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EXHIBIT 1
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STOCK PURCHASE AGREEMENT
BY AND AMONG
POOL COMPANY
AS BUYER,
POOL ENERGY SERVICES CO.
AS POOL
SEA MAR, INC.
AS THE COMPANY,
AND
THOSE OTHER PERSONS WHOSE NAMES
ARE SET FORTH IN SCHEDULE 3.1(b) HEREOF,
AS SELLERS
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Dated as of February 10, 1998
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TABLE OF CONTENTS
Page
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1. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Closing; Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Purchase Price and Payment at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Payment of Additional Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Associated Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Representations and Warranties of the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Due Organization; Good Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Validity of Agreement; Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . . 5
(d) Financial Information and Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . 6
(e) Title to Properties; Absence of Liens and Encumbrances . . . . . . . . . . . . . . . . . . . 8
(f) Properties, Contracts, Permits and Other Data . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Accounts Receivable; Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(i) Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(k) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(l) Conduct of Business in Compliance with Regulatory
and Contractual Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(m) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(n) Environmental, Health and Safety Compliance . . . . . . . . . . . . . . . . . . . . . . . . 11
(o) Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(p) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(q) Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(r) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(s) Employee Benefit Plans and Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(t) Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(u) Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(v) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(w) Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(x) Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(y) Foreign Corrupt Practices Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(z) Construction Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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3.2 Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Due Organization; Good Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) No Approvals or Notices Required; No Conflict with Instruments . . . . . . . . . . . . . . 19
(d) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Authorization of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(g) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Inspection of Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Conduct of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.7 Xxxx-Xxxxx-Xxxxxx Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.8 Acquisition Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.9 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10 Purchase Price Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.11 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.1 Conditions Precedent to Obligations of All Parties . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) No Governmental Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Termination under Xxxx-Xxxxx-Xxxxxx Act . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(d) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(e) Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2 Conditions Precedent to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Actions and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(d) Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) Licenses and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(f) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(g) Opinion of Counsel to Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(h) Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(i) Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(j) Facts or Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(k) Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(l) Vessel Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(m) New Vessel Charters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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5.3 Conditions Precedent to the Obligations of the Sellers . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Actions and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(d) Opinion of Counsel to Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(e) Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2 No Liabilities in Event of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7. Covenants; Action Subsequent to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Use of Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.1 Indemnification by the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 Monetary Limit on Indemnification Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5 Time Limits on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.6 Seller Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.1 Payment of Certain Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.4 Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.5 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.6 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.7 Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.8 Section Headings; Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.11 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.12 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Good Faith Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(c) Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.13 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.2 Certain Additional Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.3 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
SCHEDULES
Schedule 3.1(a) - State of Incorporation and Foreign Qualification
Schedule 3.1(b) - Ownership of Stock
Schedule 3.1(c) - Consents and Approvals
Schedule 3.1(d) - Financial Information
Schedule 3.1(e) - Liens and Encumbrances
Schedule 3.1(f) - Properties, Contracts, Permits and Other Data
Schedule 3.1(h) - Accounts Receivable; Inventory
Schedule 3.1(i) - Legal Proceedings
Schedule 3.1(j) - Insurance
Schedule 3.1(k) - Intellectual Property
Schedule 3.1(l) - Conduct of Business in Compliance with Regulatory and Contractual Requirements
Schedule 3.1(n) - Environmental Compliance
Schedule 3.1(o) - Books and Records
Schedule 3.1(p) - Taxes
Schedule 3.1(q) - Additional Information
Schedule 3.1(r) - Labor Matters
Schedule 3.1(s) - Employee Benefit Plans
Schedule 3.1(t) - Affiliate Transactions
Schedule 3.1(w) - Vessels
Schedule 3.1(x) - Customers
Schedule 3.2(c) - Buyer Consents
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EXHIBITS
Exhibit 1 - Allocation of Purchase Price
Exhibit 2 - Promissory Note
Exhibit 3 - Escrow Agreement
Exhibit 4 - Voting Agreement
Exhibit 5 - Adjusted Pro Forma Balance Sheet
Exhibit 6 - Employment Agreement
Exhibit 7 - Opinion of Counsel to Sellers and Company
Exhibit 8 - Opinion of Counsel to Buyer
Exhibit 9 - Construction Contract Assignment
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of February 10, 1998 by and among those persons whose names are set
forth in Schedule 3.1(b) hereof (collectively, the "Sellers" and individually,
a "Seller"), Sea Mar, Inc., a Louisiana corporation (the "Company"), Pool
Energy Services Co., a Texas corporation ("Pool") and Pool Company, a Texas
corporation ("Buyer").
R E C I T A L S:
1. The Sellers own all of the issued and outstanding capital
stock (the "Stock") of Company, which is engaged in the offshore vessel
business (the "Business"); and
2. The Sellers desire to sell to Buyer and Buyer desires to
acquire from the Sellers, the Stock, in consideration of the payment by Buyer
of the purchase price provided for herein, all upon the terms and subject to
the conditions hereinafter set forth; and
3. The Company joins in the execution of this Agreement for the
purpose of evidencing its consent to consummation of the foregoing transaction
and for the purpose of making certain representations and warranties to and
covenants and agreements with Buyer.
AGREEMENT
In consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions of the
parties contained herein, it is hereby agreed as follows:
1. Purchase and Sale.
1.1 Purchase and Sale. Subject to the terms and conditions of
this Agreement, at the Closing, Sellers shall sell and deliver to Buyer and
Buyer shall purchase from Sellers all of the Stock, free and clear of all
Encumbrances. At the Closing, each of the Sellers shall deliver to Buyer
certificates evidencing the Stock owned by such Seller (which, in the
aggregate, shall constitute all of the Stock), duly endorsed for transfer or
accompanied by duly executed stock powers.
1.2 Further Assurances. From time to time after the Closing, the
Sellers will execute and deliver, or cause to be executed and delivered,
without further consideration, such other instruments of conveyance,
assignment, transfer and delivery and will take such other actions as Buyer may
reasonably request in order to more effectively transfer, convey, assign and
deliver to Buyer, and to
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place Buyer in possession and control of any of the Stock or to enable Buyer to
exercise and enjoy all rights and benefits of the Sellers with respect thereto.
2. Closing; Purchase Price.
2.1 Closing Date. The closing of the transactions provided for in
this Agreement (the "Closing") shall take place (i) at the offices of Gardere
Xxxxx Xxxxxx & Xxxxx, L.L.P., 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx, at
10:00 a.m., local time, on the later of (x) March 31, 1998, or (y) the third
business day following the satisfaction or waiver (subject to Applicable Law)
of each of the conditions of the obligations of the parties set forth in
Section 5, or (ii) at such other time or place or on such other date as the
parties hereto shall agree. The date on which the Closing is required to take
place is herein referred to as the "Closing Date".
2.2 Purchase Price and Payment at Closing. The aggregate purchase
price for the Stock shall be the sum of subparagraphs (a) and (b) below (the
"Purchase Price"), subject to adjustment pursuant to Section 2.3 below. The
Purchase Price shall be payable at the Closing and shall consist of:
(a) $50,000,000.00 (the "Cash Amount") in cash. The
Cash Amount shall be paid to each Seller in the amounts set forth
beside the name of each Seller in Exhibit 1 at the Closing in the form
of a bank cashier's check payable to the order of such Seller or, if
requested by such Seller, in immediately available funds by confirmed
wire transfer to a bank account to be designated by such Seller (such
designation to occur no later than the second Business Day prior to
the Closing Date).
(b) An aggregate of 1,538,462 shares of common stock of
Pool (the "Pool Stock"), allocated to each Seller in the amounts set
forth beside the name of such Seller in Exhibit 1.
One-half of the Pool Stock to be delivered hereunder shall be placed
in escrow with Bank One Texas N.A. pursuant to the terms of an Escrow
Agreement substantially in the form attached hereto as Exhibit 3 (the "Escrow
Agreement") to serve as security for Sellers' indemnity obligations under
Article 8 of this Agreement. The other one- half of the Pool Stock to be
delivered to the Sellers hereunder shall be subject to the terms of a Voting
Agreement in the form attached hereto as Exhibit 4 (the "Voting Agreement").
Sellers acknowledge and agree that the allocation of the Purchase
Price among them as set forth on Exhibit 1 is the sole responsibility of the
Sellers, and Buyer and the Company shall have no obligation or other
responsibility with respect to such allocation.
2.3 Purchase Price Adjustment. The Purchase Price shall be
subject to adjustment as follows:
(a) Buyer shall cause the Company to prepare and Xxxxxx
Xxxxxxxx L.L.P. (the "Auditors"), the Company's independent certified
public accountants, to audit in accordance with generally accepted
accounting principles, consistently applied, and report on (with no
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exceptions as to the application of GAAP or as to the scope of the
audit) a statement of the Company's Shareholders' Equity as of the
Closing Date. Such statement, together with all related working
papers, being herein referred to as the "Statement". The Statement
shall be compared with the adjusted pro forma balance sheet as of
August 31, 1997, a copy of which is attached as Exhibit 5 (the "Pro
Forma Balance Sheet") and the Shareholders' Equity shown therein. The
amount of increase or decrease in the Shareholders' Equity is
hereinafter referred to as the "Purchase Price Adjustment". The fees
and expenses of the Auditors shall be borne by Buyer.
(b) The parties hereto shall use their reasonable best
efforts to cause the Auditors to complete and deliver the Statement to
Sellers and Buyer within 90 days after the Closing Date.
(c) If the Purchase Price Adjustment is a positive
amount, the Purchase Price shall be increased by such amount, with
such increase being payable in cash by Buyer within fifteen business
days of the date of the delivery to Buyer of the Statement (the
"Determination Date"). The amount of any such increase shall be
allocated among the Sellers in proportion to the allocation of the
Cash Amount payable at Closing as set forth on Exhibit 1 hereto. If
the Purchase Price Adjustment is a negative amount, then the Purchase
Price shall be reduced by such amount, and the Sellers, shall pay such
amount to Buyer in proportion to the allocations set forth in Exhibit
1 within fifteen (15) business days of the Determination Date.
(d) In the event that Buyer, on the one hand, or Seller
Representative on the other, disagrees with the Statement, such party
shall have fifteen (15) days from the Determination Date to attempt to
resolve such dispute with the other. In the event such dispute cannot
be resolved, either Buyer or Seller Representative can request, by the
delivery of a notice to the other specifying in reasonable detail the
nature of the dispute, within three (3) days of the expiration of such
fifteen day period, that the dispute be resolved by an independent
nationally-recognized accounting firm that has no business
relationship with either party (the "Accounting Arbitrator") selected
by the party delivering the notice. The Accounting Arbitrator shall
review any disputed items and resolve any such disputes within thirty
(30) days of the date the Accounting Arbitrator is retained. The
decision of the Accounting Arbitrator shall be final and binding
between the parties for the purpose of determining any Purchase Price
adjustment pursuant to this Section 2.3. The fees and expenses of the
Accounting Arbitrator shall be borne one-half by Buyer and one-half by
Sellers.
2.4 Payment of Additional Consideration. In addition to the
Purchase Price, Buyer shall pay to Sellers, or their assigns or successors,
subject to the terms and conditions of this Agreement, additional consideration
as follows:
(a) Sellers shall be paid an amount in cash equal to the lesser of
(i) $10,000,000 or (ii) Adjusted 1998 EBITDA. Such amount shall be paid within
ten Business Days after the determination of Adjusted 1998 EBITDA. As used
herein "Adjusted 1998 EBITDA" shall mean the amount by which EBITDA for
calendar year 1998 exceeds $25,000,000. "EBITDA" shall mean the Company's
audited earnings from assets owned or contracted for on the date hereof before
expenses
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11
of the transaction contemplated by this Agreement, interest expense, interest
income, depreciation expense, amortization expense, allocated overhead expenses
from Pool or any affiliate of Pool other than Sea Mar to the extent that such
allocation exceeds any expense which previously was ordinarily incurred by Sea
Mar when a stand alone entity and income tax, as reflected in the Company's
1998 or 1999, as appropriate, audited consolidated financial statements
,excluding any gain or loss on the disposal of material assets. EBITDA will be
calculated on a basis consistent with past practices including prior
capitalization policy whether or not a different capitalization policy is
actually applied; and
(b) Sellers shall be paid an amount in cash equal to the lesser of
(i) $10,000,000 or (ii) Adjusted 1999 EBITDA. Such amount shall be paid within
ten Business Days after the determination of Adjusted 1999 EBITDA. As used
herein, "Adjusted 1999 EBITDA" shall mean the amount by which EBITDA for
calendar year 1999 exceeds $35,000,000.
(c) All payments of additional consideration pursuant to this
Section 2.4 shall be allocated among the Sellers in the same percentages as the
Cash Amount is allocated in Exhibit 1. The additional consideration shall be
payable within ten (10) business days of the completion of calculation of the
adjusted 0000 XXXXXX and the Adjusted 1999 EBITDA, respectively.
2.5 Associated Transaction. In conjunction with this transaction,
Company shall enter into a Construction Contract Assignment with Sea Mar
Equipment, Inc. in the form of Exhibit 9 attached hereto, pursuant to which
Company shall acquire the Construction Contract in exchange for the provision
to Sea Mar Equipment, Inc. of either a $10,000,000 cash payment or a promissory
note in the amount of $10,000,000, payable in one year, bearing interest at
7.5% substantially in the form of Exhibit 2 attached hereto and made a part
hereof (the "Construction Contract Assignment"). Buyer shall fund Company with
either the required $10,000,000 cash or a $10,000,000 promissory note, at
Buyer's option at the time of the Closing.
3. Representations and Warranties.
3.1 Representations and Warranties of the Sellers and the Company.
The Company and the Sellers, jointly and severally, represent and warrant to
Buyer as of the date hereof and as of the Closing Date, as follows:
(a) Due Organization; Good Standing and Power. The
Company and each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation. The Company and each Subsidiary has the corporate
power and authority to own, lease and operate its respective assets
and to conduct its respective business as now conducted. The Company
and each Subsidiary is duly authorized, qualified or licensed to do
business as a foreign corporation and is in good standing in each
jurisdiction in which their respective right, title or interest in or
to any of their respective assets, or the conduct of their respective
business, requires such authorization, qualification or licensing,
except where the failure to so qualify or to be in good standing in
such other jurisdictions would not have a material adverse effect on
any of the assets, the business or the results of operations of the
Company or of such Subsidiary. The jurisdiction of incorporation of
the Company and each Subsidiary and jurisdictions in
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12
which the Company and each Subsidiary are qualified or licensed to do
business are set forth on Schedule 3.1(a). No actions or proceedings
to dissolve the Company or any Subsidiary are pending. The Company
has delivered to Buyer true and complete copies of the minute books
and stock transfer books of the Company and the Subsidiaries, each of
which is accurate and complete.
(b) Validity of Agreement; Capitalization. This
Agreement has been duly executed and delivered by the Sellers and the
Company and constitutes a legal, valid and binding obligation of each
of them, enforceable against them in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally and by general equity
principles. The Company's authorized capital consists solely of (i)
100 shares of Class A Common Stock, no par value, of which 100 are
issued and outstanding, (ii) 60 shares of Class B Common Stock, no par
value of which no shares are issued and outstanding and (iii) 100
shares of Class C Common Stock, no par value, of which no shares are
issued and outstanding. The record and beneficial ownership of such
shares is as set forth on Schedule 3.1(b) hereto. All of the issued
and outstanding shares of the Company and each Subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable,
have not been issued in violation of any preemptive or similar rights,
and have been issued in compliance with all Applicable Laws (including
state and federal securities laws). The Stock constitutes all shares
of the outstanding capital stock of the Company. The Company owns
100% of the stock and equity interest of each Subsidiary. Except as
set forth on Schedule 3.1(b), there are (and as of the Closing Date
there will be) outstanding (i) no shares of capital stock or other
voting securities of the Company or any Subsidiary, (ii) no securities
of the Company or any Subsidiary convertible into or exchangeable for
shares of the capital stock or other voting securities of the Company
or such Subsidiary, (iii) no options, warrants or other rights to
acquire from the Company or any Subsidiary, and no obligation of the
Company or any Subsidiary to issue or sell, any shares of its capital
stock or other voting securities or any securities of the Company or
any Subsidiary convertible into or exchangeable for such capital stock
or voting securities, (iv) no equity equivalents, interest in the
ownership or earnings, or other similar rights of or with respect to
the Company or any Subsidiary, and (v) no shares of any other entity
owned by the Company or any Subsidiary. There are (and as of the
Closing Date there will be) no outstanding obligations of the Company
or any Subsidiary to repurchase, redeem or otherwise acquire any
shares, securities, options, equity equivalents, interests or rights.
Each Seller is (and at the Closing Date will be) the record and
beneficial owner of, and upon consummation of the transactions
contemplated hereby Buyer will acquire, good, valid and marketable
title to, the number of shares of Stock set forth opposite the name of
such Seller on Schedule 3.1(b), free and clear of all Encumbrances,
other than (i) those that may arise by virtue of any actions taken by
or on behalf of Buyer or its affiliates or (ii) restrictions on
transfer that may be imposed by federal or state securities laws.
(c) No Approvals or Notices Required; No Conflict with
Instruments. Except as described in Schedule 3.1(c) hereto, the
execution, delivery and performance of this Agreement by the Sellers
and the Company and the consummation by them of the transactions
contemplated hereby (i) will not violate (with or without the giving
of notice or
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13
the lapse of time or both) or require any consent, approval, filing or
notice under, any provision of any Applicable Law and (ii) will not
result in the creation of any Encumbrance on the Stock under, conflict
with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of the Sellers, the Company or any
Subsidiary under, or result in the creation of an Encumbrance upon any
portion of the assets of the Company or any Subsidiary pursuant to,
the charters or by-laws of the Company or any Subsidiary, or any
indenture, mortgage, deed of trust, lease, licensing agreement,
contract, instrument or other agreement to which the Sellers, the
Company or any Subsidiary are a party or by which any of them or any
of their assets is bound or affected. The Stock is transferable and
assignable to Buyer as contemplated by this Agreement without the
waiver of any right of first refusal or the consent of any other party
being obtained, and there exists no preferential right of purchase in
favor of any person with respect of any of the Stock or the Business
or any of the assets of the Company.
(d) Financial Information and Absence of Certain Changes.
The Company has delivered to Buyer accurate and complete copies of (i)
the Company's audited consolidated balance sheets as of December
31,1995 and December 31,1996, and the related audited consolidated
statements of income, stockholders' equity and cash flows for each of
the years then ended, and the notes and schedules thereto, prepared in
conformity with GAAP, together with the unqualified reports thereon of
Xxxxxx Xxxxxxxx L.L.P., independent public accountants (the "Audited
Financial Statements"), and (ii) the Company's unaudited consolidated
balance sheet as of December 31, 1997 (the "Latest Balance Sheet"),
and the related unaudited statements of income, stockholders' equity
and cash flows for the twelve- month period then ended (together with
the Latest Balance Sheet, the "Unaudited Financial Statements"),
certified by the Company's Finance Manager (collectively, the
"Financial Statements"). The Company has also delivered the Pro Forma
Balance Sheet. Except as shown in Schedule 3.1(d), the Financial
Statements (i) represent actual bona fide transactions, (ii) have been
prepared from the books and records of the Company and its
consolidated Subsidiaries in conformity with GAAP applied on a basis
consistent with preceding years throughout the periods involved,
except that the Unaudited Financial Statements are not accompanied by
notes or other textual disclosure required by GAAP, and (iii)
accurately, completely and fairly present the Company's consolidated
financial position as of the respective dates thereof and its
consolidated results of operations and cash flows for the periods then
ended, except that the Unaudited Financial Statements are subject to
normal year-end adjustments consistent with past practice, which will
not be material in the aggregate. The Pro Forma Balance Sheet has
been prepared from the books and records of the Company and its
consolidated Subsidiaries in conformity with GAAP applied on a basis
consistent with preceding years throughout the periods involved,
subject to the footnotes and exceptions contained therein. To the
knowledge of Sellers and the Company, neither the Company nor any
Subsidiary has any liability or obligation that would materially and
adversely affect the business, assets, financial condition or results
of operations of the Company and the Subsidiaries, whether accrued,
absolute, contingent, or otherwise, except as set forth on the Latest
Balance Sheet or on Schedule 3.1(d). Except as disclosed on Schedule
3.1(d), since the date of the Latest Balance Sheet, there has not been
nor will there be any change in the assets, liabilities, financial
condition, or operations of the Company or
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14
its Subsidiaries from that reflected in the Financial Statements,
other than changes in the ordinary course of business, none of which
individually or in the aggregate have had or will have a material
adverse effect on such assets, liabilities, financial condition, or
operations. Without limiting any of the foregoing, since the date of
the Latest Balance Sheet and until the Closing Date, except as
disclosed on Schedule 3.1(d) the Company and its Subsidiaries have not
and, except as specifically contemplated in Sections 4.10 and 5.1
below, will not have:
(i) incurred or become subject to, or
agreed to incur or become subject to, any obligation or
liability, absolute or contingent, except current liabilities
incurred in the ordinary course of business;
(ii) mortgaged, pledged, or subjected to
any Encumbrance (or agreed to do so with respect to) any of
their assets, or discharged or satisfied any Encumbrance, or
paid or satisfied any obligation or liability other than in
the ordinary course of business and consistent with past
practice;
(iii) sold or transferred, or agreed to
sell or transfer, any of their assets, or canceled or agreed
to cancel, any debts due them or claims therefor, except, in
each case, for full consideration and in the ordinary course
of business;
(iv) engaged in any transactions
adversely affecting the Business or their assets or suffered
any extraordinary losses or waived any rights of substantial
value not in the ordinary course of business;
(v) purchased or agreed to purchase any
securities, bonds, or any other capital stock or assets of any
other entity with cash or liquid assets, or used cash or
liquid assets to incur debts, for matters not within the
ordinary course of business or not for appropriate corporate
purposes;
(vi) increased any salaries or granted or
agreed to grant, or paid, or agreed to pay, any bonus, loan,
incentive payment or other item of value or made any other
similar agreement, to or with any of its directors, officers
or agents except as compensation in the ordinary course of
business for appropriate services performed;
(vii) declared or paid any dividend or
made any other distribution to their shareholders;
(viii) made or authorized any capital
expenditure except as provided in the pro forma schedule of
capital expenditure heretofore furnished to Buyer;
(ix) made or agreed to make any changes
in their Articles of Incorporation, bylaws, or capital
structure;
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15
(x) entered into any representative,
distributorship, service, installation, support and
maintenance, agency or other similar agreement except in the
ordinary course of business;
(xi) incurred or suffered any damage,
destruction, or loss, not covered by insurance, materially
affecting the Business or any of their respective assets;
(xii) made or applied to make any change
in accounting methods or practices, including for tax
purposes; or
(xiii) entered into any agreement,
commitment or understanding, whether or not in writing, with
respect to any of the foregoing.
(e) Title to Properties; Absence of Liens and
Encumbrances. The Company and each Subsidiary owns (except as
described in Schedule 3.1(e) hereto) good, marketable and indefeasible
title to all of its assets, free and clear of all Encumbrances and
other restrictions of any kind and nature, other than the Encumbrances
specifically set forth on Schedule 3.1(e) hereto.
(f) Properties, Contracts, Permits and Other Data.
(i) Schedule 3.1(f) hereto contains a complete
and correct list of, and summaries of all the material
specifications and details of, all material contracts,
contract proposals, charters, outstanding bids, maintenance
and service agreements, purchase commitments for materials and
other services, construction contracts, and contracts under
which the Company or any Subsidiary is a lessor or lessee and
other agreements pertaining to the Business to which the
Company, any Subsidiary, or an affiliate of the Company or any
Subsidiary is a party, the benefits of which are enjoyed in
the Business or to which any of the assets of the Company or
any Subsidiary is subject;
(ii) Schedule 3.1(f) hereto contains a complete
and correct list of the Company's and Subsidiaries' owned and
leased real estate (the "Real Estate"); and
(iii) Schedule 3.1(f) hereto contains a complete
and correct list of all Permits relating to the development,
use, maintenance or occupation of the Company's or any
Subsidiary's properties, Real Estate, or the operation of the
Business (other than sales and use tax Permits and franchise
tax registrations).
True and complete copies of all documents (including all amendments
thereto) referred to in Schedule 3.1(f) hereto have been delivered to
or made available for inspection by Buyer. Except as shown on
Schedule 3.1(f), all rights, licenses, leases, registrations,
applications, contracts, commitments, Permits and other arrangements
by the Sellers, the Company or any Subsidiary referred to in Schedules
3.1(f) are in full force and effect and are valid and enforceable in
accordance with their respective terms, except where the failure to be
in full
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16
force and effect and valid and enforceable would not in the aggregate
have an adverse effect on the assets of the Company or its
Subsidiaries or on their respective results of operations. Except as
shown on Schedule 3.1(f), the Company, the Subsidiaries, and their
respective affiliates are not in breach or default in the performance
of any material obligation thereunder and to the best knowledge of the
Sellers and the Company, no event has occurred or has failed to occur
whereby any of the other parties thereto have been or will be released
therefrom or will be entitled to refuse to perform thereunder. Except
as set forth in Schedule 3.1(f) hereto, there are no contracts,
agreements, licenses, Permits, franchises or rights to which the
Company or any of its Subsidiaries or affiliates is a party which are
material to the ownership of any of the Company's assets, the assets
of any Subsidiary, or to the conduct of the Business as conducted by
the Company and its Subsidiaries. Except as described on Schedule
3.1(f) hereto, the Company and each Subsidiary has and will have
following the Closing, all licenses, Permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities
required for the conduct of the business as presently conducted.
Except as shown on Schedule 3.1(f), there are no outstanding powers of
attorney relating to or affecting the Company or any Subsidiary.
Except as shown on Schedule 3.1(f), neither the Company nor any
Subsidiary is a guarantor for or otherwise liable for any liability or
obligation (including indebtedness of any other person).
(g) Defects. The buildings, plants, structures, Vessels,
and equipment of the Company and the Subsidiaries are being
transferred "as is, where is" with Seller's only obligation with
respect thereto prior to Closing to continue to maintain same in
accordance with past practices in the ordinary course of business.
The building, plants, structures, equipment and Vessels of the Company
and its Subsidiaries are sufficient for the continued conduct of the
Company's and its Subsidiaries' businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
(h) Accounts Receivable; Inventory. All accounts
receivable reflected on the Latest Balance Sheet or on the accounting
records of the Company and its Subsidiaries as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent
valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. Unless paid
prior to the Closing Date, except as shown in Schedule 3.1(h), the
Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserve shown on the Balance Sheet
or on the accounting records of the Company and its Subsidiaries as of
the Closing Date (which reserves are adequate and calculated
consistently with past practice and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the
Accounts Receivable as of the Closing Date than the reserve reflected
in the Latest Balance Sheet represented of the Accounts Receivables
reflected therein and will not represent a material adverse change in
the composition of such Accounts Receivable in terms of aging.
Subject to such reserves, except as shown in Schedule 3.1(h), each of
the Accounts Receivable either has been or will be collected in full,
without any setoff. Except as shown in Schedule 3.1(h), the
inventories and work in progress reflected on the Latest Balance Sheet
and those items of inventory constructed or acquired by the Company
and the work performed by the Company after the date of the Latest
Balance Sheet, except to the extent disposed of or billed since such
date in the ordinary conduct of the business by the Company or its
Subsidiaries, are, in the case of such inventory, in good,
merchantable and usable condition, and, in the case
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17
of such work in progress, represent work completed in accordance with
the requirements of any applicable contract, and, in each case, have
been reflected on the books of the Company in accordance with GAAP.
Except as set forth on Schedule 3.1(e) hereto, all such inventories
and work in progress are owned by the Company or its Subsidiaries free
and clear of any Encumbrances.
(i) Legal Proceedings. Except as described in Schedule
3.1(i) hereto, (i) there is no litigation, proceeding, claim or
governmental investigation pending or, to the knowledge of any of the
Sellers or the Company, threatened seeking relief or damages which, if
granted, would adversely affect the Company, any Subsidiary, any of
their respective assets, or the ability of Buyer to use and operate
the assets of the Company and the Subsidiaries or which would prevent
the consummation of the transactions contemplated by this Agreement
and (ii) neither the Sellers, the Company nor any Subsidiary has been
charged with any violation of or, to the knowledge of either the
Sellers or the Company, threatened with a charge or violation of, nor
is either of the Sellers or the Company aware of any facts or
circumstances that, if discovered by third parties, could give rise to
a charge or a violation of, any provision of Applicable Law or
regulation which charge or violation, if determined adversely to
either the Sellers, the Company or any Subsidiary, would adversely
affect the Business or the results of operations of the Company or its
Subsidiaries or that might reasonably be expected to affect the right
of Buyer to own the Stock or operate the Company's and Subsidiaries'
Business after the Closing Date in substantially the manner in which
it is currently operated. None of the Company, any Subsidiary, or any
director, officer, employee or agent of any of them has, directly or
indirectly, paid or delivered any fee, commission or other sum of
money or item of property however characterized to any broker, finder,
agent, governmental official or other person, in any matter related to
the Business of the Company or any Subsidiary, which the Company, any
Subsidiary, or any such director, officer, employee or agent knows or
has reason to believe to have been illegal under any Applicable Law.
(j) Insurance.
(i) Schedule 3.1(j) hereto sets forth a list and
brief description of the insurance policies relating to the
insurable properties of the Company and its Subsidiaries and
the conduct of the Business of the Company and its
Subsidiaries. All premiums due and arising thereon have been
paid on a current basis and such policies are in full force
and effect.
(ii) The Company maintains, with financially sound
and reputable insurers, insurance policies covering such
perils and in such amounts as are usually maintained on
vessels engaged in the same or a similar business as the
Vessels under blanket fleet policies with respect to vessels
of like size, character and marine activity as the Vessels;
and such workmen's compensation or longshoremen's and harbor
workers' insurance as shall be required by applicable law,
including endorsements for borrowed servant, voluntary
compensation and in rem claims;
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18
(iii) Schedule 3.1(j) is a complete and accurate
list of all pending or outstanding insurance claims
("Outstanding Insurance Claims") of the Company against the
Company's insurance companies and the amount, if any, of each
Outstanding Insurance Claim that is reflected in the Financial
Statements as an account receivable or other asset.
(k) Intellectual Property. Schedule 3.1(k) contains a
complete list of all of the Company's and its Subsidiaries' right,
title or interest in or to any Intellectual Property. Except as
described on Schedule 3.1(k) hereto, the Company or its Subsidiaries
(i) own and possess all of the Intellectual Property needed for the
conduct of the Business as presently conducted; (ii) to the best
knowledge of the Sellers and the Company, there is no basis for the
assertion by any person of any claim against Buyer or the Company with
respect to the use by the Company or Buyer of any of the Intellectual
Property; and (iii) neither the Sellers nor the Company is infringing
or violating, and to the best knowledge of the Sellers and the
Company, neither the Sellers nor the Company have infringed or
violated, any rights of any person with respect to any of the
Intellectual Property, and the Intellectual Property is not subject to
any order, injunction or agreement respecting its use.
(l) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Except as described on Schedule 3.1(l)
hereto, the Company and each Subsidiary has conducted the Business so
as to comply with all Applicable Laws, rights of concession, licenses,
know-how or other proprietary rights of others, the failure to comply
with which would individually or in the aggregate have a material
adverse effect on the Business, the Vessels or the results of
operations of the Company or any Subsidiary.
(m) Certain Fees. Neither the Company, any Subsidiary or
their respective officers, directors or employees nor Sellers, on
behalf of the Company, any Subsidiary or themselves, has employed any
broker or finder or incurred any other liability for any brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated hereby, other than the fees and expenses payable to
Xxxxxxx & Company International and Chaffe & Associates, Inc., which
shall be paid by the Sellers prior to or at the Closing.
(n) Environmental, Health and Safety Compliance. Except
as described on Schedule 3.1(n) hereto,
(i) the Company and each Subsidiary is,
and has continuously been, in compliance with all
Environmental Laws;
(ii) all material notices, Permits,
licenses or similar authorizations, if any, required to be
obtained or filed under any Environmental Law in connection
with the operation of the Business have been obtained or
filed;
(iii) there are no past, pending or
threatened investigations, proceedings or claims against the
Company relating to the presence, release or
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remediation of any Hazardous Material or for non-compliance
with any Environmental Law;
(iv) Hazardous Materials have not been
treated, stored or disposed of on, to or from any property
relating in any way to the Company or any Subsidiary or that
is or was owned or leased by the Company or any Subsidiary;
(v) none of the properties owned, leased
or operated by the Company or any Subsidiary have been used as
landfill or waste disposal sites or contain any underground
storage tanks;
(vi) no conditions or circumstances are
known to the Company or the Sellers to exist or to have
existed with respect to the Company or any Subsidiary,
including without limitation the off-site disposal of
Hazardous Materials, that could give rise to any remedial
action under, or impose any liability on the Company, any
Subsidiary, or Buyer with respect to any Environmental Law;
(vii) neither the Sellers, the Company nor
any Subsidiary has received any notice or claim, and none of
them is aware of any facts suggesting, that the Company or any
Subsidiary is or may be liable to any person as a result of
any Hazardous Material generated, treated or stored at any
real estate at any time owned or leased by the Company or any
Subsidiary or discharged, emitted, released or transported
from any real estate at any time owned or leased by the
Company or any Subsidiary or any other source in the conduct
of the Business of the Company and its Subsidiaries;
(viii) no conditions or circumstances are
known by the Sellers or the Company to exist or to have
existed, and no activities are known by the Sellers or the
Company to be occurring or to have occurred, that are
resulting or have resulted in the exposure of any person or
property to a Hazardous Material such that the owner of the
Real Estate or of the Business 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;
(ix) there are no federal or state air
emission credits or air or water discharge Permits related to
the Real Estate; and
(x) to the extent required by Applicable
Law, the Vessels have all evidence of financial responsibility
necessary to conduct, and to continue to conduct, the business
in which they are engaged on the date of this Agreement.
For purposes of this Agreement, the term "Environmental Laws" shall
mean, as to any given asset or operation of the Company, all
applicable laws, statutes, ordinances, rules and regulations of any
Governmental Entity pertaining to protection of the environment in
effect as of the Closing Date. For purposes of this Agreement, the
term "Hazardous Material" shall
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20
mean any substance which is listed or defined as a hazardous
substance, hazardous constituent or solid waste pursuant to any
Environmental Law.
(o) Books and Records. Except as shown on Schedule
3.1(o), all of the books and records of the Company and the
Subsidiaries have been prepared and maintained in accordance with good
business practices and, where applicable, in conformity with GAAP and,
to the best of Company's and Sellers' knowledge, in compliance with
all Applicable Laws and other requirements.
(p) Taxes. Except as shown on Schedule 3.1(p), for the
past five years, the Company and the Sellers have caused to be timely
filed with appropriate federal, state, local, foreign, provincial and
other Governmental Entities all Tax Returns required to be filed with
respect to the Company, the Subsidiaries or the conduct of the
Business and have paid, caused to be paid, or adequately reserved in
the Financial Statements all Taxes due or claimed to be due from or
with respect to such Tax Returns or which are or will become payable
with respect to all periods prior to Closing. Except as set forth on
Schedule 3.1(p), no extension of time has been requested or granted
with respect to the filing of any Tax Return or payment of any Taxes,
and no issue has been raised or adjustment proposed by the IRS or any
other taxing authority in connection with any of the Company's Tax
Returns, and there are no outstanding agreements or waivers that
extend any statutory period of limitations applicable to any federal,
state, local, foreign, or provincial Tax Returns that include or
reflect the use and operation of the Company, the Subsidiaries or the
conduct of the Business. Except as set forth on Schedule 3.1(p),
neither the Sellers, the Company nor any Subsidiary have received or
have knowledge of any notice of deficiency, assessment, audit,
investigation, or proposed deficiency, assessment or audit with
respect to the Company, the Subsidiaries or the conduct of the
Business from any taxing authority. Except as shown on Schedule
3.1(p), none of the Company or any Subsidiary has taken action which
is not in accordance with past practice that could defer any liability
for Taxes from any taxable period ending on or before the Closing Date
to any taxable period ending after such date and neither of the
Company or any Subsidiary has consented to the application of Section
341(f) of the Code.
(q) Additional Information. Schedule 3.1(q) hereto
contains accurate lists and summary descriptions of the following:
(i) the name and address of every bank
and other financial institution at which the Company, any
Subsidiary or any of their respective affiliates maintain an
account (whether checking, savings or otherwise), lock box or
safe deposit box for the Business, and the account numbers and
names of persons having signing authority or other access
thereto;
(ii) the names and titles of and current
hourly rates for all employees of the Company and the
Subsidiaries, together with the vacation and severance
benefits to which each such person is entitled; and
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(iii) all names under which the Company
and the Subsidiaries have conducted any business or which any
of them has otherwise used.
(r) Labor Matters. Except as shown on Schedule 3.1(r),
neither the Company nor any Subsidiary has suffered any strike,
slowdown, picketing or work stoppage by any union or other group of
employees. Neither the Company nor any Subsidiary is a party to any
collective bargaining agreement; no such agreement determines the
terms and conditions of employment of any employee of the Company or
any Subsidiary; no collective bargaining agent has been certified as a
representative of any of the employees of the Company or any
Subsidiary; and no representation campaign or election is now in
progress with respect to any of the employees of the Company or any
Subsidiary. Except as shown on Schedule 3.1(r), neither the Sellers,
the Company nor any Subsidiary has taken or failed to take any action
that would cause Buyer to incur any liability in the event Buyer
chooses to dismiss from its employment any of the Company's employees
or any employee of any Subsidiary following the Closing. Except as
shown on Schedule 3.1(r), the Company and each Subsidiary has complied
in all material respects with all laws relating to the employment of
labor in the conduct of the Business, including provisions thereof
relating to wages, hours, equal opportunity and the payment of pension
contributions, social security and other taxes.
(s) Employee Benefit Plans and Arrangements.
(i) Schedule 3.1(s) hereto lists all
employee benefit plans and collective bargaining, labor and
employment agreements and severance agreements or other
similar arrangements, whether or not in writing (together with
all documents or instruments establishing or constituting any
related trust, annuity contract or other funding instrument)
to which the Company or any Subsidiary is (or ever has been) a
party or by which the Company or any Subsidiary is (or ever
has been) bound, including, without limitation, (1) any
profit-sharing, deferred compensation, bonus, stock option,
stock purchase, pension, retainer, consulting, retirement,
severance, or incentive compensation plan, agreement or
arrangement, (2) any welfare benefit plan, agreement or
arrangement or any plan, agreement or arrangement providing
for "fringe benefits" or perquisites to employees, officers,
directors or agents, including but not limited to benefits
relating to automobiles, clubs, vacation, child care,
parenting or maternity leave, sabbaticals, sick leave, medical
expenses, dental expenses, disability, accidental death or
dismemberment, hospitalization, life insurance and other types
of insurance, (3) any employment agreement, or (4) any other
"employee benefit plan" (within the meaning of Section 3(3) of
ERISA).
(ii) The Sellers and the Company have
delivered to Buyer true, correct and complete copies of all
plan documents and/or contracts (including, where applicable,
any documents and/or instruments establishing or constituting
any related trust, annuity contract or funding instrument) and
summary plan descriptions with respect to the plans,
agreements and arrangements listed in Schedule 3.1(s) hereto,
or summary descriptions of any such plans, agreements or
arrangements not otherwise in writing. The Sellers and the
Company have provided Buyer with true, correct and complete
copies of the Form 5500 filed with respect to each plan
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identified in Schedule 3.1(s) hereto that was required to file
an annual report for the plan year immediately preceding the
Closing Date. Each of such Forms 5500 accurately reflects the
financial status of the plan to which it relates as of the
dates specified therein. In addition, the Sellers and the
Company have provided Buyer with (a) true, correct and
complete copies of any and all written communications notices
or claims that the Sellers, the Company, or any Subsidiary
have received from the IRS, the Department of Labor and/or the
Pension Benefit Guaranty Corporation concerning any plan,
arrangement or agreement identified in Schedule 3.1(s) hereto
that give notice of possible imposition of a fine, penalty or
liability with respect to such plan, arrangement or agreement
and (b) true, correct and complete copies of any complaints,
petitions, claims or other notices of liability relating to
any such plan, arrangement or agreement that have been filed
by any other party.
(iii) For each of the plans, agreements
and arrangements identified in Schedule 3.1(s) hereto, there
are no negotiations, demands or proposals that are pending or
have been made since the dates of the respective items
furnished pursuant to Section 3.1(s)(ii) hereto which concern
matters now covered, or that would be covered, by plans,
agreements or arrangements of the type described in this
Section.
(iv) The Company, the Subsidiaries, and
each of the plans, agreements and arrangements identified in
Schedule 3.1(s) hereto are in full compliance with the
applicable provisions of the Code and ERISA, the regulations
and published authorities thereunder, and all other laws
applicable with respect to all such employee benefit plans,
agreements and arrangements. The Sellers, the Company and the
Subsidiaries have performed all of their respective
obligations under all such plans, agreements and arrangements
including, but not limited to, the full payment when due of
all amounts required to be made as contributions thereto or
otherwise. There are no actions, suits or claims (other than
routine claims for benefits) pending or threatened against
such plans or their assets, or arising out of such plans,
agreements or arrangements, and, to the best knowledge of the
Sellers and the Company, no facts exist which could give rise
to any such actions, suits or claims that might have a
material adverse effect on such plans, agreements or
arrangements.
(v) Except as specified in Schedule
3.1(s) hereto, each of the plans, agreements or arrangements
can be terminated by the Company within a period of 30 days,
without payment of any additional compensation or amount or
the additional vesting or acceleration of any such benefits.
(vi) With respect to each plan identified
in Schedule 3.1(s) hereto which is an "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) or a "plan"
(within the meaning of Section 4975(e)(1) of the Code), no
transaction has occurred which is prohibited by Section 406 of
ERISA or which could give rise to a material liability under
Section 4975 of the Code or Sections 502(i) or 409 of ERISA.
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(1) Qualified Plans. Except as
specifically identified in Schedule 3.1(s) hereto,
neither the Company nor any Subsidiary has now, or
has at any time previously maintained, a stock bonus,
pension or profit-sharing plan which is or was
intended to meet the requirements of Section 401(a)
of the Code.
(2) Title IV Plans. Except as
specifically identified in Schedule 3.1(s) hereto,
the Company does not have, and has not at any time
previously maintained, a plan subject to Title IV of
ERISA.
(3) Multiemployer Plans. No plan
listed in Schedule 3.1(s) hereto is or ever has been
a "multiemployer plan" (within the meaning of Section
3(37) of ERISA).
(4) Welfare Benefit Plans. All
group health plans of the Company and Subsidiaries
have been operated in compliance with the group
health plan continuation coverage requirements of
Sections 601 through 608 of ERISA and 4980B of the
Code to the extent such requirements are applicable.
Except to the extent required under Section 4980B of
the Code, neither the Company nor any Subsidiary
provides health or welfare benefits (through the
purchase of insurance or otherwise) for any retired
or former employees.
(5) Fines and Penalties. There has
been no act or omission by the Company, any
Subsidiary, or the Sellers or any ERISA affiliate
that has given rise to or may give rise to fines,
penalties, taxes, or related charges under Sections
502 and 4071 of ERISA or Chapter 43 of the Code.
(t) Transactions With Affiliates. No shareholder,
director or officer of the Company or any Subsidiary, and no associate
of any such shareholder, director or officer is currently, directly,
or indirectly, a party to any transaction with the Company or any
Subsidiary, including any agreement, arrangement or understanding,
written or oral, providing for the employment of, furnishing of
services by, rental of real or personal property from, or otherwise
requiring payment to any such shareholder, director, officer or
associate, except as disclosed on Schedule 3.1(t). No shareholder,
director or officer of the Company or any Subsidiary, and no associate
of such shareholder, director or officer owns, directly or indirectly,
any interest in, or serves as a director, officer, or employee of, any
customer, supplier or competitor of the Company or any Subsidiary,
except as disclosed on Schedule 3.1(t). For the purposes of this
Section 3.1(t) only, an "associate" of any shareholder, director or
officer means a member of the immediate family of such shareholder,
director or officer or any corporation, partnership, trust or other
entity in which such shareholder, director, officer or employee has a
substantial ownership or beneficial interest or is a director,
officer, partner or trustee, or person holding a similar position.
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(u) Investment Representations.
(i) Each Seller is acquiring the Pool Stock for
his own account for investment and not with a view to, or for sale or
other disposition in connection with, any distribution of all or any
part thereof, except (a) pursuant to an applicable exemption under the
Securities Act or (b) in an offering covered by a registration
statement filed pursuant to the Securities Act. In acquiring the Pool
Stock, each Seller is not offering or selling, and will not offer or
sell, for Pool in connection with any distribution of the Pool Stock
and each Seller does not have a participation and will not participate
in any such undertaking or in any underwriting of such an undertaking
except in compliance with applicable federal and state securities
laws.
(ii) Each Seller acknowledges that he or his
representatives have been furnished with substantially the same kind
of information regarding Pool and its business, assets, results of
operations and financial condition as would be contained in a
registration statement prepared in connection with a public sale of
the Pool Stock. Each Seller further represents that he has had an
opportunity to ask questions of and receive answers from Pool
regarding Buyer and its business, assets, results of operations and
financial condition and the terms and conditions of the issuance of
the Pool Stock. The foregoing, however, shall not limit or modify the
representations and warranties of Buyer in Section 3, shall not limit
the rights of a Seller prior to and in anticipation of any issuance of
the Pool Stock pursuant hereto, and shall not limit the disclosure
requirements of applicable federal and state securities laws.
(iii) Each Seller acknowledges that he is able to
fend for himself, can bear the economic risk of his investment in the
Pool Stock, and has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks
of an investment in the Pool Stock and is an "accredited investor" as
defined in Regulation D under the Securities Act.
(iv) Each Seller understands that the Pool Stock,
when issued to such Seller, will not have been registered pursuant to
the Securities Act or any applicable state securities laws, that
unless and until registered as contemplated by Section 4.12 the Buyer
Stock will be characterized as "restricted securities" under federal
securities laws, and that under such laws and applicable regulations
the Pool Stock cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom. In
this connection, each Seller represents that he is familiar with Rule
144 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued accordingly
to the transfer agent for the Pool Stock.
(v) It is agreed and understood by each Seller
that the certificates representing the Pool Stock shall each
conspicuously set forth on the face or back thereof, in addition to
any legends required by Applicable Law or other agreement, a legend in
substantially the following form:
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE FIRST REGISTERED
PURSUANT TO THAT ACT AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS THE CORPORATION RECEIVES A WRITTEN OPINION OF COUNSEL,
WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE CORPORATION,
TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
(v) Disclosure. No representation or warranty in this
Section 3.1 or in any Schedule or Exhibit to this Agreement, or in any
written statement, certificate or other document furnished to Buyer
contains or will contain any untrue statement of a material fact or
omits or will omit a material fact necessary to make the statements
therein not misleading. Except for facts generally affecting
companies engaged in offshore vessel business, there is no fact known
to either the Sellers or the Company that has, or in the future may
have, a material adverse effect on the Business or the results of
operations of the Company, which fact has not been set forth in this
Agreement or in the Schedules hereto.
(w) Vessels. All Vessels owned or chartered in by the
Company are set out in Schedule 3.1(w). Except as set out in Schedule
3.1(w), each of the Vessels is, and will be on the Closing Date, owned
by the Company free and clear of all liens, charges and rights of
others and duly documented under the laws and flag of the U.S.
entitling the Vessels to engage in the coastwise trade in the United
States and to operate on a worldwide basis in support of the offshore
petroleum industry. Except as set out in Schedule 3.1(w), none of the
equipment on board any of the Vessels or held for use on any of the
Vessels is leased to the Company. All logs (deck and engine) shall be
onboard the Vessels when delivered to Buyer as aforesaid.
(x) Customers. Set forth in Schedule 3.1(x) hereto is a
complete and accurate list of the largest ten (10) customers in terms
of revenues of the Company.
(y) Foreign Corrupt Practices Act. To the knowledge of
the Sellers and the Company, there have been no violations of the
Foreign Corrupt Practices Act by the Company or any of its agents.
(z) Construction Contract. The Construction Contract for
the New Vessels is in full force and effect, the Company and the
Sellers are aware of no defaults by any party to the Construction
Contract and the control of the Company and the Construction Contract
will be assigned to the Company or another entity or entities
designated by the Buyer without the payment of additional funds but
with the consent of the Builder.
3.2 Representations and Warranties of Buyer. Buyer represents and
warrants to the Sellers as follows:
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(a) Due Organization; Good Standing and Power. Buyer and
Pool are corporations duly organized, validly existing and in good
standing under the laws of Texas. Buyer and Pool have all corporate
power and authority to enter into this Agreement (and each other
agreement expressly provided for herein) and to perform their
respective obligations hereunder and thereunder.
(b) Authorization and Validity of Agreement. The
execution, delivery and performance of this Agreement by Buyer and
Pool and the consummation by Buyer and Pool of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite corporate action on its part. No other corporate action is
necessary for the authorization, execution, delivery and performance
by Buyer and Pool of this Agreement and the consummation by Buyer and
Pool of the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by Buyer and Pool and
constitute a legal, valid and binding obligation of Buyer and Pool,
enforceable against Buyer and Pool in accordance with their respective
terms, except as the same may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally and by
general equity principles.
(c) No Approvals or Notices Required; No Conflict with
Instruments. Except as disclosed on Schedule 3.2(c), the execution,
delivery and performance of this Agreement by Buyer and Pool and the
consummation by it of the transactions contemplated hereby (i) will
not violate (with or without the giving of notice or the lapse of time
or both), or require any consent, approval, filing or notice under any
provision of any law, rule or regulation, court order, judgment or
decree applicable to Buyer and Pool, and (ii) will not conflict with,
or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of Buyer and Pool, under, the charter
or bylaws of Buyer and Pool or any indenture, mortgage, deed of trust,
lease, licensing agreement, contract, instrument or other agreement to
which Buyer and Pool is a party or by which Buyer or any of its assets
or properties is bound.
(d) Certain Fees. None of Buyer, Pool nor any of their
respective officers, directors or employees, on behalf of it, has
employed any broker or finder or incurred any other liability for any
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby, other than fees and expenses payable
to SBC Warburg Dillon Read Inc., which shall be the sole
responsibility of Buyer.
(e) Authorization of Common Stock. The shares of Pool
Stock, when issued in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable.
(f) SEC Filings. Pool has filed all reports,
registrations, and statements, together with any required amendments
thereto, with the SEC including, but not limited to, its quarterly
report on Form 10-Q for the fiscal quarter ended September 30,1997 and
any filings required by applicable state securities authorities. All
such reports and statements filed, with any such regulatory authority
or body are collectively referred to in this Agreement as the
"Reports." As of their respective dates, the Reports filed comply
with the respective rules
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and regulations promulgated by the SEC and state securities
authorities and did not, contain at the time filed, any untrue
statement of a material fact or any omission to state a material fact
required to be stated therein or necessary in order to make the
statements in light of the circumstances under which they were made
clear and not misleading.
(g) No Material Adverse Change. There has been no
material adverse change in the financial or business condition of Pool
or Buyer since September 30, 1997.
4. Covenants.
4.1 Access to Information. During the period beginning on the
date hereof and ending on the Closing Date, the Sellers and the Company will
(a) give or cause to be given to Buyer and its representatives such access,
during normal business hours, to the plant, properties, books and records of
the Company and the Subsidiaries as Buyer shall from time to time reasonably
request and (b) furnish or cause to be furnished to Buyer such financial and
operating data and other information with respect to the Company and the
Subsidiaries as Buyer shall from time to time reasonably request. Buyer and
its representatives shall be entitled, in consultation with the Sellers, to
such access to the representatives, officers and employees of the Company and
the Subsidiaries as Buyer may reasonably request. The Sellers shall permit
Buyer and its representatives to confirm, on reasonable notice and on the basis
of agreed methods, with the Company's and Subsidiaries' principal vendors,
customers, and trade affiliates, that the acquisition by Buyer of the Company
will be acceptable to such vendors, customers, and trade affiliates and that
the acquisition will not adversely effect the relationship of such vendors,
customers and trade affiliates with the Business. The Sellers and the Company
agree that such access by Buyer and its representatives shall include the right
to perform a soil and groundwater analysis of the Real Estate and to conduct
such other environmental investigations of the Real Estate as Buyer shall deem
necessary or appropriate to determine on-site conditions and the presence or
absence of any Hazardous Materials. In connection with such environmental
investigations, the Sellers and the Company will provide to or make available
for inspection by Buyer and its representatives (i) all records relating to the
disposal of waste materials generated at the Real Estate; (ii) all
environmental Permits and records relating to compliance with such Permits;
(iii) all records of spills or other releases; (iv) all records relating to
employee exposure to workplace chemicals; (v) all environmental audits or
assessments; (vi) all insurance records relating to coverage for environmental
incidents affecting the Real Estate; (vii) all chemical inventories and reports
of chemical emissions; (viii) all correspondence relating to pending or
threatened environmental claims; and (ix) all records obtained from prior
owners or operators of the Real Estate relating to environmental conditions.
4.2 Inspection of Vessels. The Buyer shall have the right, at its
sole cost, risk and expense, to inspect the Vessels at any reasonable time and
from time to time prior to the Closing Date, provided that such inspection
shall be conducted in a manner that does not unreasonably interfere with the
operation of the Vessels. Any such inspection may include the opening up of
machinery and equipment and, at the Buyer's option, may be conducted by
drydocking any Vessel (subject to obtaining the consent of the user of such
Vessel). The Company shall keep the Buyers advised of the location and
whereabouts of each Vessel to facilitate such an inspection. Any direct costs
incurred by Company as a result of such inspection shall be reimbursed to
Company by Buyer.
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4.3 Conduct of the Business. Except as specifically required or
contemplated by this Agreement or otherwise consented to or approved in writing
by Buyer, during the period commencing on the date hereof and ending on the
Closing Date, the Company and the Subsidiaries will and the Sellers will cause
the Company and the Subsidiaries to:
(a) conduct the Business only in the usual, regular and
ordinary manner consistent with current practice and, to the extent
consistent with such operation, use its reasonable best efforts to
keep available the services of the present employees of the Company
and the Subsidiaries and preserve the Company's and the Subsidiaries'
present relationships with persons having business dealings with the
Company and the Subsidiaries;
(b) maintain the Company's and the Subsidiaries' books,
accounts and records in the usual, regular and ordinary manner, on a
basis consistent with past practice, and comply in all material
respects with all Applicable Laws and other obligations of the Company
and the Subsidiaries;
(c) not (i) sell, lease, charter or otherwise dispose of
any of the assets of the Company or any Subsidiary other than in the
ordinary course of its business in accordance with past practices,
(ii) modify or change in any material respect any contract of the
Company or any Subsidiary, other than in the ordinary course of
business or (iii) agree, whether in writing or otherwise, to do any of
the foregoing; and
(d) not (i) permit or allow any of the assets of the
Company or any Subsidiary to become subject to any liens or
Encumbrances (other than in the ordinary course of business), (ii)
waive any claims or rights relating to the Business, except in the
ordinary course of business and consistent with past practice, (iii)
grant any increase in the compensation of any employees employed in
the conduct of the Business, except for reasonable increases in the
ordinary course of business and consistent with past practice or as
required by contractual arrangements existing on the date hereof, and
reasonable payments in normal sales compensation plans, including
bonuses, (iv) enter into any agreements giving rise to trade and
barter obligations relating to the assets of the Company or any
Subsidiary, or (v) agree, whether in writing or otherwise, to do any
of the foregoing.
4.4 Further Actions. Subject to the terms and conditions hereof,
the Sellers, Company and Buyer will each use their reasonable best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using reasonable best
efforts: (i) to obtain prior to the Closing Date all licenses, Permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Entities and parties to contracts with the Company or the Subsidiaries as are
necessary for the consummation of the transactions contemplated hereby; (ii) to
effect all necessary registrations and filings; and (iii) to furnish to each
other such information and assistance as reasonably may be requested in
connection with the foregoing. Where the consent of any third party is
required under the terms of any of the Company's or the Subsidiaries' leases or
contracts to the transactions contemplated by this Agreement, the Sellers and
the Company will use reasonable best efforts to obtain such consent on terms
and conditions not less favorable than as in
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effect on the date hereof. The Sellers and Buyer shall cooperate fully with
each other to the extent reasonably required to obtain such consents.
4.5 Notification.
(a) The Sellers and the Company shall promptly notify
Buyer in writing and keep it advised as to (i) any litigation or
administrative proceeding filed or pending against the Company or any
Subsidiary or, to their knowledge, threatened against any of them,
including any such litigation or administrative proceeding that
challenges the transactions contemplated hereby; (ii) any material
damage or destruction of any of the assets of the Company or any
Subsidiary; (iii) any material adverse change in the results of
operations of the Company or any Subsidiary; and (iv) any variance
from the representations and warranties contained in Section 3.1
hereof or of any failure or inability on the part of the Sellers or
the Company to comply with any of their respective covenants contained
in this Section 4.
(b) The Buyer and Pool shall promptly notify the Sellers
and the Company in writing and keep it advised as to (i) any
litigation or administrative proceeding filed or pending against the
Buyer or Pool or, to its knowledge, threatened against it, that
challenge the transactions contemplated hereby and (ii) any variance
from the representations and warranties contained in Section 3.2
hereof or of any failure or inability on the part of the Buyer or Pool
to comply with any of their respective covenants contained in Section
2 and Section 4 hereof.
4.6 No Inconsistent Action. Subject to Sections 6.1 and 6.2
hereof, no party hereto shall take any action inconsistent with its obligations
under this Agreement or which could materially hinder or delay the consummation
of the transactions contemplated by this Agreement.
4.7 Xxxx-Xxxxx-Xxxxxx Act. Buyer and Sellers will file the
Notification and Report Forms and related material that they are required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the HSR Act, will use their reasonable
efforts to obtain an early termination of the applicable waiting period, and
will make any further filings pursuant thereto that may be necessary, proper,
or advisable, provided, however, that the reasonable efforts of Buyer shall not
include (a) proffering Buyer's willingness to accept an order providing for the
divestiture of such of the properties, assets, operations, or business of the
Company or any Subsidiary (or, in lieu thereof, such properties, assets,
operations, or business of Buyer or any of Buyer's affiliates) as are necessary
to permit the consummation of the transactions contemplated by this Agreement,
including an offer to hold separate such properties, assets, operations or
businesses pending any such divestiture, (b) proffering Buyer's willingness to
accept any other conditions, restrictions, limitations or agreements affecting
the full rights of ownership of the Company's or any Subsidiary's assets (or
any portion thereof) as may be necessary to permit the consummation of the
transactions contemplated by this Agreement, or (c) entering into or continuing
any litigation relating to this Agreement or the transactions contemplated
hereby.
4.8 Acquisition Proposals. None of the Sellers, the Company, any
Subsidiary, or any affiliate, director, officer, employee or representative of
any of them shall, directly or indirectly (i)
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solicit, initiate or knowingly encourage any Acquisition Proposal or (ii)
engage in discussions or negotiations with any person that is considering
making or has made an Acquisition Proposal. Sellers and the Company shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any persons conducted heretofore with respect
to any Acquisition Proposal and shall promptly request each such person who has
heretofore entered into a confidentiality agreement in connection with
Acquisition Proposal to return to Sellers and the Company all confidential
information hereto furnished to such person by or on behalf of any Seller or
the Company. The term "Acquisition Proposal," as used herein, means any offer
or proposal for or any indication of interest in, a merger or other business
combination involving the Company or any of its affiliates, or the acquisition
of an equity interest in or substantial portion of the assets of, the Company
or affiliate of the Company, other than the transactions contemplated by this
Agreement.
4.9 Public Announcements. Except as may be required by Applicable
Law or the National Association of Securities Dealers, Inc., neither Buyer, on
the one hand, nor Sellers and the Company, on the other, shall issue any press
release or otherwise make any public statements with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of
the other party.
4.10 Purchase Price Adjustments. (a) All debt of Company shall be
paid by Company with neither Seller nor any present Guarantor of such debt
having any responsibility whatsoever to satisfy or pay such debt; (b) the
assets of the Company at Closing shall not include two (2) Cessna aircraft
previously owned by Company; and (c) Seller's and Seller's affiliates shall be
fully released from any obligations or guarantees with respect to the
Construction Contracts or other contracts which Sellers have guaranteed or if
releases cannot be obtained, the Company shall indemnify the Sellers from such
obligations in form and substance reasonably satisfactory to Sellers. At the
Closing, Sellers will cause Sea Mar Equipment, Inc. to assign all rights and
obligations of Sea Mar Equipment, Inc. under the Construction Contract to the
Company.
4.11 Regulatory Approvals. Buyer shall seek an obtain all
necessary governmental and regulatory approvals for the acquisition of the
shares of Company and Sellers will cause Company to cooperate with Buyer in
obtaining such approvals.
4.12 Registration Rights.
(a) Within five (5) days following the last to occur of
the Closing or Pool's filing its Annual Report on Form 10-K for the
year ended December 31, 1997, Pool shall (i) prepare and file with the
Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (the "Shelf Registration Statement") covering
the shares of Pool Stock issued to the Sellers pursuant to this
Agreement, excluding, however, the shares of Pool Stock delivered into
escrow pursuant to the terms of the Escrow Agreement and references in
this Section to "Registered Pool Stock" shall be deemed to include
only such Pool Stock subject to the Shelf Registration Statement and
any shares of Registered Pool Stock or other securities received by
the Sellers on account of any stock split, stock dividend or merger of
Pool with respect to such Registered Pool Stock for the
nonunderwritten offering and sale by the Sellers of such Registered
Pool Stock on a delayed
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or continuous basis pursuant to Rule 415 under the Securities Act, and
(ii) use its reasonable best efforts to cause the Shelf Registration
Statement to become effective as soon as possible after the filing
thereof so as to permit the secondary resale of such Registered Pool
Stock by the Sellers or any of them.
(b) Notwithstanding the provisions of the foregoing
paragraph (a), if the Board of Directors of Pool determines in good
faith, expressed by a resolution specifying the reason therefor, that
the secondary offer and resale of Registered Pool Stock by the Sellers
as contemplated by the foregoing paragraph (a), would materially and
adversely affect a pending or proposed public offering of securities
of Pool, an acquisition, merger, recapitalization, consolidation,
reorganization or similar transaction relating to Pool or
negotiations, discussions or pending proposals with respect thereto or
require premature disclosure of information not otherwise required to
be disclosed to the potential detriment of Pool, then upon written
notice of such determination to each of the Sellers, Pool shall be
entitled to require the suspension by the Sellers of any distribution
of Registered Pool Stock under the Shelf Registration Statement for a
reasonable period of time which, for purposes of this paragraph (b),
shall not exceed 60 days nor 45 days after the abandonment or
consummation of the proposal or transaction. Such written notice
shall contain a general statement of the reasons for such suspension,
a copy of the resolution adopted by Pool's Board of Directors
certified by Pool's corporate secretary and an estimate of the
anticipated period of suspension. Pool shall promptly notify each of
the Sellers of the expiration or earlier termination of such
suspension.
(c) Notwithstanding the provisions of paragraph (a), if
Pool shall file a registration statement with respect to an offering
by it through an underwriter or group of underwriters (an "Underwriter
Registration Statement") of Pool Stock or securities convertible into
or exchangeable or exercisable for Registered Pool Stock, and the
managing underwriter or underwriters advise Pool that a sale or
distribution of the Registered Pool Stock covered by the Shelf
Registration Statement would adversely affect such offering, then upon
written notice to each of the Sellers by or on behalf of such
underwriters, the Sellers shall, to the extent not inconsistent with
applicable law, suspend the distribution of any shares of Pool Stock
pursuant to the Shelf Registration Statement or otherwise directly or
indirectly through derivative transactions sell any Pool Stock during
a period specified by or on behalf of such underwriters, which period
shall not be greater than 10 days prior to or 90 days following the
effective date of such Underwriter Registration Statement. The period
following the effective date of such Underwriter Registration
Statement shall be subject to early termination by the managing
underwriter or underwriters. Following expiration or termination of
any such suspension pursuant to this paragraph (c), no other
suspension may be imposed for at least 90 days.
(d) If, at any time prior to the first anniversary of the
Closing Date, Pool proposes to register under the Securities Act any
shares of Registered Pool Stock for sale by it pursuant to an
underwritten public offering (except with respect to registration
statements filed on Form S-4 or such other forms as shall be
prescribed under the Securities Act for the same purposes as such
form), it will at each such time, prior to the filing of any such
registration statement, give written notice to the Sellers who then
hold shares of Registered
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Pool Stock of its intention so to do and, upon the written request
(which must specify the number of shares of Registered Pool Stock to
participate in such underwritten offering) of any of the Sellers
delivered to Pool within five days of receipt of Pool's notice, Pool
will use all reasonable best efforts to cause any Registered Pool
Stock issued to such requesting Seller as to which registration shall
have been so requested to be included in the shares to be covered by
the registration statement proposed to be filed by Pool for sale by it
in such offering, all to the extent requisite to permit the sale or
other disposition (in accordance with the written request of the
Sellers as aforesaid) of such Registered Pool Stock in such offering
as have so requested such registration. Nothing contained herein
shall, however, limit Pool's right to cancel, postpone or withdraw any
such proposed registration for any reason.
(e) Any request by the Sellers pursuant to paragraph (a)
to register Registered Pool Stock for sale in the underwriting shall
be on the same terms and conditions as the shares of Registered Pool
Stock to be registered, if any, and sold through underwriters under
such registration; provided, however, that as a condition to such
inclusion the requesting Sellers shall execute an underwriting
agreement acceptable to the underwriters and, if requested, a custody
agreement having such customary terms as the underwriters shall
request, including indemnification, and if the managing underwriter
determines and advises in writing that the inclusion in the
underwriting of all Registered Pool Stock proposed to be included by
the requesting Sellers and any other shares of Registered Pool Stock
sought to be registered by any other shareholder of Pool exercising
rights comparable to those of the Seller (the "Other Common Stock")
would, in its reasonable and good faith judgment, interfere with the
successful marketing of the securities proposed to be registered for
underwriting by Pool or by any holder of Registered Pool Stock having
the right to require Pool to file a registration statement to register
such Registered Pool Stock, then the number of shares of Registered
Pool Stock and Other Common Stock requesting such registration and
inclusion in the underwriting and may, in the determination of such
managing underwriter and consistent with pro rata reduction, be
reduced to zero.
(f) Following the filing of the Shelf Registration
Statement, Pool will:
(i) use reasonable efforts to cause the Shelf
Registration Statement to become effective as expeditiously as
reasonably practicable and remain effective until the first
anniversary of the Closing Date or such shorter period of time
until the transfer or sale of all Registered Pool Stock so
registered has been completed;
(ii) as expeditiously as reasonably practicable,
prepare and file with the Commission such amendments and
supplements to the Shelf Registration Statement and the
prospectus used in connection therewith as may be necessary to
keep the Shelf Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the
disposition of such Registered Pool Stock covered by the Shelf
Registration Statement in accordance with the intended method
of distribution set forth in the Shelf Registration Statement;
(iii) as expeditiously as reasonably practicable,
furnish to each of the Sellers selling Registered Pool Stock
registered, or to be registered under the
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Securities Act, such number of copies of prospectuses and
preliminary prospectuses in conformity with the requirements
of the Securities Act, and such other documents as such Seller
may reasonably request, in order to facilitate the public sale
or other disposition of such Registered Pool Stock owned by
such Seller; provided, however, that the obligation of Pool to
deliver copies of prospectuses or preliminary prospectuses to
such Sellers shall be subject to the receipt by Pool of
reasonable assurances from such Sellers that they will comply
with the applicable provisions of the Securities Act and of
such other securities laws as may be applicable in connection
with any use by it of any prospectuses or preliminary
prospectuses;
(iv) as expeditiously as practicable, use its best
efforts to register or qualify Registered Pool Stock covered
by such registration statement under such other securities
laws of such United States jurisdictions as the Sellers making
such request shall reasonably request (considering the nature
and size of the offering) and do any and all other acts and
things which may be necessary or desirable to enable the
Sellers making such request to consummate the public sale or
other disposition in such jurisdictions of Registered Pool
Stock owned by such Sellers; provided, however, that Pool
shall not be required to qualify to transact business as a
foreign corporation in any jurisdiction in which it would
otherwise not be required to be so qualified or to take any
action which would subject it to general service of process or
to taxation in any jurisdiction in which it is not then so
subject; and
(v) bear all Registration Expenses (as defined
below) in connection with the Shelf Registration Statement;
provided, however, that all Selling Expenses (as defined
below) of Registered Pool Stock held by the Sellers and all
fees and disbursements of counsel for the Sellers in
connection with the Shelf Registration Statement pursuant to
this Section 4.12 shall be borne by such Sellers pro rata in
proportion to the number of shares of Registered Pool Stock
covered thereby being sold or in such proportion as they may
agree. All (i) registration and filing fees; (ii) printing
expenses; (iii) fees and disbursements of counsel for Pool;
(iv) blue sky fees and expenses; and (v) fees and expenses of
accountants for Pool are herein referred to as "Registration
Expenses". All underwriting fees and discounts and brokerage
and selling commissions and fees and expenses of the counsel
for the Sellers and any underwriter's counsel applicable to
the sales in connection with the Shelf Registration Statement
are herein referred to as "Selling Expenses".
(g) Pool will indemnify and hold harmless each Seller,
with respect to which registration or qualification of Registered Pool
Stock has been effected pursuant to this Section 4.12 against all
claims, losses, damages, and liabilities, joint or several (or actions
in respect thereof), arising out of or based upon any untrue statement
(or alleged untrue statement) of a material fact contained in the
Shelf Registration Statement, prospectus, or offering circular, or in
any document incorporated by reference in any of the foregoing, or
arising out of or based upon any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any
violation by Pool of any rule or regulation promulgated under the
Securities Act applicable to Pool and relating to action or inaction
required of Pool in connection with any
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such registration or qualification, and will promptly reimburse each
such Seller, each of such Seller's officers, directors, partners, or
members, as the case may be, and each person controlling such Seller,
for any legal and any other expenses reasonably incurred in connection
with investigating or defending any such claims, loss, damage,
liability or action; provided, however, that Pool will not be liable
in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based upon any untrue
statement or omission based upon written information furnished to Pool
by such Seller specifically for inclusion in the Shelf Registration
Statement, prospectus or offering circular. The obligations of Pool
under the foregoing indemnity agreement shall survive the completion
of the offering of Registered Pool Stock under the Shelf Registration
Statement provided for in this Section 4.12.
(h) Each Seller with respect to which registration or
qualification of Registered Pool Stock has been effected pursuant to
this Section 4.12 will indemnify and hold harmless Pool, each of
Pool's officers, directors, and each person controlling Pool, against
all claims, losses, damages, and liabilities, joint or several (or
actions in respect thereof), arising out of or based upon any untrue
statement (or alleged untrue statement) of a material fact contained
in the Shelf Registration Statement, prospectus, or offering circular,
or in any document incorporated by reference in any of the foregoing,
or arising out of or based upon any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any
violation by such Seller of any rule or regulation promulgated under
the Securities Act applicable to such Seller and relating to action or
inaction required of such Seller in connection with any such
registration or qualification, and will promptly reimburse Pool, each
of Pool's officers, directors, and each person controlling Parent, for
any legal and any other expenses reasonably incurred in connection
with investigating or defending any such claims, loss, damage,
liability or action; provided, however, that such Seller will not be
liable in any such case to the extent that any such claim, loss,
damage, liability or expense does not arise out of or is not based
upon any untrue statement or omission based upon written information
furnished by such Seller specifically for inclusion in the Shelf
Registration Statement, prospectus or offering circular. The
obligations of Sellers under the foregoing indemnity agreement shall
survive the completion of the offering of Registered Pool Stock under
the Shelf Registration Statement provided for in this Section 4.12.
(i) If Rule 144 as promulgated under the Securities Act
or any successor or similar rule or statute shall permit the sale by a
Seller at any time over a period of 90 consecutive days of all the
shares of Pool Stock received by the Sellers in compliance with the
provisions thereof, then the rights of the Sellers as to registration
provided for in this Section 4.12 with respect to all of that Seller's
portion of the Pool Stock shall terminate immediately.
5. Conditions Precedent.
5.1 Conditions Precedent to Obligations of All Parties. The
respective obligations of the parties to consummate the transactions
contemplated by this Agreement shall be subject to the
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satisfaction (or waiver by each party) at or prior to the Closing Date of each
of the following conditions:
(a) No Governmental Action. No action of any private
party or Governmental Entity shall have been taken or threatened and
no statute, rule, regulation or executive order shall have been
proposed, promulgated or enacted by any Governmental Entity which
seeks to restrain, enjoin or otherwise prohibit or to obtain damages
or other relief in connection with this Agreement or the transactions
contemplated hereby.
(b) Termination under Xxxx-Xxxxx-Xxxxxx Act. The
termination or early termination of the applicable waiting period
under the HSR Act shall have occurred.
(c) Employment Agreement. An Employment Agreement in
substantially the form of Exhibit 6 shall have been entered by the
Company with Al. X. Xxxxxxxxx.
(d) Escrow Agreement. Escrow Agreement in substantially
the form of Exhibit 3 shall have been entered by the Sellers, Bank One
Texas N.A. and Buyer.
(e) Voting Agreement. The Voting Agreement in
substantially the form of Exhibit 4 shall have been entered by Buyer
and Seller.
5.2 Conditions Precedent to Obligations of Buyer. The obligations
of Buyer under this Agreement are subject to the satisfaction (or waiver by
Buyer) at or prior to the Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of the Sellers and the Company
contained herein or in any certificate or document delivered to Buyer
pursuant hereto shall be true and correct in all material respects on
and as of the Closing Date, with the same force and effect as though
such representations and warranties had been made on and as of the
Closing Date, except as contemplated or permitted by this Agreement.
(b) Performance of Agreements. The Sellers and the
Company shall have, in all material respects, performed all
obligations and agreements, and complied with all covenants and
conditions, contained in this Agreement to be performed or complied
with by them prior to or at the Closing Date.
(c) Actions and Proceedings. All corporate actions,
proceedings, instruments and documents to be obtained by Company
and/or Sellers required to carry out the transactions contemplated by
this Agreement or incidental thereto and all other related legal
matters shall be reasonably satisfactory to counsel for Buyer, and
such counsel shall have been furnished with such certified copies of
such corporate actions and proceedings and such other instruments and
documents as it shall have reasonably requested.
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(d) Title. On the Closing Date, Buyer shall be satisfied
in its reasonable discretion as to the Sellers' ownership of the
Stock, free and clear of all liens, easements, claims, charges and
Encumbrances.
(e) Licenses and Consents. All licenses, Permits,
consents, approvals, authorizations, qualifications and orders of
governmental authorities (including, without limitation, any air and
water discharge permits required by the United States Environmental
Protection Agency) or any other third parties which are reasonably
necessary to enable Buyer to own the Stock and assets of the Company
and the Subsidiaries and conduct the Business after the Closing in
substantially the same manner as the assets of the Company are owned
and the Business is being conducted as of the date hereof shall have
been obtained and shall be in full force and effect. All consents of
the lenders to Pool or the Buyer necessary to consummate this
transaction shall have been obtained and shall be in full force and
effect.
(f) Environmental Matters. Buyer shall have obtained one
or more Environmental Assessments and shall not have discovered any
events, occurrences or conditions at or affecting the Company's or any
Subsidiary's Real Estate or the Business, other than as described on
Schedule 3.1(n) hereto, which in the aggregate could reasonably be
expected to cause the Company or any Subsidiary to incur expenses in
excess of $10,000 for remediation of existing environmental conditions
or for past exposure on-site or off-site of any person or property to
any Hazardous Materials. For purposes of this Section 5.2(f), an
"Environmental Assessment" is an environmental report or reports on
the Company's or any Subsidiary's Real Estate by an environmental
engineering firm or firms selected by Buyer. Buyer acknowledges that
it has received an Environmental Assessment satisfactory to Buyer.
(g) Opinion of Counsel to Sellers and the Company.
Xxxxxx, King & XxXxxxx L.L.P., counsel for the Sellers and the
Company, shall have furnished to Buyer its written opinion, dated the
Closing Date, substantially in the form attached as Exhibit 7.
(h) Operation. The Business shall have been operated and
maintained substantially in the manner in which it has been operated
and maintained previously in the ordinary course of business and the
Company shall not enter into (nor permit its Subsidiaries to enter
into) or renew any material agreements or other commitments extending
a substantial term beyond the Closing Date or take any action which is
not in the ordinary course of business, except for the transactions
otherwise contemplated herein, without the prior written approval of
Buyer.
(i) Material Adverse Change. There shall have been no
material adverse change in the Business or financial condition of
Company from December 31, 1996 until the Closing Date.
(j) Facts or Omissions. Buyer shall not have discovered
any fact or omission materially adverse to the condition, results of
operations or prospects of the Company.
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(k) Audit. Buyer shall have reviewed (i) the Vessels and
equipment of the Company and, in its sole discretion, found such
equipment to be in good and usable condition and to have been
reflected on the books of the Company in accordance with GAAP and (ii)
the accounts receivable of the Company, net of any reserves, and, in
its sole discretion, found such receivables to be good and
collectible.
(l) Vessel Documents. The Buyer shall have received each
of the following documents:
(i) A Certificate of Ownership or abstract of
title for each Vessel dated immediately prior to the Closing
Date evidencing the Company's ownership of the Vessel free and
clear of all Encumbrances, except as set forth in Section 3.1
(e).
(ii) All records, repair records, ship's documents
(other than logs), plans, drawings, and blueprints in
Company's possession relating to the Vessels.
(iii) Certificates from the American Bureau of
Shipping (the "ABS") as to those Vessels classed by ABS
showing such Vessels current classification. The cost of
obtaining such certificates shall be borne by Buyer.
(m) New Vessel Charters. The Company shall have entered
into charters for use of not less than four of the New Vessels and
such charters shall be in full force and effect.
5.3 Conditions Precedent to the Obligations of the Sellers. The
obligations of the Sellers under this Agreement are subject to the satisfaction
(or waiver by the Sellers) at or prior to the Closing Date of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Buyer contained herein or in any
certificate or document delivered to the Sellers pursuant hereto shall
be true and correct on and as of the Closing Date, with the same force
and effect as though such representations and warranties had been made
on and as of the Closing Date, except as contemplated or permitted by
this Agreement.
(b) Performance of Agreements. Buyer shall have
performed all obligations and agreements, and complied with all
covenants and conditions contained in this Agreement to be performed
or complied with by it prior to or at the Closing Date.
(c) Actions and Proceedings. All corporate actions,
proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and
all other related legal matters shall be reasonably satisfactory to
counsel for the Sellers, and such counsel shall have been furnished
with such certified copies of such corporate actions and proceedings
and such other instruments and documents as it shall have reasonably
requested.
(d) Opinion of Counsel to Buyer. Gardere Xxxxx Xxxxxx &
Xxxxx, L.L.P., general counsel for Buyer, shall have furnished to
Sellers its written opinion, dated the Closing Date, substantially in
the form attached as Exhibit 8.
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(e) Material Adverse Change. There shall have been no
material adverse change in the financial or business condition of
Buyer or Pool from September 30, 1997 until the Closing Date.
6. Termination.
6.1 General. This Agreement may be terminated and the
transactions contemplated herein may be abandoned (a) by mutual consent of
Buyer and the Sellers or (b) by any party by notice to the other parties in the
event that the Closing Date shall not have occurred on or before April 30,
1998; provided, however, that if the Closing Date shall not have occurred on or
before such date due to a breach of this Agreement by one of the parties or an
affiliate of such party, that party may not terminate this Agreement.
6.2 No Liabilities in Event of Termination. In the event of any
termination of this Agreement as provided above, this Agreement shall forthwith
become wholly void and of no further force or effect, except that the
provisions of Sections 4.9, 8.6, 9.1, 9.11, 9.12 and 9.13 hereof shall remain
in full force and effect, and provided that nothing contained herein shall
release any party from liability hereinafter provided in this paragraph for any
failure to comply with any provision, covenant or agreement contained herein.
In the event either party (the "Breaching Party") fails to close the
transaction as contemplated by this Agreement notwithstanding that all of the
conditions to its obligation to close have been met, the other party (the
"Non-Breaching Party") shall be entitled to payment of liquidated damages in
the amount of $10,000,000 which shall be payable by the Breaching Party on May
1, 1998; provided, however, if Sellers fail to close as a result of a breach of
Section 4.8 hereof, Sellers and Company shall be jointly and severally
obligated to pay Buyer the sum of $10,000,000 as a fee and liquidated damages.
The aforesaid payment shall be the sole and exclusive remedy of the
Non-Breaching Party for damages for failure to close this transaction.
7. Covenants; Action Subsequent to Closing.
7.1 Use of Names. After the date hereof, the Sellers each agrees
that neither they, nor any of their affiliates shall use the names, trademarks,
slogans, trade names, logos or labels of the Company or any Subsidiary.
8. Indemnification.
8.1 Indemnification by the Sellers. Subject to the provisions of
this Section 8, the Sellers, jointly and severally, (without any right of
contribution from the Company) shall protect, indemnify and hold harmless
Buyer, each officer, director and agent of Buyer and each person who controls
Buyer in respect of any losses, claims, damages, liabilities, deficiencies,
delinquencies, defaults, assessments, fees, penalties or related costs or
expenses, including, but not limited to, court costs and attorneys', and
accountants' fees and disbursements, and any federal, state or local income or
franchise taxes payable in respect of the receipt of cash or money in discharge
of the foregoing, but reduced by any net amount paid to Buyer on account of
such loss by any insurance policies
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(collectively referred to herein as "Damages") to which Buyer may become
subject if such Damages arise out of or are based upon the breach of any of the
representations and warranties (whether such breach occurred as of the date of
execution of this Agreement or as of the Closing Date), covenants or agreements
made by the Sellers or the Company in this Agreement, including the Exhibits
and Schedules hereto, or in any certificate or instrument delivered by or on
behalf of the Sellers or the Company pursuant to this Agreement.
8.2 Indemnification by Buyer. Subject to the provisions of this
Section 8, Buyer shall protect, indemnify and hold harmless the Sellers, in
respect of any Damages to which the Sellers may become subject if such Damages
arise out of or are based upon the breach of any of the representations,
warranties, covenants or agreements made by Buyer in this Agreement, including
the Exhibits and Schedules hereto, or in any certificate delivered by or on
behalf of Buyer pursuant to this Agreement. The aggregate liability of Buyer
under this Section 8.2, and any other provision of this Agreement, any other
contract, any theory in tort or any other theory in law or equity, shall not
exceed $20,000,000.
8.3 Monetary Limit on Indemnification Liability.
(a) Notwithstanding any other provisions to the contrary
in this Agreement, the aggregate total liability under Section 8.1(a)
of this Agreement, any other provision of this Agreement, any other
Contract, any theory in tort or any theory of law of the Sellers shall
be limited to the lesser of (i) $20,000,000 or (ii) the value of the
Pool Stock held pursuant to the Escrow Agreement (determined pursuant
to the terms and conditions of the Escrow Agreement) (except with
respect to Damages relating to title to the Shares the liability for
which shall not be so limited) with Buyer and Pool waiving and
releasing Sellers from any and all claims (except with respect to
Damages relating to title to the Shares) exceeding said limit in the
aggregate. Buyer and Pool waive release and discharge Sellers from
any liability hereunder in excess of the limit contained in this
Section 8.3(a).
(b) In order to avoid or diminish disputes between
Sellers and Buyer with respect to the indemnity obligations set forth
herein, as limited by Section 8.3(a) above, 8.3(c) and 8.4, below, the
parties agree that Sellers shall have no liability to either Buyer or
Pool with respect to any breach of the obligations set forth in
Section 8.1, this Agreement, any other contract, any theory of tort,
or any other theory of law, until $500,000 in aggregate liability for
Damages or under any theory of tort, or any theory is reached, with
Sellers only being responsible for amounts exceeding $500,000 in the
aggregate subject to the limits of Section 8.3(a) above.
8.4 Indemnification Procedures. The obligations and liabilities
of each indemnifying party hereunder with respect to claims resulting from the
assertion of liability by the other party or third parties shall be subject to
the following terms and conditions:
(a) If any person shall notify an indemnified party (the
"Indemnified Party") with respect to any matter which may give rise to
a claim for indemnification (a "Claim") against Buyer or the Sellers
(the "Indemnifying Party") under this Section 8, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in
writing.
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(b) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15
days after the Indemnified Party has given notice of the Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety (subject to any limitations contained in Section
8) of any Damages the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of or caused by the Claim,
(ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Claim and fulfill its indemnification obligations hereunder, (iii)
the Claim involves only money damages and does not seek an injunction
or other equitable relief, (iv) settlement of, or an adverse judgment
with respect to, the Claim is not, in the good faith judgment of the
Indemnifying Party, likely to establish a precedental custom or
practice materially adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Claim actively and diligently and in good faith.
(c) So long as the Indemnifying Party is conducting the
defense of the Claim in accordance with Section 8.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with respect to
the Claim without the prior written consent of the Indemnified Party
(not to be withheld unreasonably).
(d) In the event any of the conditions in Section 8.4(b)
above is or becomes unsatisfied, however, (i) the Indemnified Party
may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (ii) the Indemnifying Party will remain
responsible for any damages the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Claim to the fullest extent provided in this Section 8.
8.5 Time Limits on Liability. Anything contained in this
Agreement to the contrary notwithstanding, the indemnity liability of any party
for indemnity shall only extend to matters for which a bona fide claim has been
asserted by written notice of such claim delivered to the Indemnifying Party on
or before two (2) years from the Closing Date except for (i) breaches of
representations with respect to title to the Shares, authority, and finders
fees which will survive indefinitely, (ii) breaches of representations with
respect to environmental matters and Xxxxx Act liability which will survive for
three (3) years, and (iii) breaches of representations with respect to taxes
and ERISA which will survive for statutory limitation periods, including any
extensions or waivers thereof. Buyer and Seller each waive and release any
claim for indemnity hereunder if notice is not given hereunder on or before the
expiration of the periods provided herein.
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8.6 Seller Representative. The Sellers hereby appoint Xx X.
Xxxxxxxxx as their representative (the "Seller Representative"), who shall
have full power and authority to make all decisions relating to the Statement
provided in Section 2.3 and the defense and/or settlement of any claims for
which the Sellers may be required to so indemnify the Buyer (and vice versa)
and to take such other actions (and any other actions reasonably related or
ancillary thereto) provided herein to be taken by the Seller Representative.
If the Seller Representative shall die, become totally incapacitated or resign
from such position, the remaining Sellers shall select another member from
among the selling group (or their heirs, executors, administrators or personal
representatives) to fill such vacancy. All decisions and actions by the Seller
Representative, including, without limitation, any agreement between the Seller
Representative and the Buyer relating to the determination of Adjusted Profit
or Loss, the defense or settlement of any claims for which the Sellers may be
required to so indemnify Buyer, any decision, action or agreement to be made or
taken under the Escrow Agreement, any amendment to this Agreement or the Escrow
Agreement or any other action provided herein to be taken by the Seller
Representative, shall be binding upon all of the Sellers, and no Seller shall
have the right to object, dissent, protest or otherwise contest the same. By
their execution of this Agreement, the Sellers shall be deemed to have agreed
that (i) the provisions of this Section 8.6 are independent and severable, are
irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Seller may have in connection
with the transactions contemplated by this Agreement, (ii) the remedy at law
for any breach of the provisions of this Section 8.6 would be inadequate, (iii)
the Buyer shall be entitled to temporary and permanent injunctive relief
without the necessity of proving damages if it brings an action to enforce the
provisions of this Section 8.6, (iv) the provisions of this Section 8.6 shall
be binding upon the heirs, executors, administrators, personal representatives
and successors of each Seller and (v) any references in this Agreement to a
Seller or Sellers shall mean and include the successors to the Sellers' rights
hereunder, whether pursuant to testamentary disposition, the laws of descent
and distribution or otherwise. All fees and expenses incurred by the Seller
Representative shall be paid by the Sellers.
9. Miscellaneous.
9.1 Payment of Certain Fees and Expenses.
Each of the parties hereto shall pay the fees and expenses incurred by
it in connection with the negotiation, preparation, execution and performance
of this Agreement, including, without limitation, brokers' fees, attorneys'
fees and accountants' fees.
Buyer and Sellers shall each be responsible for the payment of their
own filing fees under the HSR Act. Buyer acknowledges that Sellers may not be
required to pay a filing fee as a result of certain exemptions which may be
available to Sellers.
9.2 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, first class mail, postage prepaid, return receipt requested, or sent
by telecopier, as follows:
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(a) If to the Company:
Sea Mar, Inc.
0000 X. Xxxxxxx Xxxxx
Xxx Xxxxxx, Xxxxxxxxx 00000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx III
Xxxxxx, Xxxx & XxXxxxx, L.L.P.
000 Xx. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telecopier No.: (000) 000-0000
(b) If to Buyer:
Pool Energy Services Co.
ENSERCH Tower
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
with a copy to:
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
000 Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
(c) If to a Seller, to the address shown on his or her
signature page.
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the earlier of the date
of delivery or on the fifth business day after the mailing thereof.
9.3 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the parties hereto
and supersedes all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof.
9.4 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
permitted heirs, personal representatives, successors and assigns. Nothing in
this Agreement, expressed or implied, is intended to confer on any person other
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43
than the parties hereto or their respective heirs, personal representatives,
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
9.5 Assignability. This Agreement shall not be assignable by the
Sellers without the prior written consent of Buyer or by Buyer without the
prior written consent of the Sellers; provided, however, that Buyer shall be
entitled to assign this Agreement to an affiliate without the consent of
Sellers, so long as Buyer and Pool guarantee the full performance of the
obligations set forth herein.
9.6 Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed by the
parties hereto. No waiver by any party of any of the provisions hereof shall
be effective unless explicitly set forth in writing and executed by the party
so waiving or his or her personal representative under Section 8.6. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or agreements
contained herein, and in any documents delivered or to be delivered pursuant to
this Agreement and in connection with the Closing hereunder. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach.
9.7 Limitation on Interest. Regardless of any provision contained
herein or any other document executed in connection with this Agreement, the
parties hereto shall not be obliged to pay, and the parties hereto shall never
be entitled to charge, reserve, receive, collect or apply, as interest (it
being understood that interest shall be calculated as the aggregate of all
charges that are contracted for, charged, reserved, received, collected,
applied or paid which constitute interest under Applicable Law) payable
hereunder any amount in excess of the maximum nonusurious contract rate of
interest allowed from time to time by Applicable Law, and in the event any of
the parties hereto ever charges, reserves, receives, collects or applies, as
interest, any such excess, at the option of the payor of such interest, such
amount shall be deemed a partial prepayment of the amount payable hereunder or
promptly refunded to the payor of such interest.
9.8 Section Headings; Index. The section headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
9.9 Severability. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.11 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Texas.
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9.12 Dispute Resolution. Any dispute, difference or question
("Dispute") between Buyer and the Sellers ("Disputing Parties"), shall be
resolved in accordance with the following dispute resolution procedures:
(a) Good Faith Negotiations. The Disputing Parties shall
endeavor, in good faith, to resolve the Dispute through negotiations.
If the Parties fail to resolve the Dispute within a reasonable time,
each Party shall nominate a senior officer or officers of its
management to meet at any mutually agreed location to resolve the
Dispute.
(b) Mediation. In the event that the negotiations do not
result in a mutually acceptable resolution, either Disputing Party may
require that the Dispute shall be referred to mediation in Houston,
Texas. One mediator shall be appointed by the agreement of the
Parties. The mediator shall be suitably qualified person having no
direct or personal interest in the outcome of the Dispute. Mediation
shall be held within thirty (30) days of referral to mediation. In
the event the Disputing Parties are unable to agree on a mediator, the
Parties agree to the appointment of a mediator pursuant to the
Commercial Mediation Rules of the American Arbitration Association.
(c) Arbitration. In the event the Parties are
unsuccessful in their mediation of the Dispute, or if there is any
Dispute about the scope of or the compliance by any Party with the
provisions of Section 9.12, either Disputing Party may request that
the Dispute be settled by arbitration by an arbitrator mutually
acceptable to the Disputing Parties in an arbitration proceeding
conducted in the City of Houston, Texas in accordance with the rules
existing at the date hereof of the American Arbitration Association.
If the Disputing Parties hereto cannot agree on an arbitrator within
ten (10) business days of the initiation of the arbitration
proceeding, an arbitrator shall be selected for the Disputing Parties
by the American Arbitration Association. The Disputing Parties shall
use their reasonable best efforts to have the arbitral proceeding
concluded and a judgment rendered by the arbitrator within forty (40)
business days of the initiation of the arbitration proceeding. The
decision of such arbitrator shall be final, and judgment upon the
award rendered by the arbitration may be entered in any court having
jurisdiction thereof, and the costs (including, without limitation,
reasonable fees and expenses of counsel and experts for the Disputing
Parties) of such arbitration (including the costs to enforce or
preserve the rights awarded in the arbitration) shall be borne by the
Disputing Party whom the decision of the arbitrator is against. If
the decision of the arbitrator is not clearly against one of the
disputing Parties or the decision of the arbitrator is against more
than one Disputing Party on one or more issues, the costs of such
arbitration shall be borne equally by the Disputing Parties.
Notwithstanding the foregoing, Buyer may apply to any court of
competent jurisdiction for injunctive relief under Sections 7.1 or 8.6
without breach of this Section 9.12 and this Section 9.12 shall be of
no force and effect with respect to such applicant for injunctive
relief only.
9.13 Confidentiality. In the event the Closing does not occur on
or before April 30, 1998, Pool and Buyer shall immediately return all copies of
Sea Mar documents and any abstracts, summaries, notes or other documents
relating thereto. Further, Pool and Buyer acknowledge that Sea Mar has a
legitimate and continuing proprietary interest in the protection of its
confidential
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information and that Sea Mar has invested substantial sums to develop, maintain
and protect that confidential information. Accordingly, in the event the
transaction contemplated by the Stock Purchase Agreement is not closed in
accordance with the terms set forth therein, Pool and Buyer agree that they
shall keep secret, confidential, in strictest confidence, and shall not use for
the benefit of themselves or others, any information provided by or related to
Sea Mar and its business, including without limitation, financial information,
trade secrets, customer lists, employment lists, details of client or
consulting contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, technical processes,
designs, or other information proprietary in nature utilized or relied upon by
Sea Mar in the operations of its business. Further, for a period of two years
after the termination of the Stock Purchase Agreement, Pool and Buyer shall not
directly or indirectly hire or solicit or cause others to hire or solicit any
employee of Sea Mar, without the express written consent of Sea Mar. Any
breach of this provision shall entitle Sea Mar and Sellers to all remedies
available under applicable law.
10. Definitions.
10.1 Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"Affiliate" means, with respect to any person, any other
person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such person.
"Applicable Law" means any statute, law, rule or regulation or
any judgment, order, writ, injunction or decree of any Governmental
Entity to which a specified person or property is subject.
"Builder" shall mean Halter Marine, Inc.
"Business Day" means any day other than a Saturday or Sunday,
on which national banks in Houston, Texas are required or permitted
to be open.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect on the Closing Date.
"Construction Contract" means that certain Vessel Construction
Contract between Sea Mar Equipment, Inc. and Halter Marine, Inc. dated
August 1, 1997.
"Encumbrances" means liens, charges, pledges, options,
mortgages, deeds of trust, security interests, claims, restrictions
(whether on voting, sale, transfer, disposition or otherwise),
licenses, sublicenses, easements and other encumbrances of every type
and description, whether imposed by law, agreement, understanding or
otherwise.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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46
"GAAP" means generally accepted accounting principles as in
effect on the date of this Agreement.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental or
regulatory body, agency, department, commission, board, bureau or
other authority or instrumentality (domestic or foreign).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Intellectual Property" means patents, trademarks, service
marks, trade names, copyrights, trade secrets, know-how, inventions,
and similar rights, and all registrations, applications, licenses and
rights with respect to any of the foregoing.
"IRS" means the Internal Revenue Service.
"New Vessels" means all vessels which are being constructed or
will be constructed under the Construction Contract.
"Permits" means licenses, permits, franchises, consents,
approvals and other authorizations of or from Governmental Entities.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or
Governmental Entity.
"Reasonable best efforts" means a party's best efforts in
accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholder Equity" means shareholders equity as shown on Sea
Mar's financial statements as determined in accordance with GAAP,
consistently applied.
"Subsidiary" means any corporation more than 30 percent of
whose outstanding voting securities, or any partnership, joint
venture, or other entity more than 30 percent of whose total equity
interests is owned, directly or indirectly, by the Company.
"Taxes" means any income taxes or similar assessments or any
sales, value-added excise, occupation, use, ad valorem, property,
production, severance, transportation, employment, payroll, franchise,
import or custom duties or taxes or other tax imposed by any United
States federal, state or local (or any foreign or provincial) taxing
authority, including any interest, penalties or additions attributable
thereto.
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47
"Tax Return" means any return or report, including any related
or supporting information, with respect to Taxes.
"Treasury Regulations" means one or more treasury regulations
promulgated under the Code by the Treasury Department of the United
States.
"Vessels" means all of the vessels described in Schedule
3.1(w).
10.2 Certain Additional Defined Terms. In addition to such terms
as are defined in Section 10.1, the following terms are used in this Agreement
as defined in the Sections of this Agreement referenced opposite such terms:
Defined Terms Reference
------------- ---------
Accounting Arbitrator Section 2.3(d)
Accounts Receivable Section 3.1(h)
Acquisition Proposal Section 4.8
Adjusted 1998 EBITDA Section 2.4(a)
Adjusted 1999 EBITDA Section 2.4(b)
Agreement Preamble
Audited Financial Statements Section 3.1(d)
Auditors Section 2.3(a)
Breaching Party Section 6.2
Business Recital 1
Buyer Preamble
Cash Amount Section 2.2(a)
Claim Section 8.4(a)
Closing Section 2.1
Closing Date Section 2.1
Closing Price Section 2.2(b)
Company Preamble
Construction Contract Assignment Section 2.5
Damages Section 8.1
Determination Date Section 2.3(c)
Dispute Section 9.12
Disputing Parties Section 9.12
EBITDA Section 2.4(a)
Environmental Assessment Section 5.2(f)
Environmental Laws Section 3.1(n)
Escrow Agent Section 2.2(a)
Escrow Agreement Section 2.2(a)
Financial Statements Section 3.1(d)
Hazardous Material Section 3.1(n)
Indemnified Party Section 8.4(a)
Indemnifying Party Section 8.4(a)
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Latest Balance Sheet Section 3.1(d)
Non-Breaching Party Section 6.2
Note Section 2.2(a)
Outstanding Insurance Claim Section 3.1(j)
Pool Preamble
Pool Stock Section 2.2(b)
Pro Forma Balance Sheet Section 2.3(a)
Purchase Price Section 2.2
Purchase Price Adjustment Section 2.3(a)
Real Estate Section 3.1(f)
Reports Section 3.2(f)
Seller Representative Section 8.6
Sellers Preamble
Statement Section 2.3(a)
Stock Recital 1
Unaudited Financial Statements Section 3.1(d)
10.3 References. All references in this Agreement to Sections,
paragraphs and other subdivisions refer to the Sections, paragraphs and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement", "herein", "hereof", "hereby", "hereunder" and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. Whenever the words "include",
"includes" and "including" are used in this Agreement, such words shall be
deemed to be followed by the words "without limitation". Each reference herein
to a Schedule, Exhibit or Annex refers to the item identified separately in
writing by the parties hereto as the described Schedule, Exhibit or Annex to
this Agreement. All Schedules, Exhibits and Annexes are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the date first above written.
SEA MAR, INC.
By: /s/ Xx X. Xxxxxxxxx
----------------------------------
Name: Xx X. Xxxxxxxxx
Title: President
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POOL ENERGY SERVICES CO.
By: /s/ Xxxxxxx X Xxxxx
----------------------------------
Name: Xxxxxxx X Xxxxx
Title: Group Vice President
POOL COMPANY
By: /s/ Xxxxxxx X Xxxxx
----------------------------------
Name: Xxxxxxx X Xxxxx
Title: Group Vice President
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COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain Stock
Purchase Agreement dated February 10, 1998 among Pool Energy Services Co., Pool
Company, Sea Mar, Inc. and others.
XXXXXXXXX ENTERPRISES INC.
By: /s/ Xx X. Xxxxxxxxx
----------------------------------
Xx X. Xxxxxxxxx
President
Date: February 10, 1998
Accepted and Agreed:
POOL ENERGY SERVICES CO.
By: /s/ Xxxxxxx X Xxxxx
------------------------------
Xxxxxxx X Xxxxx
Group Vice President
POOL COMPANY
By: /s/ Xxxxxxx X Xxxxx
------------------------------
Xxxxxxx X Xxxxx
Group Vice President
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51
COUNTERPART SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
The undersigned hereby agrees to become a party to that certain Stock
Purchase Agreement dated February 10, 1998 among Pool Energy Services Co., Pool
Company, Sea Mar, Inc. and others.
/s/ Xx X. Xxxxxxxxx
-----------------------------------------
Xx X. Xxxxxxxxx
Date: February 10, 1998
Accepted and Agreed:
POOL ENERGY SERVICES CO.
By: /s/ Xxxxxxx X Xxxxx
------------------------------
Xxxxxxx X Xxxxx
Group Vice President
POOL COMPANY
By: /s/ Xxxxxxx X Xxxxx
------------------------------
Xxxxxxx X Xxxxx
Group Vice President
52
EXHIBIT 1
to Stock Purchase Agreement
Allocation of Purchase Price
Shares
Shareholder Cash Amount of Pool Stock
----------- ----------- -------------
Xx X. Xxxxxxxxx $35,000,000 1,076,923
Xxxxxxxxx Enterprises, Inc. $15,000,000 461,539
TOTAL $50,000,000 1,538,462