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EXHIBIT 3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (as the same may be amended or modified from
time to time and including any and all written instructions given to "Escrow
Agent" (hereinafter defined) pursuant hereto, this "Escrow Agreement") is made
and entered into as of March __, 1998 by and among Pool Company, a Texas
corporation ("Buyer"), and Xx X. Xxxxxxxxx ("Representative") and Xxxxxxxxx
Enterprises, Inc. (Xx Xxxxxxxxx and Xxxxxxxxx Enterprises, Inc. sometimes
collectively referred to as the "Sellers," and Buyer together with the Sellers,
sometimes referred to collectively as the "Other Parties"), and Bank One Texas
N.A., a national banking association with its principal offices in Houston,
Xxxxxx County, Texas (the "Bank").
W I T N E S S E T H :
WHEREAS, Buyer, Pool Energy Services Co. ("Pool"), Sea Mar, Inc. and
the Sellers have entered into that certain Stock Purchase Agreement (the
"Agreement") of even date herewith, relating to the purchase by Buyer from the
Sellers of all of the common stock of Sea Mar, Inc.; and
WHEREAS, pursuant to the Agreement Pool is obligated to deposit
769,231 shares of Pool common stock ("Escrow Shares") received by Sellers as
part of the purchase price in escrow as security for Sellers' indemnity
obligations under the Agreement; and
WHEREAS, Buyer and the Sellers have requested Bank to act in the
capacity of escrow agent under this Escrow Agreement, and Bank, subject to the
terms and conditions hereof, has agreed so to do.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements contained herein, the parties hereto hereby agree as follows:
1. Appointment of Escrow Agent. Each of Buyer and the Sellers
hereby appoints the Bank as the escrow agent under this Escrow Agreement (the
Bank in such capacity, the "Escrow Agent"), and Escrow Agent hereby accepts
such appointment.
2. Escrow Fund and Modifications to the Escrow Fund. The parties
hereby acknowledge that on the date hereof, Buyer has delivered, or caused to
be delivered, to the Escrow Agent, to be held by it pursuant to the terms
hereof, the Escrow Shares, which are evidenced by a certificate or certificates
accompanied by stock powers executed by the Representative, as record holder of
the Escrow Shares, assigning such shares in blank. The parties acknowledge
that the Escrow Shares are owned beneficially by the Sellers in the amounts set
forth on Schedule A hereto. The Escrow Shares and any other property of any
nature received therefor, shall be held by the Escrow Agent pursuant to the
terms and conditions of this Agreement and shall constitute and be referred to
collectively as the "Escrow Fund." After one
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year from date of this Escrow Agreement, the Representative may, at its sole
option, direct that all or any portion of the Escrow Shares be sold subject to
the requirements of applicable securities laws. If, at that time or at any
time thereafter, the value of the Escrow Fund exceeds $20,000,000, the
Representative can direct that such excess be distributed in cash to Sellers
based upon their pro rata interest as shown on Schedule A hereto. All
remaining cash in the Escrow Fund shall be invested by the Escrow Agent as the
Representative directs the Escrow Agent in writing in U.S. government and
agency obligations, in certificates of deposit issued by, and interest bearing
deposit accounts, checking accounts or money market accounts of, the Escrow
Agent or in a mutual fund registered under the Investment Company Act of 1940,
the principal of which is invested solely in U.S. government and agency
obligations.
3. Dividends and Voting Rights. The Sellers shall receive all
cash dividends paid with respect to the Escrow Shares. Stock dividends or any
other non-cash distributions with respect to the Escrow Shares payable in
equity securities of Pool shall be deposited in the Escrow Fund, and shall be
considered to be Escrow Shares for all purposes of this Agreement, subject to
the rights of Representative set forth in Section 2 above. The Representative,
as directed by the Sellers as to shares beneficially owned by them, shall have
the full right to vote the Escrow Shares unless and until they are delivered to
Buyer or Sellers pursuant to the terms of this Agreement. For tax reporting
and withholding purposes, all dividends and other income with respect to the
Escrow Fund shall be allocated as the Representative shall direct in writing
or, in the absence of any such direction, to the escrow account created by this
Agreement, in which event the Escrow Agent shall at the expense of the
Representative file all necessary tax returns and pay any tax from the Escrow
Fund.
4. Application of the Escrow Fund to Satisfy Claims of Buyer.
The Escrow Agent is authorized and directed to draw upon the Escrow Fund, and
to deliver to Buyer that portion of the Escrow Shares as provided by this
Section 4, upon fulfillment of the following conditions:
(a) The Escrow Agent shall have received from Buyer (i) a
certificate to the following effect:
"Pursuant to the terms of the Stock Purchase Agreement, (the
"Agreement") dated February 10, 1998, by and among Pool Company
("Buyer"), Pool Energy Services Co., Inc., Sea Mar, Inc. and the
Sellers as defined therein, Buyer has incurred indemnifiable Losses
(as defined in the Agreement) of $_________ [the amount which Buyer
reasonably believes in good faith to be owing shall be inserted] (the
"Indemnifiable Amount") relating to __________ [Buyer shall insert in
reasonable detail the matter giving rise to the indemnifiable Losses,
the basis for a claim that such matters constitute indemnifiable
Losses, the manner in which the amount of indemnifiable Losses have
been calculated and provide supporting documentation of such
Indemnifiable Losses] which is due and owing, and you are to draw upon
the Escrow Fund held by you, and deliver to Buyer, unless directed by
Representative otherwise, cash (to the extent any cash or cash
equivalent is held in the Escrow Fund, and the fewest number of
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Escrow Shares representing Market Value which is, with such cash so
delivered, equal to the Indemnifiable Amount. A copy of this
statement has been given to the Representative in the manner specified
in Section 15 of the Escrow Agreement pursuant to which you are
acting."
and along with such certificate the Escrow Agent shall have received from
Buyer, (ii) a postal receipt evidencing the delivery by Buyer of a copy of such
certificate to the Representative in accordance with Section 15 hereof, or a
written receipt executed by the Representative evidencing such delivery. For
purposes hereof, "Market Value" shall mean the Closing Price as that term is
defined in the Stock Purchase Agreement; and.
(b) Any one of the following three events ("Operative Events")
shall have occurred.
(i) ten (10) business days shall have elapsed between
the date on which the Escrow Agent shall have received the certificate
and evidence of delivery provided in Section 4(a)(i) and (ii) and the
Escrow Agent shall not have received any letter or other document from
the Representative protesting or otherwise disputing, challenging or
disagreeing with any assertion contained in the certificate; or
(ii) the Escrow Agent shall have received a certificate
signed by Buyer and the Representative fixing and determining the
amount of indemnifiable Losses of Buyer and the amount of the Escrow
Fund (cash and/or Escrowed Shares) to be delivered and paid to Buyer
in respect thereof; or
(iii) the Escrow Agent shall have received a final arbitral
order or final arbitral award which states on its face that it is
rendered pursuant to the provisions of Section 9.12(c) of the Stock
Purchase Agreement, to deliver an amount of the Escrow Fund to Buyer,
which order or award shall override any notice from Buyer received
pursuant to Section 4(a)(i) and any notice or other document from the
Representative received pursuant to Section 4(b)(i) above.
Upon fulfillment of such conditions, the Escrow Agent shall, within
five (5) business days, but no sooner than within two (2) business days (the
"Election Date"), of the last such event of fulfillment, deliver to Buyer that
portion of the Escrow Fund to which Buyer is entitled as determined in
accordance with the provisions of this Agreement; provided, however, that if
new certificates must be issued to represent the number of Escrow Shares to be
delivered to Buyer, the Escrow Agent shall deliver the appropriate certificate
or certificates representing the Escrow Shares to the transfer agent of the
Pool common stock (the "Transfer Agent") so that the Transfer Agent may issue
new certificates representing those shares to be delivered to Buyer and those
shares that will remain Escrow Shares. The Representative has the right, but
not the obligation, to direct the Escrow Agent in writing as to whether in
satisfying any Indemnifiable Losses from the Escrow Fund, the Escrow Agent
should release cash or other properties or
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Escrow Shares, and in what amounts. Unless the Representative has otherwise
directed the Escrow Agent in writing, in satisfying any Indemnifiable Losses
from the Escrow Fund, the Escrow Agent shall release any cash or other
properties then held in the Escrow Fund prior to releasing any Escrow Shares.
If prior to the applicable Election Date of any release from the Escrow Fund,
the Escrow Agent has received any such contrary instructions on the combination
of cash (or other properties) and Escrow Shares to be released to satisfy
indemnifiable Losses, the Escrow Agent shall follow such instructions.
If the Representative shall, in accordance with the provisions of
Section 4(b)(i) hereof, protest or otherwise dispute, challenge or disagree
with any assertion contained in any certificate delivered pursuant to Section
4(a) hereof, then such matter shall be determined by arbitration pursuant to
the provisions of Section 9.12(c) of the Stock Purchase Agreement and in such
an event, the Escrow Agent shall not draw upon the Escrow Fund in connection
with such matter until the Operative Event specified in Section 4(b)(ii) or
(iii), as applicable, has been satisfied.
5. Distribution After March __, 2000. On March __, 2000, [second
anniversary of Closing] the Escrow Agent shall deliver to the Representative
(on behalf of the Sellers) the remaining Escrow Shares and other property held
in the Escrow Fund; provided, however, that if at any time prior to such
deliver the Escrow Agent shall have received a certificate as provided in
Section 4(a), and the rights of Buyer shall not have been finally determined as
elsewhere provided in this Agreement, the Escrow Agent shall retain the portion
(but only that portion) of the Escrow Fund still in dispute, until such rights
are finally determined, and then distribute such remaining Escrow Fund in
accordance with the terms and conditions of this Agreement.
6. Retention of Escrow Fund.
(a) More than one notice may be given pursuant to Section
4(a) and in the event one such claim is resolved while other claims
are pending, the Escrow Agent is authorized to make partial
distributions from the Escrow Fund to Buyer in accordance with Section
4 for such resolved claim.
(b) The Escrow Fund, to the extent not distributed due to
unresolved disputed amounts, shall be held in escrow pursuant hereto
until final payment or determination in respect of any certificate or
notice received by the Escrow Agent. Following the resolution of all
such pending matters the escrow created hereunder shall terminate and
the balance of the Escrow Fund shall be delivered to the
Representative.
7. Remedies. Neither the existence of any right or remedy under
this Agreement or otherwise, nor the exercise or partial exercise of any
thereof, shall constitute a waiver of any other such right or remedy, nor shall
any delay on the part of any party in exercising any right or remedy hereunder,
be deemed to constitute a waiver thereof, and any such right or remedy may be
exercised repeatedly and from time to time.
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8. Tax Matters. Buyer and Sellers shall provide Escrow Agent
with its taxpayer identification number documented by an appropriate Form W-8
or Form W-9 upon execution of this Escrow Agreement. Failure so to provide
such forms may prevent or delay disbursements from the Escrow Fund and may also
result in the assessment of a penalty and Escrow Agent's being required to
withhold tax on any interest or other income earned on the Escrow Fund. Any
payments of income shall be subject to applicable withholding regulations then
in force in the United States or any other jurisdiction, as applicable. The
Other Parties agree, as between themselves, that the Sellers shall be liable
for, and shall indemnify and hold Buyer harmless from and against any
liabilities for, income taxes arising from or attributable to income earned on
the Escrow Fund if the Escrow Fund is released to the Sellers' Representative
(other than as a credit towards the purchase price upon closing of the
transaction contemplated under the Agreement), and that otherwise Buyer shall
be liable for, and shall indemnify and hold the Sellers harmless from and
against any liabilities for, income taxes arising from or attributable to
income earned on the Escrow Fund.
9. Scope of Undertaking. Escrow Agent's duties and
responsibilities in connection with this Escrow Agreement shall be purely
ministerial and shall be limited to those expressly set forth in this Escrow
Agreement. Escrow Agent is not a principal, participant or beneficiary in any
transaction underlying this Escrow Agreement and shall have no duty to inquire
beyond the terms and provisions hereof. Escrow Agent shall have no
responsibility or obligation of any kind in connection with this Escrow
Agreement or the Escrow Fund and shall not be required to deliver the Escrow
Fund or any part thereof or take any action with respect to any matters that
might arise in connection therewith, other than to receive, hold, invest,
reinvest and deliver the Escrow Fund as herein provided. Without limiting the
generality of the foregoing, it is hereby expressly agreed and stipulated by
the parties hereto that Escrow Agent shall not be required to exercise any
discretion hereunder and shall have no investment or management responsibility
and, accordingly, shall have no duty to, or liability for its failure to,
provide investment recommendations or investment advice to the Other Parties or
either of them. Escrow Agent shall not be liable for any error in judgment,
any act or omission, any mistake of law or fact, or for anything it may do or
refrain from doing in connection herewith, except for, subject to Section 10
herein below, its own willful misconduct or gross negligence. It is the
intention of the parties hereto that Escrow Agent shall never be required to
use, advance or risk its own funds or otherwise incur financial liability in
the performance of any of its duties or the exercise of any of its rights and
powers hereunder.
10. Reliance; Liability. Escrow Agent may rely on, and shall
not be liable for acting or refraining from acting in accordance with, any
written notice, instruction or request or other paper furnished to it hereunder
or pursuant hereto and believed by it to have been signed or presented by the
proper party or parties. Escrow Agent shall be responsible for holding,
investing, reinvesting and disbursing the Escrow Fund pursuant to this Escrow
Agreement; provided, however, that in no event shall Escrow Agent be liable for
any lost profits, lost savings or other special, exemplary, consequential or
incidental damages in excess of Escrow Agent's fee hereunder and Escrow Agent
shall be responsible for its compliance with the terms and conditions of this
Agreement, provided, further, that Escrow Agent shall have no liability for any
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loss arising from any cause beyond its control, including, but not limited to,
the following: (a) acts of God, force majeure, including, without limitation,
war (whether or not declared or existing), revolution, insurrection, riot,
civil commotion, accident, fire, explosion, stoppage of labor, strikes and
other differences with employees; (b) the act, failure or neglect of any Other
Party or any agent or correspondent or any other person selected by Escrow
Agent unless selected with willful misconduct or gross negligence; (c) any
delay, error, omission or default of any mail, courier, telegraph, cable or
wireless agency or operator; or (d) the acts or edicts of any government or
governmental agency or other group or entity exercising governmental powers.
Escrow Agent is not responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of the subject matter of this
Escrow Agreement or any part hereof or for the transaction or transactions
requiring or underlying the execution of this Escrow Agreement, the form or
execution hereof or for the identity or authority of any person executing this
Escrow Agreement or any part hereof or depositing the Escrow Fund.
11. Right of Interpleader. Should any controversy arise
involving the parties hereto or any of them or any other person, firm or entity
with respect to this Escrow Agreement or the Escrow Fund, or should a
substitute escrow agent fail to be designated as provided in Section 16 hereof,
or if Escrow Agent should be in doubt as to what action to take, Escrow Agent
shall have the right, but not the obligation, either to (a) withhold delivery
of the Escrow Fund in dispute until the controversy is resolved, the
conflicting demands are withdrawn or its doubt is resolved, or (b) institute a
petition for interpleader in any court of competent jurisdiction to determine
the rights of the parties hereto. Should a petition for interpleader be
instituted, or should Escrow Agent be threatened with litigation or become
involved in litigation in any manner whatsoever in connection with this Escrow
Agreement or the Escrow Fund, the losing party of the Other Parties hereby
jointly and severally agree to reimburse Escrow Agent for its attorneys' fees
and any and all other expenses, losses, costs and damages incurred by Escrow
Agent in connection with or resulting from such threatened or actual litigation
prior to any disbursement hereunder.
12. Indemnification. Except as is set forth in Section 10, the
Other Parties hereby jointly and severally indemnify Escrow Agent, its
officers, directors, partners, employees and agents (each herein called an
"Indemnified Party") against, and hold each Indemnified Party harmless from,
any and all expenses, including, without limitation, attorneys' fees and court
costs, losses, costs, damages and claims, including, but not limited to, costs
of investigation, and litigation suffered or incurred by any Indemnified Party
in connection with or arising from or out of this Escrow Agreement, except such
acts or omissions as may result from the willful misconduct or gross negligence
of such Indemnified Party.
13. Fees and Expenses of Escrow Agent. Pool shall pay the fees
and expenses of the Escrow Agent in accordance with the Escrow Agent's normal
fee schedule.
14. Notices. Any notice or other communication required or
permitted to be given under this Escrow Agreement by any party hereto to any
other party hereto shall be considered as properly given if in writing and (a)
delivered against receipt therefor, (b) mailed by registered or
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certified mail, return receipt requested and postage prepaid or (c) sent by
telefax machine, in each case to the address or telefax number, as the case may
be, set forth below:
If to Escrow Agent:
Bank One Texas N.A.
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telefax No.: 000-000-0000
If to Buyer:
Pool Company
ENSERCH Tower
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Mr. Xxxxxxxx Arms
Telefax No.: (000) 000-0000
with a copy to:
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
000 Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxx Xxxxxx
Telefax No.: (000) 000-0000
If to the Sellers:
Xx X. Xxxxxxxxx, Sellers' Representative
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telefax No.: 000-000-0000
with a copy to:
Xxxx Xxxxxx
Xxxxxx, King & XxXxxxx L.L.P.
3800 First NBC Center
000 Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telecopier No.: (000) 000-0000
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Delivery of any communication given in accordance herewith shall be effective
only upon actual receipt thereof by the party or parties to whom such
communication is directed. Any party to this Escrow Agreement may change the
address to which communications hereunder are to be directed by giving written
notice to the other party or parties hereto in the manner provided in this
section.
15. Consultation with Legal Counsel. Escrow Agent may consult
with its counsel or other counsel satisfactory to it concerning any question
relating to its duties or responsibilities hereunder or otherwise in connection
herewith and shall not be liable for any action taken, suffered or omitted by
it in good faith upon the advice of such counsel.
16. Choice of Laws; Cumulative Rights. This Escrow Agreement
shall be construed under, and governed by, the laws of the State of Texas,
excluding, however, (a) its choice of law rules and (b) the portions of the
Texas Trust Code Sec. 111.001, et seq. of the Texas Property Code concerning
fiduciary duties and liabilities of trustees. All of Escrow Agent's rights
hereunder are cumulative of any other rights it may have at law, in equity or
otherwise. The parties hereto agree that the forum for resolution of any
dispute arising under this Escrow Agreement shall be Xxxxxx County, Texas, and
each of the Other Parties hereby consents, and submits itself, to the
jurisdiction of any state or federal court sitting in Xxxxxx County, Texas.
17. Resignation. Escrow Agent may resign hereunder upon ten
(10) days' prior written notice to the Other Parties. Upon the effective date
of such resignation, Escrow Agent shall deliver the Escrow Fund to any
substitute escrow agent designated by the Other Parties in writing. If the
Other Parties fail to designate a substitute escrow agent within ten (10) days
after the giving of such notice, Escrow Agent may institute a petition for
interpleader. Escrow Agent's sole responsibility after such 10-day notice
period expires shall be to hold the Escrow Fund (without any obligation to
reinvest the same) and to deliver the same to a designated substitute escrow
agent, if any, or in accordance with the directions of a final order or
judgment of a court of competent jurisdiction, at which time of delivery Escrow
Agent's obligations hereunder shall cease and terminate.
18. Assignment. This Escrow Agreement shall not be assigned by
any party hereto without the prior written consent of the Other Parties hereto
(such consent to assignments being hereinafter referred to collectively as
"Permitted Assigns").
19. Severability. If one or more of the provisions hereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect
under applicable law, such invalidity, illegality or unenforceability shall not
affect any other provisions hereof, and this Escrow Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein, and the remaining provisions hereof shall be given full force
and effect.
20. Termination. This Escrow Agreement shall terminate upon the
transfer, in accordance with Sections 4, 5, or 16 hereof, of the Escrow Fund
provided, however, that the last
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two sentences of Section 10 hereof and the provisions of Section 11 hereof
shall, in any event, survive the termination hereof.
21. General. The section headings contained in this Escrow
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Escrow Agreement. This Escrow Agreement and
any affidavit, certificate, instrument, agreement or other document required to
be provided hereunder may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute but one and the same instrument. Unless the context shall otherwise
require, the singular shall include the plural and vise a versa, and each
pronoun in any gender shall include all other genders. The terms and
provisions of this Escrow Agreement constitute the entire agreement among the
parties hereto in respect of the subject matter hereof, and neither the Other
Parties nor Escrow Agent has relied on any representations or agreements of the
other, except as specifically set forth in this Escrow Agreement. This Escrow
Agreement or any provision hereof may be amended, modified, waived or
terminated only by written instrument duly signed by the parties hereto. This
Escrow Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective heirs, devisees, executors, administrators,
personal representatives, successors, trustees, receivers and Permitted
Assigns. This Escrow Agreement is for the sole and exclusive benefit of the
Other Parties and the Escrow Agent, and nothing in this Escrow Agreement,
express or implied, is intended to confer or shall be construed as conferring
upon any other person any rights, remedies or any other type or types of
benefits.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement to be effective as of the date first above written.
POOL COMPANY
BY:
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Xxxxxxx X Xxxxx
Vice President
SELLERS:
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Xx X. Xxxxxxxxx Individually and as Representative
XXXXXXXXX ENTERPRISES, INC.
BY:
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Xx X. Xxxxxxxxx
President
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BANK ONE TEXAS N.A.
BY:
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