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EXHIBIT 10.1
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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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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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44
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.
-38-
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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"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
53
EXHIBIT 0
XXXXXXXXXX XXXX
Xxxxxxx, Xxxxx March ___, 1998
Sea Mar, Inc., a Louisiana corporation (the "Maker"), for value
received, hereby promises to pay to the order of Sea Mar Equipment, Inc.
(together with any successors or assigns, the "Payee"), at the time and in the
manner hereinafter provided, the principal sum of Ten Million and No/100
Dollars ($10,000,000), together with interest computed thereon at the rate
hereinafter provided. This Note shall be payable at the office of the Payee at
________________________, or at such other address in ____________________ as
the holder of this Note shall from time to time designate.
The outstanding principal amount of this Note shall bear interest from
the date hereof until the due date at the rate of seven and one-half percent
(7.5%) per annum. The principal amount of this Note shall be due and payable
on March __, 1999, or on such later date as may be agreed to in writing by
Payee. Interest on the outstanding principal amount of this Note shall be
payable at maturity.
All sums of principal and interest past due under the terms of this
Note shall bear interest at a per annum interest rate equal to the lesser of
ten percent (10%) per annum or the maximum rate allowed by law from the due
date thereof until paid.
In the event of default hereunder and this Note is placed in the hands
of an attorney for collection (whether or not suit is filed), or if this Note
is collected by suit or legal proceedings or through bankruptcy proceedings,
the Maker agrees to pay in addition to all sums then due hereon, including
principal and interest, all expenses of collection, including, without
limitation, reasonable attorneys' fees.
This Note may be prepaid in whole or in part from time to time,
without premium or penalty. Each prepayment of principal shall be accompanied
by an amount equal to the accrued interest on the principal amount prepaid to
the date of such prepayment.
The Payee shall be entitled to accelerate this Note and declare all
sums due hereunder immediately due and payable upon default by the Maker in any
of its obligations under this Note.
The Maker and any and all sureties, guarantors and endorsers of this
Note and all other parties now or hereafter liable hereon, severally waive
grace, demand, presentment for payment, notice of dishonor, protest and notice
of protest, notice of intention to accelerate, notice of acceleration, any
other notice and diligence in collecting and bringing suit against any party
hereto and agree (i) to all extensions and partial payments, with or without
notice, before or after maturity, (ii) to any substitution, exchange or release
of any security now or hereafter given for this Note, (iii) to the release of
any party primarily or secondarily liable hereon, and (iv) that it will not be
necessary for the holder hereof, in order to enforce payment of this Note, to
first institute or exhaust such
54
holder's remedies against the Maker or any other party liable therefor or
against any security for this Note. No delay on the part of the Payee in
exercising any power or right under this Note shall operate as a waiver of such
power or right, nor shall any single or partial exercise of any power of right
preclude further exercise of that power or right.
All agreements between the Maker and the holder hereof, whether now
existing or hereafter arising and whether written or oral, are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of the maturity hereof, or otherwise, shall the amount paid, or
agreed to be paid, to the holder hereof for the use, forbearance or detention
of the funds advanced pursuant to this Note, or otherwise, or for the payment
or performance of any covenant or obligation contained herein or in any other
document or instrument evidencing, securing or pertaining to this Note exceed
the maximum amount permissible under applicable law. If from any circumstances
whatsoever fulfillment of any provision hereof or any other document or
instrument exceeds the maximum amount of interest prescribed by law, then ipso
facto, the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the holder hereof shall ever
receive anything of value deemed interest by applicable law, which would exceed
interest at the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance of
this Note or on account of any other principal indebtedness of the Maker to the
holder hereof, and not to the payment of interest, or if such excessive
interest exceeds the unpaid principal balance of this Note and such other
indebtedness, such excess shall be refunded to the Maker. All sums paid, or
agreed to be paid, by the Maker for the use, forbearance or detention of the
indebtedness of the Maker to the holder of this Note shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest on account of such indebtedness is uniform throughout
the term hereof. The terms and provisions of this paragraph shall control and
supersede every other provision of all agreements between the Maker and the
holder hereof.
This Note shall be governed by and construed in accordance with the
laws of the State of Texas.
All references to the Maker herein shall, and shall be deemed to,
include its successors and assigns, and all covenants, stipulations, promises
and agreements contained herein by or on behalf of the Maker shall be binding
upon its successors and assigns, whether so expressed or not.
MAKER
SEA MAR, INC.
By:
---------------------------------------------
Its:
-------------------------------------
2
55
FOR VALUE RECEIVED, Pool Company ("Pool") absolutely and
unconditionally guarantees payment of this Note according to its terms to the
same extent as if Pool were the Maker of this Note. Pool waives all demand and
notices, including notice of non-payment, presentment for payment, protest,
notice of protest, suit and diligence. Pool also waives any notice of and
defense based on the extension of time of payment or change in methods of
payment and consents to all renewals, extensions and other adjustments in a
manner of payment of this Note. This is a guaranty of payment and not of
collection. Pool waives all requirements of law, if any, to require that any
collection efforts be made against Maker or that any action be brought against
Maker before resorting to this guaranty.
POOL COMPANY
By:
-------------------------------------
3
56
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
57
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
2
58
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
3
59
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.
4
60
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
5
61
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
6
62
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
7
63
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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64
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:
----------------------------------------------
Xxxxxxx X Xxxxx
Vice President
SELLERS:
--------------------------------------------------
Xx X. Xxxxxxxxx Individually and as Representative
XXXXXXXXX ENTERPRISES, INC.
BY:
----------------------------------------------
Xx X. Xxxxxxxxx
President
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65
BANK ONE TEXAS N.A.
BY:
-----------------------------------------------
66
EXHIBIT 4
VOTING AGREEMENT
THIS AGREEMENT is made as of March ___, 1998, by and among Xx X.
Xxxxxxxxx and ___________________ (who are collectively referred to herein as
the "Shareholders" and individually as a "Shareholder") and Pool Energy Services
Co., a Texas corporation (the "Company").
The Shareholders will acquire shares of the Company's Common Stock, no
par value per share ("Common Stock"), pursuant to a Stock Purchase Agreement
among the Shareholders, Sea Mar, Inc., Pool Company, and the Company dated of
even date herewith (the "Purchase Agreement").
The Company and the Shareholders desire to enter into this Agreement
for the purposes of evidencing the Shareholders' agreement to vote certain of
their shares of Common Stock as directed by the Company's Board of Directors
(the "Board"). The execution and delivery of this Agreement is a condition to
the Company's obligation to issue the Common Stock to the Shareholders pursuant
to the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Voting of Shares. The total shares subject hereto are 769,231.
From and after the Closing (as defined in the Purchase Agreement) and until the
second anniversary of the Closing, each Shareholder shall vote all shares of
Common Stock owned by him (not subject to the Escrow Agreement of even date
herewith executed pursuant to the Purchase Agreement) (the "Shareholder Shares")
and shall take all other reasonably necessary or desirable actions within his or
her control (whether in his or her capacity as a stockholder, director, member
of a board committee or officer of the Company or otherwise, and including
without limitation attendance at meetings by proxy for purposes of obtaining a
quorum and execution of written consents in lieu of meetings), and the Company
shall take all necessary or desirable actions within its control (including
without limitation calling special Board and stockholder meetings), so that the
Shareholder Shares are voted as directed by the Board.
2. Irrevocable Proxy; Conflicting Agreements.
a. In order to secure each Shareholder's obligation to vote
his or her Shareholder Shares in accordance with the provisions of
paragraph 1, each Shareholder hereby appoints X. X. Jonebloed and X. X.
Xxxxxxxx, or either of them, as his true and lawful proxy and
attorney-in-fact, with full power of substitution, to vote all of his
Shareholder Shares as
67
provided for in paragraph 1. X. X. Jonebloed and X. X. Xxxxxxxx, or
either of them, may exercise the irrevocable proxy granted to them
hereunder at any time any Shareholder fails to comply with the
provisions of this Agreement. The proxies and powers granted by each
Shareholder pursuant to this paragraph 2 are coupled with an interest
and are given to secure the performance of the Shareholder's
obligations to the Company under this Agreement. Such proxies and
powers will be irrevocable for the term of this Agreement and will
survive the death, incompetency and disability of such Shareholder.
(b) Each Shareholder represents that he has not granted and is
not a party to any proxy, voting trust or other agreement which is
inconsistent with or conflicts with the provisions of this Agreement,
and no holder of Shareholder Shares shall grant any proxy or become
party to any voting trust or other agreement which is inconsistent with
or conflicts with the provisions of this Agreement.
3. Legend. Each certificate evidencing Shareholder Shares and
each certificate issued in exchange for or upon the transfer of any Shareholder
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"The securities represented by this certificate are subject
to a Voting Agreement dated as of _________ ___, 1998, among
the issuer of such securities (the "Company") and certain of
the Company's stockholders. A copy of such Agreement will be
furnished without charge by the Company to the holder hereof
upon written request."
The legend set forth above shall be removed from the certificates evidencing any
Shareholder Shares at the request of the Shareholder at any time after the
earlier to occur of (i) the second anniversary of the Closing, or (ii) their
sale to a third party in compliance with all applicable laws.
4. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Shareholders unless such modification,
amendment or waiver is approved in writing by the Company and the Shareholders
so affected. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
5. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed,
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68
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
6. Entire Agreement. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
7. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Shareholders and any subsequent
holders of Shareholder Shares and the respective successors and assigns of each
of them, so long as they hold Shareholder Shares. Notwithstanding the foregoing,
however, (i) this Agreement does not apply to any shares placed in the Escrow
Fund pursuant to the Purchase Agreement and (ii) in the event of any sale of the
Shareholder Shares subject to this Agreement, to a third party, all
restrictions, limitation and conditions of this Agreement or to the Shareholders
Shares sold shall be released, null and void.
8. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
9. Remedies. The parties shall be entitled to enforce their
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the parties may apply to the arbitrators described in
paragraph ___ below for specific performance and/or injunctive relief (without
posting a bond or other security) in order to enforce or prevent any violation
of the provisions of this Agreement.
10. Notices. Any notice provided for in this Agreement shall be
in writing and shall be personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company and the Shareholders at the addresses set forth below
and to any subsequent holder of Shareholder Shares subject to this Agreement at
such address as indicated by the Company's records, or at such address or to the
attention of such other person as the recipient party has specified by prior
written notice to the sending party. Notices will be deemed to have been given
hereunder when delivered personally, three days after deposit in the U.S. mail
and one day after deposit with a reputable overnight courier service, as
follows;
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69
If to Shareholders:
Al. X. Xxxxxxxxx
----------------------------
Houston, Texas
--------------
With a copy to:
Xxxx X. Xxxxxx III
Xxxxxx, Xxxx & XxXxxxx, L.L.P.
000 Xx. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000
If to Company:
Pool Company
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Senior Vice President, Finance
11. Governing Law; Arbitration. All questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
the internal law, and not the law of conflicts, of the State of Texas. In the
event of any dispute, difference or question ("Dispute") between the Company and
the Shareholders ("Disputing Parties"), which cannot be otherwise resolved by
the Disputing Parties themselves, the Dispute will be settled under Section 9.12
of the Purchase Agreement.
12. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
13. Gender. Whenever required by the context hereof, the
masculine or neuter gender shall include any of the masculine, feminine or
neuter genders.
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70
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
POOL ENERGY SERVICES CO.
By:
----------------------------------
X. X. Xxxxxxxx
Senior Vice President, Finance
-------------------------------------
AL. X. XXXXXXXXX
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71
EXHIBIT 5
PRO FORMA BALANCE SHEET
SEA MAR, INC.
-----------------------------------------------------------------------------
Balance Sheet, August 31, 1997 -- Pro Forma
-------------------------------------------
Adjustment For Adjustment For
Two Cessna 6 Vessel Excess Cash Pro Forma
Actual Aircraft(1) Downpayments(2) Retained by Sellers Balance Sheet
----------- --------------- --------------- ------------------- -------------
Cash $10,714,914 $(5,100,000) $(5,614,914) $ --
Accounts Receivable 8,106,261 8,106,261
Prepaid Expense And Other 493,141 493,141
----------- -----------
Total Current Assets 19,314,316 8,599,402
Gross PP&E 36,095,596 $(133,000) 5,100,000 41,062,596
Accumulated Depreciation (7,824,623) 72,583 (7,752,240)
----------- -----------
Net PP&E 28,270,774 33,310,357
Other Assets 1,989,879 1,989,879
----------- -----------
Total Assets $49,574,969 $43,899,638
=========== ===========
Accounts Payable $ 1,445,170 $ 1,445,170
Accrued Liabilities 5,905,911 5,905,911
Current Portion Of Long-term Debt 2,857,143 2,857,143
----------- -----------
Total Current Liabilities 10,208,224 10,208,224
Long-term Debt 15,238,095 15,238,095
Deferred Income Taxes 5,451,359 5,451,359
Stockholders' Equity 18,677,291 $ (60,417) $(5,614,914) 13,001,960
----------- -----------
Total Liabilities and
Stockholder's Equity $49,574,969 $43,899,638
=========== ===========
-------------
(1) To be retained by sellers.
(2) 10 percent of total purchase price of $8.5 million per vessel.
72
EXHIBIT 6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is entered into
effective as of March ____, 1998, by and between Pool Company, a Texas
corporation (the "Company"), and XX X. XXXXXXXXX (the "Executive").
The Company desires to employ the Executive and the Executive desires
to accept employment with the Company, on the terms and conditions of this
Agreement.
Accordingly, the parties agree as follows:
1.0 Employment Duties and Acceptance.
1.1 Employment by the Company; Duties. The Company
hereby agrees to employ the Executive for a term commencing on March ____,
1998, and expiring at the end of the day on ________________, 2001 (such date,
or later date to which this Agreement is extended in accordance with the terms
hereof, the "Termination Date"), unless earlier terminated as provided in
Section 4 or unless extended as provided herein (the "Term"). Upon the written
agreement of the Executive and the Company, in each of their sole discretion,
the Term may be extended commencing on the Termination Date and likewise may be
further extended on each Termination Date thereafter (each such date being a
"Renewal Date"), so as to terminate one (1) year from such Renewal Date.
During the Term, the Executive shall be an employee of a limited partnership
which the Company is the general partner of and shall serve in the capacity of
Vice President and General Manager of SEA MAR, INC. ("Sea Mar"). The Executive
shall report to a senior operating officer of the Company who reports directly
to the Chief Executive Officer of the Company or, at the option of the Company,
the Executive shall report directly to the Chief Executive Officer of the
Company. During the Term, the Executive shall devote all reasonable efforts
and substantially all of his business time and services to the Company, subject
to the direction of the Board of Directors of the Company and the Board of
Directors of its ultimate parent (collectively, the "Board"). The duties of
the Executive shall include, without limitation, (i) the executive management
of Sea Mar, which shall be operated as a separate business unit; (ii) all
decisions on behalf of Sea Mar relative to Capital Expenditures, dry- docking
expenditures, selection of senior managers, management and key employee
compensation and bonuses for Sea Mar, contract negotiation and Sea Mar profit
and loss responsibility (all of which shall be in accordance with Sea Mar's
prior practices); and (iii) the Executive recruiting, hiring on behalf of Sea
Mar (with the prior approval of the Board) and training a competent,
experienced manager to succeed the Executive at the end of the Term. All of
the Executive's above-described
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responsibilities shall be performed in accordance with the general policies and
practices of the Company and shall be subject to the decisions of the Board.
Provided, however, that if any decisions of the Board directly and adversely
affect the rights of the Sellers under Section 2.4 of the Stock Purchase
Agreement dated as of February __, 1998 (the "Stock Purchase Agreement"),
appropriate adjustments shall be made in the amounts due under Section 2.4.
Any dispute as to the whether any of the Board's decisions adversely affects
such rights of the Sellers or as to the amount of any such adjustment shall be
resolved in accordance with Section 9.12 of the Stock Purchase Agreement. The
Executive shall not engage in any other business activities except for passive
investments in corporations or partnerships not engaged in the Company Business
(as hereinafter defined).
1.2 Acceptance of Employment by the Executive. The
Executive hereby accepts such employment and shall render the services and
perform the duties described above.
2.0 Compensation and Other Benefits.
2.1 Annual Salary and Supplemental Compensation. The
Company shall pay during the initial term hereof to the Executive an annual
salary at a rate of $150,000 per year (the "Annual Salary"), subject to
increase at the sole discretion of the Board. The Annual Salary shall be
payable in accordance with the payroll policies of the Company as from time to
time in effect, but in no event less frequently than once each month, less such
deductions as shall be required to be withheld by applicable law and
regulations. The Executive shall also receive supplemental compensation in the
amount of $150,000 annually (the "Supplemental Compensation") to be paid
annually on the date which is the sixth month anniversary of the signing of
this Agreement of each year during the Term.
2.2 Participation in Employee Benefit Plans. The Company
agrees to permit the Executive during the Term, if and to the extent eligible,
to participate in any group life, hospitalization or disability insurance plan,
health program, pension plan, vacation or similar benefit plans or other
so-called "fringe benefits" provided by the Company (collectively, "Benefits")
which may be available to other senior executives of the Company on terms no
less favorable to the Executive than the terms offered to such other
executives. The Company agrees to use its reasonable efforts to obtain
coverage for the Executive upon the commencement of the Term under any such
existing or newly adopted medical expense and hospitalization plan for
employees without premium surcharge and without exclusions for disclosed
preexisting conditions. The Executive shall cooperate with the Company in
applying for such coverage, including providing all relevant health and
personal data.
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2.3 General Business Expenses. The Company shall pay or
reimburse the Executive in accordance with the Company's general policies and
procedures for expenses reasonably and necessarily incurred by the Executive
during the Term in the performance of the Executive's services under this
Agreement. Such payment shall be made upon presentation of such documentation
as the Company customarily requires of its senior executive employees prior to
making such payments or reimbursements.
3.0 Non-Competition, Confidentiality and Company Property.
3.1 Covenants Against Competition. The Executive
acknowledges that (i) Sea Mar is currently engaged in the business of owning,
managing and operating offshore support vessels and hiring and managing crews
to operate such vessels (the "Business"); (ii) this Agreement is being entered
into in connection with, and as a material inducement for, Sea Mar's
acquisition by the Company and that the Company has a substantial interest in
protecting the goodwill and other business interests of the Company and Sea
Mar, and the assets, business and goodwill of the Company and Sea Mar would be
substantially harmed if the Executive competes with the Business; (iii) his
work for the Company will give him access to trade secrets of and confidential
information concerning Sea Mar; and (iv) the agreements and covenants contained
in this Agreement are essential to protect the business and goodwill of the
Company and Sea Mar. Accordingly, the Executive covenants and agrees as
follows:
3.1.1 Non-Compete. As an independent covenant, and
in order to enforce the provisions of Sections 3.1.3 and 3.1.5 hereof and the
other provisions of this Agreement, the Executive agrees that he shall not
during the Restricted Period (as hereinafter defined) in the Caribbean,
offshore the east coast of Canada or within any (or offshore) the States of
Texas, Louisiana, Mississippi, California, Florida or Alabama in which Sea Mar
has conducted business within the five (5) years prior to the effective date of
this Agreement, or with any person that was a customer of the Company within
such five-year period, directly or indirectly (except in the Executive's
capacity as an officer of the Company), (i) engage or participate in the
Business; (ii) enter the employ of, or render any other services to, any person
engaged in the Business except as permitted hereunder; or (iii) acquire an
interest in any such person in any capacity, including, without limitation, as
an individual, partner, shareholder, lender, officer, director, principal,
agent or trustee. As used herein, the "Restricted Period" shall mean a period
commencing on the effective date hereof and terminating two (2) years following
the end of the Term.
3.1.2 Customers. As an independent covenant, the
Executive also agrees to refrain during the Term of this
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75
Agreement and for two (2) years after the termination of this Agreement,
without the prior written permission of the Company, from diverting, taking,
soliciting and/or accepting on his own behalf or on behalf of another person,
firm, or company, the business of any past or present customer of Sea Mar., its
divisions, subsidiaries and/or other affiliated entities, or any identified
prospective or potential customer of Sea Mar, its divisions, subsidiaries
and/or affiliated entities, whose identity became known to the Executive
through his employment by the Company.
3.1.3 Confidential Information.
3.1.3.1 The Executive acknowledges that the
Company has a legitimate and continuing proprietary interest in the protection
of its confidential information and that it has invested substantial sums and
will continue to invest substantial sums to develop, maintain and protect
confidential information. The Company agrees to provide the Executive access
to confidential information ("Confidential Information") in conjunction with
the Executive's duties, including, without limitation, information of a
technical and business nature regarding the Company's and Sea Mar's past,
current or anticipated business that may encompass financial information,
financial figures, trade secrets, customer lists, details of client or
consultant contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition
plans, Company and Sea Mar employee information, organization charts, new
personnel acquisition plans, technical processes, designs and design projects,
inventions and research projects, ideas, discoveries, inventions, improvements,
trade secrets, design specifications, writings, other works of authorship and
other confidential information. In exchange, as an independent covenant, the
Executive agrees not to make any unauthorized use, publication, or disclosure,
during or for a two (2) year period subsequent to his employment by the
Company, of any Confidential Information generated or acquired by him during
the course of his employment, except to the extent that the disclosure of
Confidential Information is necessary to fulfill his responsibilities as an
employee of the Company. The Executive understands that confidential matters,
trade secrets and other Confidential Information includes information not
generally known by or available to the public about or belonging to the
Company, its owners, divisions, subsidiaries, and related affiliates, or
belonging to other companies to whom the Company, its owners, divisions,
subsidiaries, and related affiliates, may have an obligation to maintain
information in confidence, and that authorization for public disclosure may
only be obtained through the Company's written consent.
3.1.3.2 The Executive agrees that the
covenant
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set forth in Section 3.1 is an independent covenant and indefinite obligation
binding upon the Executive both during the term of and for a two (2) year
period after the termination of the Executive's employment with the Company.
3.1.4 Property of the Company. All memoranda,
notes, lists, records, engineering drawings, technical specifications and
related documents and other documents or papers (and all copies thereof)
relating to the Company, its affiliates or any entity which may become an
affiliate thereof, including such items stored in computer memories, microfiche
or by any other means, made or compiled by or on behalf of the Executive while
employed by the Company, or made available to the Executive while employed by
the Company relating to the Company, its affiliates or any entity which may
hereafter become an affiliate thereof, shall be the property of the Company,
and shall be delivered to the Company promptly upon the termination of the
Executive's employment with the Company or at any other time upon request.
3.1.5 Material. The executive agrees that
any inventions, discoveries, improvements, ideas, concepts or original works of
authorship relating to the business of the Company or Sea Mar, including
without limitation information of a technical or business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how,
manufacturing processes, product formulae, design specifications, writings and
other works of authorship, computer programs, financial figures, marketing
plans, customer lists and data, business plans or methods and the like, which
relate in any manner to the actual or anticipated business or the actual or
anticipated areas of research and development of the Company and its divisions,
subsidiaries, affiliates, or related entities, whether or not protectable by
patent or copyright, that have been originated, developed or reduced to
practice by the Executive alone or jointly with others during the Executive's
employment with the Company shall be the property or and belong exclusively to
the Company. The Executive shall promptly and fully disclose to the Company
the origination or development by the Executive of any such material and shall
provide the Company with any information that it may reasonably request about
such material. Either during or subsequent to the Executive's employment, upon
the request and at the expense of the Company or its nominee, and for no
remuneration in addition to that due the Executive pursuant to his employment
by the Company, but at no expense to him, the Executive agrees to execute,
acknowledge, and deliver to the Company or its attorneys any and all
instruments which, in the judgment of the Company or its attorneys, may be
necessary or desirable to secure or maintain for the benefit of the Company
adequate patent, copyright, and other property rights in the United States and
foreign countries with respect to any such inventions, improvements, ideas,
concepts, or original works of authorship embraced within this Agreement.
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3.1.6 Employees of the Company and its Affiliates.
As an independent covenant, the Executive agrees to refrain during and for a
two (2) year period after his employment by the Company, from inducing or
attempting to influence any employee of the Company, its divisions,
subsidiaries and/or affiliated entities to terminate his employment, other than
in instances where the Executive deems it in the best interest of Sea Mar.
3.1.7 Company's Interest. The Executive further
agrees that these covenants are made to induce the Company to acquire Sea Mar
from the Executive contemporaneously with the execution of this agreement, and
to protect the legitimate business interests of the Company and Sea Mar
including interests in the Company's and Sea Mar's property described in and
pursuant to Section 3.1.4 and Section 3.1.5, and not to restrict his mobility
or to prevent him from utilizing his general technical skills. The Executive
understands as a part of these covenants that the Company intends to exercise
whatever legal recourse against him for any breach of this Agreement and, in
particular, for any breach of these covenants.
3.2 Rights and Remedies Upon Breach. If the Executive
breaches, or threatens to commit a breach of, any of the provisions contained
in Section 3.1 of this Agreement (the "Restrictive Covenants"), the Company
shall have the rights and remedies available under applicable law, each of
which rights and remedies shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity:
3.2.1 Specific Performance. The right and remedy
to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable damage to the Company and
that money damages would not provide an adequate remedy to the Company.
3.2.2 Accounting. The right and remedy to require
the Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or received by
the Executive as the result of any action constituting a breach of the
Restrictive Covenants.
3.3 Severability of Covenants. The Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in duration and geographical scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
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thereby be affected and shall be given full effect without regard to the
invalid portions.
3.4 Court Review. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of, or scope of activities restrained by, such
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and in its reduced form, such provision
shall then be enforceable.
3.5 Enforceability in Jurisdictions. The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
such Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope of otherwise, it is the intention of the Company that
such determination not bar or in any way affect the right of the Company to the
relief provided above in the courts or any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, or this purpose, severable
into diverse and independent covenants.
4.0 Termination.
4.1 Termination Upon Death. If the Executive dies during
the Term, this Agreement shall terminate; provided, however, that in any such
event, the Company shall pay to the Executive's estate any portion of the
Annual Salary and Acceptance Bonus that shall have been earned by the Executive
prior to the termination but not yet paid, and any Benefits that have vested in
the Executive at the time of such termination as a result of his participation
in any of the Company's benefit plans shall be paid to the Executive, or to his
estate or designated beneficiary, in accordance with the provisions of such
plan; and the Company shall reimburse the Executive, or his estate, for any
expenses with respect to which the Executive is entitled to reimbursement
pursuant to Section 2.6 of this Agreement.
4.2 Termination With Cause. The Company has the right,
at any time during the Term, subject to all of the provisions hereof,
exercisable by serving notice, effective on or after the date of service of
such notice as specified therein, to terminate the Executive's employment under
this Agreement and discharge the Executive with Cause. If such right is
exercised, the Company's obligation to the Executive shall be limited solely to
the payment of unpaid Annual Salary accrued and any earned but unpaid
Acceptance Bonus and Benefits vested up to the effective date
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specified in the Company's notice of termination. As used in this Agreement,
the term "Cause" shall mean and include (i) chronic alcoholism or controlled
substance abuse as determined by a doctor mutually acceptable to the Company
and the Executive; (ii) an act of proven fraud, dishonesty, or violation of
applicable law or regulation on the part of the Executive with respect to the
Company or its subsidiaries; (iii) conviction of a crime involving moral
turpitude or a felony or (iv) the continuing failure by the Executive to
satisfactorily perform his duties as provided in this Agreement or a material
breach of this Agreement by the Executive after thirty (30) days written notice
and opportunity to cure such failure or breach, has been given by the Company
to the Executive and the Executive has failed to cure same. Prior to the
effectiveness of termination for Cause under subclause (i) or(ii) above, the
Executive shall be given 30 days' prior notice from the Board specifically
identifying the reasons which are alleged to constitute Cause or any
termination hereunder and an opportunity to be heard by the Board in the event
the Executive disputes such allegations. During such 30 day period, the
Company may relieve the Executive of his duties; provided, however, that the
Company shall remain obligated to pay the Executive his compensation during
such 30 day period.
4.3 Termination Without Cause. The Company has the
right, at any time during the Term, subject to all of the provisions hereof,
exercisable by serving notice, effective on or after the date of service of
such notice as specified therein, to terminate the Executive's employment under
this Agreement and discharge the Executive without Cause. If the Executive is
terminated during the Term without Cause, the Company's obligation to the
Executive shall be limited solely to the payment, at the time and upon the
terms provided for herein, of the Executive's Annual Salary and Supplemental
Compensation for the number of full months remaining in the Term of this
Agreement had the Executive not been so terminated and the provision to
Executive of all Benefits enjoyed by Executive at the time of such termination
or which would have been afforded Executive during the remaining Term. Any
amounts due to the Executive pursuant to this Section 4.3 shall be due and
payable as and when they would have become due and payable over the remaining
Term of this Agreement and thereafter had the Executive not been so terminated.
4.4 Termination by the Executive. Any termination of
this Agreement by the Executive during the Term hereof shall be evaluated based
upon whether the termination is one deemed for "good reason" or "voluntary
termination."
(a) A termination for good reason shall be deemed to
occur if the Executive terminates his employment for any of the reasons listed
below. In the event the Executive should terminate for good reason his
employment under this Agreement, then the
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Executive shall be entitled to receive, and the Company shall be obligated to
pay, the Executive all Salary, Supplemental Compensation and Benefits which
would have been received by the Executive had the termination been without
cause pursuant to Section 4.3 hereof. The following reasons shall be deemed
good reasons for termination by the Executive of this Agreement:
(1) Should there be a change in control of the Company,
which change in control shall be deemed to have occurred if any person,
including a group as determined in accordance with Section 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial owner, directly or
indirectly, of the common stock of Pool Energy Services Co.
(2) Except with the Executive's express written consent;
(1) a material change in the Executive's duties as described in Section 1.1
above, or (ii) any failure to reelect or reappoint the Executive to the
positions described in Section 1.1 above. However, for purposes of this
paragraph (2), subject to Executive's rights under Section 1.1 above, any
action (or inaction) on the part of the Board or of the senior executive to
whom the Executive reports that is inconsistent with any matter or matters
proposed by the Executive shall not be deemed in any way to constitute a
material change in the Executive's duties.
(3) A reduction in the Annual Salary or Supplemental
Compensation as described in Section 2.1 above.
(4) The failure of the Company substantially to maintain
and to continue the Executive's relative level of participation in the Benefits
except as to general changes in the Benefits applicable to all senior executive
of the Company.
(5) The Company's requiring the Executive to be based
anywhere other than in or within fifty (50) miles of the Sea Mar offices in
Houston, Texas.
Provided however that, in the case of paragraphs (2),(3),(4),
or (5) above, the Company fails, within a period of fifteen (15) days after the
receipt of written notice from the Executive setting out the basis for such
termination, to remedy the situation complained of.
(b) Voluntary Termination by the Executive. In the event
of any voluntary termination of this Agreement by the Executive, other than as
stated above, in Section 4.4(a), during the term hereof, such voluntary
termination shall be deemed to be a breach of the terms of this Agreement. In
the event of such voluntary termination, the Executive shall be entitled only
to receive payment of all Annual Salary, Supplemental Compensation,
9
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and Benefits earned and payable as of the date of such voluntary termination.
4.5 Termination upon Disability. If during the Term the
Executive becomes physically or mentally disabled, whether totally or
partially, as evidenced by the written statement of a competent physician
licensed to practice medicine in the United States who is mutually acceptable
to the Company and the Executive or his closest relative if he is not then able
to make such a choice, so that the Executive is unable substantially to perform
his services hereunder for (i) a period of two consecutive months, or (ii) for
shorter periods aggregating three months during any twelve-month period, the
Company may at any time after the last day of the two consecutive months of
disability or the day on which the shorter periods of disability equal an
aggregate of three months, by written notice to the Executive, terminate the
Executive's employment hereunder and discontinue payments of the Annual Salary,
Supplemental Compensation and Benefits accruing from and after the date of such
termination. The Executive shall be entitled to the full compensation payable
to him hereunder for periods of disability shorter than the periods specified
in clauses (i) and (ii) of the previous sentence.
5.0 Stock Purchase Agreement Additional Consideration. (a) The
parties acknowledge that pursuant to the Stock Purchase Agreement, the Company
has acquired all of the issued and outstanding capital stock of Sea Mar from
the Sellers. Section 2.4 of the Stock Purchase Agreement provides for the
payment by the Buyer of additional consideration to the Sellers in the event
certain conditions described in Section 2.4 are satisfied. The parties to this
Agreement acknowledge and agree that all additional consideration described in
Section 2.4 of the Stock Purchase Agreement shall be considered earned and
payable, less amounts previously paid or, if such termination takes place after
October 31, 1998, not earned by reason of the application of Section 2.4,
irrespective of whether actually earned and payable, in the event this
Agreement should be terminated pursuant to Section 4.3 or 4.4(a) above. Such
payment shall be made to the Sellers, within thirty (30) days of termination of
this Agreement pursuant to either of the above provisions.
(b) In the event that termination of this Agreement should occur
pursuant to Section 4.1, 4.2, Section 4.4(b), or 4.5 above, payment of the
additional consideration described in Section 2.4 of the Stock Purchase
Agreement shall be paid only if such additional consideration is earned as
described in Section 2.4, in which event such payment shall be made in
accordance with the provisions of Section 2.4 to Sellers or to Sellers'
successors.
6.0 Insurance. The Company may, from time to time, apply for and
take out, in its own name and at its own expense, naming itself
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or one or more of its affiliates as the designated beneficiary (which it may
change from time to time), policies for life, health, accident, disability or
other insurance upon the Executive in any amount or amounts that it may deem
necessary or appropriate to protect its interest. The Executive agrees to aid
the Company in procuring such insurance by submitting to medical examinations
and by filling out, executing and delivering such applications and other
instruments in writing as may reasonably be required by an insurance company or
companies to which any application or applications for insurance may be made by
or for the Company.
6.0 Other Provisions.
6.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
(i) "affiliate" with respect to the Company means
any other person controlling, controlled by or under common
control with the Company but shall not include any director of
the Company, as such.
(ii) "person" means any individual, corporation,
limited liability company, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated
organization, governmental or regulatory body or other entity.
(iii) "subsidiary" means any corporation or other
person 50% or more of the voting securities of which are owned
directly or indirectly by the Company.
(iv) any capitalized terms used in this Agreement
and not defined herein shall have the meanings given to them
in the Stock Purchase Agreement.
6.2 Notices. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered, or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, on the date of actual receipt thereof, as follows:
(i) if to the Company, to:
c/o Pool Company
Enserch Tower
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx Arms
General Counsel
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with a copy to:
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
(ii) if to the Executive, to:
Xx X. Xxxxxxxxx
-----------------------
-----------------------
Any party may change its address for notice hereunder by notice to the other
party hereto.
6.3 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
6.4 Waivers and Amendments. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof. Nor shall any waiver on the part of any
party of any such right, power or privilege hereunder, nor any single or
partial exercise of any other right, power or privilege hereunder.
6.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (without giving
effect to the choice of law provisions thereof) where the employment of the
Executive shall be deemed, in part, to be performed and enforcement of this
Agreement or any action taken or held with respect to this Agreement shall be
taken in the courts of appropriate jurisdiction in Houston, Texas.
6.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by the Executive and may be assigned
by the Company only to an affiliate of the Company or a successor by merger or
purchasers of the stock or substantially all of the assets of the Company.
6.7 Counterparts. This Agreement may be executed in
separate counterparts, each of which when so executed and delivered
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shall be deemed an original, but all of which together shall constitute one and
the same instrument.
6.8 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this agreement.
6.9 No Presumption Against Interest. This Agreement has
been negotiated, drafted, edited and reviewed by the respective parties, and
thereof, no provision arising directly or indirectly herefrom shall be
construed against any party as being drafted by said party.
6.10 Validity Contest. The Company shall promptly pay any
and all legal fees and expenses incurred by the Executive from time to time as
a direct result of the Company's contesting the due execution, authorization,
validity or enforceability of this Agreement.
6.11 Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon the Company and its respective successors and
assigns and the Executive and his legal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
POOL COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
EXECUTIVE
By:
-----------------------------
Xx X. Xxxxxxxxx
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EXHIBIT 7 TO
STOCK PURCHASE AGREEMENT
[LETTERHEAD OF XXXXXX, KING & XXXXXXX, X.X.X.]
_________________, 1998
Pool Company
ENSERCH Tower
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Gentlemen:
We have acted as special counsel to Sea Mar, Inc., a Louisiana
corporation (the "Company") and the persons (the "Sellers") named in Schedule
3.1(b) to the Stock Purchase Agreement by and among Pool Company, a Texas
corporation (the "Buyer"), Pool Energy Services, Co., a Texas corporation
("Pool"), the Company, and the Sellers dated as of February 10, 1998 (the
"Agreement"). This opinion is being delivered at the request of the Company
and the Sellers pursuant to Section 5.2(g) of the Agreement. We advise you
that while we represent the Company and the Sellers in connection with a number
of matters, there are many matters about which we have not been consulted and
concerning which we have no knowledge. Capitalized terms defined in the
Agreement and used but not otherwise defined herein are used herein as so
defined. For purposes of this opinion, we have examined the Agreement, the
Promissory Note, the Escrow Agreement, and the Voting Agreement (the
"Transaction Documents").
In connection with rendering the opinions set forth herein, we have
examined originals or copies of such corporate records of the Company, public
records, agreements and other instruments of the Company, certificates of
public officials, certificates of officers and representatives of the Company
and such other documents as we have deemed relevant in connection with
rendering the opinions set forth herein. As a basis for the opinions
hereinafter expressed and as to various questions of fact material to such
opinions, we have relied upon certificates of officers of the Company, upon
certificates or other assurances from public officials and upon the
representations and warranties of the Company and the Sellers
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________________, 1998
Page 2
contained in the Agreement, without investigating or verifying their accuracy.
On the basis of and in reliance upon the foregoing, and subject to the
exceptions, qualifications and limitations contained herein, and in the Stock
Purchase Agreement, including the Schedules and attachments thereto, we are of
the opinion that:
1. The Company and each Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of
its incorporation. The Company and each Subsidiary has all necessary
corporate power and authority to own and lease the assets it currently
owns and leases and to carry on its business as such business is
currently conducted.
2. 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 jurisdiction 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.
3. The Company and the Sellers have all necessary power and authority to
execute, deliver and carry out the terms and provisions of each of the
Transaction Documents to which they are a party.
4. The Company and the Sellers have taken or caused to be taken all
necessary action to authorize the execution, delivery and performance
of each of the Transaction Documents to which they are a party. The
Company and the Sellers have duly executed and delivered the
respective Transaction Documents to which they are a party, and such
Transaction Documents constitute the legal, valid and binding
obligations of the Company and the Sellers, enforceable against them
in accordance with their terms.
5. The execution and delivery by the Company and the Sellers of the
respective Transaction Documents to which they are a party, and the
performance by them of the agreements contained therein, will not (i)
violate the Company's Certificate of Incorporation or Bylaws, (ii)
violate applicable provisions of statutory law or regulation
applicable to the Company and the Sellers, (iii) result in any
violation or breach of, or
87
________________, 1998
Page 3
constitute a default under, any of its obligations under any note,
bond, mortgage, loan agreement, inventory, lease, contract, or any
other agreement to which any of them is a party or by which any of
them is bound or to which any of their respective assets are subject,
except as to consents required in connection with the sale of the
Company Common Stock contemplated by the Agreement, all of which
consents have been obtained or requested, (iv) violate any order,
writ, injunction or decree of any public body applicable to any of
them.
6. To our knowledge, except for such filings as are described in the
Transaction Documents or as have already been made, no consent,
approval, waiver, order, authorization of, or registration,
declaration of filing with, any Governmental Entity is required to be
obtained or made in connection with the delivery of the Transaction
Documents by the Company and the Sellers or the consummation by the
Company and the Sellers of the transactions contemplated thereby
except where the failure to make any such filing or obtain such
consent, authorization or approval would not have a material adverse
effect on the Company, its assets or on its business.
7. The Company's authorized capital consists of (i)100 shares of Class A
Common Stock, no par value, of which 100 shares are issued and
outstanding, (ii) 60 shares of Class B Common Stock, no par value of
which 0 shares are issued and outstanding and (iii) 100 shares of
Class C Common Stock, no par value, of which 0 shares are issued and
outstanding. The record and beneficial ownership of the Company's
shares is as set forth on Schedule 3.1(b) to the Agreement. All of
the issued and outstanding shares of the Company have been duly
authorized and validly issued, are fully paid and nonassessable, have
not been issued in violation of any preemptive or similar rights. 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) to the
Agreement, there are 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 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 their capital stock or other voting securities or any
securities of the Company or any Subsidiary convertible into
88
________________, 1998
Page 4
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 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 the record and beneficial owner of, and upon consummation of
the transactions contemplated by the Agreement, the 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) to
the Agreement, free and clear of all Encumbrances, other than (i)
those that may arise by virtue of any actions taken by or on behalf of
the Buyer or its affiliates or (ii) restrictions on transfer that may
be imposed by federal or state securities laws.
8. To the best of our knowledge, after due inquiry, there is no
litigation, proceeding, claim or governmental investigation pending
or, threatened seeking relief or damages which, if granted, would
materially adversely affect the Company, any Subsidiary, any of their
respective assets, or the ability of the 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 threatened with a charge or violation
of, nor are there 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 materially adversely affect the Business or the
results of operations of the Company or its Subsidiaries or that might
reasonably be expected to materially affect the right of the 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.
9. Except as described in Schedule 3.1(c) to the Agreement, the
execution, delivery and performance of the Agreement by the Sellers
and the Company and the consummation by them of the transactions
contemplated by the Agreement (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
Applicable Law and (ii) will not result in the creation of any
Encumbrance on the
89
________________, 1998
Page 5
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 documents of incorporation or by-laws of
the Company or any Subsidiary. The Stock is transferable and
assignable to the Buyer as contemplated by the 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.
10. Except as set out in Schedule 3.1(w) to the Agreement, to the best of
our knowledge, each of the Vessels is owned by the Company free and
clear of all liens, charges and rights of others and is duly
documented under the laws and flag of the U.S. entitling the Vessels
to operate in the U.S. coastwise trade and on a worldwide basis in
support of the offshore petroleum industry.
The opinions expressed herein are subject to the following
assumptions, exceptions, limitations and qualifications:
1. We have assumed the legal capacity of natural persons, the genuineness
of signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as copies and the authenticity of the originals of
such copied documents.
2. We have also assumed (i) that the Buyer and Pool have the power,
authority and legal right and capacity to enter into and perform the
Transaction Documents and the other agreements contemplated by the
Transaction Documents that are required on their part to be performed,
and that Pool and Company are Texas corporations, (ii) the due
authorization, execution and delivery by the Buyer and Pool of the
Transaction Documents to which they are parties, (iii) that the
Transaction Documents are the valid and binding obligations of, and
enforceable against the Buyer and Pool, (iv) neither the Buyer nor
Pool is involved in any court, administrative or other proceeding or
subject to any order, writ, injunction or decree which would prohibit
the execution, delivery or performance of the Transaction Documents by
such parties, and (v) that there is
90
________________, 1998
Page 6
no requirement of consent, approval or authorization by any person or
governmental authority with respect to the Buyer or Pool other than as
has been duly obtained.
3. To the extent any of the opinions expressed herein relate to the
existence or absence of facts and/or involve materiality or legal
conclusions based upon the existence or absence of facts and/or
materiality, we have relied solely upon the judgment of one or more
officers of the Company with respect to all factual issues necessary
to determine the existence or absence of facts and what is material or
what would constitute a material adverse effect under the
circumstances.
4. The enforceability of any Transaction Document to which the Company or
the Sellers is a party may be limited by (i) bankruptcy, insolvency,
moratorium and similar laws from time to time in effect and affecting
creditors' rights or the collection of obligations generally,
including, without limitation, laws generally defining and restricting
fraudulent conveyances, (ii) principles of equity, and (iii)
requirements of commercial reasonableness, good faith, and fair
dealing. Rights to indemnification or contribution under the
Transaction Documents may be limited by federal or state securities
laws and policies related thereto.
5. The opinions expressed herein are specifically limited to the laws of
the State of Texas and the State of Louisiana and the laws of the
United States of America applicable to transactions in the State of
Louisiana, and we assume no responsibility as to the applicability or
the effect of the laws of any other jurisdiction. No opinion is
expressed herein with respect to any laws or regulations of any
county, city or other political subdivision of the State of Texas or
the State of Louisiana.
6. As used in this opinion letter, expressions (in any form) regarding
our knowledge refer to what is in the actual current consciousness of
____________ and _____________, the attorneys at this Firm who have
worked on the transactions contemplated by the Agreement.
7. This opinion letter is limited to the matters expressly stated herein,
and no opinion other than upon the matters so expressly stated is
implied or may be inferred. Without limiting the generality of the
preceding sentence, we express no opinion as to the applicability or
the effect of securities laws or antitrust laws.
91
________________, 1998
Page 7
8. This opinion letter is delivered to you at the instruction of the
Company and the Sellers in connection with the Agreement and is not to
be used for any purpose other than in consummating the transactions
described in the Agreement. This opinion letter may not be relied
upon, circulated, quoted, in whole or in part, or otherwise referred
to in any report or document or furnished to any other person or
entity.
9. This opinion letter is as of the date hereof, and we undertake no, and
hereby disclaim any, obligation to advise you of any changes or
developments hereafter which might affect anything contained herein.
This letter is not to be construed as a guaranty, nor is it a warranty
that a court considering such matters would not rule in a manner
contrary to the opinions set forth herein.
10. In giving the opinions in paragraphs 5 and 9 above, we have based our
conclusions on our review of the Company's Facility Agreement dated as
of December 29, 1996, as amended, with First National Bank of
Commerce, its ten (10) largest commercial agreements and a certificate
of an officer of the Company.
Very truly yours,
XXXXXX, KING & XXXXXXX, L.L.P.
By:
-------------------------------------
92
EXHIBIT 8 TO
STOCK PURCHASE AGREEMENT
[LETTERHEAD OF GARDERE XXXXX XXXXXX & XXXXX, L.L.P.]
_______________, 1998
Parties listed on Schedule A attached hereto.
Gentlemen:
We have acted as counsel to Pool Company, a Texas corporation
("Buyer") and Pool Energy Services, Co., a Texas corporation ("Pool") in
connection with the Stock Purchase Agreement by and among the Buyer, Pool, Sea
Mar, Inc., a Louisiana corporation (the "Company"), and the Sellers dated as of
January ___, 1998 (the "Agreement"). This opinion is being delivered at the
request of the Buyer and Pool pursuant to Section 5.3(d) of the Agreement. We
advise you that while we represent the Buyer and Pool in connection with a
number of matters, there are many matters about which we have not been
consulted and concerning which we have no knowledge. Capitalized terms defined
in the Agreement and used but not otherwise defined herein are used herein as
so defined. For purposes of this opinion, we have examined the Agreement, the
Registration Agreement, the Voting Agreement and the Escrow Agreement (the
"Transaction Documents").
In connection with rendering the opinions set forth herein, we have
examined originals or copies of such corporate records of the Buyer and Pool,
certificates of public records, agreements and other instruments of the Buyer
and Pool, certificates of public officials, certificates of officers and
representatives of the Buyer and Pool and such other documents as we have
deemed relevant in connection with rendering the opinions set forth herein. As
a basis for the opinions hereinafter expressed and as to various questions of
fact material to such opinions, we have relied upon certificates of officers of
the Buyer and Pool, upon certificates or other assurances from public officials
and upon the representations and warranties of the Buyer and Pool contained in
the Agreement, without investigating or verifying their accuracy.
93
______________, 1998
Page 2
On the basis of and in reliance upon the foregoing, and subject to the
exceptions, qualifications and limitations contained herein, we are of the
opinion that:
1. Each of the Buyer and Pool is a corporation validly existing and in
good standing under the laws of the State of Texas.
2. Each of the Buyer and Pool have the requisite corporate power and
authority to execute, deliver and carry out the terms and provisions
of each of the Transaction Documents to which it is a party.
3. Each of the Buyer and Pool have taken or caused to be taken all
necessary corporate action to authorize the execution, delivery and
performance of each of the Transaction Documents to which it is a
party. The Transaction Documents constitute the legal, valid and
binding obligations of the Buyer and Pool, enforceable against them in
accordance with their terms.
4. The execution and delivery by each of the Buyer and Pool of the
Transaction Documents to which it is a party, and the performance by
each of them of the agreements contained therein, will not (i) violate
their respective Articles of Incorporation or Bylaws, or (ii) violate
applicable provisions of statutory law or regulation applicable to
each of them.
5. To our knowledge, except for such filings as are described in the
Transaction Documents or as have already been made, no consent,
approval, waiver, order, authorization of, or registration,
declaration of filing with, any Governmental Entity is required to be
obtained or made in connection with the delivery of the Transaction
Documents by the Buyer and Pool or the consummation by the Buyer and
Pool of the transactions contemplated thereby, except where the
failure to make any such filing or obtain such consent, authorization
or approval would not have a material adverse effect on the Buyer or
Pool.
6. The shares of Pool Stock, when issued in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable.
94
______________, 1998
Page 3
The opinions expressed herein are subject to the following
assumptions, exceptions, limitations and qualifications:
1. We have assumed the legal capacity of natural persons, the genuineness
of signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as copies and the authenticity of the originals of
such copied documents.
2. We have also assumed (i) that the Company and the Sellers have the
power, authority and legal right and capacity to enter into and
perform the Transaction Documents and the other agreements
contemplated by the Transaction Documents that are required on their
part to be performed, (ii) the due authorization, execution and
delivery by the Company and the Sellers of the Transaction Documents,
(iii) that the Transaction Documents are the valid and binding
obligations of, and enforceable against the Company and the Sellers,
(v) the Company and the Sellers are not involved in any court,
administrative or other proceeding or subject to any order, writ,
injunction or decree which would prohibit the execution, delivery or
performance of the Transaction Documents by such parties, and (vii)
that there is no requirement of consent, approval or authorization by
any person or governmental authority with respect to the Company and
the Sellers other than as has been duly obtained.
3. To the extent any of the opinions expressed herein relate to or
involve materiality, we have relied solely upon the judgment of one or
more officers of the Buyer and Pool with respect to all factual issues
necessary to determine what is material or what would constitute a
material adverse effect under the circumstances.
4. The enforceability of the Transaction Documents to which each of the
Buyer and Pool is a party may be limited by (i) bankruptcy,
insolvency, moratorium and similar laws from time to time in effect
and affecting creditors' rights or the collection of obligations
generally, including, without limitation, laws generally defining and
restricting fraudulent conveyances, (ii) principles of equity, and
(iii) requirements of commercial reasonableness, good faith, and fair
dealing. Rights to indemnification or contribution under the
Transaction Documents may be limited by federal or state securities
laws and policies related thereto.
95
______________, 1998
Page 4
5. The opinions expressed herein are specifically limited to the laws of
the State of Texas and the laws of the United States of America
applicable to transactions in the State of Texas, and we assume no
responsibility as to the applicability or the effect of the laws of
any other jurisdiction. No opinion is expressed herein with respect
to any laws or regulations of any county, city or other political
subdivision of the State of Texas.
6. As used in this opinion letter, expressions (in any form) regarding
our knowledge refer to what is in the actual current consciousness of
Xxxxx X. Xxxxxx.
7. This opinion letter is limited to the matters expressly stated herein,
and no opinion other than upon the matters so expressly stated is
implied or may be inferred. Without limiting the generality of the
preceding sentence, we express no opinion as to the applicability or
the effect of securities laws or antitrust laws.
8. This opinion letter is delivered to you at the instruction of the
Buyer and Pool in connection with the Agreement and is not to be used
for any purpose other than in consummating the transactions described
in the Agreement. This opinion letter may not be relied upon,
circulated, quoted, in whole or in part, or otherwise referred to in
any report or document or furnished to any other person without our
prior written consent.
This opinion letter is as of the date hereof, and we undertake no, and
hereby disclaim any, obligation to advise you of any changes or developments
hereafter which might affect anything contained herein.
Very truly yours,
GARDERE XXXXX XXXXXX & XXXXX, L.L.P.
By:
-------------------------------------
Xxxxx X. Xxxxxx
Partner
96
EXHIBIT 9 TO
STOCK PURCHASE AGREEMENT
CONSTRUCTION CONTRACT ASSIGNMENT
CONSTRUCTION CONTRACT ASSIGNMENT dated as of March ___, 1998 between
Sea Mar Equipment, Inc. a Louisiana corporation (herein referred to as the
"Assignor") and Sea Mar, Inc., a Louisiana corporation (herein referred to as
the "Assignee").
WHEREAS, the Assignor has entered into a Vessel Construction Contract
with Halter Marine, Inc., a Nevada corporation (herein referred to as the
"Builder") dated August 1, 1997 (said Vessel Construction Contract as amended
and modified to the date hereof being herein called the "Construction
Contract"), providing for the construction of two offshore supply vessels; and
WHEREAS pursuant to the Construction Contract, the Assignor was also
entitled to exercise an option to have the Builder construct eight additional
vessels with specified price parameters; and
WHEREAS by letter dated October 14, 1997, duly acknowledged by the
Builder, the Assignor exercised its option for eight additional vessels to be
constructed under the Construction Contract (the original two offshore supply
vessels and the eight option offshore supply vessels herein referred to as the
"Vessels"); and
WHEREAS under the terms of the Construction Contract, Xx Xxxxxxxxx
personally guaranteed performance of the Assignor's obligations under the
Construction Contract and executed a written guaranty agreement dated August 1,
1997 (the "Guaranty"); and
WHEREAS Article XVIII of the Construction Contract provides that the
Construction Contract may be assigned by the Assignor, provided that the
Assignor guarantees the performance of the obligations of the Assignee to the
Builder; and
WHEREAS, the Assignee wishes to acquire the Vessels and the Assignor
is willing to assign to the Assignee, on the terms and conditions hereinafter
set forth, all of the Assignor's right, title and interest in and to the
Construction Contract and the Assignee is willing to accept such assignment, as
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Assignor and the Assignee agree as follows:
97
1. The Assignor does hereby sell, assign, absolutely and not by way of
security, transfer and set over unto the Assignee all right, title and
interest of the Assignor in and to the Construction Contract
including, without limitation, (a) the right upon valid tender by the
Builder to purchase each of the Vessels pursuant to the Construction
Contract, and the right to take title to the Vessels pursuant to the
Construction Contract, (b) all claims for damages arising as a result
of any failure by the Builder to perform or observe any of the terms
of the Construction Contract, and all rights, benefits and claims
under all warranty and indemnity provisions contained therein, and (c)
any and all rights of the Assignor to compel performance of the
Construction Contract, to the same extent as if the Assignee were the
"Purchaser" named in the Construction Contract. The Assignee hereby
accepts such assignment.
2. The Assignor does hereby constitute the Assignee, its successors and
assigns, the Assignor's true and lawful attorney, irrevocably, with
full power (in the name of the Assignor or otherwise) to ask, require,
demand, receive, compound and give acquittance for any and all monies
and claims for monies due and to become due under or arising out of
the Construction Contract to the extent that the same have been
assigned by this Agreement and, for such period as the Assignee may
exercise rights with respect thereto under this Agreement, to endorse
any checks or other instruments or orders in connection therewith and
to file any claims or take any action or institute (or if previously
commenced, assume control of) any proceedings and to obtain any
recovery in connection therewith which the Assignee may deem to be
necessary or advisable in the premises.
3. The Assignor hereby represents, warrants and covenants that (a) the
Construction Contract is in full force and effect and is valid and
enforceable against the Assignor in accordance with its terms; (b)
neither the Builder (to the knowledge of the Assignor) nor the
Assignor is in material breach of any of the terms of the Construction
Contract; (c) the Assignor has not assigned or pledged any of its
right, title or interest in or to the Construction Contract to anyone
other than the Assignee; (d) all right, title and interest in and to
the Construction Contract to be assigned hereby has been duly and
validly assigned to the Assignee hereunder; and (e) all governmental
consents and approvals necessary for the execution, delivery by the
Assignor of, and the performance by it of its obligations under, this
Assignment have been duly obtained.
4. The Assignor will, at its own expense, promptly execute and deliver
any and all such further instruments and documents and take such
further action as the Assignee may reasonably request in order to
obtain the full benefits of this Assignment and of the rights and
powers herein granted. In
98
addition, if any claim or remedy purported to be conveyed or assigned
to the Assignee hereunder shall not be valid or enforceable by the
Assignee, the Assignor will pursue such claim or remedy in its own
name, at its own expense, to the extent requested by and for the
benefit of the Assignee.
5. Each right, power and authority granted or given to the Assignee
hereunder may be exercised by the Assignee or by such employees,
agents or attorneys-in-fact as it may designate.
6. This Assignment shall be governed by and construed in accordance with
the internal laws of the State of Louisiana.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
in several counterparts (each of which shall be deemed to be an original
hereof) as of the day and year first above written.
SEA MAR EQUIPMENT, INC.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
SEA MAR, INC.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
99
CONSENT AND AGREEMENT
1. The undersigned, Halter Marine, Inc., a Nevada corporation (the
"Builder") hereby acknowledges notice of, consents to and agrees to be
bound by, all of the terms of the foregoing Construction Contract
Assignment (herein called the "Assignment," and defined terms herein
being used with the same meaning) and hereby confirms to the Assignee
that:
(a) all representations, warranties, indemnities and agreements of
the Builder under the Construction Contract shall inure to the
benefit, of and shall be enforceable by, the Assignee to the
same extent as if the Assignee were originally named in the
Construction Contract as the Purchaser of the Vessels; and
(b) in respect of any payment of monies due or to become due to
the Assignee in respect of the Construction Contract the
Builder will not seek to set-off or credit against or deduct
from any monies payable to the Assignee by virtue of the
Assignment any amounts owing to the Builder by the Assignor,
and the Builder will not seek to recover for any reason any
such payment once made.
2. The Builder hereby represents and warrants as follows:
(a) The Builder is a corporation duly organized and existing in
good standing under the laws of the State of Nevada;
(b) the making and performance of the Construction Contract and
this Consent and Agreement have been duly authorized by all
necessary corporate action on the part of the Builder, do not
require any stockholder approval and do not contravene the
Builder's charter or by-laws or any indenture, credit
agreement or other contractual agreement to which the Builder
is a party or by which it is bound;
(c) the Construction Contract is a binding obligation of the
Builder enforceable against the Builder in accordance with its
terms; and
(d) this Consent and Agreement is a legal, valid and binding
obligation of the Builder enforceable against the Builder in
accordance with its terms.
3. The Builder hereby waives its right under the Construction Contract to
require the Assignor to guaranty the Assignee's obligations under the
Construction Contract.
100
4. The Builder hereby releases Xx Xxxxxxxxx from any and all obligations
under the Guaranty, agrees to xxxx the original Guaranty "canceled"
and to deliver it to Xx Xxxxxxxxx within ten (10) days of the date of
the Assignment.
5. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Louisiana.
Dated: March ___, 1998.
HALTER MARINE, INC.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
101
SCHEDULE 3.1(b)
VALIDITY OF AGREEMENT; CAPITALIZATION
1. Sea Mar, Inc. Stock:
Class A Common Stock
--------------------
Xx X. Xxxxxxxxx 70 shares
Xxxxxxxxx Enterprises, Inc. 30 shares
