STOCK PURCHASE AGREEMENT
Between
SUPERIOR ENERGY SERVICES, INC.
and
XXXX X. XXXXXX
Dated as of February 28, 1997
TABLE OF CONTENTS
ARTICLE 1 SALE AND PURCHASE OF SHARES; CLOSING................... 1
Section 1.1 Sale of Shares.................................... 1
Section 1.2 Purchase Price.................................... 1
Section 1.3 Closing........................................... 2
Section 1.4 Deliveries at Closing............................. 2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER............... 2
Section 2.1 Ownership......................................... 2
Section 2.2 Authority; Enforceability......................... 2
Section 2.3 Organization; Qualification; Subsidiaries......... 3
Section 2.4 Capital Stock..................................... 3
Section 2.5 No Conflict....................................... 3
Section 2.6 Consent........................................... 4
Section 2.7 Legal Proceedings................................. 4
Section 2.8 Investment Representation......................... 4
Section 2.9 Charter and By-laws............................... 5
Section 2.10 Annual Financial Statements...................... 5
Section 2.11 Accounts Receivable.............................. 6
Section 2.12 Absence of Certain Changes....................... 6
Section 2.13 Suppliers and Customers.......................... 8
Section 2.14 Properties....................................... 8
Section 2.15 Permits; Compliance with Laws.................... 8
Section 2.16 Material Contracts............................... 8
Section 2.17 Litigation....................................... 9
Section 2.18 Environmental Matters............................ 9
Section 2.19 ERISA and Related Matters........................ 9
Section 2.20 Taxes............................................ 11
Section 2.21 Transactions with Certain Persons................ 14
Section 2.22 Intellectual Property............................ 14
Section 2.23 Insurance........................................ 14
Section 2.24 Safety and Health................................ 15
Section 2.25 Bank Accounts; Powers of Attorney................ 15
Section 2.26 Compensation Agreements.......................... 15
Section 2.27 Director and Officer Indemnification............. 15
Section 2.28 Documents and Written Materials.................. 15
Section 2.29 Effectiveness of Representations and
Warranties............................................... 15
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SESI................. 16
Section 3.1 Organization...................................... 16
Section 3.2 Capitalization.................................... 16
Section 3.3 Authority; Enforceability......................... 16
Section 3.4 Consents and Approvals; Conflicts................. 16
Section 3.5 SESI Common Stock................................. 16
Section 3.6 SESI Disclosure................................... 17
Section 3.7 Effectiveness of Representations and
Warranties........................................... ... 17
ARTICLE 4 PRE-CLOSING COVENANTS.................................. 17
Section 4.1 Legal Requirements................................ 17
Section 4.2 Access to Properties and Records.................. 17
Section 4.3 Conduct of Business............................... 17
Section 4.4 Public Statements................................. 18
Section 4.5 No Solicitation................................... 18
Section 4.6 Update Information................................ 18
ARTICLE 5 CLOSING CONDITIONS..................................... 18
Section 5.1 Conditions Applicable to all Parties.............. 18
Section 5.2 Conditions to Obligations of SESI................. 19
Section 5.3 Conditions to Obligations of Seller............... 19
ARTICLE 6 POST CLOSING COVENANTS................................. 20
Section 6.1 Section 338 Elections............................. 20
Section 6.2 Registration Rights............................... 20
Section 6.3 Stock Incentive Plan.............................. 22
Section 6.4 Replacement of Note............................... 22
ARTICLE 7 TERMINATION AND AMENDMENT............................... 23
Section 7.1 Termination....................................... 23
Section 7.2 Effect of Termination............................. 23
Section 7.3 Amendment......................................... 23
Section 7.4 Extension; Waiver................................. 23
ARTICLE 8 INDEMNIFICATION; REMEDIES.............................. 24
Section 8.1 Indemnification by Seller......................... 24
Section 8.2 Indemnification by SESI........................... 24
Section 8.3 Notice and Defense of Third Party Claims.......... 24
ARTICLE 9 DEFINED TERMS.......................................... 25
Section 9.1 Definitions....................................... 25
ARTICLE 10 MISCELLANEOUS......................................... 28
Section 10.1 Confidentiality.................................. 28
Section 10.2 Survival of Representations, Warranties
and Agreements........................................... 28
Section 10.3 Notices.......................................... 28
Section 10.4 Headings; Gender................................. 29
Section 10.5 Entire Agreement; No Third Party
Beneficiaries............................................ 29
Section 10.6 Governing Law.................................... 29
Section 10.7 Assignment....................................... 29
Section 10.8 Severability..................................... 29
Section 10.9 Counterparts..................................... 30
Exhibits
A - Form of Employment Agreement
B - Form of Promissory Note
C - Form of Disclosure Schedule
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of February 28,
1997 (this "Agreement"), is between Superior Energy
Services, Inc., a Delaware corporation ("SESI" or "Buyer"),
and Xxxx X. Xxxxxx ("Seller").
W I T N E S S E T H:
WHEREAS, Seller is the owner of all of the issued and
outstanding shares of common stock, no par value, of
Nautilus Pipe & Tool Rental, Inc., a Louisiana corporation
("Nautilus"); and
WHEREAS, Seller is the owner of all of the issued and
outstanding shares of common stock, no par value, of
Superior Bearing & Machine Works, Inc., a Louisiana
corporation ("Superior Bearing");
WHEREAS, Seller desires to sell to Buyer, and Buyer
desires to buy from Seller, all of the shares of common
stock of Nautilus and Superior Bearing that are owned by
Seller for the purchase price and subject to the terms and
conditions set forth in this Agreement; and
WHEREAS, in addition to the other defined terms used
herein, as used in this Agreement, certain terms are defined
in Article 9;
NOW, THEREFORE, in consideration of the mutual
promises, covenants and agreements set forth herein and in
reliance upon the undertakings, representations, warranties
and indemnities contained herein, Seller and Buyer agree as
follows:
ARTICLE 1
SALE AND PURCHASE OF SHARES; CLOSING
Section 1.1 Sale of Shares. Subject to the terms
and conditions herein stated, at the Closing Seller agrees
to sell with full title guarantee, transfer, assign and
deliver to Buyer, and Buyer agrees to purchase from Seller,
the Shares, free and clear of all Liens.
Section 1.2 Purchase Price. In consideration of
its purchase of the Nautilus Common Stock and Superior
Bearing Common Stock, Buyer shall pay to Seller (a) the sum
of $4,000,000 by wire transfer to an account specified by
Seller to Buyer, (b) 420,000 shares of SESI Common Stock and
(c) the Note in the form attached hereto as Exhibit "B".
Section 1.3 Closing. Subject to satisfaction or
waiver of the conditions specified in Article 5 hereof, the
Closing shall take place on or before February 28, 1997 at
such place and time as Buyer and Seller may agree.
Section 1.4 Deliveries at Closing. At the Closing
(a) Buyer shall pay or deliver to Seller the cash payment,
one or more certificates representing the 420,000 shares of
SESI Common Stock, and the Note specified in Section 1.2,
(b) Seller shall deliver to Buyer certificates representing
the Shares duly endorsed to SESI, which shall transfer to
SESI good title to the Shares free and clear of any adverse
claim and (c) Seller and Buyer shall each (i) provide to the
other such certificates, agreements and instruments as are
required to be delivered under Article 5, (ii) provide to
the other proof or indication of the satisfaction or waiver
of the conditions set forth in Article 5, and (iii) take
such other action as is required to consummate the
transactions contemplated by this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of the representations and warranties set forth
herein shall be separate and independent, and, except as
expressly provided herein, shall not be limited by reference
to any other representation or warranty or anything else in
this Agreement. Except as set forth in the Disclosure
Schedule that is attached hereto and that is numbered to
correspond to the applicable representation or warranty,
Seller represents and warrants to Buyer as follows:
Section 2.1 Ownership. Seller is, and at the
Closing Date will be, the sole record and beneficial owner
of the number of shares of the Shares, which are represented
by the certificates bearing the numbers, shown opposite his
name in the Disclosure Schedule. Seller has and at the
Closing Date will have good and marketable title to the
Shares and the absolute right to deliver the Shares in
accordance with the terms of this Agreement, free and clear
of all Liens. The transfer of the Shares to SESI in
accordance with the terms of this Agreement will transfer
good and marketable title to the Shares to SESI free and
clear of all Liens, restrictions, and claims of every kind.
Section 2.2 Authority; Enforceability. Seller has
full legal right, power and authority to execute, deliver
and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been
duly executed and delivered by Seller and constitutes, and
each other agreement, instrument or documents executed or to
be executed by Seller in connection with the transactions
contemplated hereby has been, or when executed will be, duly
executed and delivered by Seller and constitutes, or when
executed and delivered will constitute, a valid and legally
binding obligation of Seller, enforceable against Seller in
accordance with their respective terms, except that such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally and equitable
principles which may limit the availability of certain
equitable remedies in certain instances.
Section 2.3 Organization; Qualification;
Subsidiaries. Each of Nautilus and Superior Bearing is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Louisiana, having
all requisite corporate power and authority to own its
property and to carry on its business as it is now being
conducted. No actions or proceedings to dissolve either
Nautilus or Superior Bearing are pending. Each of Nautilus
and Superior Bearing is duly qualified or licensed to do
business and is in good standing in each jurisdiction in
which the property owned, leased or operated by it or the
conduct of its business requires such qualification or
licensing. Neither Nautilus nor Superior Bearing has any
subsidiaries or owns any equity interests in any other
Person.
Section 2.4 Capital Stock.
(1) The authorized capital stock of Nautilus
consists exclusively of 1,000 shares of common stock, of
which 100 shares are issued. All of such issued shares, the
Nautilus Common Stock, have been validly issued and are
fully paid. There are no existing options, warrants, calls,
commitments or other agreements or rights with respect to
the capital stock of Nautilus, and there are no convertible
or exchangeable securities of Nautilus outstanding which,
upon conversion or exchange, would require the issuance of
any shares of capital stock or other securities of Nautilus.
(2) The authorized capital stock of Superior
Bearing consists exclusively of 10,000 shares of common
stock, of which 100 shares are issued. All of such issued
shares, the Superior Bearing Common Stock, have been validly
issued and are fully paid. There are no existing options,
warrants, calls, commitments or other agreements or rights
with respect to the capital stock of Superior Bearing, and
there are no convertible or exchangeable securities of
Superior Bearing outstanding which, upon conversion or
exchange, would require the issuance of any shares of
capital stock or other securities of Superior Bearing.
Section 2.5 No Conflict. Neither the execution and the
delivery of this Agreement by Seller, nor the consummation
of the transactions contemplated hereby do or will (a)
violate, conflict with, or result in a breach of any
provisions of, (b) constitute a default (or an event which,
with notice or lapse of time or both, would constitute a
default) under, (c) result in the termination of or
accelerate the performance required by, (d) result in the
creation of any Lien, upon the Nautilus Common Stock, the
Superior Bearing Common Stock or any of Nautilus' or
Superior Bearing's properties or assets under any of the
terms, conditions or provisions of Nautilus' or Superior
Bearing's Articles of Incorporation or By-laws or any note,
bond, mortgage, indenture, deed of trust, lease, license,
loan agreement or other instrument or obligation to or by
which Nautilus or Superior Bearing or any of their
respective assets are bound, or (e) violate any Applicable
Law binding upon Seller or Nautilus or Superior Bearing or
any of their respective assets.
Section 2.6 Consent. No consent, approval, order or
authorization of, or declaration, filing or registration
with, any Governmental Entity or other Person is required to
be obtained or made by Seller, Nautilus or Superior Bearing
in connection with the execution, delivery or performance by
Seller of this Agreement or the consummation by it of the
transactions contemplated hereby.
Section 2.7 Legal Proceedings. There are no
Proceedings pending or, to the knowledge of Seller,
threatened seeking to restrain, prohibit or obtain damages
or other relief in connection with the execution, delivery
or performance of this Agreement or the transactions
contemplated hereby.
Section 2.8 Investment Representation.
(1) Seller is acquiring SESI Common Stock for
investment for his own account and not with a view to, or
for sale or other disposition in connection with, any
distribution of all or any part thereof except (i) in an
offering covered by a registration statement filed with the
Securities and Exchange Commission under the Securities Act
covering SESI Common Stock acquired by Seller or (ii)
pursuant to an applicable exemption under the Securities
Act. In receiving SESI Common Stock, Seller is not offering
or selling, and will not offer and sale, for SESI in
connection with any distribution of such SESI Common Stock,
and Seller does not have any contract, undertaking,
agreement or arrangement with any person for the
distribution of SESI Common Stock and will not participate
in any undertaking or in any underwriting of such an
undertaking except in compliance with Applicable Law.
(2) Seller has such knowledge and experience in
financial and business matters that he is capable of
evaluating the merits and risks of an investment in SESI
Common Stock.
(3) Seller has received from SESI and has
reviewed with his representatives a copy of each of SESI
Disclosure Documents. Seller has also been afforded access
to information about SESI and SESI's financial position,
results of operation, business, property and management
sufficient to enable him or her to evaluate an investment in
SESI Common Stock, and has had the opportunity to ask
questions of and has received satisfactory answers from SESI
concerning the foregoing matters.
(4) Seller understands that the shares of SESI
Common Stock acquired pursuant hereto have not been
registered under the Securities Act on the basis that the
sale provided for in this Agreement and the issuance of
SESI's Common Stock hereunder is exempt from registration
under the Securities Act, and that SESI's reliance on such
exemption is based, in part, upon Seller's representations
set forth herein.
(5) Seller understands that the shares of SESI
Common Stock will not be registered under the Securities
Act, that such shares will be "restricted securities" as
that term is defined in Rule 144 promulgated by the
Securities and Exchange Commission under the Securities Act,
and that Seller cannot transfer such shares unless they are
subsequently registered under the Securities Act and under
any applicable state securities law or are transferred in a
transfer that, in the opinion of counsel satisfactory to
SESI, is exempt from such registration. Seller further
understands that SESI will, as a condition to the transfer
of any such shares, require that the request for transfer be
accompanied by an opinion of counsel, in form and substance
satisfactory to SESI, to the effect that the proposed
transfer does not result in a violation of the Securities
Act or any applicable state securities law, unless such
transfer is covered by an effective registration statement.
Seller understands that such shares of SESI Common Stock may
not be sold publicly in reliance on the exemption from
registration under the Securities Act afforded by Rule 144
unless and until the minimum holding period (currently two
years) and other requirements of Rule 144 have been
satisfied.
(6) Seller understands and agrees that all
certificates evidencing the shares of SESI Common Stock
issued hereunder will bear restrictive legends in
substantially the following form:
The securities represented by
this certificate have not been
registered under the
Securities Act of 1933, as
amended (the "Act"), or any
applicable state law, and may
not be transferred without
registration under the Act and
any such state law or an
opinion of counsel
satisfactory to the
corporation that registration
is not required.
Section 2.9 Charter and By-laws. Seller has made
available to SESI accurate and complete copies of (a) the
Articles of Incorporation and By-laws of each of Nautilus
and Superior Bearing, (b) the stock records of each of
Nautilus and Superior Bearing and (c) the minutes of all
meetings of the Boards of Directors of each of Nautilus and
Superior Bearing, any committees of such boards and the
shareholders of each of Nautilus and Superior Bearing (and
all consents in lieu of such meetings). Such records,
minutes and consents accurately reflect the stock ownership
of each of Nautilus and Superior Bearing and all actions
taken by the Boards of Directors, committees and
shareholders. Neither Nautilus nor Superior Bearing is in
violation of any provision of its Articles of Incorporation
or By-laws.
Section 2.10 Annual Financial Statements. The
Disclosure Schedule contains true and complete copies of the
Annual Financial Statements. The Annual Financial
Statements have been prepared from the respective books and
records of Nautilus and Superior Bearing and are complete,
correct and in accordance with the books of account and
records of Nautilus and Superior Bearing. Neither Nautilus
nor Superior Bearing has since the date of the Annual
Financial Statements incurred any liability or obligation
(whether accrued, absolute, contingent, unliquidated or
otherwise), except (i) liabilities reflected in the Annual
Financial Statements, (ii) current liabilities which have
arisen since the date of the Annual Financial Statements in
the ordinary course of business (none of which is a material
liability for breach of contract, tort or infringement) and
(iii) liabilities arising under executory contracts entered
into in the ordinary course of business (none of which is a
material liability for breach of contract).
Section 2.11 Accounts Receivable. All of the accounts
receivable reflected on the Annual Financial Statements or
created thereafter have arisen only from bona fide
transactions in the ordinary course of business, represent
valid obligations owing respectively to Nautilus and
Superior Bearing and have been accrued in accordance with
generally accepted accounting principles. All such accounts
receivable either have been collected in full or will be
collectible in full within 120 days of when due, without any
counterclaims, setoffs or other defenses and without
provision for any allowance for uncollectible accounts in
excess of any reserve provided for in the Annual Financial
Statements.
Section 2.12 Absence of Certain Changes. Since
December 31, 1996 there has been no event or condition of
any character that has had, or can reasonably be expected to
have, a material adverse effect on the financial condition,
results of operations, cash flow, business or prospects of
either Nautilus or Superior Bearing. Neither Nautilus nor
Superior Bearing has since December 31, 1996:
(1) made any material change in the conduct of
its business and operations or failed to operate its
business so as to preserve its business organization intact
and to preserve the good will of its customers, suppliers
and others with whom it has significant business relations;
(2) entered into any agreement or transaction not
in the ordinary course of business;
(3) incurred any obligation or liability,
absolute or contingent, except trade or business obligations
incurred in the ordinary course of business or sales,
income, franchise, or ad valorem taxes accruing or becoming
payable in the ordinary course of business;
(4) declared or paid any dividend or other
distribution with respect to any of its capital stock or
purchased any of its capital stock;
(5) acquired or disposed of any assets material
to its business or operations;
(6) subjected any of its assets to any Lien;
(7) increased the rate of compensation (including
bonuses, contingent severance payments, retirement, profit
sharing, benefit or similar payments) payable or to become
payable to any of its officers or directors;
(8) adopted any employee welfare, pension,
retirement, profit sharing or similar plan or made any
material addition to or modification of existing plans;
(9) experienced any labor trouble or any
controversy or unsettled grievance involving any personnel;
(10) terminated or received notice of the
termination of any contract, commitment or transaction that
is material to it, or waived any right of material value to
it;
(11) made any material change in any accounting
principle, procedure or practice followed by it;
(12) issued any stock or merged or consolidated
with any other business or agreed to do so;
(13) made any capital expenditure or entered into
any Lease;
(14) borrowed any money or guaranteed or assumed
any indebtedness of others;
(15) suffered any extraordinary losses or any
material damage, destruction or casualty with respect to its
assets, or experienced any events, conditions, losses or
casualties which have resulted in or might result in claims
under its insurance policies of an aggregate of $5,000 or
more;
(16) loaned any money to any Person;
(17) defaulted under any note, loan, mortgage,
guarantee or other instrument of indebtedness or any
Material Contract;
(18) received any notification, warning or inquiry
from or given any notification to or had any communication
with any Governmental Entity, with respect to any proposed
remedial action or any violation or alleged or possible
violation of any law, rule, regulation or order relating to
or affecting its business, nor are any facts known to either
Nautilus or Superior Bearing that may reasonably be expected
to give rise to any such notification, warning or inquiry;
(19) transferred any asset, right or interest to,
or entered into any transaction with Seller or any of his
Affiliates;
(20) amended its Articles of Incorporation or By-
laws;
(21) received notice or had knowledge or reason to
believe that any substantial customer of either Nautilus or
Superior Bearing has terminated or intends to terminate its
relationship with Nautilus or Superior Bearing;
(22) waived any right in connection with any
aspect of its business that could have a material effect on
the business of either Nautilus or Superior Bearing; or
(23) made any agreement or commitment to do any of
the foregoing.
Section 2.13 Suppliers and Customers. To the
knowledge of Seller, (a) no supplier providing oil field
pipe, equipment or tools to either Nautilus or Superior
Bearing intends to cease selling such oil field pipe,
equipment or tools to Nautilus or Superior Bearing or to
limit or reduce such sales to Nautilus or Superior Bearing
or materially alter the terms or conditions of such sales
and (b) no customer of either Nautilus or Superior Bearing
intends to terminate, limit or reduce its or their business
relations with Nautilus or Superior Bearing.
Section 2.14 Properties.
(1) Neither Nautilus nor Superior Bearing owns,
or has ever owned, any real property other than as described
in the Disclosure Schedule. Either Nautilus or Superior
Bearing has good title to all material properties and assets
reflected in the Disclosure Schedule, free and clear of any
Liens.
(2) The Disclosure Schedule sets forth a complete
and correct list of all Leases, all of which are valid and
enforceable and in full force and effect. Complete and
correct copies of each Lease have been made available to
SESI. Each of Nautilus and Superior Bearing is in full
compliance with and has not received a notice of default
under any Lease and neither Nautilus nor Superior Bearing is
involved in any dispute under any Lease, the effect of which
would have a material adverse effect on the business, assets
or financial condition of either Nautilus or Superior
Bearing.
(3) Except as described in the Disclosure
Schedule, there are no developments affecting any of
Nautilus' or Superior Bearing's owned or leased properties
or assets pending or threatened which could materially
detract from the value of such property or assets,
materially interfere with any present or intended use of any
such property or assets or materially adversely affect the
marketability of such properties or assets.
Section 2.15 Permits; Compliance with Laws. Each of
Nautilus and Superior Bearing (a) has all necessary permits,
licenses and governmental authorizations required for the
lease, ownership, occupancy or operation of its properties
and assets and the carrying on of its business, and (b) has
conducted its business in substantial compliance with and is
in substantial compliance with all applicable laws,
regulations, orders, permits, judgments, ordinances or
decrees of any Governmental Entity.
Section 2.16 Material Contracts. The Disclosure
Schedule lists and describes all Material Contracts. A
complete and correct copy of each Material Contract has been
furnished to or made available to SESI. Each Material
Contract is valid, binding and enforceable, except to the
extent that enforcement may be limited by bankruptcy,
reorganization, insolvency and other similar laws and court
decisions relating to or affecting the enforcement of
creditors' rights generally and by equitable principles.
Each of Nautilus and Superior Bearing and each other party
to each Material Contract are in compliance in all material
respects with the provisions of such Material Contract.
Section 2.17 Litigation. There are no Proceedings
pending or threatened against either Nautilus or Superior
Bearing and, to the knowledge of Seller, there have been no
events and there are no facts or circumstances that could
result in any Proceedings.
Section 2.18 Environmental Matters. Neither Nautilus
nor Superior Bearing is in violation of any Applicable Law
relating to the environment and neither Nautilus nor
Superior Bearing is a party to any proposed removal,
response or remedial action. Neither Nautilus nor Superior
Bearing has received any notice with respect to the
business, the leased or owned properties, or the use by
third parties of the assets of either Nautilus or Superior
Bearing that (i) any investigation, administrative order,
consent order and agreement, removal or remedial action,
litigation or settlement with respect to any environmental
permit, law or regulation is proposed, threatened,
anticipated or in existence, (ii) any release of any
hazardous substances, pollutant or contaminant into the
environment by either Nautilus or Superior Bearing has
occurred or (iii) any exposure of any person or property to
any hazardous substance, pollutant or contaminant has
occurred. The properties currently and previously leased or
owned by either Nautilus or Superior Bearing are not and
have never been on or associated with any "national
priorities" list or any equivalent state list or any federal
or state "superlien" list. Each of Nautilus and Superior
Bearing has made available to SESI all internal and external
environmental audits and studies relating to the leased or
owned properties of either Nautilus or Superior Bearing and
all correspondence on substantial environmental matters
relating to the leased or owned properties of either
Nautilus or Superior Bearing in the possession of either
Nautilus or Superior Bearing.
Section 2.19 ERISA and Related Matters.
(1) The Disclosure Schedule lists each Employee
Plan that each of Nautilus and Superior Bearing maintains,
administers, contributes to, or has any contingent liability
with respect thereto. Seller has provided a true and
complete copy of each such Plan, current summary plan
description, (and, if applicable, related trust documents)
and all amendments thereto and written interpretations
thereof together with (i) all annual reports, if any, that
have been prepared in connection with each such Employee
Plan; (ii) all material communications received from or
sent to the Internal Revenue Service or the Department of
Labor within the last two years (including a written
description of any oral communications); and (iii) the most
recent Internal Revenue Services determination letter with
respect to each Employee Plan and the most recent
application for a determination letter.
(2) The Disclosure Schedule identifies each
Benefit Arrangement that each of Nautilus and Superior
Bearing maintains, or administers. Except as set forth in
the Disclosure Schedule, each of Nautilus and Superior
Bearing has made all contributions to and has no contingent
liability with respect to any of its Benefit Arrangements.
Seller has furnished to SESI copies or descriptions of each
Benefit Arrangement. To the knowledge of Seller, each
Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit
Arrangement.
(3) Benefits under any Employee Plan or Benefit
Arrangement are as represented in said documents and have
not been increased or modified (whether written or not
written) subsequent to the dates of such documents. Neither
Nautilus nor Superior Bearing has communicated to any
employee or former employee any intention or commitment to
modify any Employee Plan or Benefit Arrangement or to
establish or implement any other employee or retiree benefit
or compensation arrangement.
(4) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified
and has been so qualified during the period from its
adoption to date, and, to the knowledge of Seller, no event
has occurred since such adoption that would adversely affect
such qualification and each trust created in connection with
each such Employee Plan forming a part thereof is exempt
from tax pursuant to Section 501(a) of the Code. To the
knowledge of Seller, each Employee Plan has been maintained
and administered in compliance with its terms and with the
requirements prescribed by any and all applicable statutes,
orders, rules and regulations, including but not limited to
ERISA and the Code.
(5) To the knowledge of Seller, full payment has
been made of all amounts which either Nautilus or Superior
Bearing is or has been required to have paid as
contributions to any Employee Plan or Benefit Arrangement
under applicable law or under the terms of any such plan or
any arrangement.
(6) To the knowledge of Seller, neither Nautilus
nor Superior Bearing nor any of their shareholders,
directors, officers or employers has engaged in any
transaction with respect to an Employee Plan that could
subject either Nautilus or Superior Bearing to a tax,
penalty or liability for a prohibited transaction, as
defined in Section 406 of ERISA or Section 4975 of the Code.
(7) To the knowledge of Seller, neither Nautilus
nor Superior Bearing has any current or projected liability
in respect of post-retirement or post-employment welfare
benefits for retired, current or former employees. No
health, medical, death or survivor benefits have been
provided under any Benefit Arrangement to any person who is
not an employee or former employee of either Nautilus or
Superior Bearing or a dependent thereof.
(8) There is no litigation, administrative or
arbitration proceeding or other dispute pending or
threatened that involves any Employee Plan or Benefit
Arrangement which could reasonably be expected to result in
a liability to either Nautilus or Superior Bearing, any
employees or directors of either Nautilus or Superior
Bearing, or any fiduciary (as defined in ERISA Section
3(21)) of such Employee Plan or Benefit Arrangement.
(9) No employee or former employee of either
Nautilus or Superior Bearing will become entitled to any
bonus, retirement, severance, job security or similar
benefit or enhanced benefit (including acceleration of
compensation, an award, vesting or exercise of an incentive
award) or any fee or payment of any kind solely as a result
of any of the transactions contemplated hereby.
(10) Neither Nautilus nor Superior Bearing is a
party to any agreement, contract, arrangement or plan that
has resulted or would result, separately or in the
aggregate, in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code (i.e., a
golden parachute).
Section 2.20 Taxes.
(1) Superior Bearing and Seller have made an
election under Code Section 1362 to have Superior Bearing
treated as an S Corporation for federal tax purposes.
Superior Bearing has continuously satisfied the requirements
necessary to be taxed as an S Corporation since the date of
the election described in the preceding sentence. Neither
Superior Bearing nor Seller has taken, or will take prior to
the Effective Time, any action that will terminate Superior
Bearing's treatment as an S Corporation.
(2) All Returns required to be filed by or on
behalf of either Nautilus or Superior Bearing have been duly
filed on a timely basis and such Returns (including all
attached statements and schedules) are true, complete and
correct. All Taxes shown to be payable on the Returns or on
subsequent assessments with respect thereto have been paid
in full on a timely basis, and no other Taxes are payable by
either Nautilus or Superior Bearing with respect to items or
periods covered by such Returns (whether or not shown on or
reportable on such Returns) or with respect to any period
prior to the Closing Date.
(3) Each of Nautilus and Superior Bearing has
withheld and paid over all Taxes required to have been
withheld and paid over (including any estimated taxes), and
has complied with all information reporting and backup
withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts
paid or owing to any employee, creditor, independent
contractor, or other third party.
(4) There are no Liens on any of the assets of
either Nautilus or Superior Bearing with respect to Taxes,
other than Liens for Taxes not yet due and payable or for
Taxes that are being contested in good faith through
appropriate proceedings and for which appropriate reserves
have been established.
(5) Seller has furnished or made available to
SESI true and complete copies of: (i) all federal and state
income and franchise tax returns of each of Nautilus and
Superior Bearing for all periods beginning on or after
January 1, 1994, and (ii) all tax audit reports, work papers
statements of deficiencies, closing or other agreements
received by either Nautilus or Superior Bearing or on
Nautilus' or Superior Bearing's behalf relating to Taxes.
(6) Except as disclosed on the Disclosure
Schedule or in documents provided to or made available to
SESI:
(1) The Returns of Nautilus and Superior
Bearing have never been audited by a governmental or taxing
authority, nor is any such audit in process, pending or
threatened (formally or informally).
(2) No deficiencies exist or have been
asserted (either formally or informally) or are expected to
be asserted with respect to Taxes of either Nautilus or
Superior Bearing, and there is no basis for the assertion of
any deficiency of Taxes of either Nautilus or Superior
Bearing. No notice (either formally or informally) has been
received by either Nautilus or Superior Bearing that it has
not filed a Return or paid Taxes required to be filed or
paid by it.
(3) Neither Nautilus nor Superior Bearing is
a party to any pending action or proceeding for assessment
or collection of Taxes, nor has such action or proceeding
been asserted or threatened (either formally or informally)
against either Nautilus or Superior Bearing or any of either
Nautilus' or Superior Bearing's assets.
(4) Except as reflected in the Returns or as
disclosed on the Disclosure Schedule, no waiver or extension
of any statute of limitations is in effect with respect to
Taxes or Returns of either Nautilus or Superior Bearing.
(5) There are no requests for rulings,
subpoenas or requests for information pending with respect
to either Nautilus or Superior Bearing.
(6) No power of attorney has been granted by
either Nautilus or Superior Bearing, with respect to any
matter relating to Taxes.
(7) The amount of liability for unpaid Taxes
of each of Nautilus and Superior Bearing for all periods
ending on or before the Effective Date will not, in the
aggregate, exceed the amount of the current liability
accruals for Taxes, as such accruals are reflected on the
respective balance sheets of Nautilus and Superior Bearing
as of the Closing Date.
(7) Except as disclosed on the Disclosure
Schedule, or as described in documents furnished to or made
available to SESI:
(1) Neither Nautilus nor Superior Bearing
has made an election, or is required to treat any asset as
owned by another person for federal income tax purposes or
as tax-exempt bond financed property or tax-exempt use
property within the meaning of section 168 of the Code.
(2) Neither Nautilus nor Superior Bearing
has issued or assumed any indebtedness that is subject to
section 279(b) of the Code.
(3) Neither Nautilus nor Superior Bearing
has entered into any compensatory agreements with respect to
the performance of services which payment thereunder would
result in a nondeductible expense to Section 280G of the
Code or an excise tax to the recipient of such payment
pursuant to Section 4999 of the Code.
(4) No consent under Section 341(f) of the
Code has been filed with respect to either Nautilus or
Superior Bearing.
(5) Neither Nautilus nor Superior Bearing
has agreed, nor is either Nautilus or Superior Bearing
required to make, any adjustment under Code Section 481(a)
by reason of change in accounting method or otherwise.
(6) Neither Nautilus nor Superior Bearing
has disposed of any property that has been accounted for
under the installment method.
(7) Neither Nautilus nor Superior Bearing
is a party to any interest rate swap, currency swap or
similar transaction.
(8) Neither Nautilus nor Bearing is a United
States real property holding corporation within the meaning
of Section 897(c)(2) of the Code and SESI is not required to
withhold tax on the acquisition of the stock of either
Nautilus or Superior Bearing.
(9) Neither Nautilus nor Superior Bearing
has participated in any international boycott as defined in
Code Section 999.
(10) Neither Nautilus nor Superior Bearing is
subject to any joint venture, partnership or other
arrangement or contract that is treated as a partnership for
federal income tax purposes.
(11) Neither Nautilus nor Superior Bearing
has made any of the foregoing elections or is required to
apply any of the foregoing rules under any comparable state
or local income tax provisions.
(12) Neither Nautilus nor Superior Bearing
has or has ever had a permanent establishment in any foreign
country, as defined in any applicable tax treaty or
convention between the United States and such foreign
country.
(13) The transactions contemplated herein are
not subject to the tax withholding provisions of Section
3406 of the Code, or of Subchapter A of Chapter 3 of the
Code, or of any other provision of law.
(8) Set forth in the Disclosure Schedule or in
documents furnished or made available to SESI is accurate
and complete information with respect to each of the
following for all tax periods beginning on or after January
1, 1994:
(1) Any tax elections in effect with respect
to each of Nautilus and Superior
Bearing; and
(2) Any tax credit carry overs of each of
Nautilus and Superior Bearing.
Section 2.21 Transactions with Certain Persons. Except
for employment relationships in the ordinary course of
business, no employee of either Nautilus or Superior Bearing
or any of the employees' Affiliates is presently a party to
any transaction with either Nautilus or Superior Bearing,
including without limitation any contract, agreement or
other arrangement providing for the furnishing of services
by or the rental of real or personal property from any such
person or from any of their Affiliates.
Section 2.22 Intellectual Property. Each of Nautilus
and Superior Bearing either own or has valid licenses to use
all patents, copyrights, trademarks, software, databases,
and other technical information used in its business as
presently conducted, subject to limitations contained in the
agreements governing the use of same, which limitations are
customary for companies engaged in businesses similar to
each of Nautilus and Superior Bearing. There are no
limitations contained in any such agreements which will
alter any such rights, breach any such agreement or any
third-party vendor, or require payments of additional sums
thereunder. Each of Nautilus and Superior Bearing is in
compliance with all such licenses and agreements and there
are no pending or, to the knowledge of Seller, threatened
Proceedings challenging or questioning the validity or
effectiveness of any license or agreement relating to such
property or the right of either Nautilus or Superior Bearing
to use, copy, modify or distribute the same.
Section 2.23 Insurance. SESI has been provided copies
of or access to all insurance policies or binders which
relate to each of Nautilus' and Superior Bearing's business.
All premiums due under such policies and binders have been
paid or accrued for on the Annual Financial Statements and
all such policies and binders are in full force and effect
and no notice of cancellation or nonrenewal of any such
policy or binder has been received by either Nautilus or
Superior Bearing and no notice of disallowance of any claim
under any insurance policy or binder, whether or not
currently in effect, has been received by either Nautilus or
Bearing. Neither Nautilus nor Superior Bearing has any
liability for or exposure to any premium expense for expired
policies and there are no current claims by either Nautilus
or Superior Bearing under any such policy or binder as to
which coverage has been questioned, denied or disputed by
the underwriters of such policies, nor are there any insured
losses for which claims have not been made.
Section 2.24 Safety and Health. The property and
assets of each of Nautilus and Superior Bearing have been
and are being operated in compliance with all Applicable
Laws designed to protect safety or health, or both,
including without limitation, the Occupational Safety and
Health Act and the regulations promulgated pursuant thereto.
Neither Nautilus nor Superior Bearing has received any
written notice of any violations, deficiency, investigation
or inquiry from any Governmental Entity, employer or third
party under any such law and, to the knowledge of Seller,
no such investigation or inquiry is planned or threatened.
Section 2.25 Bank Accounts; Powers of Attorney. The
Disclosure Schedule sets forth with respect to each bank
account or cash account maintained by either Nautilus or
Superior Bearing at any bank, brokerage or other financial
firm, the name of the institution at which such account is
maintained, the number of the account, and the names of the
individuals having authority to withdraw funds from such
account.
Section 2.26 Compensation Agreements. The Disclosure
Schedule lists all written employment, commission, bonus or
other compensation and consulting agreements to which
either Nautilus or Superior Bearing is a party. Except as
set forth on the Disclosure Schedule, neither Nautilus nor
Bearing is a party to any written or oral employment,
commission, bonus or other compensation or consulting
agreement which Nautilus or Superior Bearing may not
terminate without any payment or penalty, at will, with or
without cause, except to the extent that employment at will
may be limited by Applicable Law.
Section 2.27 Director and Officer Indemnification. The
directors and officers of each of Nautilus and Superior
Bearing are not entitled to indemnification by either
Nautilus or Superior Bearing, except to the extent that
indemnification rights are provided for generally in
Louisiana and there are no pending claims for
indemnification by any director or officer of either
Nautilus or Superior Bearing.
Section 2.28 Documents and Written Materials.
Originals or true and complete copies of all documents or
other written materials underlying items listed in the
Disclosure Schedule have been furnished or made available to
SESI in the form in which each of such documents is in
effect, and will not be modified in any material respect
prior to the Closing Date without SESI's prior written
consent.
Section 2.29 Effectiveness of Representations and
Warranties. All of the representations and warranties of
Seller in this Agreement shall be true in all material
respects on the Closing Date and shall be deemed to have
been made again by Seller on and as of the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF XXXX
XXXX represents and warrants to and agrees with Seller
as follows:
Section 3.1 Organization. SESI is a corporation duly
organized, validly existing and in good standing under the
laws of Louisiana and has all requisite corporate power and
authority to own its properties and carry on its business as
now being conducted.
Section 3.2 Capitalization. As of the date of this
Agreement, the authorized capital stock of SESI consists of
40,000,000 shares of common stock, $.001 par value per
share, 18,597,045 of which are validly issued and
outstanding, and 5,000,000 shares of preferred stock, $.01
par value, none of which are outstanding.
Section 3.3 Authority; Enforceability. SESI has the
requisite corporate power and authority to execute and
deliver this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of SESI and no other
corporate proceedings on the part of SESI are necessary to
authorize this Agreement or to consummate the transactions
so contemplated. This Agreement has been duly executed and
delivered by SESI and constitutes a valid and binding
obligation of SESI, enforceable against SESI in accordance
with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights
generally and equitable principles which may limit the
availability of certain equitable remedies in certain
instances.
Section 3.4 Consents and Approvals; Conflicts. No
filing with or notice to, and no permit, authorization,
consent or approval of, any Governmental Entity is necessary
for the execution and delivery by SESI of this Agreement or
the consummation by SESI of the transactions contemplated
hereby. Neither the execution and delivery of this
Agreement by SESI, nor the consummation of the transactions
contemplated hereby, will violate any of the provisions of
the Articles of Incorporation or By-laws of SESI; or
conflict with or result in a breach of, or give rise to a
right of termination of, or accelerate the performance
required by, any terms of any court order, consent decree,
note, bond, mortgage, indenture, deed of trust, or any
license or agreement binding on SESI or to which SESI is
subject or a party, or constitute a default thereunder, or
result in the creation of any Lien upon any of the assets of
SESI, except for any such conflict, breach, termination,
acceleration, default or Lien which would not have a
material adverse effect on (a) the business, assets or
financial condition of SESI or (b) SESI's ability to
consummate any of the transactions contemplated hereby.
Section 3.5 SESI Common Stock. All shares of SESI
Common Stock to be issued pursuant to this Agreement will
be, when issued, duly authorized, validly issued, fully paid
and non-assessable.
Section 3.6 SESI Disclosure. The SESI Disclosure
Documents do not include any misstatement of any fact
material to the assets, business, operations, financial
condition and prospects of SESI, taken as a whole, or omit
to state such a material fact necessary in order to make the
statements, in the light of the circumstances under which
they are made, not misleading.
Section 3.7 Effectiveness of Representations and
Warranties. All of the representations and warranties of
SESI in this Agreement shall be true in all material
respects on the Closing Date and shall be deemed to have
been made again by SESI on and as of the Closing Date.
ARTICLE 4
PRE-CLOSING COVENANTS
Section 4.1 Legal Requirements. Subject to the
conditions set forth in Article 5 and to the other terms and
provisions of this Agreement, each of the parties to this
Agreement agrees to take, or cause to be taken, all
reasonable actions necessary to comply promptly with all
legal requirements applicable to it with respect to the
transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to each
other in connection with any such requirements imposed upon
any of them. Each of SESI and Seller will take all
reasonable actions necessary to obtain, and will cooperate
with each other in obtaining, any consent, authorization,
order or approval of, or any exemption by, any Governmental
Entity or other public or private party, required to be
obtained or made by it or the taking or any action
contemplated by this Agreement.
Section 4.2 Access to Properties and Records. Until
the Closing Date, Seller shall cause Nautilus and Superior
Bearing to allow SESI and its authorized representatives
full access, during normal business hours and on reasonable
notice, to all of each of Nautilus' and Superior Bearing's
properties, offices, vehicles, equipment, inventory and
other assets, documents, files, books and records, in order
to allow SESI a full opportunity to make such investigation
and inspection as it desires of Nautilus' and Superior
Bearing's business and assets. Seller shall further cause
Nautilus and Superior Bearing to use their best efforts to
cause the employees, counsel and regular independent
certified public accountants of each of Nautilus and
Superior Bearing to be available upon reasonable notice to
answer questions of SESI's representatives concerning the
business and affairs of each of Nautilus and Superior
Bearing, and shall further use their best efforts to cause
them to make available all relevant books and records in
connection with such inspection and examination, including
without limitation work papers for all audits and reviews of
financial statements of each of Nautilus and Superior
Bearing.
Section 4.3 Conduct of Business. From and after the
date of this Agreement and until the Closing Date, SESI
shall conduct its business, and Seller shall cause Nautilus
and Superior Bearing to each conduct their businesses, in
the ordinary course and consistently with past practice,
except as expressly required or otherwise permitted by this
Agreement, and shall not take or permit any action which
would cause any of their representations made in this
Agreement not to be true and correct on the Closing Date.
Section 4.4 Public Statements. Prior to the Closing
Date, none of the parties to this Agreement shall, and each
party shall use its best efforts so that none of its
advisors, officers, directors or employees shall, except
with the prior written consent of the other party,
publicize, announce or describe to any third person, except
their respective advisors and employees, the execution or
terms of this Agreement, the parties hereto or the
transactions contemplated hereby, except as required by law
or as required pursuant to this Agreement to obtain the
consent of such third person; provided, in any case, that
SESI may make such disclosures and announcements as may be
necessary or advisable under applicable securities laws.
Section 4.5 No Solicitation. Seller will not prior to
the Closing Date or the termination of this Agreement
pursuant to Section 7.1, (nor will he permit any of his
affiliates or any of either Nautilus' or Superior Bearing's
officers, directors or agents to) directly or indirectly
solicit or participate or engage in or initiate any
negotiations or discussions, or enter into or authorize any
agreement or agreements in principle, or announce any
intention to do any of the foregoing, with respect to any
offer or proposal to acquire all or any significant part of
either Nautilus' or Superior Bearing's business and
properties or any Nautilus Common Stock or Superior Bearing
Common Stock whether by merger, purchase of assets, purchase
of stock or otherwise. Seller will notify SESI promptly
upon receipt of any inquiry, offer or other communication
from any third party regarding any such activities.
Section 4.6 Update Information. Each party hereto will
promptly disclose to the other any information contained in
its representations and warranties that because of an event
occurring after the date hereof is incomplete or no longer
correct; provided, however, that none of such disclosures
will be deemed to modify, amend, or supplement the
representations and warranties of such party, unless the
other party consents to such modification, amendment, or
supplement in writing.
ARTICLE 5
CLOSING CONDITIONS
Section 5.1 Conditions Applicable to all Parties. The
respective obligations of each party to consummate the
transactions contemplated by this Agreement shall be subject
to the satisfaction or, where permissible, waiver by such
party of the following conditions at or prior to the Closing
Date:
(1) No statute, rule, regulation, executive
order, decree, preliminary or permanent injunction or
restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent
jurisdiction or other Governmental Entity which prohibits or
restricts the consummation of the transactions contemplated
by this Agreement, and no action, suit, claim or proceeding
by a state or federal Governmental Entity before any court
or other Governmental Entity shall have been commenced and
be pending which seeks to prohibit or restrict the
consummation of the transactions contemplated by this
Agreement.
(2) Seller shall have entered into the Employment
Agreement.
Section 5.2 Conditions to Obligations of SESI. The
obligations of SESI to consummate the transactions
contemplated by this Agreement are subject to the
satisfaction of the following conditions unless waived by
SESI:
(1) The representations and warranties of Seller
set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing
Date, except as otherwise contemplated by this Agreement,
and Seller shall have performed in all material respects all
obligations required to be performed by him under this
Agreement at or prior to the Closing Date.
(2) All consents and approvals of third parties
necessary for consummation of the transactions contemplated
by this Agreement shall have been obtained. Seller shall
have used his best efforts to obtain all necessary permits,
authorizations, consents and approvals required by such
Governmental Entities prior to the Closing Date.
(3) SESI shall have had a full opportunity to
conduct inspections of the operating assets and books and
records of each of Nautilus and Superior Bearing. Seller
shall have provided SESI certified copies of Nautilus' and
Superior Bearing's Articles of Incorporation and By-laws and
certificates of existence, good standing and qualification
to do business as a foreign corporation, certified by the
Secretary of State of the State of Louisiana.
(4) Any and all changes made to the Disclosure
Schedule or to the representations and warranties of Seller
shall be satisfactory in all respects to SESI.
Section 5.3 Conditions to Obligations of Seller. The
obligations of Seller to consummate the transactions
contemplated by this Agreement are subject to the
satisfaction of the following conditions, unless waived by
Seller:
(1) The representations and warranties of SESI
set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing
Date, except as otherwise contemplated by this Agreement,
and SESI shall have performed in all material respects all
obligations required to be performed by them under this
Agreement at or prior to the Closing Date.
(2) Seller shall have received a certificate of a
duly authorized officer of SESI, dated the Closing Date,
certifying as to the incumbency of any person executing this
Agreement or any certificate or other document delivered in
connection with this Agreement and certifying such other
matters as Seller shall reasonably request.
ARTICLE 6
POST CLOSING COVENANTS
Section 6.1 Section 338 Elections. If requested by
SESI, Seller shall join in an election to have the
provisions of Section 338(h)(10) of the Code and similar
provisions of state law (collectively, the "Section 338
Elections") apply to the acquisition of the Shares. SESI
shall be responsible for, and control, the preparation and
filing of such election. The allocation of purchase price
among the assets of the Nautilus and Superior Bearing shall
be made in accordance with Code Sections 338 and 1060 and
any comparable provisions of state, local or foreign law, as
appropriate. Seller shall, unless it would be unreasonable
to do so, accept SESI's determination of such purchase price
allocations and shall report, act, file in all respects and
for all purposes consistent with such determination of SESI.
SESI shall execute and deliver to Seller such documents or
forms (including Section 338 Forms, as defined below) as
Seller shall request or as are required by applicable law
for an effective 338(h)(10) Election. "Section 338 Forms"
shall mean all returns, documents, statements, and other
forms that are required to be submitted to any federal,
state, county, parish or other local taxing authority in
connection with a 338(h)(10) Election, including, without
limitation, any "statement of Section 338 election" and IRS
Form 8023 (together with any schedules or attachments
thereto) that are required pursuant to applicable Treasury
Regulations.
Section 6.2 Registration Rights.
(1) Seller may request in writing that SESI
effect the registration under the Securities Act of all or
any part of the Registrable Shares owned by Seller.
Thereupon, SESI shall, as expeditiously as possible, take
such steps as are necessary to effect the registration of
all Registrable Shares that SESI has been requested to so
register. SESI shall be obligated to prepare and file at
its expense one registration statement under the Securities
Act pursuant to this Section 6.2(a); provided, however, that
SESI may for up to a 90 day period defer filing a
registration statement and from time to time suspend the
ability of Seller to resell Registrable Shares pursuant to
such registration statement if SESI reasonably concludes,
after consultation with Seller, that filing a registration
statement or updating the prospectus contained therein would
(i) interfere with or adversely affect the negotiation or
completion of any transaction that is being contemplated by
SESI at the time the right to delay is exercised or (ii)
involve an initial or continuing disclosure obligation that
would not be in the best interest of SESI's stockholders.
If at any time SESI defers filing a registration statement
or suspends the ability to sell the Registrable Shares
pursuant to such registration statement, SESI shall use its
best efforts to file such registration statement or permit
resales of Registrable Shares pursuant to such registration
statement as soon as thereafter as practicable; provided,
however, that the foregoing shall not require SESI to alter
its actions with respect to any pending corporate
developments or business transactions of the nature
described in clauses (i) and (ii) above.
(2) Whenever SESI proposes to file a registration
statement (other than pursuant to Section 6.2(a) or on Form
S-4 or Form S-8, or any successor forms) relating to SESI
Common Stock proposed to be sold for SESI's account at any
time and from time to time, it will, prior to such filing,
give written notice to Seller of its intention to do so and,
upon the written request of Seller given within 30 days
after SESI provides such notice (which request shall state
the intended method of disposition of such Registrable
Shares), SESI shall use its best efforts to cause all
Registrable Shares that SESI has been requested by Seller to
register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition
in accordance with the intended methods of distribution
specified in the request of Seller; provided that SESI shall
have the right to postpone or withdraw any registration
effected pursuant to this Section 6.2(b) without obligation
to Seller. In connection with any offering under this
Section 6.2(b) involving an underwriting, SESI shall not be
required to include any Registrable Shares in such offering
unless the holder thereof accepts the terms of the
underwriting as agreed upon between SESI and the
underwriters selected by it (provided that such terms must
be consistent with this Agreement), and then only in such
quantity as will not, in the opinion of the underwriters,
jeopardize the success of the offering by SESI. If in the
opinion of the managing underwriter the registration of all,
or part of, the Registrable Shares that Seller has requested
to be included would materially and adversely affect such
public offering, then SESI shall be required to include in
the underwriting only that number of Registrable Shares, if
any, that the managing underwriter believes may be sold
without causing such adverse effect.
(3) SESI will pay all the expenses incurred by
SESI in complying with this Section 6.2, including, without
limitation, all registration and filing fees, exchange
listing fees, printing expenses, fees, and expenses of
counsel for SESI, state "blue sky" fees and expenses, and
the expense of any special audits incident to or required by
any such registration, but excluding underwriting discounts,
selling commissions, and the fees and expenses of selling
Seller's own counsel.
(4) Seller agrees not to effect any public sale
or distribution (including sales pursuant to Rule 144) of
Registrable Shares during the five (5) days prior to
(provided that Seller receives a notice from SESI of a
commencement of such 5-day period) and up to a 180-day
period beginning on the effective date of any underwritten
registration effected pursuant to Section 6.2(a) or any
registration effected pursuant to Section 6.2(b) in which
Registrable Shares are included (except as part of such
underwritten registration), that may be requested by the
underwriters managing the public offering.
(5) If and whenever SESI is required by the
provisions of this Agreement to use its best efforts to
effect the registration of any of the Registrable Shares
under the Securities Act, SESI shall file with the
Securities and Exchange Commission a registration statement
with respect to such Registrable Shares and use its best
efforts to cause that registration statement to become and
remain effective and any amendments and supplements to the
registration statement and the prospectus included in the
registration statement as may be necessary to keep the
registration statement effective, in the case of a firm
commitment underwritten public offering, until each
underwriter has completed the distribution of all securities
purchased by it and, in the case of any other offering,
until the earlier of the sale of all Registrable Shares
covered thereby or 90 days after the effective date thereof.
(6) The holder of Registrable Shares included in
any registration shall furnish to SESI such information
regarding such holder and the distribution proposed by such
holder as SESI may request in writing and as shall be
required in connection with any registration, qualification
or compliance referred to in this Section 6.2.
(7) SESI agrees to:
(1) comply with the requirements of Rule
144(c) under the Securities Act with respect to current
public information about SESI;
(2) use its best efforts to file with the
Securities and Exchange Commission in a timely manner all
reports and other documents required of SESI under the
Securities Act and the Exchange Act; and
(3) furnish to the holder of Registrable
Shares upon request (i) a written statement by SESI as to
its compliance with the requirements of Rule 144(c) and the
reporting requirements of the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or
quarterly report of SESI, and (iii) such other reports and
documents of SESI as such holder may reasonably request to
avail itself of any similar rule or regulation of the
Securities and Exchange Commission allowing it to sell any
such securities without registration.
Section 6.3 Stock Incentive Plan. SESI will propose
to its stockholders in connection with its 1997 annual
meeting of stockholders to amend its stock incentive plan
to, among such other amendments as may be proposed, increase
by 500,000 the number of shares of SESI Common Stock
eligible under the stock incentive plan with those shares
reserved for grant to employees of Nautilus and Superior
Bearing.
Section 6.4 Replacement of Note. Promptly after the
Closing Date, the Buyer and Seller shall attempt to obtain
term insurance on the life of Seller in an amount
sufficient to fund Buyer's obligations under the Note. If
insurance can be obtained, then when the policy is issued
(with Buyer as owner and being responsible for the payment
of all related premiums), the Note shall be amended to
provide that if Seller dies prior to the Payment Date, then
the Seller's successors shall be entitled to the prepayment
of the Note by Buyer from the proceeds of such insurance
policy in an amount equal to $2,150,000 plus interest
thereon.
ARTICLE 7
TERMINATION AND AMENDMENT
Section 7.1 Termination. This Agreement may be
terminated and may be abandoned at any time prior to the
Closing Date:
(1) by mutual consent of SESI and Seller;
(2) by SESI or Seller, as the case may be, if (a)
there shall have been a material breach of any
representation, warranty, covenant or agreement on the part
of either the Seller or on the part of SESI, as the case may
be, which breach shall not have been cured prior to the
earlier of (i) 10 days following notice of such breach and
(ii) the Closing Date; or (b) any permanent injunction or
other order of a court or other competent Governmental
Entity preventing the transactions contemplated by this
agreement shall have become final and nonappealable; or
(3) by SESI or Seller if the transactions
contemplated by this Agreement shall not have been
consummated on or before February 28, 1997; provided, that
the right to terminate this Agreement under this Section
7.1(c) shall not be available to any party whose breach of
its representations and warranties in this Agreement or
whose failure to perform any of its covenants and agreements
under this Agreement has resulted in the failure of the
transactions contemplated by this agreement to occur on or
before such date.
Section 7.2 Effect of Termination. In the event of a
termination of this Agreement as provided in Section 7.1,
this Agreement shall forthwith become void and there shall
be no liability or obligation under any provisions hereof on
the part of SESI or Seller, except (a) pursuant to the
covenants and agreements contained in Section 10.1 and this
Section 7.2 and (b) to the extent that such termination
results from the willful material breach by a party hereto
of any of its representations, warranties, covenants or
agreements set forth in this Agreement, in which case the
non-breaching party shall have a right to recover its
damages caused thereby.
Section 7.3 Amendment. This Agreement may not be
amended except by an instrument in writing signed by each of
the parties hereto.
Section 7.4 Extension; Waiver. At any time prior to
the Closing Date, the parties hereto may, in their
respective sole discretion and to the extent legally
allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto;
(b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered
pursuant thereto; and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument
signed by or on behalf of such party.
ARTICLE 8
INDEMNIFICATION; REMEDIES
Section 8.1 Indemnification by Seller. Except as
otherwise expressly provided in this Article 8, Seller shall
defend, indemnify and hold harmless SESI and each of SESI's
officers, directors, employees, Affiliates, successors and
assigns (SESI and such persons, collectively, "SESI's
Indemnified Persons"), and shall reimburse SESI's
Indemnified Persons, for, from and against each and every
demand, claim, action, loss (which shall include any
diminution in value), liability, judgment, damage, cost and
expense (including, without limitation, interest, penalties,
costs of preparation and investigation, and the reasonable
fees, disbursements and expenses of attorneys, accountants
and other professional advisors) (collectively, "Losses")
imposed on or incurred by SESI's Indemnified Persons,
directly or indirectly, relating to, resulting from or
arising out of: (a) any inaccuracy in any representation or
warranty of Seller in this Agreement or any certificate,
document or other instrument delivered or to be delivered
pursuant hereto in any respect whether or not SESI's
Indemnified Persons relied thereon or had knowledge thereof
or (b) any breach or nonperformance of any covenant,
agreement or other obligation of Seller Agreement or any
certificate, document or other instrument delivered or to be
delivered pursuant hereto; provided, however, that, except
for a knowing and intentional breach of any representation
or warranty of Seller in this Agreement (as to which there
shall be no Minimum Amount), Seller shall have no liability
under Section 8.1(a) unless and until the aggregate of all
Losses resulting therefrom exceeds $25,000 (the "Seller's
Minimum Amount"), in which event Seller shall be liable for
all Losses in excess of Seller's Minimum Amount.
Section 8.2 Indemnification by SESI. Except as
otherwise expressly provided in this Article 8, SESI shall
defend, indemnify and hold harmless Seller and each of
Seller's successors and assigns (Seller and such persons,
collectively, "Seller's Indemnified Persons"), and shall
reimburse Seller's Indemnified Persons for, from and against
all Losses imposed on or incurred by Seller's Indemnified
Persons, directly or indirectly, relating to, resulting from
or arising out of: (a) any inaccuracy in any representation
or warranty of SESI in this Agreement or any certificate,
document or other instrument delivered or to be delivered
pursuant hereto in any respect, whether or not Seller's
Indemnified Persons relied thereon or had knowledge thereof,
or (b) any breach or nonperformance of any covenant,
agreement or other obligation of SESI under this Agreement
or any certificate, document or other instrument delivered
or to be delivered pursuant hereto; provided, however, that
SESI shall have no liability under this Section 8.2(b)
unless and until the aggregate of all Losses exceeds $25,000
("SESI Minimum Amount"), in which event SESI shall be liable
for all Losses in excess of SESI's Minimum Amount.
Section 8.3 Notice and Defense of Third Party Claims.
If any third party demand, claim, action or proceeding shall
be brought or asserted under this Article 8 against an
indemnified party or any successor thereto (the "Indemnified
Person") in respect of which indemnity may be sought under
this Article 8 from an indemnifying person or any successor
thereto (the "Indemnifying Person"), the Indemnified Person
shall give prompt written notice thereof to the Indemnifying
Person who shall have the right to assume its defense,
including the hiring of counsel reasonably satisfactory to
the Indemnified Person and the payment of all expenses;
except that any delay or failure to so notify the
Indemnifying Person shall relieve the Indemnifying Person of
its obligations under this Article 8 only to the extent, if
at all, that it is prejudiced by reason of such delay or
failure. The Indemnified Person shall have the right to
employ separate counsel in any of the foregoing actions,
claims or proceedings and to participate in the defense
thereof, but the fees and expenses of such counsel shall be
at the expense of the Indemnified Person unless both the
Indemnified Person and the Indemnifying Person are named as
parties and the Indemnified Person shall in good faith
determine that representation by the same counsel is
inappropriate. In the event that the Indemnifying Person,
within ten days after notice of any such action or claim,
does not assume the defense thereof, the Indemnified Person
shall have the right to undertake the defense, compromise or
settlement of such action, claim or proceeding for the
account of the Indemnifying Person, subject to the right of
the Indemnifying Person to assume the defense of such
action, claim or proceeding with counsel reasonably
satisfactory to the Indemnified Person at any time prior to
the settlement, compromise or final determination thereof.
Anything in this Article 8 to the contrary notwithstanding,
the Indemnifying Person shall not, without the Indemnified
Person's prior consent, settle or compromise any action or
claim or consent to the entry of any judgment with respect
to any action, claim or proceeding for anything other than
money damages paid by the Indemnifying Person. The
Indemnifying Person may, without the Indemnified Person's
prior consent, settle or compromise any such action, claim
or proceeding or consent to entry of any judgment with
respect to any such action or claim that requires solely the
payment of money damages by the Indemnifying Person and that
includes as an unconditional term thereof the release by the
claimant or the plaintiff of the Indemnified Person from all
liability in respect of such action, claim or proceeding.
ARTICLE 9
DEFINED TERMS
Section 9.1 Definitions. In addition to the other
defined terms used herein, as used in this Agreement, the
following terms when capitalized have the meanings
indicated.
"Affiliate" shall have the meaning ascribed by Rule
12b-2 promulgated under the Exchange Act.
"Annual Financial Statements" shall mean, as the
context may require, (a) the unaudited balance sheet and
related unaudited statements of income, stockholders' equity
and cash flows and the related notes thereto of Nautilus as
of and for the fiscal year ended December 31, 1996 or (b)
the unaudited balance sheet and related unaudited statements
of income, stockholders' equity and cash flows and the
related notes thereto of Superior Bearing as of and for the
fiscal year ended December 31, 1996.
"Applicable Law" shall mean any statute, law, rule or
regulation or any judgement, order, writ, injunction or
decree of any Governmental Entity to which a specified
Person or its property is subject.
"Agreement" shall mean this Stock Purchase Agreement,
including the Exhibits hereto, all as amended or otherwise
modified from time to time.
"Benefit Arrangement" shall mean any employment,
severance or similar contract, or any other contract, plan,
policy or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option or other
stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage
(including any self-insured arrangement), health or medical
benefits, disability benefits, severance benefits and post-
employment or retirement benefits (including compensation,
pension, health, medical or life insurance benefits), other
than the Employee Plans, that is maintained, administered
or contributed to by the employer and covers any employee or
former employee of the employer.
"Business Day" shall mean a day other than a Saturday,
a Sunday or a day on which national banks are closed.
"Closing" means the consummation of the Purchase and
the other transactions contemplated by this Agreement.
"Closing Date" shall mean the date on which the Closing
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Disclosure Schedule" shall mean the disclosure
schedules and other documents attached hereto as Exhibit "C"
prepared by Seller in accordance with the applicable
provisions of this Agreement.
"Employee Plan" means a plan or arrangement as defined
in Section 3(3) of ERISA, that (a) is subject to any
provision of ERISA, (b) is maintained, administered or
contributed to by the employer and (c) covers any employee
or former employee of the employer.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations
promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Governmental Entity" shall mean any court or tribunal
in any jurisdiction or any public, governmental or
regulatory body, agency, department, commission, board,
bureau or other authority or instrumentality.
"Leases" shall mean any executory lease to which either
Nautilus or Superior Bearing is subject having future rental
payments of more than $5,000 in the aggregate.
"Liens" shall mean pledges, liens, defects, leases,
licenses, equities, conditional sales contracts, charges,
claims, encumbrances, security interests, easements,
restrictions, chattel mortgages, mortgages or deeds of
trust, of any kind or nature whatsoever.
"Material Contract" means any executory contract,
agreement or other understanding, whether or not reduced to
writing, that is not cancellable within 30 days, to which
either Nautilus or Superior Bearing or its property is
subject, which provides for future payments to another
Person by either Nautilus or Superior Bearing of more than
$5,000 in the aggregate.
"Multiemployer Plan" means a plan or arrangement as
defined in Section 4001(a)(3) and 3(37) of ERISA.
"Nautilus Common Stock" shall mean all of the issued
and outstanding shares of common stock, without par value,
of Nautilus.
"Note" shall mean a Non-Negotiable Promissory Note in
the form attached hereto as Exhibit "B".
"Person" shall mean an individual, firm, corporation,
general or limited partnership, limited liability company,
limited liability partnership, joint venture, trust,
governmental authority or body, association, unincorporated
organization or other entity.
"Pre-Closing Periods" shall mean all Tax periods ending
at or before the Closing Date and, with respect to any Tax
period that includes but does not end at the Closing Date,
the portion of such period that ends at and includes the
Closing Date.
"Proceedings" means any suit, action, proceeding,
dispute or claim before or investigation by any Governmental
Entity.
"Purchase" shall mean the purchase by SESI of the
Nautilus Common Stock and Superior Bearing Common Stock for
the consideration specified in Section 2.2 of this
Agreement.
"Registrable Shares" means, at any time, SESI Common
Stock issued to Seller pursuant to this Agreement that
cannot be sold without satisfying the holding period
required of Rule 144(d) under the Securities Act (presently
two years from the date of issuance of the SESI Common Stock
or such shorter period as the Securities and Exchange
Commission may adopt).
"Returns" means all returns, reports, estimates,
declarations and statements of any nature regarding Taxes
for any Pre-Closing Period required to be filed by the
taxpayer relating to its income, properties or operations.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"SESI Common Stock" means the shares of common stock,
$.001 par value per share, of SESI.
"SESI Disclosure Documents" shall mean SESI's Annual
Report on Form 10-KSB for the year ended December 31, 1995,
SESI's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1996 and any other document filed by SESI with
the Securities and Exchange Commission in accordance with
the Exchange Act prior to the Closing Date.
"Shares" shall mean, collectively, the Nautilus Common
Stock and the Superior Bearing Common Stock.
"Superior Bearing Common Stock" shall mean all of the
issued and outstanding shares of common stock, without par
value, of Superior Bearing.
"Taxes" shall mean any federal, state, local or other
taxes (including, without limitation, income, alternative
minimum, franchise, property, sales, use, lease, excise,
premium, payroll, wage, employment or withholding taxes),
fees, duties, assessments, withholdings or governmental
charges of any kind whatsoever (including interest,
penalties and additions to tax).
ARTICLE 10
MISCELLANEOUS
Section 10.1 Confidentiality. Until the Closing Date
and subsequent to the termination of this Agreement pursuant
to Section 7.1, SESI will keep confidential and will not
disclose to any third party any information obtained by it
from Seller in connection with this Agreement except (a)
that information may be disclosed by SESI to its advisors in
connection with the negotiation of and the activities
conducted pursuant to this Agreement, or (b) to the extent
that such information is or becomes generally available to
the public through no act or omission of SESI in violation
of this Agreement.
Section 10.2 Survival of Representations, Warranties and
Agreements. The representations, warranties, covenants and
agreements in this Agreement (or in any Exhibit hereto) or
in any instrument delivered pursuant to this Agreement shall
survive the Closing and shall not be limited or affected by
any investigation by or on behalf of any party hereto.
Section 10.3 Notices. All notices hereunder must be in
writing and shall be deemed to have been given upon receipt
of delivery by: (a) personal delivery to the designated
individual, (b) certified or registered mail, postage
prepaid, return receipt requested, (c) a nationally
recognized overnight courier service (against a receipt
therefor) or (d) facsimile transmission with confirmation of
receipt. All such notices must be addressed as follows or
such other address as to which any party hereto may have
notified the other in writing:
If to SESI, to:
0000 Xxxxxxxxx Xxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Facsimile transmission No.: 000-000-0000
If to Seller, to:
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Section 10.4 Headings; Gender. When a reference is made
in this Agreement to a section, exhibit or schedule, such
reference shall be to a section, exhibit or schedule of this
Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All personal pronouns
used in this Agreement shall include the other genders,
whether used in the masculine, feminine or neuter gender,
and the singular shall include the plural and vice versa,
whenever and as often as may be appropriate.
Section 10.5 Entire Agreement; No Third Party
Beneficiaries. This Agreement (including the documents,
exhibits and instruments referred to herein) (a) constitutes
the entire agreement and supersedes all prior agreements,
and understandings and communications, both written and
oral, among the parties with respect to the subject matter
hereof, and (b) is not intended to confer upon any person
other than the parties hereto any rights or remedies
hereunder.
Section 10.6 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
State of Louisiana without regard to any applicable
principles of conflicts of law.
Section 10.7 Assignment. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of
the other parties.
Section 10.8 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable
of being enforced by reason of any rule of law or public
policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any
adverse manner to either party. Upon such determination
that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent
possible, and in any case such term or provision shall be
deemed amended to the extent necessary to make it no longer
invalid, illegal or unenforceable.
Section 10.9 Counterparts. This Agreement may be
executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall
constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed themselves or by their respective
duly authorized officers as of the date first written above.
SUPERIOR ENERGY SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxx
__________________________
Xxxxxxx X. Xxxx,
President
SELLER:
/s/ Xxxx X. Xxxxxx
____________________________
Xxxx X. Xxxxxx
