(b) Accounting . . . . . . . . . . . . . . . . . . . . 36
(c) Licenses and Permits . . . . . . . . . . . . . . . 36
(d) Access to Corporate Headquarters . . . . . . . . . 36
7.10 Accounting Records . . . . . . . . . . . . . . . . . . . . . 36
7.11 Nondisclosure of Proprietary Information. . . . . . . . . . 37
7.12 Contact with Former Employees . . . . . . . . . . . . . . . 37
7.13 Assumed Obligations. . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.1 Events of Termination . . . . . . . . . . . . . . . . . . . 37
8.2 Liability Upon Termination . . . . . . . . . . . . . . . . . 38
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8.3 Notice of Termination . . . . . . . . . . . . . . . . . . . 38
8.4 Break-Up Fee. . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.1 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . 39
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.3 Assignment and Binding Effect . . . . . . . . . . . . . . . 39
9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 40
9.6 No Benefit to Others . . . . . . . . . . . . . . . . . . . . 40
9.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 40
9.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . 40
9.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 41
9.11 Construction . . . . . . . . . . . . . . . . . . . . . . . . 41
9.12 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.13 Specific Performance . . . . . . . . . . . . . . . . . . . . 41
9.14 Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.15 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . 42
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DEFINITIONS:
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The definition of "401(K) PLAN" can be found in Section 3.1(t)(i).
The definition of "AFFECTED EMPLOYEES" can be found in Section 3.1(t)(xxiv)(A).
The definition of "AGREEMENT" can be found on page 1.
The definition of "ASSETS" can be found in Section 1.1.
The definition of "ASSUMED LIABILITIES" can be found in Section 1.4(a).
The definition of "AUTHORIZATIONS" can be found in Section 3.1(j).
The definition of "BALANCE SHEET" can be found in Section 3.1(e)(ii).
The definition of "BALANCE SHEET DATE" can be found in Section 3.1(e)(ii).
The definition of "BREAK-UP FEE" can be found in Section 8.4.
The definition of "BUSINESS" can be found on page 1.
The definition of "CAUSE" can be found in Section 7.1(c).
The definition of "CLOSING" can be found in Section 2.1.
The definition of "CLOSING DATE" can be found in Section 2.1.
The definition of "CODE" can be found in Section 1.3(c).
The definition of "CONTAMINANT" can be found in Section 3.1(n).
The definition of "CONTRACTS" can be found in Section 3.1(c)(iv).
The definition of "DAMAGES" can be found in Section 6.2.
The definition of "DISPUTE NOTICE" can be found in Section 6.9(a).
The definition of "DOL" can be found in Section 3.1(t)(ii).
The definition of "EFFECTIVE DATE" can be found on page 1.
The definition of "EMPLOYEE" can be found in Section 3.1(t)(xxiv)(C).
The definition of "EMPLOYEE BENEFIT PLAN" can be found in Section
3.1(t)(xxiv)(B).
The definition of "EQUIPMENT" can be found in Section 1.1(a)(vi).
The definition of "EQUIPMENT LEASES" can be found in Section 1.1(a)(iv).
The definition of "ERISA" can be found in Section 3.1(t)(xxiv)(D).
The definition of "ERISA AFFILIATE" can be found in Section 3.1(t)(xxiv)(E).
The definition of "EXCLUDED ASSETS" can be found in Section 1.1(b).
The definition of "EXCLUDED PARCEL" can be found in Section 1.7.
The definition of "FEE PROPERTIES" can be found in Section 1.1(a)(i).
The definition of "FINAL ARBITRATOR" can be found in Section 6.9(b).
The definition of "FINANCIAL STATEMENTS" can be found in Section 3.1(e)(i).
The definition of "FUEL AND INVENTORY" can be found in Section 1.1(a)(x).
The definition of "GOVERNMENTAL ENTITY" can be found in Section 6.1(a).
The definition of "GP" can be found on page 1.
The definition of "HOLDINGS" can be found on page 1.
The definition of "HOLDINGS CONTRACTS" can be found in Section 1.1(a)(iii).
The definition of "HSR ACT" can be found in Section 4.1(g).
The definition of "INDEMNITEE" can be found in Section 6.1(b).
The definition of "INDEMNITOR" can be found in Section 6.1(c).
The definition of "IRS" can be found in Section 3.1(t)(ii).
The definition of "LEASED PROPERTIES" can be found in Section 1.1(a)(ii).
The definition of "LP" can be found on page 1.
The definition of "MULTIEMPLOYER PLAN" can be found in Section 3.1(t)(xxiv)(F).
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The definition of "NEGOTIATION PERIOD" can be found in Section 6.9(a).
The definition of "PARTNERSHIP" can be found on page 1.
The definition of "PBGC" can be found in Section 3.1(t)(ii).
The definition of "PENSION PLAN" can be found in Section 3.1(t)(xxiv)(G).
The definition of "PERMITS" can be found in Section 1.1(a)(ix).
The definition of "PERMITTED LIENS" can be found in Section 3.1(i).
The definition of "PERSON" can be found in Section 9.11.
The definition of "PERSONAL PROPERTY" can be found in Section 1.1(a)(viii).
The definition of "PREVAILING PARTY" can be found in Section 9.15.
The definition of "PROPERTY TAXES" can be found in Section 1.5.
The definition of "PROPRIETARY INFORMATION" can be found in Section 7.11(a).
The definition of "PROXY STATEMENT" can be found in Section 4.1(f).
The definition of "PURCHASE PRICE" can be found in Section 1.3(a).
The definition of "PURCHASER" can be found on page 1.
The definition of "PURCHASER LOSSES" can be found in Section 6.2.
The definition of "PURCHASER'S COMMON STOCK" can be found in Section 8.4.
The definition of "REAL PROPERTIES" can be found in Section 1.1(a)(ii).
The definition of "REAL ESTATE LEASES" can be found in Section 3.1(o)(i)(A).
The definition of "RECORDS" can be found in Section 1.1(a)(vii).
The definition of "REGULATIONS" can be found in Section 3.1(j).
The definition of "SELLER" can be found on page 1.
The definition of "SELLER LOSSES" can be found in Section 6.3.
The definition of "SELLER'S DOCUMENTS" can be found in Section 3.1(b).
The definition of "STOCK" can be found in Section 1.1.
The definition of "TAX RETURNS" can be found in Section 3.1(f).
The definition of "TAXES" can be found in Section 3.1(f).
The definition of "THIRD PARTY CLAIMS" can be found in Section 6.4(b).
The definition of "TRANSITION PERIOD" can be found in Section 7.9.
The definition of "VEBA" can be found in Section 3.1(t)(iv).
The definition of "VEHICLE LEASES" can be found in Section 1.1(a)(v).
The definition of "WARN" can be found in Section 7.1(a).
The definition of "WELFARE PLAN" can be found in Section 3.1(t)(xxiv)(H).
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "AGREEMENT"), dated as of the 23rd day of
December, 1996 (the "EFFECTIVE DATE"), is entered into by and between Pride
Petroleum Services, Inc., a Louisiana corporation ("SELLER"), and Xxxxxx
Production Services, Inc., a Texas corporation ("PURCHASER").
RECITALS:
A. Seller is engaged in the domestic, onshore well servicing
business (the "BUSINESS") as well as several other related business activities;
B. Purchaser is engaged in the business of oil well servicing;
C. The respective Boards of Directors of Purchaser and Seller
have approved this Agreement and the transactions contemplated by this
Agreement;
D. Purchaser and Seller have entered into that certain
Confidentiality Agreement dated November 13, 1996;
E. Seller proposes to restructure its ownership of the Business
as set forth on SCHEDULE 1, with the result that the Business will be held,
directly or indirectly, by a corporate subsidiary of Seller ("GP") and by a
limited partnership ("PARTNERSHIP" and, together with GP, "HOLDINGS"), with GP
as the general partner of the Partnership and a wholly owned corporate
subsidiary of Seller ("LP") as the limited partner of the Partnership; and
F. Subject to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell and Purchaser desires to purchase all of the issued and outstanding
equity interests in Holdings, which will at the Closing (as defined herein)
own, directly or indirectly, the Business and substantially all of the assets
now owned by Seller or acquired by Seller prior to Closing and used primarily
in the Business.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements contained in this
Agreement, and intending to be legally bound by this Agreement, the parties
agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing (as defined in Section
2.1), and except as otherwise specifically provided in this Section 1.1, Seller
and LP shall grant, sell, convey, assign, transfer and deliver to Purchaser,
upon and subject to the terms and conditions of this Agreement, all right,
title and interest of Seller and LP in and to all of the issued and outstanding
equity
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interests in Holdings (collectively, the "STOCK"), consisting of (1) all of the
issued and outstanding capital stock of GP, which shall be sold to Purchaser by
Seller, and (2) all of the limited partnership interest in the Partnership,
which shall be sold to Purchaser by LP. At the Closing, such limited
partnership interest shall constitute the entire limited partnership interest
in the Partnership, and the general partnership interest in the Partnership
held by GP shall constitute the entire general partnership interest in the
Partnership. At the Closing, Holdings, directly or indirectly, shall own: (a)
the Business as a going concern, and (b) all of the assets, properties and
rights of Seller and Holdings constituting the Business or used primarily
therein, of every kind and description, real, personal and mixed, tangible and
intangible, wherever situated (which Business, assets, properties and rights
are herein sometimes collectively referred to as the "ASSETS"), free and clear
of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and encumbrances of any nature whatsoever except Permitted Liens
(as defined in Section 3.1(i)).
(a) Included Assets. The Assets shall include, without
limitation, the following assets, properties and rights of Seller and Holdings
used in the conduct of, or generated by or constituting the Business, except as
otherwise expressly excluded pursuant to Section 1.1(b):
(i) all interests of Seller and Holdings in all
real properties that are owned by Seller or Holdings and used primarily in
connection with the Business which are identified in SCHEDULE 1.1(A)(I) (the
"FEE PROPERTIES");
(ii) all of Seller's and Holdings' interests as
lessee in all real property and offices leased or subleased to Seller or
Holdings and used primarily in connection with the Business, which are
identified in SCHEDULE 1.1(A)(II) (the "LEASED PROPERTIES" and, together with
the Fee Properties, the "REAL PROPERTIES");
(iii) those Contracts (as hereinafter defined),
including purchase orders and noncompetition agreements, but exclusive of all
leases of personal property, to which Seller or Holdings is a party described
in SCHEDULE 1.1(A)(III), together with all Contracts that are entered into by
Seller or Holdings as part of the Business in the ordinary course of business
after the Effective Date and are not prohibited by this Agreement
(collectively, the "HOLDINGS CONTRACTS");
(iv) all of Seller's and Holdings' rights in and
to operating leases of personal property used primarily in connection with the
Business other than vehicles, all of which are described in SCHEDULE
1.1(A)(IV), together with all such leases that are entered into by Seller or
Holdings as part of the Business in the ordinary course of business after the
Effective Date that are not prohibited by this Agreement (the "EQUIPMENT
LEASES"), subject to the consents of lessors, if required;
(v) all of Seller's rights in and to the vehicles
identified in and subject to the vehicle leases listed on SCHEDULE 1.1(A)(V)
(the "VEHICLE LEASES");
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(vi) all office furniture, fixtures and equipment
owned by Seller and Holdings and all other equipment, parts, materials,
supplies, furniture and fixtures owned by Seller or Holdings, in either case
used primarily in connection with the Business including, without limitation,
the equipment, furniture, fixtures, computers, servers, local area network
systems, intranet systems, electronic mail and financial accounting equipment,
software and systems described on SCHEDULE 1.1(A)(VI) (collectively, the
"EQUIPMENT");
(vii) except for materials relating to Excluded
Assets, litigation, Employee Benefit Plans, and other matters not constituting
part of the Assets, originals or (at Seller's election) copies of all books,
records, correspondence, files, plans and other documents and instruments of
Seller or Holdings used primarily in connection with the Business, including
software, financial and accounting systems and records, information technology
systems and management information systems, and customer files related to the
Business or to the Assets (collectively, the "RECORDS");
(viii) all other intangible and tangible personal
property, all technologies, methods, formulations, data bases, trade secrets,
customer lists, know-how, inventions and other intellectual property used
primarily in connection with the Business or under development for use
primarily in connection with the Business, and owned, leased or licensed by
Seller or Holdings (collectively, the "PERSONAL PROPERTY");
(ix) any and all permits, authorizations,
certificates, approvals, registrations, or other approvals and licenses granted
by any federal, state, local or foreign court, arbitrator or administrative or
Governmental Entity (as hereinafter defined) in connection with the Business to
the extent transferrable (collectively, the "PERMITS");
(x) all motor fuel and inventory on hand on the
Closing Date used in connection with the Business, including without
limitation, all motor fuel, oil, lubricants, drilling mud and other items of
tangible personal property of similar character (collectively, the "FUEL AND
INVENTORY"); and
(xi) all of the corporate books and records of
Holdings.
(b) Excluded Assets. The Assets shall not include the
following: (i) Seller's corporate headquarters located at 0000 Xxxx Xxxx
Xxxx., Xxxxx 000, Xxxxxxx, Xxxxx or the furniture, fixtures, equipment,
software and systems or other tangible property located therein other than as
specifically listed in the Schedules to Section 1.1(a) above; (ii) certain rigs
and related equipment identified on SCHEDULE 1.1(B); (iii) corporate seals,
certificates of incorporation, minute books, stock books, or other records
having to do with the corporate organization of Seller, or any of its
subsidiaries other than Holdings and its subsidiaries; (iv) cash, the accounts
receivable of Seller or Holdings, Seller's or Holdings' prepaid items, and the
deposits listed on SCHEDULE 1.1(B); (v) Seller's name and service marks, or any
rights therein; and (vi) the rights which accrue or will accrue to Seller under
this Agreement, the rights to any of Seller's or Holdings' claims for any
federal, state, local, or foreign tax refunds arising prior to Closing,
Seller's financial and accounting records not relating to the Business or the
other assets, properties
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or rights described in SCHEDULE 1.1(B) (which Schedule may be modified prior to
Closing to exclude any Real Properties which Purchaser does not wish to
acquire), all of which are referred to in this Agreement as the "EXCLUDED
ASSETS."
1.2 AGREEMENT TO PURCHASE. At the Closing, Purchaser shall
purchase the Stock from Seller and LP, upon and subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants of Seller contained herein, in exchange for the Purchase Price
(as defined in Section 1.3). In addition, Purchaser shall assume at the
Closing and agree to pay, discharge or perform, as appropriate, certain
liabilities and obligations of Seller or Holdings, but only to the extent
expressly provided in Section 1.4. Except as expressly provided in Section
1.4, Purchaser shall not assume or be responsible for any liabilities or
obligations based on events occurring prior to Closing relative to the Assets,
the Business, Seller or Holdings.
1.3 THE PURCHASE PRICE.
(a) Purchase Price. In consideration of the transfer to
Purchaser of the Stock, Purchaser shall pay to Seller and LP the aggregate
amount of $135,650,000 (the "PURCHASE PRICE"), which shall be paid by wire
transfer at the Closing; provided, however, the Purchase Price shall be
adjusted (by an adjustment in the amount wire transferred to Seller) by the
amount, if any, determined in accordance with Sections 1.5, 1.6, 1.7, and 7.2
of this Agreement. One percent of the Purchase Price shall be paid to Seller
and the balance to LP.
(b) Fair Market Value. The fair market value for federal
income tax purposes of the Assets shall be agreed to by the parties hereto
prior to the Closing Date. Seller and Purchaser each hereby covenant and agree
that such amounts reflect or will reflect the fair market value of the Assets
and that neither of them, directly or indirectly, through a subsidiary or
affiliate or otherwise, will take a position on any income tax return, before
any Governmental Entity charged with the collection of any income tax, or in
any judicial proceeding that is in any way inconsistent with the tax basis and
fair market value of the Assets set forth on SCHEDULE 1.3(B). Such allocations
will be reflected in the schedules required by Treasury Regulation Section
1.755-2T(c) to be attached to the returns of Purchaser and GP to reflect their
acquisition of interests in the Partnership.
(c) Federal Income Tax Elections. Purchaser and Seller
will join in making an election under Section 338(h)(10) of the Internal
Revenue Code of 1986, as amended (the "CODE") with respect to the purchase and
sale of the stock of GP. Seller will pay all federal income taxes which result
from such election under Section 338(h)(10)(A)(ii) of the Code and Treasury
Regulation Section 1.338(h)(10)-1(e)(1). The Partnership will make an election
under Section 754 of the Code.
1.4 ASSUMPTION OF LIABILITIES.
(a) Except as otherwise specifically provided in this
Section 1.4, (i) in connection with the transfer of the Assets from Seller to
Holdings, Holdings shall assume and agree to pay, discharge or perform, as
appropriate, the liabilities and obligations of Seller (1) that
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accrue or arise after the Closing under the leases of the Leased Properties,
the Holdings Contracts, and the Equipment Leases and (2) those that are set
forth on SCHEDULE 1.4(A) (the "ASSUMED LIABILITIES"); and (ii) at the Closing,
Purchaser shall agree to cause Holdings to pay, discharge or perform, as
appropriate, the Assumed Liabilities.
(b) Notwithstanding Section 1.4(a), it is expressly
understood that, other than obligations and liabilities expressly assumed in
Section 1.4(a), Purchaser shall not be liable for, and shall not assume, any of
Seller's or Holdings' obligations or liabilities, whether known or unknown,
matured or unmatured, fixed or contingent, including but not limited to
liabilities relating to events occurring prior to the Closing, any Taxes (as
hereinafter defined, other than those prorated as of the Closing Date), or any
liabilities under any Employee Benefit Plans (as hereinafter defined) of Seller
or Holdings, it being expressly agreed that upon Closing, Seller shall remain
liable for all obligations of Holdings incurred prior to Closing, other than
Assumed Liabilities. Seller shall remain obligated to pay and discharge any of
its liabilities and obligations not expressly assumed hereby. Seller hereby
agrees that it will indemnify Purchaser as set forth in Section 6.2 for any
liabilities of Seller not expressly assumed by Purchaser pursuant to Section
1.4(a).
1.5 PRORATIONS. All annual or periodic ad valorem fees, taxes and
assessments, licensing fees and vehicle use fees, and similar charges imposed
by taxing authorities on the Assets (collectively, "PROPERTY TAXES") shall be
borne and paid (a) by Seller for all full tax years or periods ending before
the Closing Date (as defined in Section 2.1) and for that portion of any tax
year or period ending on or after the Closing Date from the date of
commencement of such year or period to the date immediately preceding the
Closing Date and (b) by Purchaser for all full tax years or periods beginning
on or after the Closing Date and for that portion of any tax year or period
ending on or after the Closing Date from and including the Closing Date to the
final date of such year or period, regardless of when or by which party such
Property Taxes are actually paid to the applicable taxing authority. In
addition, all rents and other lease charges, power and utility charges, license
or other fees, revenues on Holdings Contracts, and similar items shall be
allocated between Purchaser and Seller effective as of 12:01 a.m. on the
Closing Date. Such allocations shall be determined and payment accordingly
made from one party to the other, as the case may be, on the Closing Date to
the extent they are known and agreed to by Purchaser and Seller; otherwise such
allocations shall be determined and payment made (effective as of 12:01 a.m. on
the Closing Date) as soon as practicable. All work for customers of Seller
shall be performed for the account of Purchaser, and invoiced under the name of
Purchaser, effective as of 12:01 a.m. on the Closing Date, unless the Closing
does not occur.
1.6 TRANSFER TAXES; RECORDING FEES.
(a) Purchaser and Seller agree that Seller's sale and
Purchaser's purchase of the Stock is not subject to sales and use taxes in all
jurisdictions, and that all parties hereto shall treat the sale of Stock
provided for herein accordingly; provided, however, that if, contrary to the
foregoing, it shall be finally determined after the Closing that the sale by
Seller and the purchase by Purchaser of the Stock or any other transaction
consummated pursuant to the Closing, is
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subject to any sales, use or similar tax, then all such taxes shall be borne
equally by Purchaser and Seller.
(b) Purchaser shall pay any and all recording, filing or
other fees relating to the conveyance or transfer of (i) the Stock from Seller
and LP to Purchaser, or (ii) the Assets from Seller to Holdings.
1.7 CERTAIN ENVIRONMENTAL MATTERS. If prior to the Closing Date,
Purchaser determines pursuant to its investigation conducted in accordance with
Section 4.1(d) that, as a result of an environmental condition existing at any
one or more separate parcels of the Real Properties, Purchaser elects to cause
Holdings not to acquire any such parcel(s), Purchaser may give written notice
of such election and of the reasons therefor, in which case such parcel(s)
shall not be acquired by Holdings and shall be excluded from the Assets. Each
parcel excluded pursuant to this Section 1.7 is referred to herein as an
"EXCLUDED PARCEL." If any parcel of Real Property is so excluded, the Purchase
Price shall be reduced by the value relating to such Excluded Parcel that is to
be determined by the parties, in good faith, at or prior to Closing. In
addition to identifying a parcel of Real Property as an Excluded Parcel,
Purchaser at Closing also, in its sole discretion, shall be permitted to lease
such property from Seller with an option to purchase. Any such lease shall be
for a term of one year with an option for Purchaser to purchase the Real
Property at a value to be determined by the parties, in good faith, at or prior
to Closing. Rentals under any such lease shall be $100 per month for each such
parcel, plus taxes; any such lease shall not impose any obligations on
Purchaser to indemnify Seller with respect to pre-existing environmental
matters.
1.8 ADJUSTMENT FOR CERTAIN LIABILITIES. The Purchase Price set
forth in Section 1.3(a) was determined on the basis that Seller prior to the
Closing would fully pay (i) the Vehicle Leases and (ii) indebtedness evidenced
by a note dated on or about March 22, 1995, payable by Seller to Xxxxx X.
Xxxxxx and Xxxxxxx X. Xxxxx in the approximate outstanding amount of $3.9
million, secured by certain of the Assets, and that Purchaser and Holdings
would not be subject to any liability or obligation with respect to such
indebtedness from and after the Closing.
ARTICLE II - CLOSING, ITEMS TO BE DELIVERED,
THIRD PARTY CONSENTS AND FURTHER ASSURANCES
2.1 CLOSING. Subject to the terms and conditions of this
Agreement, the closing (the "CLOSING") of the sale and purchase of the Stock
shall take place at 10:00 a.m., local time, on such date as is mutually agreed
to by Purchaser and Seller but in no event later than two business days after
the date on which the conditions specified in Sections 5.1(j), 5.1(k), 5.2(e)
and 5.2(g) have been satisfied, at the offices of Jenkens & Xxxxxxxxx, A
Professional Corporation, 0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, and
shall be effective as of 12:01 a.m. local time on such date. The effective
date of the Closing is sometimes herein referred to as the "CLOSING DATE."
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2.2 ITEMS TO BE DELIVERED AT CLOSING. In connection with the
Closing and subject to the terms and conditions contained in this Agreement:
(a) Seller shall deliver to Purchaser the following:
(i) at the Closing, stock certificates
representing all of the Stock of Holdings, together with properly executed
stock transfer powers in a form consistent with the provisions of this
Agreement and reasonably satisfactory to the parties hereto; copies of fully
executed instruments of conveyance evidencing that all of the Assets have been
transferred and conveyed to Holdings, including but not limited to bills of
sale with covenants of warranty of title in a form consistent with the
provisions of this Agreement and reasonably satisfactory to the parties hereto;
assignments in a form consistent with the provisions of this Agreement and
reasonably satisfactory to the parties hereto; warranty deeds (or special
warranty deeds if Seller acquired such property pursuant to a special warranty
deed) in a form consistent with the provisions of this Agreement and reasonably
satisfactory to the parties hereto; and other good and sufficient instruments
and documents of conveyance and transfer, in forms reasonably satisfactory to
Purchaser and its counsel, as shall be necessary and effective to evidence the
transfer and assignment to Holdings of all of Seller's right, title and
interest in and to the Assets; and
(ii) at the Closing or concurrently therewith at a
mutually agreed upon location, all of the certificates, certificates of title,
Contracts, customer lists, supplier lists, Equipment Leases, Real Estate
Leases, all correspondence, files, plans and other documents and instruments,
books, Records, and data belonging to Seller or Holdings which are part of the
Assets;
and simultaneously with such delivery, Seller shall take all steps as may be
reasonably required to put Purchaser in control of Holdings and to put Holdings
in actual possession and operating control of the Assets.
(b) Purchaser shall deliver to Seller, and in the case of
(i) to LP, the following:
(i) the wire transfer of the Purchase Price
(adjusted in accordance with Sections 1.5, 1.6, 1.7, and 7.2); and
(ii) a fully executed assignment of Contracts,
assignment of leases of Leased Properties, and assignment of Equipment Leases
in a form consistent with the provisions of this Agreement and reasonably
satisfactory to the parties hereto.
(c) At or prior to the Closing, the parties hereto also
shall deliver to each other the agreements, opinions, certificates and other
documents and instruments referred to in Article V.
2.3 THIRD PARTY CONSENTS. To the extent that Seller's or
Holdings' rights under any Contracts, Authorizations (as defined in Section
3.1(j)), Permits, Equipment Leases, Real Estate Leases, or other Assets may not
be transferred in accordance with the terms of this Agreement
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without the consent of another person, which consent has not been obtained
prior to the Closing, this Agreement shall not constitute an agreement to
assign or transfer the same if an attempted assignment or transfer would
constitute a breach thereof or be unlawful, and Purchaser and Seller, each at
its own expense, shall use commercially reasonable efforts to obtain any such
required consent(s) as promptly as possible. If any such consent shall not be
obtained or if any attempted assignment or transfer would be ineffective or
would impair Holdings' rights under the Asset in question so that Holdings
would not in effect acquire the benefit of all such rights, Seller, to the
maximum extent permitted by law and by the terms of any documents affecting the
Asset, shall act for one year after the Closing as Holdings' agent in order to
obtain for Holdings the benefits thereunder and shall cooperate, to the maximum
extent permitted by law and by the terms of any document affecting the Asset,
with Purchaser in any other reasonable arrangement designed to provide such
benefits to Holdings. Seller agrees to pay any termination or assignment fees
provided in such agreements.
2.4 FURTHER ASSURANCES. Seller from time to time after the
Closing, at Purchaser's request, will execute, acknowledge and deliver to
Purchaser such other instruments of conveyance and transfer and will take such
other actions and execute and deliver such other documents, certifications and
further assurances as Purchaser reasonably may request in order to vest more
effectively in Holdings, or to put Holdings more fully in possession of, any of
the Assets, or to better enable Holdings to complete, perform or discharge any
of the liabilities or obligations assumed by Holdings at the Closing pursuant
to Section 1.4. Each of the parties will cooperate with the other and execute
and deliver to the other parties hereto such other instruments and documents
and take such other actions as reasonably may be requested from time to time by
the other party hereto as necessary to carry out, evidence and confirm the
intended purposes of this Agreement. If Seller dissolves or is merged out of
existence within one year following the Closing Date, effective as of the
dissolution of Seller, Seller hereby irrevocably appoints Purchaser or
Purchaser's substitute as its attorney-in-fact coupled with an interest and
with full power of substitution to carry out the provisions of this Section
2.5 CONDITIONS OF ASSETS. The Assets acquired by Purchaser as a
result of Purchaser's acquisition of the Stock, shall be acquired on an "AS IS,
WHERE IS" basis. Title, possession and risk of loss with respect to the Assets
shall be deemed to pass on the Closing Date.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Purchaser that the following statements are true and
correct, except as set forth on the Schedules. Unless the context clearly
indicates otherwise, references in this Agreement to Seller shall include
Seller, Holdings and LP prior to Closing.
(a) Corporate Existence. Seller is and, prior to
Closing, GP will be a corporation duly organized, validly existing and in good
standing under the laws of Louisiana and Delaware, respectively, and the
Partnership will be a limited partnership duly organized and validly existing;
Seller is and, prior to Closing, Holdings will be duly qualified to do business
and
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in good standing as a foreign corporation, and the Partnership will be duly
qualified to do business in Texas and in each other jurisdiction where the
conduct of the Business by it requires it or them to be so qualified, all of
which jurisdictions are listed on SCHEDULE 3.1(A).
(b) Corporate Power; Authorization; Enforceable
Obligations. Seller has the corporate power and authority to execute, deliver
and perform this Agreement. The execution, delivery and performance of this
Agreement by Seller have been duly authorized by all necessary corporate action
as of the Closing Date. This Agreement has been, and the other agreements,
documents and instruments required to be delivered by Seller in accordance with
the provisions hereof (collectively, the "SELLER'S DOCUMENTS") will be, duly
executed and delivered on behalf of Seller by duly authorized officers or
directors of Seller, and this Agreement constitutes, and the Seller's Documents
when executed and delivered will constitute, the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with their
respective terms except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, or other laws affecting the enforcement of
creditors' rights generally and the application of general principles of
equity. Seller's Board of Directors has approved this Agreement and the
transactions contemplated hereby.
(c) Validity of Contemplated Transactions, Etc. The
execution, delivery and performance of this Agreement by Seller does not and
will not violate, conflict with or result in the breach of any material term,
condition or provision of, or require the consent of any other person under:
(i) any Regulation (as hereinafter defined) to
which Seller is subject other than filings required under the HSR Act and the
Securities Exchange Act of 1934, as amended,
(ii) any judgment, order, writ, injunction, decree
or award of any court, arbitrator or Governmental Entity which is applicable to
Seller,
(iii) the charter documents of Seller or any
securities issued by Seller, or
(iv) any material mortgage, indenture,
undertaking, note, bond, debenture, letter of credit, commitment, agreement,
contract, lease, Authorization, Holdings' Contract (including but not limited
to the Equipment Leases) or other instrument, or understanding, whether or not
assigned hereby (collectively, the "CONTRACTS"), by which Seller may have
rights or by which any of the Assets may be bound or affected.
No fact or condition exists which would give any party to a Contract the right
to terminate, modify, accelerate or otherwise change the existing rights or
obligations of Seller or Holdings in or to any material Asset. Except as
aforesaid, no Authorization, approval or consent of, and no registration or
filing with, any Governmental Entity is required in connection with the
execution, delivery or performance of this Agreement by Seller.
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(d) No Third Party Options. No person has any existing
agreements, options, commitments or rights to acquire any of the Assets or any
interest therein.
(e) Financial Statements.
(i) Seller has delivered to Purchaser copies of
balance sheets relating to the Business at December 31, 1994 and December 31,
1995 and related statements of income, cash flows, and owner's equity for the
fiscal years then ended and for the fiscal year ended December 31, 1993,
audited and reported upon by Coopers & Xxxxxxx. Seller also has delivered to
Purchaser certain unaudited financial information of the Business as of and for
the nine months ended September 30, 1995, and September 30, 1996. Upon the
Effective Date or promptly thereafter as soon as they are available, Seller
will deliver to Purchaser the unaudited monthly statements of income for the
month ended October 31, 1996 and for each month thereafter until the Closing
relating to the Business. Such unaudited financial statements will contain all
adjustments, which shall be solely of a normal recurring nature, necessary to
present fairly, in all material respects, the results of operations for the
period then ended. The monthly unaudited financial statements described above
shall also set forth for each such period the amount of maintenance capital
expenditures, and maintenance and repairs, recorded for such period with
respect to the Business. All of the above mentioned financial statements shall
be referred to herein as the "FINANCIAL STATEMENTS."
(ii) The balance sheet as of September 30, 1996
(the "BALANCE SHEET") includes the Assets which, if the Closing had been held
on September 30, 1996 (the "BALANCE SHEET DATE"), would have been held directly
or indirectly by Holdings in accordance herewith.
(iii) The Financial Statements fairly present, in
all material respects, as of their respective dates, the financial position,
assets and liabilities (whether accrued, absolute, contingent or otherwise) of
the Business. The monthly, unaudited financial information referred to above
fairly presents, and shall fairly present, in all material respects, the
operating income of the Business for such periods. The property, plant and
equipment shown as belonging to the Business in the Balance Sheet fairly
reflects and at the Closing will fairly reflect in all material respects the
Assets being acquired hereunder and necessary to conduct the Business, subject
to acquisitions and dispositions thereof subsequent to the Balance Sheet Date
not prohibited by this Agreement.
(f) Taxes; Tax and Other Returns and Reports. All
federal, state, local and foreign tax returns, reports, statements and other
similar filings required to be filed by Seller or to be filed by Holdings or LP
and affecting the Assets or the Business (the "TAX RETURNS") with respect to
any federal, state, local or foreign taxes, assessments, interest, penalties,
deficiencies, fees, duties and other governmental charges or impositions
(including without limitation all income tax, unemployment compensation, social
security, payroll, sales and use, excise, gross receipts, value-added,
privilege, property, ad valorem, franchise, license, school transfer, mortgage
recording, customs, withholding, estimated and other tax or similar
governmental charge or imposition under laws of the United States or any state,
county, or municipal entity, agency or instrumentality or political subdivision
thereof or any foreign country or political
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subdivision thereof) insofar as same may affect the Assets or the Business (the
"TAXES") have been timely filed with the appropriate governmental agencies in
all jurisdictions in which such Tax Returns are required to be filed, and all
such Tax Returns properly reflect the liabilities of Seller or Holdings for
Taxes for the periods, property and events covered thereby. All Taxes,
including, without limitation, those which are called for by the Tax Returns,
have been properly accrued or timely paid. Purchaser will have no liability to
any person or taxing authority for Taxes relating to actions or events
occurring prior to the Closing Date, except as otherwise provided by Section
1.5. Seller's warranties and representations under this Section 3.1(f) shall
be construed consistently with Section 1.5.
(g) Books of Account. The books, records and accounts of
Seller and Holdings maintained with respect to the Business and the Assets
fairly reflect, in all material respects and in reasonable detail, the
transactions and the assets and liabilities of Seller and Holdings with respect
to the Business.
(h) Existing Condition. Since the Balance Sheet Date,
neither Seller nor Holdings has entered into any transaction affecting the
Business or the Assets except in the ordinary course of business, consistent
with past practice; encumbered or transferred any material assets which would
have been included in the Assets if the Closing had been held on the Balance
Sheet Date or on any date since then except in the ordinary course of business,
consistent with past practice; subjected any of its Assets to any lien or other
encumbrance of any nature whatsoever, except in the ordinary course of
business, consistent with past practice, and except for Permitted Liens
(defined in Section 3.1(i)); made any amendment or termination of any material
agreement affecting the Business or the Assets, or canceled, modified or waived
any rights of substantial value affecting the Business or the Assets, whether
or not in the ordinary course of business; changed any of the accounting
principles followed by it or the methods of applying such principles; increased
the compensation of any Affected Employee (as hereinafter defined) other than
in the ordinary course of business; or suffered any loss, whether or not
covered by insurance, materially and adversely affecting the Business or
Assets.
(i) Title to Properties. Notwithstanding anything herein
to the contrary, Seller has at the Effective Date and Holdings will have on the
Closing Date, good, valid and marketable title (or in the case of real
property, indefeasible title) to all of its assets, real, personal and mixed,
which would be included in the Assets if the Closing took place on the date
hereof, which it purports to own, including without limitation all assets
reflected in the Balance Sheet, free and clear of all liens (including but not
limited to Tax liens), claims, restrictions and other encumbrances and defects
of title of any nature whatsoever, except for (i) liens for current real or
personal Property Taxes not yet due and payable; (ii) Real Properties as to
which Seller or Holdings is the lessee; (iii) liens and other exceptions to
title as disclosed in SCHEDULE 3.1(I); (iv) inchoate mechanics' and
materialmen's liens for construction in progress; (v) inchoate workmen's,
repairmen's, warehousemen's, customers', employees' and carriers' liens arising
in the ordinary course of business; (vi) liens and imperfections of title
(including liens created by operation of law) that, singularly or in the
aggregate, would not materially affect the value or operations of the Assets
subject to such lien in the hands of a purchaser thereof; and (vii) liens
securing obligations included in the Assumed Liabilities (collectively,
"PERMITTED LIENS").
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(j) Compliance with Laws; Authorizations. Seller and
Holdings have complied in all material respects with each, and are not in
material violation of any, law, ordinance or governmental or regulatory rule or
regulation, whether federal, state, local or foreign, to which the Business or
Assets is subject ("REGULATIONS"). Seller on the Effective Date and Holdings
on the Closing Date owns, holds, possesses or lawfully uses or will own, hold,
possess or lawfully use in the operation of the Business, all permits,
franchises, licenses, easements, rights, applications, filings, registrations
and other authorizations ("AUTHORIZATIONS") which are in any material respect
necessary for it to conduct its Business as now conducted or for the ownership
and use of the Assets in the conduct of the Business. Seller is and at the
Closing Date, Holdings will be in compliance in all material respects with all
Regulations related to the Authorizations. Seller is not in material default,
and on the Closing Date Holdings will not be in material default, nor has
Seller received any notice of any claim of material default, with respect to
any such Authorization. Seller has not received any notice that any of the
material Authorizations used by Seller or to be used by Holdings in the
operation of the Business would not or cannot be renewed or continued in the
ordinary course of business, and to Seller's knowledge, all such material
Authorizations are renewable by their terms or in the ordinary course of
business. No person other than Seller owns or has any proprietary, financial
or other interest (direct or indirect) in any Authorization.
(k) Transactions With Affiliates. Any material
transactions between Seller and its affiliates affecting the Business or the
Assets and occurring since January 1, 1995 have been upon terms substantially
comparable to those that would have been available to Seller from third parties
in arms length transactions.
(l) Litigation. As of the date hereof, except as set
forth on SCHEDULE 3.1(L), and except for insured claims subject to customary
deductibles, no litigation or administrative proceeding, including any
arbitration, investigation or other proceeding of or before any court,
arbitrator or Governmental Entity is pending or, to the best knowledge of
Seller, threatened against Seller, which relates to the Business or Assets or
the transactions contemplated by this Agreement, nor does Seller know of any
reasonably likely basis for any such litigation, arbitration, investigation or
proceeding. As of the date hereof, Seller is not a party to or subject to the
provisions of any judgment, order, writ, injunction, decree or award of any
court, arbitrator or Governmental Entity which may materially adversely affect
the Assets or Business, or the transactions contemplated hereby.
(m) Contracts and Commitments. Except as set forth on
SCHEDULE 3.1(M), Seller is not a party to, and at Closing, Holdings will not be
a party to any written or oral:
(i) lease under which Seller or Holdings is
either lessor or lessee relating to the Assets or any property at which the
Assets are located other than those set forth on the Schedules to this
Agreement;
(ii) Contract or agreement for any capital
expenditure or leasehold improvement in excess of $100,000 relating to the
Assets or the Business; or
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(iii) Contract or agreement limiting or restraining
Seller or Holdings, or their respective successors or assigns, from engaging or
competing in any manner in the Business.
Each of the Contracts and agreements listed in SCHEDULE 3.1(M), and each other
Holdings Contract, including but not limited to Equipment Leases under which
Purchaser is to acquire rights or obligations hereunder, is valid and
enforceable in accordance with its terms; Seller is, and to Seller's knowledge
all other parties thereto are, in material compliance with the provisions
thereof; Seller is not, and to Seller's knowledge no other party thereto is, in
default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein; and to Seller's knowledge
no event has occurred which with or without the giving of notice or lapse of
time, or both, would constitute a default thereunder. Furthermore, Seller is
not aware of any reason that Seller or any other party will be unable to comply
with any of the requirements contained in any such Contract or agreement.
(n) Environmental Matters. Except as set forth in
SCHEDULE 3.1(N), Seller with respect to the Assets (a) is, and has continuously
been, in compliance in all material respects with all laws, regulations and
ordinances relating to environmental, health and safety matters (including
those relating to toxic and hazardous waste and the discharge of matter into
the air or water) and (b) have not had any Contaminant (as hereinafter defined)
placed, held, located, released, generated, treated, stored or disposed of
thereon except for Contaminants properly and legally stored or disposed of in
compliance with applicable environmental laws or as would not have a material
adverse effect. Except as set forth in SCHEDULE 3.1(N), Seller has not
received any notice or claim, and Seller is not aware of any facts suggesting,
that it has been or may be liable to any person as a result of any Contaminant
having been generated, treated, stored, discharged, emitted, released or
transported by it with respect to the Business or the Assets that would have a
material adverse effect on the Assets or the Business. Except as set forth in
SCHEDULE 3.1(N), no conditions or circumstances are known to Seller to exist or
to have existed, and no activities are known to Seller to be occurring or to
have occurred, that are resulting or have resulted in the exposure of any
person or property to a Contaminant such that Seller, or after Closing,
Holdings or Purchaser may in the future be liable to such persons or to the
owners of such property for personal or other injuries or damages resulting
from such exposure. For purposes of this Agreement, a "CONTAMINANT" is any
waste, pollutant, hazardous substance, toxic substance, hazardous waste,
special waste, petroleum-based substance or waste, product or by-product or any
constituent of any said substance, waste or product, whether solid, liquid or
gaseous in form.
(o) Real Properties.
(i) Real Estate Leases.
A. Seller has delivered to Purchaser a
true and complete copy of every real estate lease and sublease that is in
writing to which Seller is a tenant or subtenant as to each of the Leased
Properties described on SCHEDULE 1.1(A)(II) (the "REAL ESTATE LEASES").
B. Each Real Estate Lease is, and at
Closing shall be, in full force and effect and has not been assigned, modified,
supplemented or amended except as listed
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in SCHEDULE 1.1(A)(II) or SCHEDULE 3.1(O), and no party to any Real Estate
Lease is in material default under any of the Real Estate Leases, and, other
than provisions in the Real Estate Leases permitting termination without cause,
no circumstances or state of facts presently exists which, with the giving of
notice or passage of time, or both, would permit the landlord, lessee or
sublessee under any Real Estate Lease to terminate any Real Estate Lease.
C. Prior to Closing, Seller shall
assign to Holdings all right, title and interest of Seller in and to all Real
Estate Leases and shall deliver to Purchaser originals or copies of all
consents required for such assignments. All security deposits made by Seller
or Holdings pursuant to any of the Real Estate Leases, including but not
limited to the security deposits pertaining to the Real Estate Leases listed in
SCHEDULE 3.1(O), together with all interest earned on such deposits shall be
retained by Holdings at and following the Closing.
(ii) Zoning. To the best of Seller's knowledge,
the Real Properties, as used at the date of execution of this Agreement, until
and including the Closing Date, are in material compliance with all applicable
zoning and other land use requirements.
(iii) Access. Seller has obtained all material
Authorizations and rights-of-way, including proof-of-dedication, which are
necessary to ensure vehicular and pedestrian ingress and egress to and from the
Real Properties. To the best of Seller's knowledge, there are no material
restrictions on entrances to or exits from the Real Properties to adjacent
public streets and no conditions exist which will result in the termination of
the present access from the Real Properties to existing highways and roads.
(iv) Assessments. Neither Seller nor Holdings has
received any written notice from any Governmental Entity that the assessed
value of any of the Real Properties has been determined to be materially
greater than that upon which county, township or school tax was paid for the
1995 tax year. If, at the time of Closing, the Real Properties or any portion
thereof are affected by any assessment which is or may become payable in annual
installments, of which one or more is then payable or has been paid, then for
the purpose of this Agreement, all the unpaid installments of any such
assessment including without limitation those which are to become due and
payable after Closing, shall be prorated in accordance with Section 1.5.
(v) Eminent Domain. Neither Seller nor Holdings
has received any written notice and neither of them has any reason to believe
that any Governmental Entity having the power of eminent domain over the Real
Properties has commenced or intends to exercise the power of eminent domain or
a similar power with respect to any part of the Real Properties that in the
aggregate is material to the Business.
(vi) No Violations. The Real Properties and the
present uses thereof comply in all material respects with all regulations of
the Governmental Entities having jurisdiction over the Real Properties, and
neither Seller nor Holdings has received any written notices from any
Governmental Entity, and neither of them has any reasonable basis upon which to
believe that the Real Properties or any improvements erected or situated
thereon, or the uses
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conducted thereon, violate any regulations of any such Governmental Entity that
would have a material adverse effect on Purchaser.
(vii) Executory Contracts. Other than the Real
Estate Leases, Seller is not a party to or bound by, and at the Closing Date,
Holdings will not be a party to or bound by, any material executory contracts
for the operation, management or maintenance of the Real Properties.
(p) Availability of Documents. Seller has made available
to Purchaser copies of all of the Contracts, Permits, and licenses listed in
the Schedules. Seller will use its best efforts to obtain any such documents
not in its possession and promptly deliver same to Purchaser. Such copies are
true and complete and include all amendments, supplements and modifications
thereto or waivers currently in effect thereunder.
(q) Assets. Except as set forth in SCHEDULE 3.1(Q), and
except for working capital of Holdings and the other assets of Holdings
expressly excluded from the Assets pursuant to Section 1.1(b), the Assets on
the Closing Date will include all rights and properties reasonably necessary
for Purchaser or Holdings to continue to conduct the Business in the manner in
which it is conducted by Seller on the Effective Date, and no property excluded
or omitted from the Assets constitutes property or rights material to the
Business.
(r) Restrictions. Neither Seller nor Holdings is a party
to any material agreement, license, Permit, Authorization or other instrument
or, to the best of either of their knowledge, any understanding or oral
agreement, and neither Seller nor Holdings is subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree or
award, which materially adversely affects or materially restricts the Business
or Assets.
(s) Conditions Affecting the Business. Other than the
transactions contemplated by this Agreement and such conditions as may affect
as a whole the well servicing industry generally, there is no fact known to
Seller or Holdings which would materially adversely affect the Business
considered as a whole.
(t) Employee Benefit Plans.
(i) SCHEDULE 3.1(T) lists all Employee Benefit
Plans of Seller. Except for the plan maintained by Seller pursuant to Section
401(k) of the Code (the "401(K) PLAN"), Seller is not now a party to any
Pension Plan, and for the preceding five years has not been a party to any
Pension Plan subject to Title IV of ERISA. Seller is under no legal obligation
to create a new Employee Benefit Plan or, except as provided herein, amend an
existing Employee Benefit Plan in a manner that would have a material effect on
any Affected Employee, except as required by applicable law.
(ii) All material documents, including all
amendments thereto, with respect to each Employee Benefit Plan under which one
or more Affected Employees are, or are reasonably likely to be, participants
have been given to Purchaser or will be made available to
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Purchaser prior to the Closing Date. Such documents include, but are not
limited to, the following documents to the extent material and applicable: plan
documents, trust agreements, insurance contracts, annuity contracts, fidelity
bonds and fiduciary liability policies and applications therefor, summary plan
descriptions, pending filings with, pending applications to and correspondence
with any Governmental Entity, unresolved disputed claims made by or against any
Employee Benefit Plan, investment manager and investment advisory contracts,
administration contracts, actuarial reports, audit reports, financial
statements, union contracts, agreements concerning plan mergers or transfers,
determination letters and private letter rulings from the Internal Revenue
Service ("IRS"), advisory opinion letters from the Department of Labor ("DOL")
or the Pension Benefit Guaranty Corporation ("PBGC"), prohibited transaction
exemptions, resolutions of the Board of Directors of Seller, minutes or other
records of the meetings of any plan committee, and current reports of trustees.
(iii) To the extent required under the terms of any
Employee Benefit Plan and applicable law, and otherwise only to the extent
Holdings shall determine in its sole discretion, Holdings shall adopt each
Employee Benefit Plan(s) for the benefit of Affected Employees prior to the
Closing Date, and Seller and Holdings shall not (except by operation of law)
terminate any adopted Employee Benefit Plan solely with respect to Affected
Employees prior to the Closing Date without providing prior written notice to
Purchaser; however, at the written request of Purchaser delivered within a
reasonable time prior to the Closing Date, Seller shall, or shall cause
Holdings to, terminate any one or more of such Employee Benefit Plans prior to
the Closing Date with respect to the participation of Holdings and, to the
extent possible under the terms of the Employee Benefit Plan, and applicable
law, the Affected Employees. All benefits earned or accrued by Affected
Employees under the 401(k) Plan, or the 401(k) Restoration Plan, if terminated
prior to the Closing Date, shall be fully vested. Seller shall cooperate with
Purchaser to the full extent reasonably possible to insure that Affected
Employees receive all of the benefits they have accrued under each Employee
Benefit Plan through the Closing Date. Without limitation, to the extent
Seller maintains an Employee Benefit Plan which provides coverage or benefits
to any Employee or such Employee's dependents with respect to medical expenses
incurred after the Employee terminates employment with Seller, other than
coverage or benefits provided solely as a result of compliance with Section
4980B of the Code, at any time through the Closing Date if such Employee
Benefit Plan is adopted by Holdings, Seller is legally entitled to cause
Holdings to terminate such post-termination of employment medical coverage or
benefits, with respect to all Affected Employees.
(iv) At the written request of Purchaser within a
reasonable time prior to the Closing Date, and upon agreement between Seller
and Purchaser with respect to Purchaser's reimbursement of Seller for the cost
hereof, and subject to the consents, if any, required of third parties, Seller
will allow Affected Employees to remain under Seller's medical plans and
related cafeteria plan for a period requested by Purchaser, not to exceed 30
days, after the Closing Date. Seller shall cause Holdings to withdraw as an
adopting employer in all Employee Benefit Plans as of the Closing Date (or, if
later, the applicable date under the preceding sentence). Seller, Holdings and
Purchaser shall cooperate in causing the separation of the portion of each
Employee Benefit Plan adopted by Holdings and continued after the Closing Date
attributable to Affected Employees from the corresponding Employee Benefit Plan
sponsored by Seller. Without limiting
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the generality of the foregoing, Seller, Holdings, and Purchaser agree to
separate Seller's voluntary employee beneficiary association ("VEBA") trust
under which vacation benefits are paid, by transferring to a separate VEBA
trust maintained by Holdings as soon as practicable following the Closing Date,
$400,000 in cash.
(v) Except to the extent the following would not
have a material adverse effect on Purchaser, each person who has participated
in the operations of any Employee Benefit Plan has acted in accordance with the
material terms and conditions of such Employee Benefit Plan; and each Employee
Benefit Plan is now, and has always been established, maintained and operated
materially in accordance with all applicable laws (including but not limited to
ERISA and the Code), as well as materially in accordance with its plan
documents.
(vi) Except to the extent the following would not
have a material adverse effect on Purchaser, all communications to Affected
Employees with respect to each Employee Benefit Plan by any authorized person
have reflected accurately the documents and operations of such Employee Benefit
Plan, and no person has any material liability by reason of any communication
or failure to communicate with respect to or in connection with any Employee
Benefit Plan.
(vii) The 401(k) Plan is and always has been
qualified under Section 401 of the Code, and each trust maintained in
connection with such 401(k) Plan is and always has been tax exempt under
Section 501 of the Code. The IRS has issued a determination letter with
respect to the current version of the 401(k) Plan stating that such 401(k) Plan
is qualified.
(viii) The assets of all funded Employee Benefit
Plans that are not Pension Plans are held by entities that are and always have
been tax exempt under all applicable federal and state laws and, without
limitation, each VEBA which is intended to fund or implement any Welfare Plan
has received a favorable ruling or determination letter as to its tax-exempt
status.
(ix) Except as described in SCHEDULE 3.1(T), and
except with respect to taxes on benefits paid or provided, no material income,
excise or other tax or penalty (federal or state) has been waived or excused,
has been paid or is owed by any person (including but not limited to any
Employee Benefit Plan, any plan fiduciary and Seller) with respect to the
operations of, or any transactions with respect to, any Employee Benefit Plan.
No action has been taken, nor has there been any failure to take action, that
would subject Holdings to any material liability for any tax or penalty in
connection with any Employee Benefit Plan. No reserve for any taxes or
penalties has been established with respect to any Employee Benefit Plan, nor
has any advice been given to any person with respect to the need to establish
such a reserve.
(x) There are no agreements by Seller which
might, under any circumstances, result in payments to any Affected Employee who
is an officer, shareholder, or highly compensated individual within a period of
two years following the Closing Date of amounts which would constitute
"parachute payments" under Section 280G of the Code that are nondeductible to
Seller or subject to tax under Section 4999 of the Code.
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(xi) All reports, forms, summaries, and other
documents required to be filed, or advisable to be filed, with any Governmental
Entity, or with any participant or beneficiary with respect to any Employee
Benefit Plan have been timely filed and are materially accurate.
(xii) Except as described in SCHEDULE 3.1(T) or
with respect to the filing of a Summary Plan Description, a Summary of Material
Modifications, an Annual Report, tax report, or a request for a determination
letter with respect to the qualified status of a Pension Plan, there have been
no written or oral communications with respect to any Employee Benefit Plan
with the IRS, DOL, or the PBGC.
(xiii) All contributions required to be made to or
with respect to each Employee Benefit Plan that are due have been completely
and timely made. All such contributions, and any further such contributions
paid prior to the Closing Date, have been, or will be, fully deducted by
Seller for federal and state income tax purposes; such deductions have not been
challenged or disallowed by any Governmental Entity; and Seller has no reason
to believe that such deductions are not allowable.
(xiv) All material benefits and other payments due
and payable under or by any Employee Benefit Plan have been completely and
timely paid.
(xv) Except as described in SCHEDULE 3.1(T), to
the best of Seller's knowledge, there has been no actual, anticipated,
threatened, or expected material actions, suits, or claims (other than routine
claims for benefits in the ordinary course), or arbitration, or any material
complaints to or by any Governmental Entity filed, threatened, or expected,
concerning or involving any Employee Benefit Plan, and, without limitation,
Seller has no knowledge of any facts which could give rise to any such actions,
suits, claims or complaints.
(xvi) No material claims have been made or are
expected to be made with respect to any bond or any fiduciary liability or
other similar insurance with regard to the actions of any person in connection
with any Employee Benefit Plan, nor has there been nor is there expected to be
any notice to any insurer under any such bond or policy with regard to any
Employee Benefit Plan. No application for any bond or fiduciary liability or
similar insurance policy with respect to any Employee Benefit Plan has been
rejected nor is any such bond or policy now subject to any qualification,
condition or exclusion.
(xvii) Holdings will be in material compliance with
all requirements of the continuation health care coverage requirements of
Section 4980B of the Code with respect to any Employee Benefit Plan adopted by
Holdings on or prior to the Closing Date.
(xviii) With respect to the 401(k) Plan and the
401(k) Restoration Plan, Seller's and/or Holdings' matching contribution shall
be made with respect to Affected Employee contributions through the Closing
Date. All financial reports and statements with respect to each Employee
Benefit Plan contain materially accurate statements of the financial condition
of such Employee Benefit Plan.
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(xix) No events have occurred or are expected to
occur with respect to any Employee Benefit Plan that would cause a material
adverse effect on Holdings.
(xx) The cost of providing benefits under, and
paying liabilities of, each material Employee Benefit Plan with respect to
Affected Employees for 1996 will be provided prior to the Closing Date upon
written request. All additional direct or indirect costs with respect to
establishing or maintaining each Employee Benefit Plan (including but not
limited to legal fees, accounting fees, and administrative costs), to the
extent they can be allocated to Affected Employees, for 1996 will be made
available to Purchaser prior to the Closing Date upon written request. All of
the information in this subsection shall be based on the best reasonable
estimate of Seller.
(xxi) There have been no contributions to any
Employee Benefit Plan in any form other than cash, and there has been no
prohibited transaction (within the meanings of Section 406 of ERISA and Section
4975 of the Code) with respect to any Employee Benefit Plan which would
materially affect Holdings.
(xxii) With respect to any Employee Benefit Plan, no
insurance contract, annuity contract or other agreement or arrangement with any
financial or other organization would impose a penalty, discount or other
reduction on account of the withdrawal of assets from such organization or the
change in investment of such assets.
(xxiii) The name, address and telephone number of
each person who gives or has given material advice of any kind to or in
connection with each Employee Benefit Plan will be made available to Purchaser
prior to the Closing Date upon written request.
(xxiv) The following are definitions used primarily,
or exclusively, in this Section 3.1(t):
A. "AFFECTED EMPLOYEE" means every Employee
employed by Holdings on the Closing Date, and each former Employee, if any,
with respect to whom Holdings has assumed a direct or indirect liability,
responsibility, or employment relationship with under any contract, law or
Employee Benefit Plan.
B. "EMPLOYEE BENEFIT PLAN" means all present
plans, programs, agreements, arrangements, and methods of contribution or
compensation providing any remuneration or benefits, other than current cash
compensation, to any current or former Employee or to any other person who
provides services to Seller, whether or not such plan or plans, programs,
agreements, arrangements, and methods of contribution or compensation are
subject to ERISA, as hereinafter defined, and whether or not such plan or
plans, programs, agreements, arrangements and methods of contribution or
compensation are qualified under the Code; and such term includes, but is not
limited to plans which are, or are in the nature of pension, retirement, profit
sharing, stock bonus, 401(k), nonqualified deferred compensation, medical,
dental, workers' compensation, health insurance, life insurance, incentive,
compensation
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for forgoing vacation benefits, and fringe benefits, but such term does not
include normal policies concerning holidays, vacations and salary continuations
during short absences for illness or other reasons, nor any Multiemployer Plan,
as hereinafter defined.
C. "EMPLOYEE" shall mean all current or former
officers, employees, consultants or others who are or were employed or
otherwise compensated by Seller, or any such person employed by an ERISA
Affiliate who is or becomes an Affected Employee.
D. "ERISA" means the Employee Retirement Income
and Security Act of 1974, as amended, and the regulations and rulings
thereunder.
E. "ERISA AFFILIATE" shall mean any person (as
defined in Section 3(9) of ERISA) (including each trade or business (whether or
not incorporated)) which is a member of a "controlled group" including, or
under common control with Seller or a Subsidiary of Seller within the meaning
of Sections 414(b) and (c) of the Code or Section 4001(a)(14) of ERISA, or an
affiliated service group under Section 414 of the Code.
F. "MULTIEMPLOYER PLAN" means a plan which is
described in Section 3(37) of ERISA.
G. "PENSION PLAN" means an Employee Benefit Plan
described in Section 3(2) of ERISA, and a Multiemployer Plan.
H. "WELFARE PLAN" means an Employee Benefit Plan
described in Section 3(1) of ERISA.
(u) Personnel. SCHEDULE 3.1(U) lists the names, years of
service, and current annual base rates of compensation for salaried, non-hourly
Affected Employees, and current hourly rates for hourly Affected Employees;
Seller will make available to Purchaser information concerning the bonus,
profit sharing, percentage compensation, automobile, club membership and other
like benefits, if any, paid or payable to Affected Employees during Seller's
1996 fiscal year and to the date hereof. SCHEDULE 3.1(U) also contains a list
of all written, and a brief description of all material terms of all oral,
employment agreements, severance agreements, confidentiality agreements,
noncompete agreements or similar agreements with Seller to which any Employee
is or may be subject. Seller has delivered to Purchaser accurate and complete
copies of all such agreements, and all other agreements, plans and other
instruments to which Seller is a party and under which Affected Employees
and/or sales representatives involved in the Business are entitled to receive
benefits of any nature. To Seller's knowledge, and except as set forth on
SCHEDULE 3.1(U), the employee relations of Seller are good and there is no
pending or threatened controversy, labor dispute or union organization campaign
between Seller and any Affected Employees. None of the Affected Employees or
sales representatives of Seller are represented by any labor union or
organization nor is Seller a party to any collective bargaining agreement.
Except as set forth on SCHEDULE 3.1(U) OR 3.1(L), Seller is in compliance in
all material respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment and wages and hours
and is not engaged in any unfair labor practices.
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Except as set forth on SCHEDULE 3.1(U), there is no unfair labor practices
complaint or charge of employment discrimination pending, or threatened against
Seller with respect to an Affected Employee before the National Labor Relations
Board, the Equal Employment Opportunity Commission, or any other state, federal
or local court or government board, agency or commission or any strike, labor
dispute, work slowdown or work stoppage pending or, to Seller's
knowledge,threatened against or involving Seller, and Seller has not
experienced any material labor dispute during the last three years. Seller
agrees that to the extent it has entered into confidentiality agreements,
noncompete agreements or similar agreements affecting the Business with
Employees who are not Affected Employees, it shall cooperate with Purchaser in
enforcing such agreements to the maximum extent permitted by law, subject only
to Purchaser reimbursing Seller for the cost, if any, incurred by Seller with
respect to such enforcement; provided, however, Seller shall not be obligated
to bring legal action to enforce any such agreements or to take action
materially detrimental to Seller and its other businesses.
(v) Condition of Rigs. Of the total of approximately 407
workover rigs to be owned by Holdings on the Closing Date, approximately 318
rigs have been operated within the 12 months preceding the Effective Date.
3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Seller as follows:
(a) Corporation. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas.
(b) Corporate Power and Authorization. Purchaser has the
corporate power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by
Purchaser have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by Purchaser and constitutes the
legal, valid and binding obligation of Purchaser, enforceable against Purchaser
in accordance with its terms except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, or other laws affecting the enforcement
of creditors' rights generally and the application of general principles of
equity.
(c) Validity of Contemplated Transactions, Etc. The
execution, delivery and performance of this Agreement by Purchaser does not and
will not violate, conflict with or result in the breach of any material term,
condition or provision of, or require the consent of any other party under, (i)
any existing law, ordinance, or governmental rule or regulation to which
Purchaser is subject, (ii) any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory official, body or
authority which is applicable to Purchaser, (iii) the Articles of Incorporation
or Bylaws of, or any securities issued by, Purchaser, or (iv) any contract to
which Purchaser is a party or by which Purchaser is otherwise bound. Except as
otherwise contemplated by this Agreement, no Authorization, approval or consent
of, and no registration or filing with, any Governmental Entity is required in
connection with the execution, delivery and performance of this Agreement by
Purchaser.
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(d) Financing. Purchaser intends to finance the
transactions contemplated hereby as set forth in Section 5.1(k), and reasonably
expects to be able to consummate such financing on terms acceptable to it.
3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS. The
representations and warranties of the parties to this Agreement shall expire as
of the Closing except for the representations and warranties set forth in
Sections 3.1(a) (Corporate Existence), 3.1(b) (Corporate Power; Authorization;
Enforceable Obligations), 3.1(f) (Taxes; Tax and Other Returns and Reports),
3.2(b) (Corporate Power and Authorization), and 9.1 (Finders' Fees) which shall
survive the Closing Date. All covenants and agreements contained herein shall
survive without limitation. All representations, warranties, covenants and
agreements made by the parties shall not be affected by any investigation
heretofore or hereafter made by and on behalf of any of them and shall not be
deemed merged into any instruments or agreements delivered in connection with
this Agreement or otherwise in connection with the transactions contemplated
hereby.
3.4 REPRESENTATIONS BY SELLER REFER TO THE BUSINESS. Whether or
not so expressed, all representations and warranties of Seller herein relate
only to Holdings or to the Business or the Assets and not to any other
businesses or assets of Seller.
ARTICLE IV - AGREEMENTS PENDING CLOSING
4.1 AGREEMENTS OF SELLER PENDING THE CLOSING. Seller covenants
and agrees that, pending the Closing and except as otherwise agreed to in
writing by Purchaser:
(a) Business in the Ordinary Course. Except as otherwise
specifically provided herein, the Business shall be conducted solely in the
ordinary course consistent with past practice. Seller shall maintain its
capital expenditures and shall continue to maintain and service the physical
Assets used in the conduct of the Business consistent with Seller's past
practices. Seller shall not cause, or permit to occur to the extent Seller may
reasonably prevent, any of the events or occurrences described in Section
3.1(h) (Existing Condition). Seller shall use commercially reasonable efforts
to maintain in full force and effect all Authorizations currently in effect and
used in the conduct of the Business, and shall comply with all Regulations
applicable to the Business, the noncompliance with which might materially and
adversely affect the Business or the Assets. Seller shall not (i) sell any of
the Assets, (ii) enter into any Contract outside of the ordinary course of
business, (iii) amend, modify, terminate, waive any material provision of, or
breach any material Contract, or (iv) cancel, terminate or cause or allow to
lapse any insurance coverage affecting the Business or the Assets.
(b) Conduct of Business. Seller shall use commercially
reasonable efforts to conduct the Business in such a manner that on the Closing
Date the representations and warranties contained in this Agreement shall be
true, except as specifically contemplated by this Article IV, as though such
representations and warranties were made on and as of such date.
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(c) Litigation. Between the Effective Date and the
Closing Date, Seller shall notify Purchaser of any and all pending or
threatened litigation and administrative proceedings, including any
arbitration, investigation or other proceeding of or before any court,
arbitrator or Governmental Entity which relates to the Business or Assets or
the transactions contemplated by this Agreement arising since the Effective
Date; Seller also will notify Purchaser if it becomes aware after the
Effective Date of any reasonably likely basis for any such litigation,
arbitration, investigation or proceeding, the result of which could adversely
affect the Assets or Business, or the transactions contemplated hereby.
(d) Access. Seller shall give to Purchaser's officers,
employees, counsel, accountants and other representatives reasonable access to
and the right to inspect, during normal business hours, all of the premises,
properties, Assets, Records, Contracts and other documents relating to
Holdings, the Business and the Assets and shall permit them to consult with the
officers, employees, accountants, counsel and agents of Seller for the purpose
of making such investigation of Holdings, the Business and the Assets as
Purchaser shall desire to make, provided that such investigation shall be at
Purchaser's sole cost and expense and shall not unreasonably interfere with
Seller's business operations. Without limitation, Seller shall permit Purchaser
to perform Phase I environmental testing (but not Phase II tests or any other
testing of the soil or any testing of groundwater without Seller's consent).
Furthermore, Seller shall furnish to Purchaser copies of all such documents,
Records and information with respect to Holdings, the Business and the Assets,
and copies of any internal financial records relating thereto as Purchaser
shall from time to time reasonably request and shall permit Purchaser and its
agents to make such physical inventories and inspections of the Assets as
Purchaser may reasonably request from time to time.
(e) Press Release. Upon the execution of this Agreement,
Seller shall cooperate with Purchaser in the drafting and issuance of a press
release concerning this Agreement. Except for such press release and
discussions with employees and customers as mutually agreed to by Seller and
Purchaser and except as required by applicable law, Seller shall not give
notice to third parties or otherwise make any public statement or releases
concerning this Agreement or the transactions contemplated hereby except for
such written information as shall have been approved in writing as to form and
content by Purchaser, which approval shall not be unreasonably withheld.
(f) Actions of Directors and Shareholders. If required
by law or by the rules of any stock exchange, Seller shall promptly and
diligently take all action necessary in accordance with law and its Articles of
Incorporation, Bylaws and other organizational documents to convene a meeting
of its shareholders promptly to consider and vote upon the approval of this
Agreement. The proxy statement (such proxy statement and the form of proxy,
including all amendments, supplements, or modifications thereto, being herein
referred to as the "PROXY STATEMENT") disseminated to its shareholders shall
contain the recommendation of the Board of Directors of Seller in favor of the
transaction contemplated hereby, and the Board of Directors of Seller shall
recommend that the shareholders vote to approve this Agreement. Seller shall
use reasonable efforts to solicit from its shareholders proxies in favor of
such adoption and approval and shall take all other action customary in
transactions of this nature in accordance with its organizational
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documents and applicable law which is necessary to secure a vote of its
shareholders in favor of and to consummate this transaction.
(g) Xxxx-Xxxxx-Xxxxxx. Seller shall promptly make any
and all filings required to be made by Seller under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 0000 (xxx "XXX XXX") with respect to the
transactions contemplated by this Agreement and will take all reasonable
actions necessary to obtain any consent, Authorization, order or approval of,
or any exemption from or termination of any applicable waiting periods required
by, any Governmental Entity or other public or private third party in
connection with the transactions contemplated by this Agreement.
(h) Employee Matters. Seller shall give Affected
Employees all notices required by law, including but not limited to notices of
their rights under the Comprehensive Omnibus Budget Reconciliation Act of 1986.
(i) Actions of Seller. Seller will not take any action
which would result in a material breach of any of its representations and
warranties hereunder. Furthermore, Seller shall cooperate with Purchaser and
use its best efforts to cause all of the conditions to the obligations of
Purchaser under this Agreement to be satisfied on or prior to and at the
Closing Date.
4.2 AGREEMENTS OF PURCHASER PENDING THE CLOSING. Purchaser
covenants and agrees that, pending the Closing and except as otherwise agreed
to in writing by Seller:
(a) Confidentiality. Until the Closing, Purchaser will
hold, and shall cause its counsel, independent certified public accountants,
appraisers and investment bankers and other representatives to hold, in
confidence any confidential data or information made available to Purchaser in
connection with this Agreement with respect to the Assets or Business in
accordance with the Confidentiality Agreement between Seller and Purchaser
dated November 13, 1996.
(b) Press Release. Upon the execution of this Agreement,
Purchaser shall cooperate with Seller in the drafting and issuance of a press
release concerning this Agreement. Except for such press release and
discussions with Affected Employees and customers as mutually agreed to by
Seller and Purchaser and except as required by applicable law, Purchaser will
not give notice to third parties or otherwise make any public statement or
releases concerning this Agreement or the transactions contemplated hereby
except for such written information as shall have been approved in writing as
to form and content by Seller, which approval shall not be unreasonably
withheld.
(c) Xxxx-Xxxxx-Xxxxxx. Purchaser shall promptly make any
and all filings required to be made by Purchaser under the HSR Act with respect
to the transactions contemplated by this Agreement and will take all reasonable
actions necessary to obtain any consent, Authorization, order or approval of,
or any exemption from or termination of any applicable waiting periods required
by, any Governmental Entity or other public or private third party in
connection with the transactions contemplated by this Agreement.
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(d) Actions of Purchaser. Purchaser will not take any
action which would result in a breach of any of its representations and
warranties hereunder. Furthermore, Purchaser shall cooperate with Seller and
use its best efforts to cause all of the conditions to the obligations of
Seller under this Agreement to be satisfied on or prior to the Closing Date.
ARTICLE V - CONDITIONS PRECEDENT TO THE CLOSING
5.1 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. The
obligations of Purchaser under this Agreement to purchase the Stock are subject
to the fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
(a) Representations and Warranties True as of the Closing
Date. The representations and warranties of Seller contained in this Agreement
or in any Schedule, certificate or document delivered by Seller to Purchaser
pursuant to the provisions hereof shall have been true on the Effective Date
and shall be true on the Closing Date as though such representations and
warranties were made as of such date (except to the extent such representations
and warranties expressly speak only as of an earlier date), except where the
failure to be true (without giving effect to the individual materiality
qualifications and thresholds otherwise contained in Section 3.1) would not
have a material adverse effect on Holdings, the Stock, the Business or the
Assets.
(b) Compliance with this Agreement. Seller shall have
performed and complied in all material respects with all of its obligations
under this Agreement to be performed or complied with by it prior to or at the
Closing.
(c) Closing Certificate. Purchaser shall have received
certificates from Seller, dated the Closing Date, certifying in such detail as
Purchaser may reasonably request that the conditions specified in Sections
5.1(a), 5.1(b) and 5.1(h) have been fulfilled and certifying that Seller has
obtained all consents and approvals required by Section 5.1(g) with respect to
it or the Business.
(d) Opinion of Counsel for Seller. Xxxxx & Xxxxx,
L.L.P., outside counsel for Seller, shall have delivered to Purchaser a written
opinion, dated the Closing Date, in the form of EXHIBIT A with only such
changes as shall be in form and substance reasonably satisfactory to Purchaser
and its counsel. In rendering such opinion, Xxxxx & Xxxxx, L.L.P. may rely on
special Louisiana counsel as to all matters of Louisiana law relevant to such
opinion.
(e) Good Standing. Seller shall have delivered to
Purchaser a certificate issued by the appropriate Secretary of State evidencing
the good standing of Seller and Holdings, as of a date not more than five
calendar days prior to the Closing Date. Seller also shall have delivered to
Purchaser a certificate issued by the appropriate taxing authority evidencing
that all applicable corporate income and state franchise taxes have been paid.
(f) No Threatened or Pending Litigation. On the Closing
Date, no suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be
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pending before any Governmental Entity in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding shall be
pending or threatened.
(g) Consents and Approvals. Consistent with Section 2.3,
Purchaser or Seller shall have obtained the consents of third parties relative
to Contracts, Authorizations, Permits, Equipment Leases, or Real Estate Leases
reasonably sufficient to permit Purchaser after the Closing to operate the
Business as previously operated by Seller, except as would not have a material
adverse effect.
(h) Material Adverse Changes. Neither Holdings, the
Assets nor the Business in the aggregate shall have been or shall be threatened
to be materially adversely affected in any way as a result of any event or
occurrence other than such conditions as may affect as a whole the well
servicing industry generally.
(i) Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved with respect to sufficiency and legal compliance on the Closing
Date by Jenkens & Xxxxxxxxx, A Professional Corporation, counsel for Purchaser,
in the exercise of its reasonable judgment. Seller also shall have delivered
to Purchaser such other documents, instruments, certifications and further
assurances as such counsel may reasonably require to enable such counsel to
pass on such matters.
(j) Xxxx-Xxxxx-Xxxxxx Approval. The waiting period
(including any extension thereof) applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act shall have
expired or terminated.
(k) Financing. Purchaser shall have completed the offer
and sale, including the closing and funding thereof, of (i) newly issued senior
notes in the original principal amount of approximately $110,000,000, and (ii)
authorized but unissued shares of Purchaser's common stock in an amount
sufficient to raise gross proceeds to Purchaser of at least $50,000,000.
(l) Securities Filings. Purchaser shall have received
from Seller consolidated audited and unaudited financial statements for the
Business in compliance with the requirements for filing a Form 8-K with the
Securities and Exchange Commission and reasonable assurances from the
independent accountants performing such audits that they will, consistent with
their professional obligations, provide to Purchaser manually signed reports
and consents in the future as required under the rules of the Securities and
Exchange Commission.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. The
obligations of Seller under this Agreement to sell the Stock are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
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(a) Representations and Warranties True as of the Closing
Date. The representations and warranties of Purchaser contained in this
Agreement or in any Schedule, certificate or document delivered to Seller by
Purchaser pursuant to the provisions hereof shall have been true on the
Effective Date and shall be true on the Closing Date as though such
representations and warranties were made as of such date (except to the extent
such representations and warranties expressly speak only as of an earlier
date).
(b) Compliance with this Agreement. Purchaser shall have
performed and complied with all obligations required by this Agreement to be
performed or complied with by it prior to or at the Closing.
(c) Closing Certificates. Seller shall have received a
certificate from Purchaser, dated the Closing Date, certifying in such detail
as Seller may reasonably request that the conditions specified in Sections
5.2(a) and 5.2(b) have been fulfilled.
(d) No Threatened or Pending Litigation. On the Closing
Date, no suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any Governmental
Entity in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby, and no investigations that might result in
any such suit, action or proceeding shall be pending or threatened.
(e) Consent of Shareholders. If required, the requisite
percentage of Seller's shareholders shall have approved the consummation of the
transactions contemplated by this Agreement in accordance with the requirements
of applicable law.
(f) Opinion of Counsel for Purchaser. Jenkens &
Xxxxxxxxx, A Professional Corporation, counsel for Purchaser, shall have
delivered to Seller a written opinion, dated the Closing Date, in the form of
EXHIBIT B with only such changes as shall be in form and substance reasonably
satisfactory to Seller and its counsel.
(g) Xxxx-Xxxxx-Xxxxxx Approval. The waiting period
(including any extension thereof) applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act shall have
expired or terminated.
ARTICLE VI - INDEMNIFICATION
THE FOLLOWING SECTIONS ARE IMPORTANT AND
SHOULD BE READ CAREFULLY.
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6.1 DEFINITIONS.
(a) "GOVERNMENTAL ENTITY" shall mean any arbitrator,
court, administrative or regulatory agency, commission, department, board or
bureau or body or other government or authority or instrumentality or any
entity or person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
(b) "INDEMNITEE" shall mean the person or persons
indemnified, or entitled or claiming to be entitled to be indemnified, pursuant
to the provisions of Article VI.
(c) "INDEMNITOR" shall mean the person or persons having
the obligation to indemnify pursuant to the provisions of Article VI.
6.2 INDEMNIFICATION BY SELLER. Except as otherwise limited by
this Article VI or by Section 3.3 (Survival of Representations and Warranties
and Covenants), Seller agrees to indemnify, defend and hold harmless Purchaser
and Holdings and each of its respective officers, directors, employees, agents,
shareholders and controlling persons, and their respective successors and
assigns, separate consideration for which is hereby acknowledged, of, from and
against and in respect of any and all liabilities, actions, lawsuits, conduct,
losses, damages, demands, assessments, claims, costs and expenses (including
interest, awards, judgments, penalties, settlements, fines, diminutions in
value, costs and expenses incurred in connection with investigating and
defending any claims or causes of action including reasonable attorneys' fees
and expenses and all reasonable fees and expenses of consultants and other
professionals) ("DAMAGES") actually suffered, incurred or realized by such
party (collectively, "PURCHASER LOSSES") arising out of or resulting from or
relating to any of the following:
(a) any misrepresentation, breach of warranty or breach
of any covenant or agreement made or undertaken by Seller in this Agreement or
any misrepresentation in or omission from any other agreement, certificate,
exhibit or writing delivered to Purchaser pursuant to this Agreement, including
the Schedules; provided that this clause shall apply with respect to any
misrepresentation, breach of warranty or omission if, but only if, the
representation, warranty or omission is set forth in a provision that survives
the Closing pursuant to Section 3.3;
(b) any Damages or Purchaser Losses (other than the
Assumed Liabilities) relating to Seller, Holdings, the Assets or the Business,
whether known or unknown, now existing or hereafter arising, contingent or
liquidated, (including without limitation, any Tax liabilities) accruing or
arising prior to the Closing Date; and
(c) any services provided by or on behalf of Seller or
Holdings on or prior to the Closing Date or with respect to any claims made
pursuant to warranties to third persons in connection with services provided by
or on behalf of Seller or Holdings on or prior to the Closing Date.
Notwithstanding the foregoing, Seller shall not be liable under clause (a) of
this Section 6.2 based upon a misrepresentation or breach of warranty or
omission unless and until the aggregate amount of any Purchaser Losses exceeds
$2.0 million at which time all Purchaser Losses in excess of such amount shall
be subject to indemnification by Seller; provided, however, (i) Seller's
liability under
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Sections 6.2(b) and (c) shall not be so limited, and (ii) liability under
Section 6.2(a) shall not be so limited if such Purchaser Losses arise from
Seller's breach of any of the provisions set forth in Sections 3.1(b), 3.1(f),
or 9.1 of this Agreement.
6.3 INDEMNIFICATION BY PURCHASER. Except as otherwise limited by
this Article VI and Section 3.3 (Survival of Representations and Warranties and
Covenants), Purchaser agrees to indemnify, defend and hold Seller and each of
its officers, directors, employees, agents, shareholders and controlling
persons and its successors and assigns harmless from and against and in respect
of any and all Damages actually suffered, incurred or realized by such party
(collectively, "SELLER LOSSES") arising out of or resulting from any of the
following:
(a) any misrepresentation, breach of warranty or breach
of any covenant or agreement made or undertaken by Purchaser in this Agreement
or any misrepresentation in or omission from any other agreement, certificate,
exhibit or writing delivered to Seller pursuant to this Agreement; provided
that this clause shall apply with respect to any misrepresentation, breach of
warranty or omission if, but only if, the representation, warranty or omission
is set forth in a provision that survives the Closing pursuant to Section 3.3;
(b) any Assumed Liability;
(c) conduct of the Business or the ownership or operation
of the Assets or Holdings on or after the Closing Date, or any other action by
Purchaser or any affiliate of Purchaser (including Holdings after the Closing)
related to the Business or the Assets; or
(d) the application of WARN (as hereinafter defined) to
Seller as a result of the impact on the Affected Employees of the transactions
contemplated by this Agreement.
6.4 PROCEDURE. All claims for indemnification shall be asserted
and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor
notice of any matter that an Indemnitee has determined has given or could give
rise to a right of indemnification under this Agreement, stating the amount of
the Damages, if known, and method of computation thereof, all with reasonable
particularity, and stating with particularity the nature of such matter.
Failure to provide such notice shall not affect the right of an Indemnitee to
indemnification except to the extent such failure shall have resulted in
liability to the Indemnitor that actually could have been avoided had such
notice been provided within the required time period.
(b) The obligations and liabilities of an Indemnitor with
respect to Damages arising from claims of any third party that are subject to
the indemnification provided for in this Article VI ("THIRD PARTY CLAIMS")
shall be governed by and contingent upon the following additional terms and
conditions: if an Indemnitee receives notice of any Third Party Claim, the
Indemnitee shall give the Indemnitor prompt notice of such Third Party Claim
and the Indemnitor may, at its option, assume and control the defense of such
Third Party Claim at the Indemnitor's expense and through counsel of the
Indemnitor's choice reasonably acceptable to the Indemnitee.
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If the Indemnitor assumes the defense against any such Third Party Claim as
provided above, the Indemnitee shall have the right to participate at its own
expense in the defense of such asserted liability, shall cooperate with the
Indemnitor in such defense and will use commercially reasonable efforts to make
available on a reasonable basis to the Indemnitor all witnesses, pertinent
records, materials and information in its possession or under its control
relating thereto as reasonably required by the Indemnitor. If the Indemnitor
does not elect to conduct the defense against any such Third Party Claim, the
Indemnitor shall pay all reasonable costs and expenses of such defense as
incurred and shall cooperate with the Indemnitee (and be entitled to
participate) in such defense and will use commercially reasonable efforts to
make available to it on a reasonable basis all such witnesses, records,
materials and information in its possession or under its control relating
thereto as reasonably required by the Indemnitee. Except for the settlement of
a Third Party Claim that involves the payment of money only and for which the
Indemnitee is totally indemnified by the Indemnitor, no Third Party Claim may
be settled without the written consent of the Indemnitee.
6.5 FAILURE TO PAY INDEMNIFICATION. If and to the extent an
Indemnitee makes written demand upon an Indemnitor for indemnification pursuant
to this Article VI and the Indemnitor refuses or fails to pay in full within 10
business days after final determination with respect thereto, then the
Indemnitee may use any legal or equitable remedy to collect from the Indemnitor
the amount of its Damages. Nothing contained herein is intended to limit or
constrain an Indemnitee's rights against an Indemnitor for indemnity, the
remedies herein being cumulative and in addition to all other rights and
remedies of the Indemnitee.
6.6 ADJUSTMENT OF LIABILITY. The amount which an Indemnitee shall
be entitled to receive from an Indemnitor with respect to any Damages under
this Article VI shall be net of any insurance recovery by an Indemnitee on
account of such Damages from an unaffiliated party.
6.7 EXPRESS NEGLIGENCE. THE FOREGOING INDEMNITIES ARE INTENDED TO
BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND
SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE RULE OR ANY SIMILAR
DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE
NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR
STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.
6.8 DISCLAIMER. SELLER MAKES NO GUARANTEE, WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE, AS TO THE
QUALITY, SERVICEABILITY, MERCHANTABILITY OR CONDITION OF THOSE ASSETS
CONSISTING OF TANGIBLE PERSONAL PROPERTY, BUILDINGS, FIXTURES OR OTHER
IMPROVEMENTS TO REAL ESTATE, ANY MACHINERY, EQUIPMENT, SPARE PARTS, DRILLING
RIGS AND RELATED APPURTENANCE, OR THEIR FITNESS FOR ANY USE OR PURPOSE, AND
SELLER SHALL NOT BE LIABLE TO PURCHASER FOR ANY SPECIAL OR CONSEQUENTIAL
DAMAGES ARISING FROM ANY USE OF SUCH ASSETS AFTER THE CLOSING BY HOLDINGS OR
PURCHASER OR ARISING IN CONNECTION WITH THIS SALE. SELLER DOES NOT WARRANT
THAT
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THE SUBJECT ASSETS ARE FIT FOR A PARTICULAR PURPOSE, OR ARE FREE FROM
REDHIBITORY OR LATENT DEFECTS OR VICES AND SELLER IS RELIEVED OF ANY LIABILITY
FOR REDHIBITORY OR LATENT DEFECTS OR VICES UNDER LOUISIANA CIVIL CODE, ARTICLE
2476 (INSOFAR ONLY THAT ARTICLE 2476 RELATES TO HIDDEN DEFECTS OF THE THING
SOLD OR ITS REDHIBITORY VICES AND NOT AS ARTICLE 2476 RELATES TO PURCHASER'S
PEACEABLE POSSESSION OF THE THING SOLD), AND LOUISIANA CIVIL CODE, ARTICLE 2520
THROUGH ARTICLE 2548.
6.9 ARBITRATION.
(a) Negotiation Period. After the Closing, all disputes
arising under this Agreement (other than a suit for injunctive relief) or
arising with respect to any transaction contemplated hereby will be subject to
binding arbitration in accordance with this Section 6.9. If such a dispute
exists, the parties shall attempt for a 30-day period (the "NEGOTIATION
PERIOD") from the date any party gives any one or more of the other parties
notice (a "DISPUTE NOTICE") pursuant to this Section, to negotiate in good
faith, a resolution of the dispute. The Dispute Notice shall set forth with
specificity the basis of the dispute and shall be delivered to each party to
this Agreement to whom the dispute relates. During the Negotiation Period,
representatives of each party involved in the dispute who have authority to
settle the dispute shall meet at mutually convenient times and places and use
their best efforts to resolve the dispute.
(b) Commencement of Arbitration. If a resolution is not
reached by the parties prior to the end of the Negotiation Period, each party
shall have 10 days from the end of such period to give each other party who
received a Dispute Notice written notice of the selection of an independent
arbitrator. If only one party gives such written notice, the arbitrator
selected by that party (the "FINAL ARBITRATOR") shall make a final and binding
determination as to the parties' respective rights and obligations with respect
to the matters set forth in the Dispute Notice. If more than one party selects
an arbitrator, the persons so selected shall, within 10 days of the last timely
notice of such selection, select a different independent arbitrator (also
referred to herein as the "FINAL ARBITRATOR") who shall make a final and
binding determination of the parties' respective rights and obligations with
respect to the matters set forth in the Dispute Notice. Following the
selection of the Final Arbitrator, the other arbitrators selected shall have no
further responsibilities hereunder. Each arbitrator selected hereunder shall
be experienced in the arbitration of complex commercial disputes.
(c) Consolidation of Hearings. If more than one party
delivers a Dispute Notice to one or more other parties pursuant to this Section
6.9, the Final Arbitrators selected with respect to each such Dispute Notice
may elect, in their sole discretion, to combine the matters set forth in one or
more, but not necessarily all, of the Dispute Notices into one or more
hearings, in which case, the Final Arbitrators shall adjust the time deadlines
set forth herein as they determine appropriate, and shall decide which one of
them will hear the evidence and render a final determination with respect to
each hearing.
(d) Discovery. Unless the Final Arbitrator otherwise
directs, each party to an arbitration shall be entitled to one deposition,
lasting no more than one day, of a designated
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representative of each other party to the arbitration prior to the arbitration
hearing; and each party shall be entitled, within 30 days of the appointment of
the Final Arbitrator, to serve upon each other party one set of Interrogatories
(seeking no more than 30 responses), one set of Requests for Production
(limited to 30 requests) and one set of Requests for Admission (limited to 30
requests), each of which shall be answered by the recipient thereof within two
weeks of its receipt. Otherwise, the arbitration shall be conducted in
accordance with the rules of the American Arbitration Association.
(e) Conclusion of Arbitration. Unless the Final
Arbitrator otherwise directs, the decision of the Final Arbitrator as to the
parties' respective rights and obligations shall be made within 60 days of the
end of the Negotiation Period and shall be binding on the parties. The Final
Arbitrator may determine that a party is entitled to Damages hereunder from one
or more other parties, and the manner in which such Damages shall be assessed
against the other parties. However, the Final Arbitrator may not award
emotional distress or punitive Damages.
(f) Expenses of Arbitrators. The expenses of the Final
Arbitrator shall be shared equally by the parties to the arbitration. The
expenses of each other arbitrator selected hereunder shall be borne by the
party selecting such arbitrator.
6.10 OTHER RIGHTS AND REMEDIES NOT AFFECTED. Except as set forth
herein, the indemnification rights of the parties under this Agreement are
independent of and in addition to such rights and remedies as the parties may
have at law or in equity or otherwise for any misrepresentation, breach of
warranty or failure to fulfill any agreement or covenant hereunder on the part
of any party hereto, including without limitation the right to seek specific
performance, rescission or restitution, none of which rights or remedies shall
be affected or diminished hereby. The indemnification rights of the parties
under this Article VI shall be the sole remedy available to Purchaser and
Seller after the Closing with respect to the representations and warranties set
forth herein or made or deemed to be made in connection with this Agreement.
ARTICLE VII - POST CLOSING MATTERS
7.1 SELLER'S AFFECTED EMPLOYEES.
(a) Purchaser will cause Holdings to continue the
employment of, or reemploy, all of the Affected Employees listed on SCHEDULE
3.1(U) who have been actively working on the job for the period beginning 30
days prior to the Closing Date and ending on the Closing Date initially at the
same salaries and wages of such Affected Employees on the Closing Date.
Nothing in this Agreement shall be considered a Contract between Holdings or
Purchaser and any Affected Employee or consideration for, or inducement with
respect to, any Affected Employee's continued employment, or reemployment, and,
without limitation, all such Affected Employees are and will continue to be
considered to be employees at will pursuant to the applicable state employment
at will laws or doctrines. Purchaser warrants to Seller that it will take no
action not contemplated in this Agreement which would have the effect of
causing a "plant closing" or "mass layoff" within the meaning of the Workers
Adjustment and Retraining Notification Act ("WARN").
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(b) Without limiting the generality of any other
provision of this Agreement, Seller agrees that it is required to, and shall
comply with the provisions of Section 4980B of the Code by notifying each
Affected Employee who is not employed by Holdings on or after the Closing Date,
and does not continue in the employ of Seller after the Closing Date, of their
right, if any, to "continuation coverage" (as defined in Section 4980B(f)(2) of
the Code) under the group health plan of Seller or ERISA Affiliate, and Seller
agrees that Seller or an ERISA Affiliate will maintain a group health plan in
which such Affected Employees who do not become employees of Holdings will have
continuation coverage rights until that continuation coverage terminates with
respect to all such Affected Employees.
(c) Notwithstanding anything to the contrary in this
Section 7.1, if a salaried, non-hourly Affected Employee remains a salaried,
non-hourly employee of Holdings or Purchaser on the Closing Date, and Holdings
or Purchaser terminates such salaried, non-hourly Affected Employee without
cause prior to the date that is 18 months from the Closing Date, Holdings or
Purchaser will pay any such terminated salaried, non-hourly Affected Employee
(other than tool pushers) an amount (in regular bi-weekly payments) which is
equal to the product of (i) one month's current salary, as determined at the
time of the termination, times (ii) such Affected Employee's number of full
years of service for Seller shown on SCHEDULE 3.1(U). Any such salaried, non-
hourly Affected Employee may be required by Purchaser or Holdings to change his
or her primary work location, provided any such change does not require a
change of principal residence or an unreasonable commute; if the salaried, non-
hourly Affected Employee refuses or declines any such relocation, he/she shall
not be entitled to the termination payments described in this Section. "CAUSE"
for this purpose shall mean conduct such as fraud, embezzlement, theft,
commission of a felony, or any other criminal act against Purchaser, Holdings,
or employees of Purchaser or Holdings, dishonesty in the course of employment
with Purchaser or Holdings, excessive absenteeism under Purchaser's or
Holdings' applicable policies, or deliberate disregard of assigned duties and
responsibilities, or of Purchaser's or Holdings' written employment policies of
general application.
(d) With respect to each Affected Employee employed by
Purchaser, Purchaser shall deem the period of employment with Seller (as
reflected on SCHEDULE 3.1(U)) to have been employment and service with
Purchaser for purposes of determining the Affected Employee's eligibility to
join, and vesting (if any) under, but, without limitation, not with respect to
the Affected Employee's accrual of benefits under, all of Purchaser's employee
benefit plans, programs, policies or similar employment related arrangements to
the extent service with Purchaser is recognized thereunder. Purchaser shall
waive, and to the extent necessary to effect the terms hereof, if any, shall
cause the relevant insurance carriers and other third parties to waive, such
restrictions and limitations for any medical condition existing as of the
Closing Date of those Affected Employees, and such of their dependents, who are
covered on the Closing Date under the Employee Benefit Plan which is a group
health plan, but only to the extent that such medical condition would be
covered by Purchaser's or Holdings' group health plan if it were not a pre-
existing condition and only to the extent of comparable coverage in effect
under such Employee Benefit Plan which is a group health plan immediately prior
to the Closing Date. Further, Purchaser shall offer to each Affected Employee
coverage under a group health plan (as defined in Section 5000(b)(1) of the
Code) which (i) provides medical and dental benefits to such
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Affected Employee and his eligible dependents (within the meaning of
Purchaser's group health plan) effective as of the later of the Closing Date
and the date Affected Employees' coverage under Purchaser's or Holdings' group
health plan terminates, (ii) credits such Affected Employee towards the
deductibles imposed under Purchaser's group health plan, for the year during
which the Closing Date occurs, with any deductibles already incurred during
such year under Seller's group health plan, and (iii) waives any pre-existing
condition restrictions to the extent provided in the preceding sentence.
7.2 DISCHARGE OF BUSINESS OBLIGATIONS. Following the Closing
Date, Seller shall pay and discharge, in accordance with past practice but not
less than on a timely basis, all obligations and liabilities incurred by Seller
or Holdings prior to the Closing Date relating to the Business and the Assets,
its operations or the assets and properties used therein (except for the
Assumed Liabilities and except to the extent prorated pursuant to Section 1.5),
including without limitation any liabilities or obligations to employees, trade
creditors and customers of the Business. Seller and Purchaser shall each use
their best efforts following the Closing to ensure a smooth transition of the
Business to Holdings as controlled by Purchaser. Following the Closing Date,
Purchaser shall pay and discharge, or cause Holdings to pay and discharge, not
less than on a timely basis, all obligations and liabilities incurred on or
after the Closing Date with respect to the Business or the Assets, and
operations or the assets and properties used therein, including without
limitation any such liabilities or obligations to trade creditors and
customers. Notwithstanding the foregoing, with respect to accrued vacation and
other similar employee expenses relating to Affected Employees, all such
amounts up to but not to exceed $650,000, will be assumed by Purchaser at the
Closing. Any such amounts ultimately not paid by Purchaser or Holdings within
one year following Closing, up to $250,000, shall be accounted for and refunded
to Seller.
7.3 MAINTENANCE OF BOOKS AND RECORDS. Seller and Purchaser shall
(and Purchaser will cause Holdings to) each preserve all Records possessed by
such party relating to the Business or Assets prior to the Closing Date for a
period of at least six years following the fiscal year to which the Records
relate. After the Closing Date, where there is a legitimate purpose, such party
shall provide the other parties and their representatives with access, upon
prior reasonable written request specifying the need therefor, during regular
business hours, to (a) the officers and employees of such party and (b) the
books of account and Records of such party, but, in each case, only to the
extent relating to the Assets or Business prior to the Closing Date, and the
other parties and their representatives shall have the right to make copies of
such books and Records; provided, however, that the foregoing right of access
shall not be exercisable in such a manner as to interfere unreasonably with the
normal operations and business of such party; and further, provided that, as to
so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party and its officers,
directors and representatives will use due care to not disclose such information
except (x) as required by law, (y) with the prior written consent of such party,
which consent shall not be unreasonably withheld, or (z) where such information
becomes available to the public generally, or becomes generally known to
competitors of such party through sources other than the requesting party, its
affiliates or its officers, directors or representatives. Such Records may
nevertheless be destroyed by a party if such party sends to the other parties
written notice of its intent to destroy the Records, specifying with
particularity the contents of the Records to be destroyed. Such Records may
then
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be destroyed after the 30th day after such notice is given unless another party
objects to the destruction in which case the party seeking to destroy the
Records shall deliver such Records to the objecting party.
7.4 PAYMENTS RECEIVED. Seller and Purchaser each agree that after
the Closing they will (and Purchaser will cause Holdings to) hold and will
promptly transfer and deliver to the other, from time to time as and when
received by them, any cash, checks with appropriate endorsements (using their
best efforts not to convert such checks into cash), or other property that they
may receive on or after the Closing which properly belongs to the other party,
including without limitation any insurance proceeds, and will account to the
other for all such receipts. Following the Closing, Purchaser and Holdings
shall have the right and authority to endorse without recourse the name of
Seller on any check or any other evidences of indebtedness received by
Purchaser or Holdings on account of the Business and the Assets, for the sole
purpose of depositing such items into accounts over which Seller has signatory
authority.
7.5 USE OF NAME. Promptly following the Closing Date, and in any
event within 60 days following the Closing Date, Purchaser shall cause Holdings
to replace, repaint or remark all signs, signage and other items containing
Seller's name, logo or otherwise containing the word "Pride" so as not to make
any reference to Seller's name or logo.
7.6 INQUIRIES. Following the Closing Date, Seller will promptly
refer all inquiries with respect to Holdings or with respect to ownership of
the Assets or the Business to Purchaser. In addition, Seller will execute
such documents and financing statements as Purchaser may reasonably request
from time to time to evidence the transactions contemplated by this Agreement.
7.7 COVENANT NOT TO COMPETE. Seller agrees that for a period of
five years after the Closing Date, neither Seller nor any of its subsidiaries
will, directly or indirectly, own, manage, operate, join or control, or
participate in ownership, management, operation or control of, any business
whether in corporate, proprietorship or partnership form or otherwise as more
than a ten percent owner in such business where such business is competitive
with the Business in providing onshore oil field rig workover services and is
within a 75-mile radius of any of Purchaser's facilities now existing or
Seller's or Holdings' facilities used in the Business or in the operation of
the Assets as of the Closing Date. The foregoing does not restrict Seller or
its subsidiaries from owning or operating drilling rigs. The parties hereto
specifically acknowledge and agree that the remedy at law for any breach of the
foregoing will be inadequate and that Purchaser, in addition to any other
relief available to it, shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damage. Seller acknowledges
that this covenant not to compete is being provided as an inducement to
Purchaser to acquire the Stock and that this Section 7.7 contains reasonable
limitations as to time, geographical area and scope of activity to be
restrained that do not impose a greater restraint than is necessary to protect
the goodwill or other business interest of Purchaser in the Business. Whenever
possible, each provision of this Section 7.7 shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of this Section 7.7 is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Section 7.7. If any
provision of this Section 7.7 is, for any
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reason, judged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Section 7.7 but shall be confined in its operation to the
provision of this Section 7.7 directly involved in the controversy in which
such judgment has been rendered. If the provisions of this Section 7.7 are
ever deemed to exceed the time or geographic limitations permitted by
applicable laws, then such provisions shall be reformed to the maximum time or
geographic limitations permitted by applicable law.
7.8 SUBSEQUENT ACQUISITIONS BY SELLER. The parties agree that
during the five-year period specified in Section 7.7 above, Seller may acquire
entities which, as an immaterial part of their business, provide domestic,
onshore well servicing. If, as a result of any such acquisition, Seller is in
violation of the provisions of Section 7.7, Seller shall have one year from the
date of such acquisition, to cease all operations that violate Section 7.7, and
shall be deemed not to be in violation of Section 7.7 during such one-year
period as a result of such activities.
7.9 TRANSITION PERIOD. During the six-month period following the
Closing (the "TRANSITION PERIOD"), the parties shall operate the Business in
the following manner. As used in this Section 7.9, references to Purchaser
shall include Holdings.
(a) Collections. Purchaser's employees shall issue
invoices for work in process as of the Closing Date for both the portion of the
work completed by Seller prior to the effective date of the Closing and the
portion of the work completed by Purchaser thereafter. Purchaser's employees
shall use commercially reasonable best efforts to collect the invoices issued
on Seller's behalf and Purchaser shall promptly pay to Seller all such amounts
collected representing work completed by Seller prior to the effective date of
the Closing.
(b) Accounting. Purchaser's employees will assist Seller
as reasonably necessary to close out Seller's books and Records related to the
Business.
(c) Licenses and Permits. Seller will continue to
cooperate with Purchaser in connection with Purchaser's applications for the
transfer, renewal or issuance of any Permits, licenses, approvals or other
Authorizations and as required to satisfy any regulatory requirements arising
as a result of the sale of the Business pursuant to this Agreement, provided
that all out-of-pocket expenses incurred in connection therewith shall be paid
by Purchaser.
(d) Access to Corporate Headquarters. Seller shall
provide Purchaser's employees with reasonable access during normal business
hours to Seller's ordinary work environment at Seller's corporate headquarters
in Houston, Texas, including but not limited to reasonable access during normal
business hours to Seller's computer systems used in the Business and MIS
systems used in the Business, and shall allow Purchaser's employees to
communicate with Seller's employees at that location in order for Purchaser's
employees to obtain certain information required for the operation of the
Business.
7.10 ACCOUNTING RECORDS. For a five-year period following the
Closing, Seller will use commercially reasonable efforts to allow Purchaser to
obtain access to audit work papers of
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Seller's accountants for the immediately preceding five years, if Purchaser
requests such access in connection with the audit by Purchaser of Seller for
periods preceding the Closing.
7.11 NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Seller agrees that, from and after the Closing Date,
Seller and its subsidiaries shall hold in confidence and will not directly or
indirectly at any time reveal, report, publish, disclose or transfer to any
person other than Purchaser any proprietary information relating primarily to
the Business or the Assets (the "PROPRIETARY INFORMATION") that is not
generally known to the public or use any Proprietary Information for any
purpose.
(b) Seller acknowledges that all documents and objects
containing or reflecting any Proprietary Information whether developed by
Seller or by a third party for Seller, will after the Closing Date become the
exclusive property of Purchaser and be delivered to Purchaser.
7.12 CONTACT WITH FORMER EMPLOYEES. Purchaser and Seller agree for
a period of two years following the Closing Date, not to solicit, directly or
indirectly, any of the other's respective employees, or employees of their
respective subsidiaries.
7.13 ASSUMED OBLIGATIONS. Purchaser shall, and shall cause
Holdings to, fulfill in all material respects the obligations it assumes in
connection with the Assumed Liabilities, and shall indemnify Seller for any
loss or expense incurred by Seller for events occurring after the effective
time of the Closing relative to the Assumed Liabilities or relating to the
conduct of the Business after the Closing.
ARTICLE VIII - TERMINATION
8.1 EVENTS OF TERMINATION. The obligation to close the
transactions contemplated by this Agreement may be terminated as follows:
(a) by mutual agreement of Purchaser and Seller;
(b) by Purchaser, if a material default is made by Seller
in the observance or in the due and timely performance by Seller of any
agreements and covenants of Seller herein contained, or if there has been a
breach by Seller of any of the warranties and representations of Seller herein
contained that results in a material adverse effect (without giving effect to
the individual materiality qualifications and thresholds otherwise contained in
Section 3.1 hereof), and such default or breach has not been cured or waived
within 20 days of written notice thereof;
(c) by Seller, if a material default is made by Purchaser
in the observance or in the due and timely performance by Purchaser of any
agreements and covenants of Purchaser herein contained, or if there has been a
breach by Purchaser of any of the warranties and representations of Purchaser
herein contained that results in a material adverse effect (without giving
effect to the individual materiality qualifications and thresholds otherwise
contained in
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Section 3.2 hereof), and such default or breach has not been cured or has not
been waived within 20 days of written notice thereof;
(d) by Purchaser or Seller, upon written notice provided
not less than four business days prior to the effective date of such
termination (provided the terminating party has not materially breached any of
its agreements, covenants or representations and warranties), if the Closing
shall not have occurred on or before March 17, 1997.
8.2 LIABILITY UPON TERMINATION. If the obligation to consummate
the transactions contemplated by this Agreement is terminated pursuant to any
provision of this Article VIII, then, other than the provisions of Section 8.4
which shall survive such termination, this Agreement shall forthwith become
void and there shall not be any liability or obligation with respect to this
Agreement on the part of Seller or Purchaser except and to the extent such
termination results from the willful breach by a party of any of its
representations, warranties or agreements hereunder.
8.3 NOTICE OF TERMINATION. The parties hereto may exercise their
respective rights of termination under this Article VIII only by delivering
written notice to that effect to the other party on or before the Closing Date
(or, in the event of a termination pursuant to Section 8.1(d), at the time
therein provided), specifically describing the factual basis and provisions of
this Agreement relied upon for such termination.
8.4 BREAK-UP FEE. Seller acknowledges that Purchaser is required
to secure financing to fund the Closing, and intends to seek funding by
offering securities in public or, if required, in private transactions as set
forth in Section 5.1(k). In the event Purchaser is not able to obtain such
funding and this Agreement is terminated pursuant to Section 8.1(d), Purchaser
agrees to pay Seller within fifteen days following the date of such termination
(i) $1.0 million in cash and (ii) $4.0 million in cash or, at Purchaser's
option, through the issuance to Seller of Purchaser's common stock, par value
$0.01 per share ("PURCHASER'S COMMON STOCK"). Purchaser's Common Stock shall
be valued at the average closing price reported on the Nasdaq National Market
for the 10 trading days immediately prior to the date of termination of this
Agreement. In the event Purchaser's Common Stock is issued as described above,
Purchaser shall grant registration rights to Seller with respect to such
shares, consistent with the Registration Rights Agreement dated November 1,
1995, by and among Purchaser and the Holders, as therein defined. The fee
described above is referred to herein as the "BREAK-UP FEE." The parties agree
that the Break-Up Fee is a substitute for Damages and not an incentive to
performance and that the amount is a reasonable estimate of the harm that would
result from any such breach or termination in light of the anticipated harm,
difficulties of proof of loss, and inconvenience or non-feasibility of any
other remedy and that the Break-Up Fee is not imposed as a penalty; provided,
however, that if any court or other authority determines that the Break-Up Fee
is unreasonable or otherwise unenforceable, Purchaser shall pay to Seller the
maximum reasonable amount payable as a Break-Up Fee allowable by law, but not
to exceed $5.0 million. If the Break-Up Fee is judicially determined not to be
enforceable, Seller shall be entitled to all other rights and remedies provided
by law or in equity.
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ARTICLE IX - MISCELLANEOUS
9.1 FINDERS' FEES. Other than the fees payable by Purchaser to
Jefferies & Company, Inc., Seller represents to Purchaser and Purchaser
represents to Seller that all negotiations relative to this Agreement have been
carried on by them directly without the intervention of any person who may be
entitled to any brokerage or finder's fee or other commission in respect of
this Agreement or the consummation of the transactions contemplated hereby, and
each agrees to indemnify and hold harmless the other against any and all
claims, losses, liabilities and expenses which may be asserted against or
incurred by it as a result of its dealings, arrangements or agreements with any
such person.
9.2 EXPENSES. Except as otherwise provided in this Agreement,
each party hereto shall pay its own expenses incidental to the preparation of
this Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
9.3 ASSIGNMENT AND BINDING EFFECT. This Agreement may not be
assigned prior to the Closing by any party hereto without the prior written
consent of the other party; provided, however, Purchaser may assign its rights
and obligations hereunder to any other entity that is controlling, controlled
by or under common control with Purchaser but any such assignment shall not
relieve Purchaser of its obligations hereunder. Purchaser shall give Seller
prompt written notice of any such assignment. Subject to the foregoing, all of
the terms and provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and assigns of Seller and
Purchaser.
9.4 NOTICES. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally or sent by
facsimile (in either case, with a copy also sent by first class mail, postage
prepaid) as follows:
If to Purchaser, to: With a copy to:
Xxxxxx Production Services, Inc. Jenkens & Xxxxxxxxx,
000 X.X. Xxxx 000, Xxxxx 000 A Professional Corporation
Xxx Xxxxxxx, Xxxxx 00000-0000 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
ATTN: Xxxxxxx X. Xxxxxx Xxxxxx, Xxxxx 00000
Facsimile Number: (000) 000-0000 ATTN: X. Xxxxxxx Xxxx
Facsimile Number: (000) 000-0000
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If to Seller, to: With a copy to:
Pride Petroleum Services, Inc. Xxxxx & Xxxxx, L.L.P.
0000 Xxxx Xxxx Xxxx., Xxxxx 000 One Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000 000 Xxxxxxxxx Xxxxxx
ATTN: Xxxxxx X. Xxxxxxx Xxxxxxx, Xxxxx 00000
Facsimile Number: (000) 000-0000 ATTN: L. Xxxxxxx Xxxxxx and
J. Xxxxx Xxxxxxxx, Jr.
Facsimile Number: (000) 000-0000
or to such other address or facsimile number as the addressee may have
specified in a notice duly given to the sender as provided herein. Such
notice, request, demand, waiver, consent, approval or other communication will
be deemed to have been given as of the date so delivered or faxed.
9.5 GOVERNING LAW. This Agreement shall be governed by,
interpreted and enforced in accordance with the laws of the State of Texas
(without regard to the choice or conflicts of law provisions of Texas law).
9.6 NO BENEFIT TO OTHERS. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit
of the parties hereto and their heirs, executors, administrators, legal
representatives, successors and assigns and they shall not be construed as
conferring any rights on any other persons, except for (a) in the case of
Article VI hereof, certain other indemnified parties, and (b) in the case of
Section 7.1(d) hereof, the Affected Employees.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, to the extent they related in any way to the
subject matter hereof except that the Confidentiality Agreement dated November
13, 1996, between Purchaser and Seller shall remain in full force and effect.
All Exhibits and Schedules referred to herein are incorporated herein in full
and are specifically made a part of this Agreement.
9.8 HEADINGS. All Section headings contained in this Agreement
are for convenience of reference only, do not form a part of this Agreement and
shall not affect in any way the meaning or interpretation of this Agreement.
9.9 SEVERABILITY. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
enforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction; provided if any provision of this
Agreement is held to be illegal, invalid, or unenforceable under present or
future laws effective during the effective period of this Agreement, such
provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part of this Agreement; and the remaining provisions of this
Agreement shall remain in full force and effect
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and shall not be affected by the illegal, invalid, or unenforceable provision
or by its severance from this Agreement. Furthermore, in lieu of each illegal,
invalid, or unenforceable provision there shall be added automatically as part
of this Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and
enforceable.
9.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when all counterparts taken
together shall have been executed and delivered by the parties. It shall not
be necessary in making proof of this Agreement as to a party to produce or
account for any of the other counterparts signed by another party not joined in
the action.
9.11 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Words used herein,
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context requires. Any reference
to a "PERSON" herein shall include an individual, firm, corporation,
partnership, trust, Governmental Entity, association, unincorporated
organization and any other entity. Any references to a Section, Article,
Schedule or Exhibit are to sections, articles, schedule and exhibits to this
Agreement, unless otherwise specifically stated.
9.12 WAIVER. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
occurrence.
9.13 SPECIFIC PERFORMANCE. The parties acknowledge and agree that
a party would be damaged irreparably if any of the provisions of this Agreement
are not performed in accordance with their specific terms or otherwise are
breached. Accordingly, a party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions of this
Agreement in any action instituted in any court of the United States or any
state thereof having jurisdiction over the parties and the matter (subject to
the provisions set forth in Section 6.9), in addition to any other remedy to
which they may be entitled, at law or in equity.
9.14 GOOD FAITH. The parties agree to act in good faith in the
performance and enforcement of the Agreement.
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9.15 ATTORNEYS' FEES. Except as otherwise provided in Section 6.9,
if any arbitration or action at law or in equity, including an action for
declaratory relief, is brought to enforce or interpret the provisions of this
Agreement, the Prevailing Party shall be entitled to recover reasonable
attorneys' fees and costs from the other party. No party to any such
proceeding shall be considered a "PREVAILING PARTY" unless it recovers more (or
pays less) as a result of arbitration or a lawsuit than it has been offered as
a settlement of the dispute.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written.
XXXXXX PRODUCTION SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
President
PRIDE PETROLEUM SERVICES, INC.
By: /s/ Xxx Xxxxxx
-----------------------------------
Xxx Xxxxxx
Chairman of the Board, President and
Chief Executive Officer
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LIST OF SCHEDULES
-----------------
Schedule 1 Restructure of Seller's U.S. Land Operations
Schedule 1.1(a)(i) Fee Properties
Schedule 1.1(a)(ii) Leased Properties
Schedule 1.1(a)(iii) Holdings Contracts
Schedule 1.1(a)(iv) Equipment Leases
Schedule 1.1(a)(v) Vehicle Leases
Schedule 1.1(a)(vi) Equipment
Schedule 1.1(b) Excluded Assets
Schedule 1.3(b) Fair Market Value
Schedule 1.4(a) Assumed Liabilities
Schedule 3.1(a) Corporate Jurisdiction
Schedule 3.1(i) Permitted Liens
Schedule 3.1(l) Litigation
Schedule 3.1(m) Contracts and Commitments
Schedule 3.1(n) Environmental Matters
Schedule 3.1(o) Real Properties
Schedule 3.1(q) Assets
Schedule 3.1(t) Employee Benefit Plans
Schedule 3.1(u) Personnel
LIST OF EXHIBITS
----------------
Exhibit A Form of Opinion of Counsel for Seller
Exhibit B Form of Opinion of Counsel for Purchaser
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SCHEDULE 1
RESTRUCTURE OF SELLER'S U.S. LAND OPERATIONS
1. Seller transfers 1% of its U.S. land assets, subject to
certain liabilities, to a new corporation ("GP") in exchange for all of the
stock of GP.
2. Seller transfers 99% of its U.S. land assets, subject to
certain liabilities, to a new limited partnership (the "Partnership") in
exchange for a 99% limited partnership interest. At the same time, GP
transfers 1% of the U.S. land assets, subject to certain liabilities, to the
Partnership for a 1% general partner interest.
3. Seller contributes the limited partner interest to a newly
organized corporation ("LP") for all of the stock of LP.
4. LP sells the limited partner interest and Seller sells all of
the stock of GP to Purchaser. Seller and Purchaser make a section 338(h)(10)
election for federal income tax purposes as to the sale of the stock of GP.
The Partnership makes an election under section 754 of the Code.
