STOCK PURCHASE AGREEMENT
Among
SUPERIOR ENERGY SERVICES, INC.
and
XXX X. XXXXXX, Individually and as Trustee
of the Xxx X. Xxxxxx Testamentary Trust,
XXXXX X. XXXXXX,
XXXX X. XXXXXX
and
JO XXX XXXXXX
Dated as of November 5, 1997
TABLE OF CONTENTS
Page
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 1
Section 1.4 Deliveries at Closing 2
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF SELLERS 2
Section 2.1 Ownership 2
Section 2.2 Authority; Enforceability 2
Section 2.3 Organization; Qualification; Subsidiaries 2
Section 2.4 Capital Stock 3
Section 2.5 No Conflict 3
Section 2.6 Consent 3
Section 2.7 Legal Proceedings 3
Section 2.8 Charter and By-laws 4
Section 2.9 Financial Statements 4
Section 2.10 Accounts Receivable 4
Section 2.11 Absence of Certain Changes 4
Section 2.12 Suppliers and Customers 6
Section 2.13 Properties; Equipment 6
Section 2.14 Permits; Compliance with Laws 7
Section 2.15 Material Contracts 7
Section 2.16 Litigation 7
Section 2.17 Environmental Matters 7
Section 2.18 ERISA and Related Matters. 8
Section 2.19 Taxes 9
Section 2.20 Transactions with Certain Persons 12
Section 2.21 Intellectual Property 12
Section 2.22 Insurance 12
Section 2.23 Safety and Health 12
Section 2.24 Books and Records 13
Section 2.25 Bank Accounts; Powers of Attorney 13
Section 2.26 Compensation Agreements 13
Section 2.27 Payments 13
Section 2.28 Director and Officer Indemnification 13
Section 2.29 Documents and Written Materials 13
Section 2.30 Effectiveness of Representations and
Warranties 13
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SESI 14
Section 3.1 Organization 14
Section 3.2 Authority; Enforceability 14
Section 3.3 Consents and Approvals; Conflicts 14
Section 3.4 Effectiveness of Representations and
Warranties 14
ARTICLE 4 - COVENANTS 15
Section 4.1 Legal Requirements 15
Section 4.2 Access to Properties and Records 15
Section 4.3 Conduct of Business 15
Section 4.4 Public Statements 15
Section 4.5 No Solicitation 15
ARTICLE 5 - CLOSING CONDITIONS 17
Section 5.1 Conditions Applicable to all Parties 17
Section 5.2 Conditions to Obligations of SESI 17
Section 5.3 Conditions to Obligations of Sellers 18
ARTICLE 6 - TERMINATION AND AMENDMENT 18
Section 6.1 Termination 18
Section 6.2 Effect of Termination 19
Section 6.3 Amendment 19
Section 6.4 Extension; Waiver 19
ARTICLE 7 - INDEMNIFICATION; REMEDIES 19
Section 7.1 Indemnification by Sellers 19
Section 7.2 Indemnification by SESI 20
Section 7.3 Notice and Defense of Third Party Claims 20
Section 7.4 Survival of Representations and Warranties 21
ARTICLE 8 - DEFINED TERMS 22
Section 8.1 Definitions 22
ARTICLE 9 - MISCELLANEOUS 24
Section 9.1 Bonus Pool 24
Section 9.2 Confidentiality 24
Section 9.3 Notices 25
Section 9.4 Headings; Gender 25
Section 9.5 Entire Agreement; No Third Party
Beneficiaries 25
Section 9.6 Governing Law 26
Section 9.7 Assignment 26
Section 9.8 Severability 26
Section 9.9 Counterparts 26
Exhibits
A - Form of Employment Agreement
B - Form of Promissory Note
C - Form of Disclosure Schedule
D - Form of Security Agreement
E - Form of Subordination Agreement
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of November 5, 1997
(this "Agreement"), is between Superior Energy Services, Inc., a
Delaware corporation ("SESI" or "Buyer"), and Xxx X. Xxxxxx,
individually and as Trustee of the Xxx X. Xxxxxx Testamentary
Trust, Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx and Jo Xxx Xxxxxx
(collectively, the "Sellers" and individually, a "Seller").
W I T N E S S E T H:
WHEREAS, Sellers are the owner of all of the issued and
outstanding shares of common stock, no par value, of Sub-Surface
Tools, Inc., a Louisiana corporation ("Sub-Surface");
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires
to buy from Sellers, all of the issued and outstanding shares of
common stock of Sub-Surface that is owned by Sellers 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
8.
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, Sellers 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 Sellers agree to sell to
Buyer, and Buyer agrees to purchase from Sellers, the Shares,
free and clear of all Liens, restrictions, and claims of every
kind.
Section 1.2 Purchase Price. In consideration of its
purchase of the Shares, Buyer shall (a) pay to Sellers the sum of
$17,500,000 in immediately available funds and (b) execute and
deliver to the Sellers Notes providing for maximum payments
thereunder of $7,500,000 plus interest and deliver the other
documents specified in Article 5. The payments and Notes
required by this Section 1.2 shall be allocated among the Sellers
in accordance with their ownership of Shares specified in the
Disclosure Schedule.
Section 1.3 Closing. Subject to satisfaction or waiver
of the conditions specified in Article 5 hereof, the Closing
shall take place at such place and time as Buyer and Sellers may
agree.
Section 1.4 Deliveries at Closing. At the Closing (a)
Buyer shall pay or deliver to Sellers the payments and the Notes
specified in Section 1.2, (b) Sellers shall deliver to Buyer
certificates representing the Shares duly endorsed to SESI, which
shall transfer to SESI good and marketable title to the Shares
free and clear of all Liens, restrictions, and claims of every
kind and (c) Sellers 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 SELLERS
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, Sellers represent and warrant to
Buyer as follows:
Section 2.1 Ownership. Sellers are, and at the Closing
Date will be, the sole record and beneficial owners of the
Shares, which are represented by the certificates bearing the
numbers, shown opposite their names in the Disclosure Schedule.
Sellers have 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. Sellers have 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
Sellers and constitutes, and each other agreement, instrument or
documents executed or to be executed by Sellers in connection
with the transactions contemplated hereby has been, or when
executed will be, duly executed and delivered by Sellers and
constitutes, or when executed and delivered will constitute, a
valid and legally binding obligation of Sellers, enforceable
against Sellers 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.
(a) Sub-Surface 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 Sub-
Surface are pending. Sub-Surface 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.
(b) Sub-Surface does not own, directly or indirectly,
any capital stock, equity interest or other ownership interest in
any corporation, partnership, association, joint venture, limited
liability company or other entity.
Section 2.4 Capital Stock.
(a) The authorized capital stock of Sub-Surface
consists exclusively of 10,000 shares of common stock, without
par value, divided into 1,000 shares designated as Class A common
stock and 9,000 shares designated as Class B common stock, of
which only the Shares are issued and are owned, beneficially and
of record, by the Sellers. The shares of each class of common
stock have the relative rights, preferences and limitations set
forth in the Company's articles of incorporation, as amended.
All of such issued shares have been validly issued and are fully
paid and nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Sellers
will, by delivery to Buyer of certificates properly endorsed
representing the Shares at the Closing, have transferred,
delivered and vested in Buyer good and marketable (legal and
beneficial) title to the whole of the Shares free and clear of
all Liens.
(b) There are no existing options, warrants, calls,
commitments or other agreements or rights with respect to the
capital stock of Sub-Surface, and there are no convertible or
exchangeable securities outstanding which, upon conversion or
exchange, would require the issuance of any shares of capital
stock or other securities of Sub-Surface.
Section 2.5 No Conflict. Except as provided in
Disclosure Schedule 2.5, neither the execution and the delivery
of this Agreement by Sellers, 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 Shares or any of Sub-
Surface's properties or assets under any of the terms, conditions
or provisions of Sub-Surface'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 Sub-Surface, or any of its assets is bound, or (e)
violate any Applicable Law binding upon Sellers, Sub-Surface or
any of the properties or assets of Sub-Surface.
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 Sellers or Sub-Surface in connection with the
execution, delivery or performance by Sellers of this Agreement
or the consummation by any of them of the transactions
contemplated hereby.
Section 2.7 Legal Proceedings. There are no Proceedings
pending or, to the knowledge of Sellers, 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 Charter and By-laws. Sellers have made
available to SESI accurate and complete copies of (a) the
articles of incorporation, as amended, and by-laws of Sub-
Surface, (b) the stock records of Sub-Surface and (c) the minutes
of all meetings of the Board of Directors, any committees of such
board and the shareholders of Sub-Surface (and all consents in
lieu of such meetings). Such records, minutes and consents
accurately reflect the stock ownership of Sub-Surface and all
actions taken by the Board of Directors, committees and
shareholders. Sub-Surface is not in violation of any provision
of its articles of incorporation or by-laws.
Section 2.9 Financial Statements. Disclosure Schedule
2.9(i) contains true and complete copies of the Financial
Statements. The Financial Statements have been prepared from the
books and records of Sub-Surface and are complete, correct and in
accordance with the books of account and records of Sub-Surface.
Except as provided in Disclosure Schedule 2.9(ii), as of
September 30, 1997, Sub-Surface did not have, and Sub-Surface's
properties and assets were not subject to, any liability,
commitment, indebtedness or obligation of any kind whatsoever
(whether liquidated or unliquidated, actual or contingent), which
(a) is not shown and adequately reserved against in the Financial
Statements or (b) has not been disclosed to Buyer in writing.
Sub-Surface has not since September 30, 1997 incurred any
liability or obligation (whether accrued, absolute, contingent,
unliquidated or otherwise), except (a) liabilities reflected in
the Financial Statements, (b) current liabilities which have
arisen since the date of the Financial Statements in the ordinary
course of business (none of which is a material liability for
breach of contract, tort or infringement) and (c) 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 2.10 Accounts Receivable. Except as provided in
Disclosure Schedule 2.10, all of the accounts receivable
reflected on the Financial Statements or created thereafter have
arisen only from bona fide transactions in the ordinary course of
business, represent valid obligations owing to Sub-Surface. 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 Financial Statements.
Section 2.11 Absence of Certain Changes. Since September
30, 1997 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 Sub-Surface. Except as
provided in Disclosure Schedule 2.11, Sub-Surface has not since
September 30, 1997:
(a) 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;
(b) entered into any agreement or transaction not in
the ordinary course of business;
(c) 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;
(d) declared or paid any dividend or other
distribution with respect to any of its capital stock or
purchased any of its capital stock;
(e) acquired or disposed of any assets material to its
business or operations;
(f) subjected any of its assets to any Lien;
(g) 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;
(h) adopted any employee welfare, pension, retirement,
profit sharing or similar plan or made any material addition to
or modification of existing plans;
(i) experienced any labor trouble or any controversy
or unsettled grievance involving any personnel;
(j) 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;
(k) made any material change in any accounting
principle, procedure or practice followed by it;
(l) issued any stock or merged or consolidated with
any other business or agreed to do so;
(m) made any capital expenditure or entered into any
Lease;
(n) borrowed any money or guaranteed or assumed any
indebtedness of others;
(o) 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 $25,000 or more;
(p) loaned any money to any Person;
(q) defaulted under any note, loan, mortgage,
guarantee or other instrument of indebtedness or any Material
Contract;
(r) 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
for 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 the Sellers that may reasonably be
expected to give rise to any such notification, warning or
inquiry;
(s) transferred any asset, right or interest to, or
entered into any transaction with Sellers or any of their
Affiliates;
(t) amended its articles of incorporation or by-laws;
(u) received notice or had knowledge or reason to
believe that any substantial customer has terminated or intends
to terminate its relationship with Sub-Surface;
(v) waived any right in connection with any aspect of
its business that could have a material effect on the business of
Sub-Surface; or
(w) made any agreement or commitment to do any of the
foregoing.
Section 2.12 Suppliers and Customers. To the knowledge of
Sellers, (a) no supplier providing products, materials or
services to Sub-Surface intends to cease selling such products,
materials or services to Sub-Surface or to limit or reduce such
sales to Sub-Surface or materially alter the terms or conditions
of such sales and (b) no customer of Sub-Surface intends to
terminate, limit or reduce its or their business relations with
Sub-Surface.
Section 2.13 Properties; Equipment.
(a) Sub-Surface has good and marketable title to, or
in the case of leased property valid leasehold interests in, all
property and assets (whether real or personal, tangible or
intangible) reflected on the Financial Statements or used by it
in the conduct of the Company's business or acquired after
September 30, 1997 except for properties and assets sold since
September 30, 1997 in the ordinary course of business consistent
with past practice. Except as disclosed on Disclosure Schedule
2.13(a), none of such properties or assets is subject to any
Liens. No Seller owns, directly or indirectly (except through
such Seller's interest in Sub-Surface) any property used in the
business of Sub-Surface.
(b) The Disclosure Schedule sets forth all of the real
property owned by Sub-Surface. Sub-Surface has never owned any
real property other than as described in the Disclosure Schedule.
Sub-Surface has good title to all material properties and assets
reflected in the Disclosure Schedule, free and clear of any
Liens.
(c) 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. Sub-
Surface is in full compliance with and has not received a notice
of default under any Lease and is not 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
Sub-Surface.
(d) Except as described in the Disclosure Schedule,
there are no developments affecting Sub-Surface'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 2.14 Permits; Compliance with Laws. Sub-Surface (a)
has all necessary permits, licenses and authorizations required
by any Governmental Entity 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.
Section 2.15 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. Sub-Surface and each other party to each Material
Contract are in compliance in all material respects with the
provisions of such Material Contract.
Section 2.16 Litigation. Except as provided on Disclosure
Schedule 2.16, there are no Proceedings pending or threatened
against Sub-Surface and, to the knowledge of Sellers, there have
been no events and there are no facts or circumstances that could
result in any Proceedings.
Section 2.17 Environmental Matters. Except as disclosed on
Disclosure Schedule 2.17, Sub-Surface is not in violation of any
Applicable Law relating to pollution or the protection of the
environment and is not a party to any proposed removal, response
or remedial action. Sub-Surface has not received any notice with
respect to the business, the leased or owned properties, or the
use by third parties of the assets of Sub-Surface 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 Sub-Surface 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 Sub-Surface 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. Sub-Surface
has made available to SESI all internal and external
environmental audits and studies relating to its leased or owned
properties and all correspondence on substantial environmental
matters relating to its leased or owned properties in its
possession.
Section 2.18 ERISA and Related Matters.
(a) The Disclosure Schedule lists each Employee Plan
that Sub-Surface maintains, administers, contributes to, or has
any contingent liability with respect thereto. Sellers have
provided a true and complete copy of each such Employee 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.
(b) The Disclosure Schedule identifies each Benefit
Arrangement that Sub-Surface maintains or administers. Except as
set forth in the Disclosure Schedule, Sub-Surface has made all
contributions to and has no contingent liability with respect to
any of its Benefit Arrangements. Sellers have furnished to SESI
copies or descriptions of each Benefit Arrangement. To the
knowledge of Sellers, 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.
(c) Sub-Surface does not maintain and has never
maintained an "employee benefit plan" (as defined in Section 3(3)
of ERISA) which is or was (i) a plan subject to Title IV of ERISA
or (ii) a "multiemployer plan" (as defined in Section 3(37) of
ERISA).
(d) 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. Sub-Surface has not
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.
(e) 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 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. 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.
(f) Full payment has been made of all amounts which
Sub-Surface 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.
(g) Neither Sub-Surface nor its shareholders,
directors, officers or employers have engaged in any transaction
with respect to an Employee Plan that could subject Sub-Surface
to a tax, penalty or liability for a prohibited transaction, as
defined in Section 406 of ERISA or Section 4975 of the Code.
(h) Sub-Surface has no 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 Sub-Surface or a dependent thereof.
(i) 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 Sub-
Surface or any of its employees or directors, or any fiduciary
(as defined in ERISA Section 3(21)) of such Employee Plan or
Benefit Arrangement.
(j) Except as disclosed on Disclosure Schedule
2.18(j), no employee or former employee of Sub-Surface 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 as a result of any of
the transactions contemplated hereby.
(k) Sub-Surface is not 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 2.19 Taxes.
(a) All Returns required to be filed by or on behalf
of Sub-Surface 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 Sub-Surface 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.
(b) Sub-Surface 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.
(c) There are no Liens on any of the assets of Sub-
Surface 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.
(d) Sellers have furnished or made available to SESI
true and complete copies of: (i) all federal and state income
and franchise tax returns of Sub-Surface 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 Sub-Surface or on Sub-Surface's behalf
relating to Taxes.
(e) Except as disclosed on the Disclosure Schedule:
(i) The Returns of Sub-Surface have never been
audited by a governmental or taxing authority, nor is any such
audit in process, pending or threatened (formally or informally).
(ii) No deficiencies exist or have been asserted
(either formally or informally) or are expected to be asserted
with respect to Taxes of Sub-Surface, and there is no basis for
the assertion of any deficiency of Taxes of Sub-Surface. No
notice (either formally or informally) has been received by Sub-
Surface that it has not filed a Return or paid Taxes required to
be filed or paid by it.
(iii) Sub-Surface is not 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 Sub-Surface or any of its assets.
(iv) 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 Sub-Surface.
(v) There are no requests for rulings, subpoenas
or requests for information pending with respect to Sub-Surface.
(vi) No power of attorney has been granted by Sub-
Surface, with respect to any matter relating to Taxes.
(f) Except as disclosed on the Disclosure Schedule:
(i) Sub-Surface has not made an election, and is
not 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.
(ii) Sub-Surface has not issued or assumed any
indebtedness that is subject to section 279(b) of the Code.
(iii) Sub-Surface has not 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.
(iv) No consent under Section 341(f) of the Code
has been filed with respect to Sub-Surface.
(v) Sub-Surface has not agreed, nor is Sub-
Surface required to make, any adjustment under Code Section
481(a) by reason of change in accounting method or otherwise.
(vi) Sub-Surface has not disposed of any property
that has been accounted for under the installment method.
(vii) Sub-Surface is not a party to any interest
rate swap, currency swap or similar transaction.
(viii) Sub-Surface is not 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 Sub-Surface.
(ix) Sub-Surface has not participated in any
international boycott as defined in Code Section 999.
(x) Sub-Surface is not subject to any joint
venture, partnership or other arrangement or contract that is
treated as a partnership for federal income tax purposes.
(xi) Sub-Surface has not 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.
(xii) Sub-Surface has never 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.
(xiii) 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.
(g) Set forth in the Disclosure Schedule is accurate
and complete information with respect to each of the following
for all tax periods beginning on or after January 1, 1994:
(i) Any tax elections in effect with respect to
Sub-Surface;
(ii) Any net operating loss carry overs of Sub-
Surface; and
(iii) Any tax credit carry overs of Sub-Surface.
Section 2.20 Transactions with Certain Persons. Except for
employment relationships in the ordinary course of business, no
employee of Sub-Surface or any of the employees' Affiliates is
presently a party to any transaction with Sub-Surface, 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 2.21 Intellectual Property. Sub-Surface either owns
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 Sub-
Surface. 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. Sub-Surface is in compliance with all
such licenses and agreements and there are no pending or, to the
knowledge of Sellers, threatened Proceedings challenging or
questioning the validity or effectiveness of any license or
agreement relating to such property or the right of Sub-Surface
to use, copy, modify or distribute the same.
Section 2.22 Insurance. SESI has been provided copies of or
access to all insurance policies or binders which relate to the
Company's Business. All premiums due under such policies and
binders have been paid or accrued for on the 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 Sub-Surface and no notice of
disallowance of any claim under any insurance policy or binder,
whether or not currently in effect, has been received by Sub-
Surface. Except as disclosed on Disclosure Schedule 2.22, Sub-
Surface has no liability for or exposure to any premium expense
for expired policies and there are no current claims by Sub-
Surface 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 2.23 Safety and Health. The property and assets of
Sub-Surface 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.
Sub-Surface has not 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 Sellers, no such investigation or
inquiry is planned or threatened.
Section 2.24 Books and Records. All of the books and
records of Sub-Surface, including all personnel files, employee
data and other materials relating to employees, are substantially
complete and correct, have been maintained in accordance with
good business practice and all Applicable Laws. Such books and
records accurately and fairly reflect, in reasonable detail, all
assets, liabilities and material transactions of Sub-Surface.
Section 2.25 Bank Accounts; Powers of Attorney. The
Disclosure Schedule sets forth with respect to each bank account
or cash account maintained by Sub-Surface 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 Sub-Surface is a
party. Except as set forth on the Disclosure Schedule, Sub-
Surface is not a party to any written or oral employment,
commission, bonus or other compensation or consulting agreement
which Sub-Surface 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 Payments. Neither Sub-Surface nor any of its
directors or officers nor, to the knowledge of Sellers, any other
Person associated with or acting on behalf of Sub-Surface has
directly or indirectly: (a) made any bribe, payoff, influence
payment, kickback or other payment to any Person, to obtain
favorable treatment in securing business, to pay for favorable
treatment for business secured or to obtain special concessions
or for special concessions already obtained, for or in respect of
Sub-Surface; (b) received any bribe, payoff or kickback from any
person regardless of form, whether in money, property or services
to award business; or (c) established or maintained any fund or
asset that has not been recorded in the books and records of Sub-
Surface.
Section 2.28 Director and Officer Indemnification. The
directors and officers of Sub-Surface are not entitled to
indemnification by Sub-Surface, except to the extent that
indemnification rights are provided for generally in Louisiana
and there are no pending claims for indemnification by any such
director or officer.
Section 2.29 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 2.30 Effectiveness of Representations and
Warranties. All of the representations and warranties of Sellers
in this Agreement shall be true in all material respects on the
Closing Date and shall be deemed to have been made again by
Sellers on and as of the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF XXXX
XXXX represents and warrants to and agrees with Sellers 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 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 3.3 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 Certificate 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 3.4 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
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 Sellers 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, Sellers shall cause Sub-Surface to allow SESI and
its authorized representatives full access, during normal
business hours and on reasonable notice, to all of Sub-Surface'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 Sub-Surface's business and assets. Sellers shall
further cause Sub-Surface to use its best efforts to cause the
employees, counsel and regular independent certified public
accountants of Sub-Surface to be available upon reasonable notice
to answer questions of SESI's representatives concerning the
business and affairs of Sub-Surface, 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 Sub-Surface.
Section 4.3 Conduct of Business. From and after the date of
this Agreement and until the Closing Date, Sellers shall cause
Sub-Surface to conduct its business, in the ordinary course and
consistent with past practice, maintain satisfactory
relationships with its customers and take all other actions
reasonably necessary to preserve the good will of its business,
except as expressly required or otherwise permitted by this
Agreement, and shall not take or permit any action which would
cause any of his 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. Sellers will not prior to the
Closing Date or the termination of this Agreement pursuant to
Section 6.1, (nor will he permit any of his affiliates or any of
Sub-Surface'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 Sub-Surface's business
and properties or any Shares whether by merger, purchase of
assets, purchase of stock or otherwise. Sellers will notify SESI
promptly upon receipt of any inquiry, offer or other
communication from any third party regarding any such activities.
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:
(a) 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.
(b) Xxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx Xxxxxxx and Xxxxxxxxxxx Xxxxxx shall each have entered
into an 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:
(a) The representations and warranties of Sellers 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 Sellers 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.
(b) All consents and approvals of third parties
necessary for consummation of the transactions contemplated by
this Agreement shall have been obtained. Sellers shall have used
their best efforts to obtain all necessary permits,
authorizations, consents and approvals required by such
Governmental Entities prior to the Closing Date.
(c) SESI shall have had a full opportunity to conduct
inspections of the operating assets and books and records of Sub-
Surface. Sellers shall have provided SESI certified copies of
Sub-Surface's Articles of Incorporation and By-laws and
certificates of existence and good standing, certified by the
Secretary of State of the State of Louisiana.
(d) Sellers shall have executed and delivered to SESI
for the benefit of Whitney National Bank the Subordination
Agreement.
(e) Any and all changes made to the Disclosure
Schedule or to the representations and warranties of Sellers
shall be satisfactory in all respects to SESI
(f) Sellers shall have provided to SESI such
certificates and other documents as SESI shall reasonably
request.
Section 5.3 Conditions to Obligations of Sellers. The
obligations of Sellers to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of
the following conditions, unless waived by Sellers:
(a) 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.
(b) Sellers 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.
(c) Sellers shall have received evidence that either
the guarantees or endorsements of the Company's indebtedness to
Guaranty Bank & Trust Company shall have been canceled or that
SESI shall have implemented arrangements to the Sellers
reasonable satisfaction that all such indebtedness shall be paid
on the Closing Date.
(d) Sellers shall receive a Security Agreement
executed by the Company granting a security interest in the
equipment specified therein to secure SESI's obligation under the
Notes.
ARTICLE 6
TERMINATION AND AMENDMENT
Section 6.1 Termination. This Agreement may be terminated
and may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of SESI and Sellers;
(b) by SESI or Sellers, 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 of the
Sellers 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
(c) by SESI or Sellers if the transactions
contemplated by this Agreement shall not have been consummated on
or before December 31, 1997; provided, that the right to
terminate this Agreement under this Section 6.1(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 6.2 Effect of Termination. In the event of a
termination of this Agreement as provided in Section 6.1, this
Agreement shall forthwith become void and there shall be no
liability or obligation under any provisions hereof on the part
of SESI or Sellers, except (a) pursuant to the covenants and
agreements contained in Section 9.2 and this Section 6.2 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 6.3 Amendment. This Agreement may not be amended
except by an instrument in writing signed by each of the parties
hereto.
Section 6.4 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 7
INDEMNIFICATION; REMEDIES
Section 7.1 Indemnification by Sellers. Except as otherwise
expressly provided in this Article 7, Sellers shall jointly and
severally defend, indemnify and hold harmless SESI and any
successors of SESI through merger or consolidation (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 Sellers 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 Sellers under this
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 Sellers in this Agreement (as to
which there shall be no minimum or maximum amount of liability),
Sellers shall have no liability under this Section 7.1 unless and
until the aggregate of all Losses resulting therefrom exceeds
$50,000, in which event Sellers shall be liable for all Losses in
excess of that amount up to a maximum aggregate amount of
$5,000,000.
Section 7.2 Indemnification by SESI. Except as otherwise
expressly provided in this Article 7, SESI shall defend,
indemnify and hold harmless Sellers and each of Sellers'
successors and assigns (Sellers and such persons, collectively,
"Sellers' Indemnified Persons"), and shall reimburse Sellers'
Indemnified Persons for, from and against all Losses imposed on
or incurred by Sellers' 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 Sellers' 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 7.2 unless
and until the aggregate of all Losses exceeds $50,000, in which
event SESI shall be liable for all Losses in excess of that
amount up to a maximum aggregate amount of $5,000,000.
Section 7.3 Notice and Defense of Third Party Claims. If any
third party demand, claim, action or proceeding shall be brought
or asserted under this Article 7 against an indemnified party or
any successor thereto (the "Indemnified Person") in respect of
which indemnity may be sought under this Article 7 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 7 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 7 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.
Section 7.4 Survival of Representations and Warranties.
(a) The obligation of the Sellers to indemnify SESI's
Indemnified Persons pursuant to Section 7.1 shall survive the
consummation of the transactions contemplated by this Agreement,
as follows:
(i) with respect to the representations and
warranties in Sections 2.1 and 2.7, indefinitely;
(ii) with respect to the representations and
warranties in Sections 2.17 and 2.19, until the expiration of the
applicable statute of limitations period; and
(iii) with respect to all other representations
and warranties of the Sellers and any other matters covered by
Section 7.1, until the third anniversary of the Closing Date.
(b) The obligation of SESI to indemnify Sellers'
Indemnified Persons pursuant to Section 7.2 shall survive the
consummation of the transactions contemplated by this Agreement,
as follows:
(i) with respect to the representations and
warranties in Section 3.2, indefinitely; and
(ii) with respect to all other representations and
warranties of SESI and any other matters covered by Section 7.2,
until the third anniversary of the Closing Date.
(c) The obligations of the parties for
indemnification under this Article 7 shall terminate after the
expiration of the periods indicated in subsections (a) and (b) of
this Section 7.4, except with respect to any Loss which has been
the subject of written notice to the party against whom such
claim of Loss is asserted prior to the expiration of such period,
which notice will preserve such claim until it is liquidated or
otherwise finally resolved pursuant to the procedures set forth
in Sections 7.3 and 7.4 of this Agreement.
(d) The provisions of this Article 7 shall apply to
any claim of Loss resulting or arising from any untruth or
inaccuracy of any representation or warranty of any party to this
Agreement which gives rise to an indemnity to one party from
another party or parties, with the intent that all such claims
shall be subject to the procedures, limitations and other
provisions contained in this Article 7. The indemnification
provided by Sections 7.1 and Section 7.2 shall be the sole and
exclusive remedy available to the parties hereto for any breach
or inaccuracy of any of the representations or warranties by a
party set forth in this Agreement. Notwithstanding the
foregoing, the provisions of this Article 7 shall not be deemed
to preclude an action by any party for, or a recovery pursuant to
a final decision of a court of competent jurisdiction against any
party for, actual, and not negligent or unintentional, fraud.
ARTICLE 8
DEFINED TERMS
Section 8.1 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 Securities Exchange Act of 1934, as
amended.
"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.
"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
Sellers 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.
"Employment Agreement" shall mean the Employment Agreement
in the form attached hereto as Exhibit "A".
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated
thereunder.
"Financial Statements" shall mean, as the context may
require, the balance sheet and related statements of income and
retained earnings of Sub-Surface as of and for the fiscal year
ended July 31, 1997 and the unaudited balance sheet and related
unaudited statement of income and retained earnings for the two
month period ended September 30, 1997.
"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 Sub-Surface
is subject having future rental payments of more than $25,000 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 cancelable within 30 days, to which Sub-Surface or its
property is subject, which provides for future payments to
another Person by Sub-Surface of more than $25,000 in the
aggregate.
"Multiemployer Plan" means a plan or arrangement as defined
in Section 4001(a)(3) and 3(37) of ERISA.
"Note" shall mean 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.
"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 Shares for
the consideration specified in Section 2.2 of this Agreement.
"Returns" means all returns, reports, estimates,
declarations and statements of any nature relating to, or
required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding
and other payments to third parties.
"Security Agreement" shall mean the Security Agreement in
the form attached hereto as Exhibit "D".
"Shares" shall mean all of the issued and outstanding shares
of both classes of common stock, no par value, of Sub-Surface.
"Subordination Agreement" shall mean the Subordination
Agreement in the form attached hereto as Exhibit "E".
"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 9
MISCELLANEOUS
Section 9.1 Bonus Pool. SESI will cause Sub-Surface
following the Closing Date to establish an employee bonus pool
for its employees for the 12 month periods ending October 31,
1998, 1999 and 2000 in accordance with this Section 9.1. If Sub-
Surface's EBITDA (as defined and calculated in accordance with
the Note) exceeds $6,000,000 in any of these 12-month periods,
then a bonus pool of 20% of the amount over $6,000,000 will be
established for that period for the benefit of Sub-Surface's
employees to be allocated as determined by the Sellers and paid
on or prior to December 31 of each year.
Section 9.2 Confidentiality. Until the Closing Date and
subsequent to the termination of this Agreement pursuant to
Section 6.1, SESI will keep confidential and will not disclose to
any third party any information obtained by it from Sellers 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 9.3 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 Sellers, to:
000 Xxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxxx 00000
Facsimile transmission No.: 000-000-0000
With a copy to:
Xxxxxx X. Reso, Xx.
Xxxxxxx & Xxxxxx, X.X.X.
0000 Energy Centre
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Facsimile transmission No.: 000-000-0000
Section 9.4 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 9.5 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 9.6 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 9.7 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 9.8 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 9.9 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/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Chief Financial
Officer
SELLERS:
/s/ Xxx X. Xxxxxx
Xxx X. Xxxxxx
XXX X. XXXXXX TESTAMENTARY TRUST
By: /s/ Xxx X. Xxxxxx, Trustee
Xxx X. Xxxxxx, Trustee
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
/s/ Jo Xxx Xxxxxx
Jo Xxx Xxxxxx