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EXHIBIT 3
SETTLEMENT AGREEMENT TO
STOCK PURCHASE AND MERGER AGREEMENT
THIS SETTLEMENT AGREEMENT TO STOCK PURCHASE AND MERGER AGREEMENT, (the
"Settlement Agreement") is made and entered into as of the 17th day of May, 1999
by and among TransCoastal Marine Services, Inc., a Delaware corporation
("TransCoastal") and Xxxxxxx GMP International, Inc., a Louisiana corporation
("Xxxxxxx GMP"); Xxxx X. Xxxxxxxxx, Xx. ("Xxxxxxxxx") Xxxx X. Xxxxxxx, Xx.
("Xxxxxxx"), Xxxxx X. Xxxxxxx ("Xxxxxxx") and Xxxxxx X. Xxxxxx ("Xxxxxx")
Gallander, Gariepy, Xxxxxxx and Xxxxxx are collectively referred to as
"Shareholders." (Each spouse of the Shareholders is joining in and consenting to
the execution of this Settlement Agreement.) Capitalized terms used but not
defined below shall have the respective meaning ascribed to such terms in the
Agreement (as hereinafter defined).
WHEREAS, the parties hereto have entered into that certain Stock
Purchase and Merger Agreement, dated as of August 1, 1998 (as amended by the
First Amendment dated August 31, 1998, collectively, the "Agreement");
WHEREAS, TransCoastal is required to pay Contingent Consideration to
the Shareholders as an Earn-Out Payment under certain conditions pursuant to the
Agreement;
WHEREAS, the parties have agreed to an alternate arrangement for the
Earn-Out Payment and Contingent Consideration and desire to modify or supersede
the Agreement and to settle the issues regarding the Earn-Out Payment and the
Contingent Consideration and certain other matters in accordance with this
Settlement Agreement;
NOW THEREFORE, for and in consideration of the foregoing and the
respective representations, warranties, covenants and agreements contained
herein, the parties hereto agree as follows:
1. SETTLEMENT CONSIDERATION. In lieu of all Contingent Consideration
and any Earn-Out Payment set forth in the Agreement and the First Amendment, the
total consideration to be paid by TransCoastal to the Shareholders for such
Contingent Consideration and Earn-Out Payment shall be payable on the Settlement
Closing Date, as hereinafter defined, as follows (the "Settlement
Consideration"):
(a)(i) Delivery by TransCoastal to the Shareholders of an
aggregate of $4,700,000 to be paid by wire transfer or other
immediately available funds approved by the Shareholders in accordance
with the instructions set forth in Schedule 1(a)(i) and (ii) issuance
by TransCoastal of 400,000 shares of TransCoastal Common Stock to
Shareholders in accordance with the sharing ratios set forth in
Schedule 1(a)(ii);
(b) Issuance by TransCoastal to the Shareholders of
TransCoastal Series A Preferred Stock in accordance with the
Certificate of Designation of Series A Preferred Stock as set forth on
Exhibit A attached hereto. The dollar amount of the Series A Preferred
Stock shall be
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determined by subtracting from $3,500,000 the sum of the (i) value of
the 400,000 shares of Common Stock issued on the Settlement Closing
Date (as hereinafter defined) pursuant to Section 1(a)(ii), such value
per share being based upon the average closing price of TransCoastal
Common Stock for the ten (10) business days immediately prior to May
14, 1999 and all parties agree such value is $4.20 per share and (ii)
the dollar amount of the Series B Convertible Preferred Stock as
determined in (c) below. The Series A Preferred Stock shall be
redeemable by TransCoastal at any time after six years from the Issue
Date and shall be redeemable at the option of the holder of such stock
no earlier than five years from the date of issuance of such stock in
accordance with the terms of the Certificate of Designations; and,
(c) Issuance by TransCoastal to the Shareholders of
TransCoastal Series B Convertible Preferred Stock in accordance with
the Certificate of Designation of Series B Convertible Preferred Stock
as set forth on Exhibit B attached hereto. The dollar amount of the
Series B Convertible Preferred Stock shall be determined based upon the
average closing price of TransCoastal Common Stock for the ten (10)
business days immediately prior to May 14, 1999 and all parties agree
such value is $4.20 per share multiplied by 400,000. The Series B
Preferred Stock shall be redeemable by TransCoastal at any time after
six years from the Issue Date and shall be redeemable at the option of
the holder of such stock no earlier than five years from the date of
issuance of such stock in accordance with the terms of the Certificate
of Designation. All of the outstanding shares of Series B Convertible
Preferred Stock shall be converted automatically into an aggregate of
400,000 shares of TransCoastal Common Stock if TransCoastal receives
shareholder approval for the issuance of such Common Stock shares at
its May 1999 Annual Stockholders Meeting, or any adjournment thereof,
or at its May 2000 Annual Stockholders Meeting, or any adjournment
thereof, or at any special meeting of the shareholders occurring
between these meetings, as hereinafter provided. Upon such conversion,
certificates representing such shares of Common Stock shall be issued
not later than 30 days following such shareholder approval.
TransCoastal agrees to recommend, seek and use its reasonable efforts
to obtain such approval from its shareholders at its May 1999 Annual
Stockholders Meeting, its May 2000 Annual Stockholders Meeting, and at
any special stockholders meetings occurring between these meetings. At
any meeting of the stockholders with respect to the foregoing, and at
any adjournment thereof, and with respect to any consent solicited with
respect to the foregoing, each Shareholder who is a party to this
Settlement Agreement hereby agrees to vote such Shareholder's
TransCoastal Common Stock in favor of the issuance of the Common Stock
as set forth herein.
2. REGISTRATION RIGHTS. TransCoastal shall grant to the Shareholders
certain demand and piggyback registration rights for the TransCoastal Common
Stock issued pursuant to Section 1 above. Such rights, as well as amendments to
prior registration rights for the Common Stock issued to the Shareholders prior
to the date hereof, shall be set forth in a Registration Rights Agreement to be
executed on the Settlement Closing Date in the form of Exhibit C attached
hereto.
3. SIRPI AND ABB MOBIL DISPUTES. TransCoastal and the Shareholders
agree as to any liabilities and obligations (including attorneys fees, costs,
expenses and all settlement amounts, if any, but only if such attorneys fees,
costs, expenses and settlement amounts are taxed to or assessed against Xxxxxxx
GMP or its affiliates, including TransCoastal, (i) by a court of competent
jurisdiction in a final judgment or (ii) pursuant to a settlement agreement
approved by Xxxxxxxxx, as the Shareholders' Representative, as hereinafter
provided (collectively, the "Liabilities") associated with the lawsuit styled
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Sirpi Alusteel Construction, Ltd. vs. Xxxxxxx GMP International, Inc., on the
docket of the United States District Court for the Eastern District of
Louisiana, Civil Action No. 98-0929, Section "F", Mag.: 5 and relating to
disputes arising under the Letter Agreement between Xxxxxxx Xxxxxxxx Joint
Venture and ABB Xxxxxx Global, dated July 28, 1998 and all attachments, a true
and correct copy of which is attached hereto as Exhibit D (collectively, the
"Disputes"). The Shareholders represent to TransCoastal that they have made
available to TransCoastal either the original or copies of any and all
documentation, correspondence, memos, notes, demands or any other written
material regarding or related to, and have furnished to TransCoastal those items
material to each of the Disputes in both their or Xxxxxxx GMP's possession,
custody or control. TransCoastal agrees to assume responsibility for the first
$600,000 of Liabilities under the Disputes. Thereafter, the Shareholders shall
be responsible for all Liabilities to the full extent of the liquidation
preference of the Series A Preferred Stock as defined in the Certificate of
Designation for the Series A Preferred Stock attached hereto as Exhibit "A",
plus accrued dividends thereon (collectively, the "Value"), provided such
obligation of the Shareholders for such Liabilities shall be payable solely from
the Series A Preferred Stock issued pursuant to Section 1(b) hereof, and such
obligation shall be shared between the Shareholders based on the pro rata
ownership of the shares of Series A Preferred Stock. Upon notice given by
TransCoastal to the Shareholders of amounts due by the Shareholders to
TransCoastal as a result of the Disputes, certificates representing the Series A
Preferred Stock up to an amount equal in Value necessary to satisfy
Shareholder's obligation for the Liabilities as set forth hereunder shall be
delivered to TransCoastal immediately after TransCoastal's notice, such shares
to be free and clear of all liens, claims and encumbrances and in sufficient
number to satisfy the amounts owed by the Shareholders. To the extent necessary,
TransCoastal shall reissue stock certificates representing the number of shares
exceeding the amount of shares required to satisfy Shareholder's obligation for
the Liabilities as set forth hereunder. If the amount of the Liabilities for the
Disputes exceeds the sum of $600,000 plus the Value of the Series A Preferred
Stock delivered to TransCoastal, then TransCoastal and the Shareholders, in the
aggregate, shall share the additional Liabilities equally up to a maximum of
total Liabilities of $1,500,000. TransCoastal shall be responsible for all
Liabilities of the Disputes in excess of the sum of the initial $600,000, the
value of the Series A Preferred Stock and the additional shared liability of up
to $1,500,000 in total Liabilities.
Any settlement of the Disputes for an aggregate amount in excess of
$600,000 shall require the prior written consent and approval of Xxxxxxxxx as
the Shareholders' Representative. The Shareholders shall have the right, but not
the obligation, to participate, at their own expense, in the defense of any of
the Disputes and irrespective of Shareholder's decision to participate in such
defense, TransCoastal shall apprise Xxxxxxxxx for and on behalf of the
Shareholders of all significant events and developments concerning the Disputes.
Upon conclusion of the Settlement Closing, this Settlement Agreement shall
extinguish, and TransCoastal, Xxxxxxx GMP or any of their affiliates do hereby
release and forever discharge the Shareholders, and each and every one of them,
from, any and all obligations, claims, indebtedness and liabilities arising
under the Agreement or otherwise, whether contractual or otherwise, relating to
the Disputes, unless specifically preserved in this Settlement Agreement.
4. REPRESENTATION AND WARRANTIES OF TRANSCOASTAL AND XXXXXXX GMP.
TransCoastal and Xxxxxxx GMP represent and warrant to the Shareholders as
follows:
(a) TransCoastal is a corporation duly organized under the
laws of the State of Delaware and is validly existing and in good
standing under the laws of such jurisdiction. Xxxxxxx GMP is a
corporation duly organized under the laws of the State of Louisiana and
is validly existing and in good standing under the laws of such
jurisdiction.
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(b) Each of TransCoastal and Xxxxxxx GMP have all requisite
corporate power and authority to execute and deliver this Settlement
Agreement and any other transaction documents to which such entity is a
party and to perform its obligations hereunder and thereunder. The
execution and delivery of this Settlement Agreement and the other
transaction documents to which TransCoastal and Xxxxxxx GMP are a party
and the performance of such entity's obligations contemplated hereby
and thereby have been duly and validly approved by all corporate
action, if any, necessary on behalf of such entity. This Settlement
Agreement and each of the transaction documents to which TransCoastal
and Xxxxxxx GMP are a party constitutes the legal, valid and binding
obligations of such entity, enforceable against it in accordance with
their terms, subject to Creditors' Rights. All other documents required
hereunder to be executed and delivered by TransCoastal and/or Xxxxxxx
GMP at the Settlement Closing have been duly authorized, executed and
delivered by such entity and constitute the legal, valid and binding
obligations of such entity, enforceable against it in accordance with
their terms, subject to Creditors' Rights.
(c) Neither the execution and delivery by TransCoastal of this
Settlement Agreement nor the consummation of the transactions
contemplated hereby will violate or breach the terms of, cause a
default under, conflict with, result in acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, require any
notice or consent or give rise to any preferential purchase or similar
right under (i) any applicable Law, (ii) such entity's charter or
bylaws, or (iii) any Material Contract to which such entity is a party
or by which it or any of its properties, is bound, except for the
required stockholder approval for the issuance of the additional shares
of TransCoastal Common Stock.
(d) Upon consummation of the transactions contemplated by this
Settlement Agreement, the TransCoastal Common Stock, Series A Preferred
Stock and Series B Convertible Preferred Stock issued to the
Shareholders pursuant to Section 1 hereof, will be duly authorized,
validly issued, fully paid and non-assessable, and free and clear of
any Lien other than restrictions noted on the legends on the stock
certificates evidencing such shares in compliance with federal or state
securities laws. The issuance of the TransCoastal Common Stock, Series
A Preferred Stock and Series B Convertible Preferred Stock issued to
the Shareholders pursuant to Section 1 hereof, will not violate
TransCoastal's charter or bylaws or any agreement or other document to
which TransCoastal is a party or by which TransCoastal is bound or give
rise to preemptive rights, preferential rights or any such other rights
or claims on the part of any Person that have not been previously
waived.
5. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS.
(a) Such Shareholder has the full power, legal right, capacity
and authority to enter into, execute and deliver this Settlement
Agreement, the Registration Rights Agreement, and the other transaction
documents to which such Shareholder is a party, and to carry out and
perform the transactions contemplated hereby and thereby. Each of this
Settlement Agreement, the Registration Rights Agreement, and the other
transaction documents to which such Shareholder is a party constitutes
a legal, valid and binding obligation of such Shareholder, enforceable
against such Shareholder in accordance with its terms, subject to
Creditors' Rights.
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(b) Neither the Company nor any of its Affiliates are required
to deduct or withhold from the consideration otherwise payable at the
Settlement Closing pursuant to this Settlement Agreement to such
Shareholder any amounts under the Code or any other provisions of
federal, state or local law.
(c) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby by the
Shareholder will violate or breach the terms of, cause a default under,
conflict with, result in the acceleration of, create in any party the
right to accelerate, terminate, modify in a manner adverse to the
Shareholder or cancel, require any notice or consent or give rise to
any preferential purchase or similar right under (i) any applicable
Law, or (ii) any Material Contract to which such entity is a party or
by which they, or any of their properties, is bound.
6. OPINION LETTER FROM GENERAL COUNSEL. As a condition to the
Settlement Closing, TransCoastal shall provide to Shareholders the written
opinion of Xxxxxxx Xxx Xxxxx, the General Counsel of TransCoastal, in form and
content satisfactory to Shareholders and their legal counsel.
7. SETTLEMENT CLOSING DATE. The closing (the "Settlement Closing") of
the transactions contemplated by this Settlement Agreement shall take place at
the offices of Xxxxxx & Xxxxxx L.L.P. or other location mutually agreeable to
the parties, on the date of execution of this Agreement. The date on which the
Settlement Closing occurs is referred to in this Settlement Agreement as the
"Settlement Closing Date."
8. PRIOR RIGHTS AND OBLIGATIONS. Upon conclusion of the Settlement
Closing, this Settlement Agreement shall extinguish (i) all rights which
Shareholders may have, and obligations which TransCoastal, Xxxxxxx GMP or any of
their affiliates may have, contractual or otherwise, relating to the Contingent
Consideration or Earn-Out Payment and any registration rights set forth in the
Agreement, and (ii) all rights which TransCoastal, Xxxxxxx GMP or any of their
affiliates may have, and obligations which the Shareholders may have,
contractual or otherwise, relating to the Contingent Consideration or Earn-Out
Payment and any registration rights set forth in the Agreement, unless
specifically preserved in this Settlement Agreement, and for which the
Shareholders and TransCoastal, Xxxxxxx GMP and all of their affiliates do hereby
mutually and reciprocally release and discharge each other.
9. INVESTMENT. Each Shareholder as to himself, (a) understands that the
shares of TransCoastal Common Stock, Series A Preferred Stock and Series B
Convertible Preferred Stock to be issued to such Shareholder have not been, and
will not be, registered under the Federal securities laws or any state
securities laws, and are being offered and sold in reliance upon Federal and
state exemptions for transactions not involving any public offering, (b) is
acquiring the shares of the TransCoastal Common Stock, Series A Preferred Stock
and Series B Convertible Preferred Stock solely for his own account for
investment purposes, and not with a view to the distribution thereof, (c) is a
sophisticated investor with knowledge and experience in business and financial
matters, (d) has received certain information concerning TransCoastal, and has
had the opportunity to obtain additional information if desired in order to
evaluate the merits and risks inherent in holding the shares of TransCoastal
Common Stock, Series A Preferred Stock and Series B Convertible Preferred Stock,
(e) is able to bear the economic risk and lack of liquidity inherent in holding
the shares of TransCoastal Common Stock, Series A Preferred Stock and Series B
Convertible Preferred Stock, and (f) is an Accredited Investor.
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10. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Settlement
Agreement (including the Schedules and Exhibits hereto) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
oral and written, among the parties or any of them, with respect to the subject
matter hereof. Neither this Settlement Agreement nor any document delivered in
connection with this Settlement Agreement confers upon any person not a party
hereto any rights or remedies hereunder.
11. WAIVER AND AMENDMENT. This Settlement Agreement may not be amended
or supplemented at any time, except by an instrument in writing signed on behalf
of each party hereto. The waiver by any party hereto of any condition or of a
breach of any provision of this Settlement Agreement shall not operate or be
construed as a waiver of any other condition or subsequent breach.
12. ASSIGNMENT. This Settlement Agreement shall inure to the benefit of
and will be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. Except as set forth in this
Settlement Agreement, this Settlement Agreement shall not be assignable by any
party hereto without the consent of the other parties hereto.
13. NOTICES. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and (i) delivered in person or by courier, (ii) sent by
telecopy or facsimile transmission, or (iii) mailed, certified first class mail,
postage prepaid, return receipt requested, to the appropriate party at the
following addresses:
if to TransCoastal or Xxxxxxx GMP:
TransCoastal Marine Services, Inc.
0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
with copies to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: T. Xxxx Xxxxx
if to the Shareholders:
Xxxx X. Xxxxxxxxx
Xxxxxxx GMP International, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telecopy: (000) 000-0000
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with copies to:
Xxxxx X. Xxxxxxxx, Esq.
000 Xx. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telecopy: (000) 000-0000
or to such other address as the parties set forth above shall have furnished to
the other parties set forth above by notice given in accordance with this
Section 10.07. Such notices shall be effective (i) if delivered in person or by
courier, upon actual receipt by the intended recipient, (ii) if sent by telecopy
or facsimile transmission, when the sender receives telecopier confirmation that
such notice was received at the telecopier number of the addressee, or (iii) if
mailed, upon the earlier of five days after deposit in the mail and the date of
delivery as shown by the return receipt therefor.
14. GOVERNING LAW. THE CONSTRUCTION, INTERPRETATION, AND VALIDITY OF
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAW OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES
OF CONFLICTS OF LAW THEREOF.
15. SEVERABILITY. If any term, provision, covenant or restriction of
this Settlement Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provision, covenants
and restrictions of this Settlement Agreement shall continue in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term, provision, covenant or restriction is invalid, void or
unenforceable, the parties hereto shall negotiate in good faith to modify this
Settlement Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
16. COUNTERPARTS. This Settlement Agreement may be executed in two or
more counterparts or facsimile signatures, each of which shall be an original,
but all of which together shall constitute one and the same agreement.
17. HEADINGS. The Section headings herein are for convenience only and
shall not affect the construction hereof.
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IN WITNESS WHEREOF, TransCoastal and the Shareholders have each
executed or caused this Agreement to be executed on its behalf by its officer
thereunto duly authorized, as applicable, all as of the date first above
written.
TRANSCOASTAL:
TRANSCOASTAL MARINE SERVICES, INC.
By: /s/ N. M. XXXXX
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Name: N. M. Xxxxx
Title: President
XXXXXXX GMP:
XXXXXXX GMP INTERNATIONAL, INC.
By: /s/ XXXX X. XXXXXXXXX
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Name: Xxxx X. Xxxxxxxxx
Title: President
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SHAREHOLDERS:
/s/ XXXX X. XXXXXXXXX, XX.
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Xxxx X. Xxxxxxxxx, Xx.
/s/ XXXXXXX X. XXXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ XXXX X. XXXXXXX, XX.
--------------------------------------
Xxxx X. Xxxxxxx, Xx.
/s/ XXXXXXX X. XXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ XXXXX X. XXXXXXX
--------------------------------------
Xxxxx X. Xxxxxxx
/s/ XXXXXXX X. XXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ XXXXXX X. XXXXXX
--------------------------------------
Xxxxxx X. Xxxxxx
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