EXHIBIT 10.1
PURCHASE AGREEMENT
AMONG
CAL DIVE INTERNATIONAL, INC.
COFLEXIP
AND
CERTAIN SHAREHOLDERS OF
CAL DIVE INTERNATIONAL, INC.
Dated as of April 11, 1997
TABLE OF CONTENTS
Page
1. Authorization and Closing............................................ 1
1A. Purchase and Sale of Common Stock.............................. 1
1B. The Closing.................................................... 2
2. Conditions to the Purchaser's Obligation at the Closing.............. 2
2A. Representations and Warranties................................. 2
2B. Compliance..................................................... 2
2C. Bring-Down Certificate......................................... 2
2D. Material Adverse Change....................................... 3
2E. Third Party Consents........................................... 3
2F. HSR Act........................................................ 3
2G. Exon-Xxxxxx Filing............................................. 3
2H. Registration Rights Agreement................................. 3
2I. Shareholders Agreement ........................................ 3
2J. Business Cooperation Agreement................................. 3
2K. Corporate Governance Documents................................. 3
2L. Employment Agreements.......................................... 4
2M. Legal Opinions................................................. 4
2N. Closing Documents.............................................. 4
2O Proceedings.................................................... 5
3. Conditions to the Company's and Shareholders' Obligation
at the Closing..................................................... 5
3A. Representations and Warranties................................. 5
3B. Compliance..................................................... 5
3C. Bring-Down Certificate......................................... 5
3D. ROV Agreement.................................................. 5
3E. HSR Act........................................................ 5
3F. Business Cooperation Agreement................................. 5
3G. Third Party Consents........................................... 5
3H. Registration Rights Agreement.................................. 5
3I. Shareholders Agreement......................................... 6
3J. Legal Opinions................................................. 6
3K. Closing Documents.............................................. 6
3L. Proceedings.................................................... 6
4. Appointment of Representative........................................ 6
5. Covenants............................................................ 7
5A. Financial Statements and Other Information..................... 7
5B. Inspection of Property......................................... 8
5C. Affirmative Covenants.......................................... 8
5D. Compliance with Agreements..................................... 9
5E. Vessels........................................................ 9
5F. Access to Information; Confidentiality......................... 9
5G. Conduct of the Business Pending the Closing.................... 9
5H. Financial Statements........................................... 11
5I. Purchaser Covenant............................................. 12
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5J. Other Actions.................................................. 12
6. Representations and Warranties of the Company........................ 12
6A. Organization and Corporate Power............................... 12
6B. Capital Stock and Related Matters.............................. 13
6C. Authorization; No Breach....................................... 14
6D. Financial Statements........................................... 14
6E. Absence of Undisclosed Liabilities............................. 14
6F. Absence of Certain Developments................................ 15
6G. Tax Matters.................................................... 16
6H. Litigation..................................................... 16
6I. Real Property.................................................. 17
6J. Vessels........................................................ 18
6K. Tangible Personal Property..................................... 19
6L. Intangible Property............................................ 20
6M. Material Contracts............................................. 20
6N. Employee Benefits.............................................. 21
6O. Labor.......................................................... 23
6P. Compliance with Laws; Permits.................................. 23
6Q. Environmental Matters.......................................... 24
6R. Investment Company Act......................................... 24
6S. Insurance...................................................... 25
6T. Customers and Suppliers........................................ 25
6U. Related Party Transactions..................................... 25
6V. Entire Business................................................ 25
6W. No Finder's Fee................................................ 26
6X. Disclosure..................................................... 26
7. Representations and Warranties of the Shareholders................... 26
7A. Title to Shares................................................ 26
7B. Authority Relative to this Agreement........................... 26
8. Purchaser's Representations and Warranties........................... 27
8A. Organization and Corporate Power............................... 27
8B. Authorization; No Breach....................................... 28
8C. Restricted Securities.......................................... 28
8D. No Finder's Fee................................................ 28
8E. Purchaser Inquiry.............................................. 28
8F. Qualification as an Accredited Investor........................ 28
9. Public Disclosure.................................................... 28
10. Definitions.......................................................... 29
11. Post-Closing Activities.............................................. 35
12. Miscellaneous........................................................ 35
12A. Expenses....................................................... 35
12B. Remedies....................................................... 35
12C. Entire Agreement; Amendments and Waivers....................... 35
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12D. Survival of Representation and Warranties; Indemnification..... 36
12E. Successors and Assigns......................................... 39
12F. Severability................................................... 39
12G. Counterparts................................................... 39
12H. Table of Contents and Section Headings; Interpretation......... 39
12I. Governing Law; Submission to Jurisdiction;
Consent to Service of Process................................ 40
12J. Arbitration.................................................... 40
12K. Notices........................................................ 42
12L. Further Assurances............................................. 43
12M. Interpretation................................................. 43
13. Consent to Sale...................................................... 43
14. Termination of Agreement............................................. 43
15. Survival After Termination........................................... 44
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - List of Shareholders of the Company
Exhibit B - Form of ROV Agreement
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Shareholders Agreement
Exhibit E - Form of Business Cooperation Agreement
Exhibit F - Form of Articles of Incorporation and By-Laws
Exhibit G-1 - Form of Employment Agreement - Xxxxxx X. Xxxxx
Exhibit G-2 - Form of Employment Agreement - Xxxx X. Xxxxx
Exhibit G-3 - Form of Employment Agreement - S. Xxxxx Xxxxxx
Exhibit G-4 - Form of Employment Agreement - Xxxxxx X. Xxxxxx
Exhibit G-5 - Form of Employment Agreement - Xxxxxxx X. Xxxxxx
Exhibit G-6 - Form of Employment Agreement - Xxxxxxx X. Xxxxxxxxx
Exhibit G-7 - Form of Employment Agreement - Xxx Xxxxxxxx
Exhibit G-8 - Form of Employment Agreement - Xxx Xxxxx
Exhibit H-1 - Form of Opinion of the General Counsel of
the Company
Exhibit H-2 - Form of Opinion of Special Counsel to the Company and
Certain Selling Shareholders (other than the Funds)
Exhibit H-3 - Form of Opinion of Counsel to the Funds
Exhibit I - Form of FIRPTA Certificate
Exhibit J-1 - Form of Opinion of French Counsel to the Purchaser
Exhibit J-2 - Form of Opinion of Special U.S. Counsel to the Purchaser
Exhibit K - Reserves Report
Exhibit L - Ruling Letter and Customs Commissioner Response thereto
Schedule 6A - List of Foreign Jurisdictions
Schedule 6B - Capital Stock and Options
Schedule 6C - Consents and Waivers
Schedule 6D - Financial Statements
Schedule 6E - Material Adverse Changes
Schedule 6F - Certain Developments
Schedule 6G - Tax Matters
Schedule 6H - Legal Proceedings
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Schedule 6I - Real Property
Schedule 6J - Vessels
Schedule 6K - Tangible Personal Property
Schedule 6L - Intangible Property
Schedule 6M - Material Contracts
Schedule 6N - Employee Benefits
Schedule 6P - Compliance with Laws; Permits
Schedule 6Q - Environmental Matters
Schedule 6S - Insurance
Schedule 6T - Customers and Suppliers
Schedule 6U - Related Party Transactions
Schedule 7A - Shareholder Restrictions
Schedule 8B - Purchaser Consents and Approvals
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "AGREEMENT"), dated as of April 11, 1997, is
among Cal Dive International, Inc., a Minnesota corporation (the "COMPANY"),
Coflexip, a French corporation (the "PURCHASER"), and the shareholders of the
Company listed on EXHIBIT A (individually, a "SHAREHOLDER" and, collectively,
the "SHAREHOLDERS"). Except as otherwise defined herein, capitalized terms used
in this Agreement are defined in Section 10.
This Agreement is being executed in connection with the acquisition of
thirty-one and eight-tenths percent (31.8%) of the issued and outstanding
capital stock (after giving effect to the transactions contemplated by this
Agreement) of the Company by the Purchaser. This acquisition will be
accomplished through the (i) issuance and sale by the Company of 528,541 shares
of Common Stock, no par value, of the Company (the "COMPANY SHARES") for an
aggregate purchase price of Four Million Nine Hundred Ninety-Nine Thousand Nine
Hundred Ninety-Seven and 86/100 Dollars ($4,999,997.86), and (ii) the sale by
the Shareholders of 3,171,247 shares of Common Stock, no par value, of the
Company (the "SHAREHOLDER SHARES") for an aggregate purchase price of
Twenty-Nine Million Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Seven
Dollars ($29,999,997.00), all as hereinafter described.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
1. AUTHORIZATION AND CLOSING.
1A. PURCHASE AND SALE OF COMMON STOCK. At the Closing, subject to the
terms and conditions of this Agreement, the Company shall sell the Company
Shares and the Shareholders shall sell the Shareholder Shares to the Purchaser
or its designee for an aggregate purchase price of Thirty-Four Million Nine
Hundred Ninety-Nine Thousand Nine Hundred Ninety-Four and 86/100 Dollars
($34,999,994.86), as follows:
(i) The Company shall sell to the Purchaser, and the Purchaser
shall purchase from the Company, the Company Shares at a price
of $9.46 per share, for an aggregate purchase price of Four
Million Nine Hundred Ninety-Nine Thousand Nine Hundred
Ninety-Seven and 86/100 Dollars ($4,999,997.86).
(ii) At the Closing, the Company shall deliver to the Purchaser
stock certificates evidencing the Company Shares with all
applicable stock transfer Taxes paid and stamps affixed, duly
registered in the Purchaser's name free and clear of all
Liens, upon payment by the Purchaser of $4,999,997.86 by
Purchaser's execution of the agreement, in substantially the
form of EXHIBIT B hereto (the "ROV AGREEMENT"), for the
delivery by the Purchaser to the Company of certain assets
free and clear of all Liens, including two remotely operated
vehicles, as described therein. The parties agree that such
assets have an aggregate value of $4,999,997.86.
(iii) At the Closing, the Shareholders shall sell to the Purchaser,
and the Purchaser shall purchase from the Shareholders, the
Shareholder Shares free and clear of all Liens at a price of
$9.46 per share, for an aggregate purchase price of Twenty
Nine Million Nine Hundred Ninety-Nine Thousand Nine Hundred
Ninety-Seven Dollars
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($29,999,997.00), which purchase price shall be paid at the
time of the Closing by wire transfer of immediately available
funds or by cashiers check to the Shareholders' accounts as
designated by the Shareholders at least four (4) business days
prior to the Closing. The number of Shareholder Shares to be
sold to the Purchaser by each of the Shareholders is set forth
on EXHIBIT A hereto opposite the name of each of such
Shareholders.
(iv) At the Closing, the Shareholders shall deliver to the
Purchaser stock certificates evidencing the Shareholder
Shares, in each case duly endorsed for transfer or accompanied
by stock transfer powers duly endorsed in blank with all
requisite stock transfer Taxes paid and stamps affixed, free
and clear of all Liens.
Purchaser shall have no obligation to complete the Closing or the
transactions contemplated hereby unless there shall have been transferred and
conveyed to Purchaser good, valid and marketable title to all of the Company
Shares and the Shareholder Shares, in each case free and clear of all Liens.
1B. THE CLOSING. The closing of the purchase and sale of the Company
Shares and the Shareholder Shares pursuant to Section 1A (the "CLOSING") shall
take place at the offices of Nixon, Hargrave, Devans & Xxxxx LLP, 437 Madison
Avenue, New York, New York, at 10:00 a.m. on the date of this Agreement, or at
such other place or on such other date as may be mutually agreeable to the
Company, the Purchaser, the Funds and the Representative . The date on which the
Closing is held is referred to in this Agreement as the "CLOSING DATE."
2. CONDITIONS TO THE PURCHASER'S OBLIGATION AT THE CLOSING. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions (any or all of which may be waived by the
Purchaser in whole or in part to the extent permitted by applicable Law):
2A. REPRESENTATIONS AND WARRANTIES. All representations and warranties of
the Company and the Shareholders to the Purchaser contained herein shall be true
and correct at and as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of that time.
2B. COMPLIANCE. The Company and the Shareholders shall have performed and
complied in all material respects with all obligations and covenants required by
this Agreement and the Seller Documents to be performed or complied with by any
one or more of them on or prior to the Closing Date.
2C. BRING-DOWN CERTIFICATE. The Purchaser shall have been furnished with
certificates (dated the Closing Date and in form and substance reasonably
satisfactory to the Purchaser) executed by the Company, the Funds, the
Executives and the Representative, certifying as to the fulfillment of the
conditions specified in this Section 2.
2D. MATERIAL ADVERSE CHANGE. Since September 1, 1996, there shall not have
been or occurred (i) any change, destruction or loss, whether or not covered by
insurance, which would result in the loss of a material part of the properties
or assets of the Company or any of its Subsidiaries, (ii) any Legal Proceedings
instituted or threatened against the Company, any of the Shareholders or the
Purchaser seeking to restrain or prohibit or to obtain substantial damages with
respect to the consummation of the transactions contemplated hereby, or which
might, in the reasonable opinion of the Purchaser, result in a Material Adverse
Change, (iii) any Order by a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting
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the consummation of the transactions contemplated hereby, or (iv) any other
event or occurrence which could reasonably be expected to result in a Material
Adverse Change.
2E. THIRD PARTY CONSENTS. The Company and the Shareholders shall have
obtained the consents and waivers, in a form reasonably satisfactory to the
Purchaser, with respect to the transactions contemplated by this Agreement and
the other Seller Documents set forth on SCHEDULE 6C; PROVIDED, HOWEVER, that
neither the Company, the Shareholders nor the Purchaser shall be obligated to
pay any consideration therefor to any third party from whom consent or approval
is requested (other than the payment of filing fees, recording fees and other
similar administrative fees).
2F. HSR ACT. Any Person required in connection with the transactions
contemplated by this Agreement to file a notification and report form in
compliance with the HSR Act shall have filed such form and the applicable
waiting period with respect to each such form (including any extension thereof
by reason of a request for additional information) shall have expired or been
terminated.
2G. EXON-XXXXXX FILING. All filings made by the Purchaser to comply with
the notification procedure under EXFA shall have been made and neither the
Company, any one or more of the Shareholders nor the Purchaser shall have
received any notification from or on behalf of the Committee on Foreign
Investment in the United States (the "COMMITTEE") within a 30-day period after
the date of such filings to the effect that the Committee intends to investigate
or otherwise review any of the transactions contemplated by this Agreement.
2H. REGISTRATION RIGHTS AGREEMENT. The Company, certain Shareholders, and
other Shareholders which are signatories thereof shall have entered into a
registration rights agreement, in substantially the form of EXHIBIT C attached
hereto (the "REGISTRATION RIGHTS AGREEMENT"), and the Registration Rights
Agreement shall be in full force and effect as of the Closing.
2I. SHAREHOLDERS AGREEMENT. The Company, the Funds, the Employee
Shareholders, Xxxxxx X. Xxxxx and the Executives shall have entered into a
shareholders agreement, in substantially the form of EXHIBIT D attached hereto
(the "SHAREHOLDERS AGREEMENT"), and the Shareholders Agreement shall be in full
force and effect as of the Closing.
2J. BUSINESS COOPERATION AGREEMENT. The Purchaser (or an Affiliate of the
Purchaser) and the Company shall have entered into a business cooperation
agreement, in substantially the form of EXHIBIT E attached hereto (the "BUSINESS
COOPERATION AGREEMENT"), and the Business Cooperation Agreement shall be in full
force and effect as of the Closing.
2K. CORPORATE GOVERNANCE DOCUMENTS. The Company's Articles of
Incorporation, By-laws and other agreements, instruments and indentures relating
to the corporate governance of the Company (including, without limitation,
voting trust agreements) shall be in substantially the form attached hereto as
EXHIBIT F.
2L. EMPLOYMENT AGREEMENTS. The Company and each of the Executives ,
Xxxxxx X. Xxxxxx, Senior Vice President and General Counsel of the Company,
Xxxxxxx X. Xxxxxx, Vice President-Bids and Proposals, Xxx Xxxxxxxx, Senior Vice
President - Business Development, Xxxxxxx X. Xxxxxxxxx, Vice President -
Operations, Xxx Xxxxx, Vice President Special Projects, and Xxx Xxxx, Vice
President Sales, shall have entered into employment and non-competition
agreements in substantially the forms of Exhibits G-1, X-0, X-0, X-0, X-0, X-0,
G-7 AND G-8 attached hereto, respectively.
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2M. LEGAL OPINIONS. The Purchaser shall have received from the Company's
General Counsel, from Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P., special counsel to
the Company and certain Shareholders other than the Funds, and from Xxxxxxx
Xxxxxxx & Xxxxxxxx, counsel to the Funds, opinions with respect to the matters
set forth in EXHIBITS H-1, H-2 and H-3 attached hereto, respectively, which
shall be addressed to the Purchaser, dated the Closing Date and in form and
substance reasonably satisfactory to the Purchaser.
2N. CLOSING DOCUMENTS. The Company and the Shareholders shall have
delivered to the Purchaser each of the following documents:
(i) certified copies of the resolutions duly adopted by the
Company's shareholders and board of directors authorizing the
execution, delivery and performance of this Agreement and each of
the Seller Documents and the other agreements contemplated hereby,
the issuance and sale of the Company Shares and the consummation of
all other transactions contemplated by this Agreement and the other
Seller Documents;
(ii) certified copies of the Company's Articles of Incorporation and
By-laws, each as in effect at the Closing;
(iii) certified copies of the resolutions duly adopted by the
requisite equity owners and governing bodies of any Shareholder
which is not an individual authorizing the execution, delivery and
performance of this Agreement and each of the Seller Documents and
the other agreements contemplated hereby to which such Shareholder
is a party and the sale of such Shareholder's Shares;
(iv) copy of the consent of Fleet Capital Corporation and any other
necessary third party consents;
(v) such affidavit and certificate, in substantially the form
attached hereto as EXHIBIT I, to the effect that the Company was NOT
prior to or at Closing a "United States real property holding
corporation" as defined in Section 897 of the Code; and
(vi) such other documents, instruments and certificates relating to
the transactions contemplated by this Agreement or any of the other
Seller Documents as the Purchaser or its counsel may reasonably
request or are otherwise required by this Agreement.
2O. PROCEEDINGS. All corporate and other proceedings taken or required to
be taken in connection with the transactions contemplated hereby to be
consummated at or prior to the Closing and all documents, instruments and
certificates incident thereto shall be satisfactory in form and substance to the
Purchaser and its counsel.
3. CONDITIONS TO THE COMPANY'S AND SHAREHOLDERS' OBLIGATION AT THE
CLOSING. The obligations of the Company and the Shareholders to consummate the
transactions contemplated by this Agreement are subject to the fulfillment,
prior to or on the Closing Date, of each of the following conditions (any or all
of which may be waived by the Company, the Funds and the Representative, in
whole or in part to the extent permitted by applicable Law):
3A. REPRESENTATIONS AND WARRANTIES. All representations and warranties of
the Purchaser contained herein shall be true and correct in all material
respects at and as of the Closing Date with the same
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effect as though those representations and warranties had been made again at and
as of that date.
3B. COMPLIANCE. The Purchaser shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by the Purchaser on or prior to the Closing
Date.
3C. BRING-DOWN CERTIFICATE. The Company and the Shareholders shall have
been furnished with a certificate (dated the Closing Date and in form and
substance reasonably satisfactory to the Company, the Funds and the
Representative) executed by the Purchaser certifying as to the fulfillment of
the conditions specified in Sections 3A and 3B.
3D. ROV AGREEMENT. Purchaser shall have executed and delivered the ROV
Agreement to the Company, and the ROV Agreement shall be in full force and
effect as of the Closing.
3E. HSR ACT. Any Person required in connection with the transactions
contemplated by this Agreement to file a notification and report form in
compliance with the HSR Act shall have filed such form and the applicable
waiting period with respect to each such form (including any extension thereof
by reason of a request for additional information) shall have expired or been
terminated.
3F. BUSINESS COOPERATION AGREEMENT. The Purchaser (or an Affiliate of the
Purchaser) shall have entered into the Business Cooperation Agreement, and the
Business Cooperation Agreement shall be in full force and effect as of the
Closing.
3G. THIRD PARTY CONSENTS. The Purchaser shall have obtained the consents
and waivers, in a form reasonably satisfactory to the Company, with respect to
the transactions contemplated by this Agreement set forth in SCHEDULE 8B;
provided, however that the Purchaser shall not be obligated to pay any
consideration therefor to any third party from whom consent or approval is
requested (other than the payment of filing fees, recording fees and other
similar administrative fees).
3H. REGISTRATION RIGHTS AGREEMENT. The Purchaser shall have entered into
the Registration Rights Agreement, and the Registration Rights Agreement shall
be in full force and effect as of the Closing.
3I. SHAREHOLDERS AGREEMENT. The Purchaser shall have entered into the
Shareholders Agreement, and the Shareholders Agreement shall be in full force
and effect as of the Closing.
3J. LEGAL OPINIONS. The Company and the Shareholders shall have received
from Falque Xxxxxxxxxx Xxxxx & Associes, the Purchaser's French counsel, and
from Nixon, Hargrave, Devans & Xxxxx LLP, special U.S. counsel to the Purchaser,
opinions with respect to the matters set forth in Exhibits J-1 AND J-2 attached
hereto, respectively, which shall be addressed to the Company and the
Shareholders, dated the Closing Date and in form and substance reasonably
satisfactory to the Company.
3K. CLOSING DOCUMENTS. The Purchaser shall have delivered to the Company
and the Shareholders each of the following documents:
(i) certified copies of the resolutions duly adopted by the
Purchaser's board of directors authorizing the execution,
delivery and performance of this Agreement and each of the
Seller Documents and the other agreements contemplated hereby
and the consummation of all other transactions contemplated by
this Agreement; and
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(ii) such other documents, instruments and certificates
contemplated by this Agreement as the Company, the
Representative or their counsel may reasonably request.
3L. PROCEEDINGS. All corporate and other proceedings taken or required to
be taken in connection with the transactions contemplated hereby to be
consummated at or prior to the Closing and all documents, instruments and
certificates incident thereto shall be satisfactory in form and substance to the
Company, the Shareholders and their counsel.
4. APPOINTMENT OF REPRESENTATIVE. Subject to the successorship provisions
of this Section 4, each Employee Shareholder hereby irrevocably appoints Xxxx
Xxxxx as the representative of such Shareholder's interests (the
"REPRESENTATIVE") for all purposes of this Agreement. Without giving notice to
the Employee Shareholders, the Representative shall have full, exclusive and
irrevocable authority on behalf of the Employee Shareholders to: (a) accept and
give notices and other communications relating to this Agreement; (b) waive any
condition, which is of general applicability to all the Employee Shareholders,
to the obligations of the Employee Shareholders under this Agreement; (c)
modify, amend or supplement this Agreement, unless such modification, amendment
or supplement could reasonably be expected to have a material adverse effect on
any Employee Shareholder; (d) take any other action in connection with this
Agreement and the transactions contemplated hereby, unless such action would
have a material adverse effect on any Employee Shareholder; and/or (e) execute
and deliver any instrument or document required pursuant to this Agreement or
that the Representative deems necessary or desirable in the exercise of his
authority under this Section 4.
The Company and each of the Employee Shareholders hereby severally agrees
to indemnify the Representative and to hold him harmless from any loss,
liability and expense incurred without willful malfeasance or bad faith on the
part of the Representative based upon, arising out of or in connection with the
acceptance or exercise by the Representative of his powers and authorities
granted pursuant to this Section 4, including, without limitation, the
reasonable fees, costs and expenses of defending himself in respect of any Legal
Proceedings based upon, arising out of or in connection with his acting as the
Representative pursuant to this Section 4.
In the event of the inability to serve, death or incapacity of the
Representative, S. Xxxxx Xxxxxx shall become his successor, with all the powers
and authority of the Representative. Those who currently are the holders of a
majority of the Employee Shareholders' Shares may, at any time and by written
action delivered to the Purchaser, remove the Representative or any successor
thereto, but such removal shall be effective only upon the replacement of such
Representative or successor by a new Representative designated, by written
action delivered to the Purchaser, by those who currently are the holders of a
majority of the Employee Shareholders' Shares. If Xxxx Xxxxx, S. Xxxxx Xxxxxx
and any successor thereto shall have died, resigned, or become incapacitated or
unable to serve, the holders of a majority of the Employee Shareholders' Shares
shall promptly designate, by written action delivered to the Purchaser, a
replacement Representative.
The foregoing authorization is granted and conferred by each of the
Employee Shareholders in consideration of the grant of such authorization by
each of the other Employee Shareholders and in consideration for the agreements
and covenants of the Purchaser contained herein. In consideration of the
foregoing, and subject to the removal and successorship provisions of this
Section 4, this authorization granted to the Representative shall be irrevocable
and shall not be terminated by any act of any of the Employee Shareholders or by
operation of law, whether by death or incompetency of any Employee Shareholder
or by the occurrence of any other event except the termination of this
Agreement. If after the
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execution hereof any such Employee Shareholder shall die or become incompetent,
the Representative is nevertheless authorized and directed to exercise the
authority granted in this Section 4 as if such death or incompetence had not
occurred and regardless of notice thereof.
5. COVENANTS
5A. FINANCIAL STATEMENTS AND OTHER INFORMATION. Until the Company has
completed its initial Qualified Public Offering, the Company shall deliver to
the Purchaser (so long as the Purchaser and/or its Affiliates Beneficially Owns
at least 100,000 shares (subject to adjustment for any stock splits, stock
dividends, recapitalizations or similar events) of Common Stock of the Company):
(i) As soon as practicable, and in any event within 40 days after
the close of each monthly accounting period, unaudited consolidated
statements of income, shareholders' equity and cash flows of the
Company and its Subsidiaries for such monthly period and an
unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the close of such monthly period, setting forth
in comparative form, the corresponding figures for the corresponding
period of the preceding fiscal year, all in reasonable detail, and
prepared in accordance with GAAP consistently applied (excluding
footnote disclosures and subject to normal year-end audit
adjustments).
(ii) As soon as practicable, and in any event within 45 days after
the close of each quarterly accounting period, unaudited
consolidated statements of income, shareholders' equity and cash
flows of the Company and its Subsidiaries for such quarterly period
and an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the close of such quarterly period, setting forth
in comparative form, the corresponding figures for the corresponding
period of the preceding fiscal year, all in reasonable detail, and
prepared in accordance with GAAP consistently applied (excluding
footnote disclosures and subject to normal year-end audit
adjustments).
(iii) As soon as practicable and in any event within 90 days after
the close of each fiscal year, consolidated statements of income,
cash flow and shareholders equity of the Company and its
Subsidiaries for such fiscal year and a consolidated balance sheet
of the Company and its Subsidiaries as of the close of such fiscal
year setting forth in comparative form, the corresponding figures
for the preceding fiscal year, all in reasonable detail and
certified by Xxxxxx Xxxxxxxx & Co.,or another independent certified
public accountant of recognized standing selected by the Company and
reasonably satisfactory to the Purchaser.
(iv) As soon as practicable, copies of all financial statements,
proxy materials or reports sent to the shareholders of the Company
and all reports and registration statements, including accompanying
prospectuses, filed with the Securities and Exchange Commission.
(v) Such other financial information as the Purchaser may reasonably
request, including, without limitation, certificates of the
principal financial officer of the Company concerning compliance
with the covenants of the Company under this Section 5.
5B. INSPECTION OF PROPERTY. Until the Company has completed its initial
Qualified Public Offering, the Company shall permit any representatives
designated by the Purchaser (so long as the Purchaser and/or its Affiliates
Beneficially Owns any Common Stock of the Company), upon reasonable notice and
during
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normal business hours and such other times as any the Purchaser may reasonably
request, to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the Company
and its Subsidiaries and make copies thereof or extracts therefrom and (iii)
discuss the affairs, finances and accounts of the Company and its Subsidiaries
with the directors, officers, key employees and independent accountants of the
Company and its Subsidiaries.
5C. AFFIRMATIVE COVENANTS. So long as the Purchaser and/or its Affiliates
Beneficially Owns any Common Stock of the Company, the Company shall, and shall
cause each of its Subsidiaries to:
(i) Pay and discharge all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or properties prior to
the date on which any penalty is attached thereto or the same shall
otherwise become in default; provided that the Company shall not be
required to pay any such tax, assessment, charge or levy which is
being contested in good faith and by proper proceedings and for which
such reserves or other provisions as may be required by GAAP shall
have been made and recorded.
(ii)Maintain a comparative system of accounts in accordance with
GAAP, consistently applied, and keep full and complete financial
records and books of account, in which complete entries shall be made
in accordance with GAAP, consistently applied, reflecting all
financial transactions of the Company.
(iii) Comply with the applicable requirements of all laws, rules,
regulations, treaties and orders of any governmental authority
(including, without limitation, federal and state securities laws,
ERISA and Environmental Laws), the violation of which might
reasonably be expected to have a Material Adverse Effect.
5D. COMPLIANCE WITH AGREEMENTS. The Company shall perform and observe all
of its material obligations to the Purchaser set forth in the (i) Company's
Articles of Incorporation and By-laws, (ii) Registration Rights Agreement, and
(iii) Shareholders Agreement.
5E. VESSELS. At all times on and after the Closing Date, the Company and
each of its Subsidiaries:
(a) so long as it owns U.S. documented vessels, shall be a corporation
qualified to document a vessel under 46 U.S.C ss. 12102(a)(4); and
(b) shall not operate any of the Vessels or any other vessels owned by the
Company or any of its Subsidiaries to perform any of the services described in
Part I.E. of the Ruling Letter or otherwise so as to cause the Company, any of
its Subsidiaries or any of their respective assets to be liable for any material
penalties for breach of the Coastwise Laws.
5F. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Prior to the Closing
Date, the Purchaser shall be entitled, through its officers, employees and
representatives (including, without limitation, its legal advisors and
accountants), to make such investigation of the properties, businesses and
operations of the Company and its Subsidiaries and such examination of the
books, records and financial condition of Company and its Subsidiaries as the
Purchaser reasonably requests and to make extracts and copies of such books and
records. Any such investigation and examination shall be conducted during
regular business hours and under reasonable circumstances, and the Company shall
cooperate, and shall cause its Subsidiaries to cooperate, fully therein. No
investigation by the Purchaser prior to or after the date of this Agreement
shall diminish,
8
impair, discharge or obviate any of the representations, warranties, covenants
or agreements of the Company or the Shareholders contained in this Agreement or
any of the Seller Documents.
(b) Information obtained by each of the Purchaser and the Company pursuant
to this Agreement shall be subject to the provisions of the Confidentiality
Agreement, dated as of September 20, 1996, between the Purchaser and the
Company.
5G. CONDUCT OF THE BUSINESS PENDING THE CLOSING. Except as otherwise
expressly contemplated by this Agreement or with the prior written consent of
the Purchaser (which shall not be unreasonably withheld, conditioned or
delayed), until the Closing Date the Company shall and shall cause its
Subsidiaries to:
(i) conduct the respective businesses of the Company and its
Subsidiaries only in the ordinary course of business consistent with past
practice;
(ii)not declare, set aside, make or pay any dividend or other
distribution in respect of the capital stock of the Company or repurchase,
redeem or otherwise acquire any outstanding shares of the capital stock or other
securities of, or other profit participations or proprietary or equity interests
in, the Company or any of its Subsidiaries; not transfer, issue, sell or dispose
of any shares of capital stock or profit participations or other proprietary or
equity interests in, or other securities of the Company or any of its
Subsidiaries or grant options, warrants, calls or other rights to directly or
indirectly purchase or otherwise acquire profit participations or proprietary or
equity interests in the Company or any of its Subsidiaries or shares of capital
stock of the Company or any of its Subsidiaries or other securities (except as
to any of the foregoing as set forth on SCHEDULE 6F);
(iii) not effect any recapitalization, reclassification, stock split
or like change in the capital ization of the Company or its Subsidiaries;
(iv) not amend the Articles of Incorporation or By-laws of the
Company or its Subsidiaries;
(v) use its best efforts to (A) preserve its present business
operations, organization (including, without limitation, management) and
goodwill of the Company and its Subsidiaries and (B) preserve its present
relationship with Persons having business dealings with the Company and its
Subsidiaries;
(vi) maintain insurance upon all of the properties and assets of the
Company and its Subsidiaries in such amounts and of such kinds comparable to
that in effect on the date of this Agreement (with insurers of substantially the
same or better financial condition);
(vii) (A) maintain the books, accounts and records of the Company
and its Subsidiaries in the ordinary course of business consistent with past
practices, (B) continue to collect accounts receivable and pay accounts payable
utilizing historical procedures and without discounting or accelerating payment
of such accounts, and (C) comply with all contractual and other obligations
applicable to the operations of the Company and its Subsidiaries;
(viii) not, other than in the ordinary course of business consistent
with past practice and without materially increasing the benefits or the costs
thereof (except as described on SCHEDULE 6F) (A) increase the compensation
payable or to become payable by the Company or any of its Subsidiaries to any of
their respective directors, officers, employees, agents or representatives, (B)
increase the coverage or benefits
9
available under any (or create any new) severance pay, termination pay, vacation
pay, company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan, payment or arrangement made to, for, or with any of the
directors, officers, employees, agents or representatives of the Company or any
of its Subsidiaries or (C) enter into any employment, deferred compensation,
severance, consulting, non-competition or similar agreement (or amend any such
agreement) to which the Company or any of its Subsidiaries is a party or
involving a director, officer or employee of the Company or any of its
Subsidiaries in his or her capacity as a director, officer or employee of the
Company or any of its Subsidiaries;
(ix) not introduce any material change with respect to the
operations of the Company or any of its Subsidiaries;
(x) except as set forth on SCHEDULE 6F, not permit the Company or
any of its Subsidiaries to enter into any transaction or to make or enter into
any Contract which by reason of its size, subject matter or otherwise is not in
the ordinary course of business ;
(xi) promptly notify the Purchaser of (A) any one or more or
Extraordinary Losses suffered by the Company or any of its Subsidiaries, (B) any
casualty losses or damages suffered by the Company or any of its Subsidiaries
with respect to property and assets having an individual replacement cost of
more than $100,000 or aggregate replacement cost of more than $500,000 or which
could cause a Material Adverse Change, whether or not such losses or damages are
covered by insurance, and (C) (i) any material Legal Proceeding commenced by or
against the Company or any of its Subsidiaries or (ii) any Legal Proceeding
commenced or threatened against the Company, any of its Subsidiaries or the
Shareholders relating to the transactions contemplated by this Agreement;
(xii) not permit the Company or any of its Subsidiaries to make any
investments in or loans to, or pay any fees or expenses (except in the Ordinary
Course of Business) to, or enter into or modify any Contract with, the
Shareholders or any of their respective Affiliates;
(xiii) promptly and accurately record in the appropriate records and
books of account of the Company and its Subsidiaries, as applicable, all
material corporate action taken on or after the date hereof by the shareholders
or the boards of directors (including committees thereof) of the Company and its
Subsidiaries and promptly following such recordation deliver true, correct and
complete copies thereof to Purchaser;
(xv) not permit any of their respective directors, officers,
employees, Affiliates, representatives or agents to, directly or indirectly, (A)
discuss, negotiate, undertake, authorize, recommend, propose or enter into any
transaction involving a merger, consolidation, business combination, purchase or
disposition of any amount of the assets (other than in the ordinary course of
business consistent with past practice), partnership interests or capital stock
or other proprietary or equity interest in the Company or any of its
Subsidiaries other than the transactions contemplated by this Agreement (an
"ACQUISITION TRANSACTION"), (B) facilitate knowingly, encourage, solicit or
initiate discussions, negotiations or submissions of proposals or offers in
respect of an Acquisition Transaction, (C) furnish or cause to be furnished, to
any Person any information concerning the business, operations, properties or
assets of the Company or any of its Subsidiaries in connection with an
Acquisition Transaction, or (D) otherwise cooperate in any way with, or assist
or participate in, facilitate knowingly or encourage, any effort or attempt by
any other Person to do or seek any of the foregoing; and
10
(xvi) not agree to do anything prohibited by this Section 5G or
anything which would make any of the representations and warranties of the
Company or the Shareholders in this Agreement or the Seller Documents untrue or
incorrect in any material respect.
5H. FINANCIAL STATEMENTS. The Company (i) shall (if the request is
timely) deliver to Purchaser as promptly as practicable after Purchaser's
request therefor and, in any event at least 15 days prior to the applicable
filing deadline therefor under the Securities Act, the Securities Exchange Act
or the regulations promulgated thereunder, such financial statements, financial
statement schedules and other financial information relating to the Company and
its Subsidiaries which Purchaser may require in order to prepare any
registration statement, report, proxy statement or other filing under any such
securities law or regulation and shall direct its independent public accountants
to cooperate with Purchaser in connection therewith and (ii) shall use its best
efforts to obtain promptly for Purchaser, upon Purchaser's request (and at
Purchaser's sole cost), any consent, report, opinion or letter of such
accountants required to be filed by Purchaser under such law or regulations.
5I. PURCHASER COVENANT. Except as otherwise expressly contemplated by
this Agreement or with the prior written consent of the Company, which shall not
be unreasonably withheld, conditioned or delayed, until the Closing Date, the
Purchaser shall not enter into any negotiations or discussions relating to the
acquisition of or the making of an investment in, or any acquisitions of or
investments in (other than the acquisition of less than 2% of the outstanding
common stock of any publicly held corporation) any Person performing subsea
construction, maintenance, repair and salvage services to the offshore natural
gas and oil industry in the Gulf of Mexico substantially similar in scope,
methodology, cost and quality to those provided by the Company in the Gulf of
Mexico in the form of a merger, consolidation, purchase of stock or acquisition
of assets.
5J. OTHER ACTIONS. Each of the Company, the Shareholders and the
Purchaser shall use its best efforts to (i) take all actions necessary or
appropriate to consummate the transactions contemplated by this Agreement and
(ii) cause the fulfillment at the earliest practicable date of all of the
conditions to their respective obligations to consummate the transactions
contemplated by this Agreement set forth in Sections 2 and 3.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material inducement
to the Purchaser to enter into this Agreement and purchase the Company Shares
and the Shareholder Shares, the Company hereby represents and warrants at the
time of execution hereof that:
6A. ORGANIZATION AND CORPORATE POWER. The Company is a corporation duly
incorporated validly existing and in good standing under the laws of the State
of Minnesota and is duly qualified or authorized to do business as a foreign
corporation and is in good standing in each of the jurisdictions listed on
SCHEDULE 6A, which listing includes every jurisdiction in which the Company's
ownership or lease of property or conduct of business requires it to so qualify,
except for those jurisdictions where the failure to be so qualified or
authorized would not have a Material Adverse Effect. The Company has all
requisite legal and corporate power and authority and all Permits necessary to
own, lease and operate its properties, to carry on its businesses as now
conducted , to execute and deliver this Agreement and each other Seller
Document, to consummate the transactions contemplated hereby and thereby and to
duly perform its obligations hereunder and thereunder, including but not limited
to all Permits necessary to operate the vessels and diving bells used in the
Company's business, except for such Permits which, if not obtained, would not
have a Material Adverse Effect. The Company is not an "issuing public
corporation" within the meaning of Subdivision 39 of Section 302A.011 of the
Minnesota Business Corporation Act. ERT is a corporation duly
11
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is duly qualified or authorized to do business as a foreign
corporation and is in good standing in each of the jurisdictions listed on
SCHEDULE 6A, which listing includes every jurisdiction in which its ownership or
lease of property or conduct of business requires it to so qualify, except for
those jurisdictions where the failure to be so qualified or authorized would not
have a Material Adverse Effect. ERT has all requisite legal and corporate power
and authority and all material Permits necessary to own, lease and operate its
properties, to carry on its business as now conducted . Copies of the Company's
and each of its Subsidiaries' Articles of Incorporation, By-laws or other
organizational documents have been delivered to the Purchaser and its counsel,
which reflect all amendments made thereto and are correct and complete.
6B. CAPITAL STOCK AND RELATED MATTERS.
(i) The authorized capital stock of the Company consists solely of
(A) 60,000,000 shares of Common Stock, no par value, of which 11,099,260
shares of Common Stock are issued and outstanding and, as of the Closing
Date, 11,627,801 shares of Common Stock shall be issued and outstanding
and (B) 5,000,000 shares of Preferred Stock, par value $.01 per share,
none of which are issued and outstanding. Neither the Company nor any of
its Subsidiaries has outstanding any capital stock or securities directly
or indirectly convertible into or exchangeable for any shares of its
capital stock or any profit participation (other than a cash bonus program
based upon earnings as described in SCHEDULE 6N) or proprietary or equity
interests, nor shall it have outstanding any options, warrants or other
rights (except as expressly set forth on SCHEDULE 6B) to acquire,
subscribe for or purchase its capital stock or any other profit
participation (other than a cash bonus program based on earnings described
in SCHEDULE 6N) or proprietary or equity interest in the Company or any of
its Subsidiaries or any stock or securities directly or indirectly
convertible into or exchangeable for its capital stock or any other profit
participation or proprietary or equity interest in the Company or any of
its Subsidiaries nor is the Company or any of its Subsidiaries committed
to do any of the foregoing, except as expressly set forth on SCHEDULE 6B.
Neither the Company nor any of its Subsidiaries is subject to: (i) any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock, any stock or securities directly
or indirectly convertible into or exchangeable for its capital stock or
any other profit participation (other than a cash bonus program based on
earnings described in SCHEDULE 6N) or proprietary or equity interest in
the Company or any of its Subsidiaries, or (ii) any options, warrants or
other rights to directly or indirectly acquire its capital stock or any
other profit participation (other than a cash bonus program based on
earnings described in SCHEDULE 6N) or proprietary or equity interest in
the Company or any of its Subsidiaries except to the Purchaser under this
Agreement or as expressly set forth on SCHEDULE 6B. All of the outstanding
shares of the Company's capital stock (including, without limitation, the
Company Shares and the Shareholder Shares) and of each of its Subsidiaries
are, and as of the Closing, shall have been duly authorized, validly
issued, fully paid and nonassessable. Immediately upon completion of the
Closing, Purchaser will own, and have good, valid and marketable title to,
the Company Shares free and clear of all Liens.
(ii)There are no statutory or contractual shareholders preemptive
rights, rights of first offer, rights of refusal, co-sale rights or
similar rights with respect to any capital stock, securities or other
profit participations (other than a cash bonus program based on earnings
described in SCHEDULE 6N) or proprietary or equity interests in the
Company, including, without limitation, the issuance of the
12
Purchaser Common Stock hereunder, except as expressly set forth on
SCHEDULE 6B. No capital stock or other securities of the Company or any of
its Subsidiaries have been issued in violation of any such right. To the
best of the Company's knowledge, there are no agreements with respect to
the issuance, sale, redemption, transfer, disposition or voting of capital
stock of the Company or any of its Subsidiaries or any other profit
participation (other than a cash bonus program based on earnings described
in SCHEDULE 6N) or proprietary or equity interest in the Company or any of
its Subsidiaries or with respect to any other aspect of the Company's or
any of its Subsidiaries affairs, except as expressly set forth on SCHEDULE
6B. Neither the Articles of Incorporation, By-laws or other organizational
documents of the Company or any of its Subsidiaries contains any
restriction or limitation on the direct or indirect ownership of any
capital stock, securities or any other profit participation (other than a
cash bonus program based on earnings described in SCHEDULE 6N) or
proprietary or equity interest in the Company or any of its Subsidiaries
by any Person who is not a U.S. citizen, resident or domiciliary.
(iii) The Company owns 100% of the issued and outstanding capital
stock of ERT and such capital stock is duly authorized, validly issued,
fully paid and nonassessable. Other than the ownership by the Company of
the capital stock of ERT, neither the Company nor ERT (i) Beneficially
Owns or owns of record any capital stock, security or other profit
participation or proprietary or equity interest of or in any other Person
or (ii) has any other investment in any other Person.
6C. AUTHORIZATION; NO BREACH. The execution, delivery and performance of
this Agreement and the other Seller Documents to which the Company is a party
have been duly authorized by all necessary corporate, including shareholder,
action on the part of the Company. This Agreement and each other Seller Document
have been duly and validly executed and delivered by, and constitute a valid and
binding obligation of, the Company and each Executive which is a party thereto
enforceable against such Person in accordance with its respective terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditor's rights generally (regardless of whether such
enforceability is considered in a proceeding at law or in equity). The execution
and delivery by the Company and each Executive of this Agreement and each other
Seller Document to which such Person is a party, the offering, sale and issuance
by the Company or any Shareholder of the Purchaser Common Stock, and the
fulfillment of and compliance with the respective terms of this Agreement and
the other Seller Documents to which such Person is a party by any such Person,
do not and shall not (a)(i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default or any event which with
the giving of notice, passage of time or both would constitute a default under,
(iii) give rise to any right or right of termination, cancellation or
acceleration or right to increase in any material respect the obligations or
otherwise modify in any material respect the terms of, (iv) result in a
violation of, or (v) require any consent, approval, waiver, Order, Permit or
exemption or other action by or notice, declaration or filing to or with any
Governmental Body pursuant to, the Articles of Incorporation, By-laws or other
organizational documents of the Company or any of its Subsidiaries or any Law,
Contract, Permit or Order, to which the Company, any of its Subsidiaries,
Executive or any of their respective assets is subject, except for waivers or
consents set forth on SCHEDULE 6C, or (b) result in the creation or imposition
of any Lien upon the capital stock, property or assets of the Company or any of
its Subsidiaries, Shareholders or Executive .
6D. FINANCIAL STATEMENTS. Attached hereto on SCHEDULE 6D are the audited
consolidated balance sheets of the Company and its Subsidiaries as of December
31, 1994, 1995 and 1996, and the related statements of income, shareholders'
equity and cash flows for the respective twelve month periods then ended
13
(the "FINANCIAL STATEMENTS"). Each of the Financial Statements (including in all
cases the notes thereto, if any) is accurate and complete in all material
respects, is consistent with the books and records of the Company (which, in
turn, are accurate and complete in all material respects) has been prepared in
accordance with GAAP consistently applied, and presents fairly the financial
condition and results of operations of the Company and its Subsidiaries in
accordance with GAAP consistently applied through the periods covered thereby.
6E. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE
6E, the Company and its Subsidiaries do not have any obligation or liability
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due and regardless of when asserted) arising out of transactions
entered into at or prior to the Closing, or any action or inaction at or prior
to the Closing, or any state of facts existing at or prior to the Closing
(regardless of when any such obligation or liability is asserted, including
Taxes, with respect to or based upon transactions or events occurring on or
before the Closing, other than (i) liabilities set forth on the audited
consolidated balance sheet of the Company and its Subsidiaries as of December
31, 1996 (including any notes thereto) (the "LATEST BALANCE SHEET,"), (ii)
liabilities and obligations which have arisen after the date of the Latest
Balance Sheet in the ordinary course of business, (iii) as set forth in the
footnotes to the Financial Statements, or (iv) liabilities and obligations which
would not, either individually or in the aggregate, have a Material Adverse
Effect. The XxXxxxxxx Agreements and the transactions contemplated thereby have
been terminated without any further material obligation or liability on the part
of the Company, any Shareholder or any Affiliate of the Company on or after the
Closing Date.
6F. ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on SCHEDULE 6F or
as expressly contemplated by this Agreement, since September 1, 1996 up to and
including the Closing Date:
(i) there has not occurred any Material Adverse Change nor has any
event occurred which could reasonably be expected to result in
any Material Adverse Change;
(ii) there has not been any damage, destruction or loss, whether or
not covered by insurance, with respect to the property and
assets of the Company or any of its Subsidiaries at a
replacement cost of more than $100,000 for any single loss or
$500,000 for all such losses;
(iii) there has not been any declaration, setting aside or payment
of any dividend or other distribution in respect of any shares
of capital stock of the Company or any of its Subsidiaries or
any repurchase, redemption or other acquisition by the Company
or any of its subsidiaries of any outstanding shares of the
capital stock or other securities of, or other profit
participation (other than a cash bonus program based on
earnings described in SCHEDULE 6N) or proprietary or equity
interest in, the Company or any of its Subsidiaries;
(iv) there has not been any transfer, issue, sale or disposition of
any sales of capital stock, securities or profit
participations (other than a cash bonus program based on
earnings described in SCHEDULE 6N) or other proprietary or
equity interests in the Company or any of its Subsidiaries or
any grant of options, warrants, calls or other rights to
directly or indirectly purchase or otherwise acquire profit
participations (other than a cash bonus program based on
earnings described in SCHEDULE 6N) or proprietary or equity
interests in the Company or any of its Subsidiaries or shares
of capital stock or securities of the Company or any of its
Subsidiaries;
14
(v) neither the Company nor any of its Subsidiaries has awarded or
paid any bonuses to employees of the Company or any of its
Subsidiaries except to the extent appearing on the Latest
Balance Sheet or has entered into any employment, deferred
compensation, severance or similar agreement (nor amended any
such agreement) or agreed to increase the compensation payable
or to become payable by the Company or any of its Subsidiaries
to any directors, officers, employees, agents or
representatives of the Company or any of its Subsidiaries or
agreed to increase the coverage or benefits available under
any severance pay, termination pay, vacation pay, company
awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation,
insurance, pension, or other employee benefit plan, payment or
arrangement made to, or with such directors, officers,
employees, agents or representatives;
(vi) there has not been any change by the Company or any of its
Subsidiaries in accounting principles, methods or policies;
(vii) neither the Company nor any of its Subsidiaries has introduced
any material change with respect to the operations of the
Company or any of its Subsidiaries which is not in the
Ordinary Course of Business;
(viii) neither the Company nor any of its Subsidiaries has entered
into any transaction or made or entered into any Contract
which by reason of its size, subject matter or otherwise is
not in the Ordinary Course of Business ;
(ix) neither the Company nor any of its Subsidiaries has suffered
one or more Extraordinary Losses;
(x) neither the Company nor any of its Subsidiaries has made any
investments in or loans to, or paid any material fees or
expenses to, or entered into or modified any Contract with any
of the Shareholders or any other respective Affiliates other
than inter-company arrangements between the Company and its
Subsidiaries; and
(xi) neither the Company nor any of its Subsidiaries has agreed or
committed to do anything set forth in this Section 6F.
6G. TAX MATTERS. The Company and each of its Subsidiaries have filed in a
timely manner all tax returns which they are required to file other than those
which, individually or in the aggregate, would not have a Material Adverse
Effect; and such returns are true and correct in all material respects. The
Company and each of its Subsidiaries have timely paid all taxes owed by them (or
have made provision for the payment thereof on the Latest Balance Sheet) and
have withheld and paid over all Taxes which they are obligated to withhold from
amounts owing to any employee, creditor or other Person. No unresolved
deficiencies or additions to Taxes have been proposed, asserted or assessed
against the Company or any of its Subsidiaries, and the assessment of any
additional Taxes for periods for which returns have been filed is not expected
to exceed the recorded liability therefor on the Latest Balance Sheet. Neither
the Company nor any of its Subsidiaries have incurred any liability for Taxes
from the date of the Latest Balance Sheet except for Taxes incurred in the
ordinary course of business consistent with past practice. The federal income
tax returns of the Company and its Subsidiaries have been audited for all tax
years through 1991; there are no pending
15
federal or state tax audits being conducted with respect to the Company or any
of its Subsidiaries; and there are no material unresolved questions or claims
concerning the Company's or any of its Subsidiaries' tax liability, except as
described on SCHEDULE 6G.
6H. LITIGATION. There are no Legal Proceedings pending or, to the best of
the Company's knowledge, threatened against or affecting the Company or any of
its Subsidiaries or the business or assets of the Company or any of its
Subsidiaries, that if adversely determined, could reasonably be expected to have
a material adverse effect on the Company's ability to perform its obligations
under this Agreement or any of the Seller Documents or any action taken or to be
taken by the Company or any of its Subsidiaries in connection with the
consummation of the transactions contemplated hereby or thereby. SCHEDULE 6H
sets forth a list of all Legal Proceedings pending or, to the knowledge of the
Company, threatened against or involving the Company or any of its Subsidiaries
or any business or assets of the Company or any of its Subsidiaries, at law, in
equity or admiralty, or otherwise which, if determined adversely to the Company
or any of its Subsidiaries, could reasonably be expected to result in a
liability to the Company or any of its Subsidiaries in excess of $100,000. There
is no outstanding or, to the knowledge of the Company, threatened Order of any
Governmental Body against, involving or naming the Company or any of its
Subsidiaries or involving any of their respective businesses or assets. SCHEDULE
6H sets forth a list of all Legal Proceedings pending or contemplated in which
the Company or any of its Subsidiaries is the plaintiff or claimant. Some of the
Legal Proceedings identified in SCHEDULE 6H against the Company or its
Subsidiaries may be subject to punitive damage awards . Since punitive damage
awards are uninsured exposures, an adverse result in any of the cases listed on
SCHEDULE 6H could have a Material Adverse Effect on the Company.
6I. REAL PROPERTY. (a) Neither the Company nor any of its Subsidiaries
owns any real property. SCHEDULE 6I contains a correct and complete schedule of
the documents comprising all leases, subleases, licenses, rights of way or other
Contracts for the use or occupancy of any real property ("ONSHORE REAL PROPERTY
LEASES") or the exploration, development or exploitation of oil or gas
properties by the Company or any of its Subsidiaries ("OFFSHORE REAL PROPERTY
LEASES"). Neither the Company nor any of its Subsidiaries is a party to any
lease, sublease, license or other agreement for the use or occupancy of any
onshore or offshore real property other than the Onshore or Offshore Real
Property Leases. There exists no material reciprocal easement or operating
Contracts relating to the Offshore Real Property Leases between the Company
and/or any of its Subsidiaries and any third party. Except as set forth on
SCHEDULE 6I, neither the Company nor any of its Subsidiaries has assigned,
sublet, mortgaged or otherwise encumbered in any respect whatsoever its
leasehold estate under the Onshore or Offshore Real Property Leases. Except as
set forth on SCHEDULE 6I, neither the Company nor any of its Subsidiaries owns
or holds, or is obligated under or a party to, any option, right of first
refusal or other contractual right to purchase, acquire, sell, assign or dispose
of any real estate or any portion thereof or interest therein.
(b) Each of the Onshore and Offshore Real Property Leases is a valid and
binding obligation enforceable against the Company and/or any of its
Subsidiaries which is a party thereto and, to the knowledge of the Company,
against each other party thereto in accordance with its terms, and there is no
default under any of the Onshore and Offshore Real Property Leases by the
Company, any of its Subsidiaries or, to the knowledge of the Company, by any
other party thereto and, to the knowledge of the Company, no event has occurred
that with the lapse of time or the giving of notice or both would constitute a
default thereunder, except for such defaults or events which would not have a
Material Adverse Effect. No previous or current party to the Onshore or Offshore
Real Property Leases has given written notice of or made a claim against the
Company or any of its Subsidiaries with respect to any breach or default
thereunder which remains uncured or otherwise in existence as of the date
hereof. To the knowledge of the Company, each of the Onshore or Offshore Real
Property Leases covers the entire estate it purports to cover and, entitles the
16
Company and its Subsidiaries to the use, occupancy and possession of the real
property or the exploration, development or exploitation of the oil or gas
properties, as applicable, specified in the Onshore or Offshore Real Property
Leases and for the purposes such property is now being used by the Company and
its Subsidiaries. To the knowledge of the Company, neither the Company nor any
of its Subsidiaries is engaged in any "slant drilling" across the properties of
any other Person or otherwise engaged in any activities which violate the
property rights of any other Person. Complete and correct copies of the Onshore
or Offshore Real Property Leases, together with all amendments, modifications,
supplements or side letters affecting the obligations of any party thereunder
have been delivered to the Purchaser. To the knowledge of the Company, the
property which is subject to the Onshore and Offshore Real Property Leases
complies with all applicable Laws, except for such failure to comply which would
not have a Material Adverse Effect. No notice of violation of any such Law has
been received by the Company or any of its Subsidiaries and, to the knowledge of
the Company, no such notice has been issued by any Governmental Body with
respect to such property.
(c) No portion of property covered by an Onshore Real Property Lease
("Onshore Property") is dependent for its access, operation or utility on any
land, building or other improvement not part of the Onshore Property. The
Onshore Property has direct, unobstructed access, both pedestrian and vehicular,
to public rights of way. All material utility systems required in connection
with use, occupancy and operation of the Onshore Property are supplied directly
to the Onshore Property by facilities of public utilities, are sufficient for
their present purposes, are fully operational and in working order, and are
benefitted by customary utility easements providing for the continued use and
maintenance of such systems.
(d) EXHIBIT K contains a true and correct copy of the estimate dated
December 31,1995, prepared by Xxxxxx & Xxxxx, Ltd., independent petroleum
engineers ("XXXXXX & XXXXX"), of the proved developed reserves and future net
revenue attributable to interests in properties located offshore Texas and
offshore Louisiana of ERT (the "RESERVES REPORT"). The historical information
underlying the estimates of the reserves of ERT supplied by the Company to
Xxxxxx & Xxxxx, for the purposes of preparing the Reserve Report, including,
without limitation, production volumes, sales prices for production, contractual
pricing provisions under oil or gas sales or marketing contracts or under
hedging arrangements, costs of operations and development, and working interest
and revenue information relating to ERT's ownership interests in properties, was
true and correct in all material respects on the date of such Reserve Report;
the estimates of future capital expenditures and other future exploration and
development costs supplied to Xxxxxx & Xxxxx were prepared in good faith and
with a reasonable basis; the information provided by Xxxxxx & Xxxxx for purposes
of preparing the Reserve Report was prepared in accordance with customary
industry practices; to the best of the Company's knowledge, Xxxxxx & Xxxxx was,
as of the date of the Reserve Report prepared by it, and are, as of the date
hereof, independent petroleum engineers with respect to the Company; and other
than normal production of reserves and intervening spot market product price
fluctuations, the Company is not aware of any facts or circumstances that would
result in a materially adverse change in the reserves in the aggregate, or the
aggregate present value of future net cash flows therefrom, as reflected in the
Reserve Report except as indicated in EXHIBIT K .
6J. VESSELS. (a) The Company and its Subsidiaries do not own or operate
any vessels other than those listed on SCHEDULE 6J (collectively, the
"VESSELS"). Each of the Vessels listed on SCHEDULE 6J is duly documented in the
sole ownership of the Company under the Law and flag of the jurisdiction
indicated for such vessel on SCHEDULE 6J, is in compliance with all applicable
Laws of such jurisdiction and of the United States of America, except for any
such noncompliance as would not have a Material Adverse Effect, and, at no time
during the Company's or any of its Subsidiaries' ownership of the Vessels, have
any of the Vessels been sold, chartered or otherwise transferred to any Person
in violation of Law.
17
(b) The Company has good, valid and marketable title to each of the
Vessels, free and clear of any Liens, other than those Liens described on
SCHEDULE 6J.
(c) Each of the Vessels listed on SCHEDULE 6J maintains the class
indicated on SCHEDULE 6J with the classification society indicated on SCHEDULE
6J, free of recommendations that would have a Material Adverse Effect.
(d) Except as indicated on Schedule 6J, each of the Vessels is in
adequate running order and repair, and, insofar as due diligence can make such
vessel so, tight, staunch, strong and well and sufficiently tackled, apparelled,
furnished equipped and in all material respects seaworthy and in adequate
operating condition to perform its functions as currently contemplated. Each of
the Vessels that is documented under U.S. flag has a clean certificate of
inspection from the United States Coast Guard free of reported or reportable
exceptions or notations of record.
(e) The Company and its Subsidiaries have filed with each appropriate
Governmental Body all evidence of financial responsibility to the extent
required under all applicable Laws, including the Oil Pollution Act of 1990, 33
U.S.C. xx.xx. 2710 ET SEQ., and the rules and regulations promulgated
thereunder, except for such failure to file as would not have a Material Adverse
Effect.
(f) The description of services to be performed by non-coastwise
qualified vessels set forth in the Ruling Letter, completely and correctly
describes in all material respects the manner in which the Company and its
Subsidiaries currently operate the Vessels, except that any Vessel documented
under the law and flag of the United States of America with a Certificate of
Documentation issued with a coastwise endorsement currently may be operated by
the Company to perform services described in Part I.F of the Ruling Letter. A
true, complete and correct copy of the Ruling Letter and the response thereto of
the Customs Commissioner is set forth in EXHIBIT L. Each of the Company and each
of its Subsidiaries that owns Vessels is and at all times prior to Closing will
have been a citizen of the United States of America within the meaning of
Section 2 of the Shipping Act of 1916, as amended (46 U.S.C. ss. 802), and
qualified to operate vessels in coastwise trade.
(g) In respect of each Vessel documented under the law and flag of
the United States of America with a Certificate of Documentation issued with a
coastwise endorsement, the Company has provided to the Purchaser a true and
complete copy of the duly completed application for exchange of such Certificate
of Documentation with a new Certificate of Documentation issued with a registry
endorsement.
6K. TANGIBLE PERSONAL PROPERTY. (a) SCHEDULE 6K sets forth all leases of
personal property ("PERSONAL PROPERTY LEASES") involving annual payments in
excess of $100,000 relating to personal property, other than Vessels, used in
the business of the Company and its Subsidiaries or to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets is bound, the
parties thereto, the amount of annual payments in respect thereof and the
termination date and the conditions of renewal thereof. Complete and correct
copies of the Personal Property Leases, together with all amendments,
modifications, supplements or side letters affecting the obligations of any
party thereunder, have been delivered or otherwise made available to Purchaser.
(b) Each of the Personal Property Leases is valid and enforceable against
the Company and/or any of its Subsidiaries which is party thereto and, to the
knowledge of the Company, against each other party thereto in accordance with
its terms, and there is no default under any Personal Property Lease either by
the
18
Company or any of its Subsidiaries or, to the knowledge of the Company, by any
other party thereto which could reasonably be expected to have a Material
Adverse Effect, and, to the knowledge of the Company, no event has occurred that
with the lapse of time or the giving of notice or both would constitute a
default thereunder which could reasonably be expected to have a Material Adverse
Effect.
(c) Except for such items of personal property that are not material to
the operation of the business of the Company and the Subsidiaries, taken as a
whole, the Company and its Subsidiaries have good and marketable title to all of
the items of tangible personal property reflected on the Latest Balance Sheet,
free and clear of any and all Liens, other than as set forth on SCHEDULE 6K. In
the reasonable judgment of the Company, such items of tangible personal property
which are material to and are currently used in the operation of the business of
the Company and its Subsidiaries , taken as a whole, are in operating condition
and in a state of adequate maintenance and repair (ordinary wear and tear
excepted) and are generally suitable for the purposes used for the operation of
the business of the Company and its Subsidiaries as currently conducted.
6L. INTANGIBLE PROPERTY. (a) SCHEDULE 6L sets forth a complete and correct
list of each patent, trademark, trade name, service xxxx, brand xxxx, brand
name, Software and copyright owned or used in the business of the Company and
its Subsidiaries as well as all registrations thereof and pending applications
therefor, and each material license or other material Contract relating thereto
(collectively, the "INTANGIBLE PROPERTY") and indicates, with respect to each
item of Intangible Property, the owner thereof and, if applicable, the name of
the licensor and licensee thereof and the basic terms of such license or other
Contract relating thereto. Except as set forth on SCHEDULE 6L, each of the
foregoing is owned by the Company or one of its Subsidiaries free and clear of
any and all Liens and is in good standing and no other Person has any claim of
ownership with respect thereto. The use of the foregoing by the Company or any
of its Subsidiaries does not conflict with, infringe upon, violate or interfere
with or constitute an appropriation of any right, title, interest or goodwill,
including, without limitation, any intellectual property right, patent,
trademark, trade name, service xxxx, brand xxxx, brand name, computer program,
database, industrial design, copyright or any pending application therefor of
any other Person, which, in any such case, could have a Material Adverse Effect.
There have been no Legal Proceedings initiated or, to the knowledge of the
Company, threatened with respect to Intangible Property and neither the Company
nor any of its Subsidiaries has received any notice or otherwise knows that any
of the foregoing is invalid or conflicts with the asserted rights of other
Persons or have failed to be used or enforced in a manner that would result in
the abandonment, cancellation or unenforceability of the Intangible Property
that could have a Material Adverse Effect.
(b) The Company and its Subsidiaries own or license all Intangible
Property, know-how, formulae and other proprietary and trade rights necessary
for the conduct of their respective businesses as now conducted .
6M. MATERIAL CONTRACTS. (a) Except as set forth on SCHEDULES 6B, 6I, 6J,
6K AND 6L or as set forth on SCHEDULE 6M, neither the Company nor any of its
Subsidiaries nor any of their respective properties or assets is a party to or
bound by any (i) Contract not made in the ordinary course of business, the
performance of which will extend over a period greater than thirty (30) days;
(ii) employment, consulting, non-competition, severance, golden parachute or
employee, officer, or director indemnification Contract (including, without
limitation, in each case any material Contract to which the Company or any of
its Subsidiaries is a party involving employees of the Company or any of its
Subsidiaries), which is not terminable by the Company or any of its
Subsidiaries, as
19
the case may be, within thirty (30) days after written notice thereof and
without liability to the Company or any of its Subsidiaries; (iii)
distributorship, sales representative or sales agency Contract, which is not
terminable by the Company or any of its Subsidiaries, as the case may be, within
thirty (30) days after written notice thereof and without liability to the
Company or any of its Subsidiaries; (iv) Contract (including, without
limitation, purchase orders issued by customers or to suppliers of the Company
or any of its Subsidiaries which remain open as of the date of this Agreement)
involving the commitment or payment reasonably expected to be in excess of
$1,000,000 for the future purchase of services or equipment; (v) Contract among
stockholders or granting a right of first refusal or for a partnership or a
joint venture or for the acquisition, sale or lease of any assets individually
or in the aggregate in excess of $100,000, partnership interests or capital
stock of the Company or any of its Subsidiaries or any other Person or involving
a sharing of profits which could, individually or in the aggregate, reasonably
be expected to be in excess of $100,000; (vi) mortgage, pledge, conditional
sales contract, security agreement, factoring agreement or other similar
Contract with respect to any real or tangible personal property of the Company
or any of its Subsidiaries involving annual payments or liabilities in excess of
$100,000; (vii) loan agreement, credit agreement, promissory note, guarantee,
subordination agreement, letter of credit or any other similar type of Contract
involving liabilities, individually or in the aggregate, in excess of $100,000;
(viii) material Contract relating to the exploration, development, exploitation,
extraction or transportation of oil or gas, (ix) Contract with any Governmental
Body; or (x) Contract for the charter of any vessels. There has been delivered
or otherwise made available to Purchaser complete and correct copies of the
Contracts listed on SCHEDULE 6M 6B, 6I, 6J, 6K AND 6L, together with all
amendments, modifications, supplements or side letters affecting the obligations
of any party thereunder.
(b) Each of the Contracts listed on SCHEDULE 6M is a valid and binding
obligation enforceable against the Company and/or any of its Subsidiaries which
is a party thereto and, to the knowledge of the Company, against each other
party thereto in accordance with its terms, and there is no default under any
Contract listed or described on SCHEDULE 6M either by the Company or any of its
Subsidiaries or, to the knowledge of the Company, by any other party thereto,
and no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder, which could result in a Material
Adverse Effect. No party to any Contract set forth on SCHEDULE 6M has given
notice of or initiated a material Legal Proceeding with respect to any breach or
default thereunder.
6N. EMPLOYEE BENEFITS. (a) SCHEDULE 6N AND 6B sets forth a complete and
correct list of all "employee benefit plans", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and any
other pension plans or employee benefit arrangements or payroll practices
(including, without limitation, severance pay, vacation pay, company awards,
salary continuation for disability, sick leave, deferred compensation, bonus or
other incentive compensation, stock purchase arrangements or policies)
maintained by the Company or any of its Subsidiaries or any trade or business
(whether or not incorporated) which is under common control with the Company or
any of its Shareholders or is treated with the Company as a single employer
under Section 414(b), (c), (m) or (o) of the Code ("ERISA AFFILIATE") or to
which the Company or any of its Subsidiaries contributes or is obligated to
contribute thereunder with respect to employees of the Company or any of its
Subsidiaries ("EMPLOYEE BENEFIT PLANS").
(b) Neither the Company nor any ERISA Affiliate has now or has ever
sponsored or contributed to any Employee Benefit Plans that are (i) subject to
Section 4063 and 4064 of ERISA (multiple employer plans), (ii) multiemployer
plans as defined in Section 4001(a)(3) of ERISA, (iii) welfare plans providing
continuing benefits after the termination of employment (other than COBRA
benefits required by Section 4980B of the Code and paid for by the former
employer), or (iv) defined benefit pension plans subject to Title IV of ERISA or
the funding requirements of Section 412 of the Code.
(c) The Employee Benefit Plan intended to qualify under Section 401(a) of
the Code ("QUALIFIED PLANS") so qualifies, and, except as disclosed on SCHEDULE
6N, nothing has occurred with respect to the
20
operation of any such plan which, either individually or in the aggregate, would
cause the loss of such qualification or the imposition of any liability, penalty
or tax under ERISA or the Code.
(d) All contributions and premiums required by law or by the terms of any
Employee Benefit Plan or any agreement relating thereto have been timely made or
provided for (without regard to any waivers granted with respect thereto).
(e) The liabilities of each Employee Benefit Plan that has been terminated
or otherwise wound up, have been fully discharged in compliance with applicable
Law.
(f) There has been no violation of ERISA with respect to the filing of
applicable returns, reports, documents and notices regarding any of the Employee
Benefit Plans with the Secretary of Labor or the Secretary of the Treasury or
the furnishing of such notices or documents to the participants or beneficiaries
of the Employee Benefit Plans which, either individually or in the aggregate,
could result in material liability to the Company or any ERISA Affiliate.
(g) Complete and correct copies of the following documents, with respect
to each of the Employee Benefit Plans (as applicable), have been delivered to
Purchaser: (i) any plan documents and related trust documents, and all
amendments thereto; (ii) the most recent Forms 5500 and schedules thereto; (iii)
the most recent IRS determination letters; (iv) the most recent summary plan
descriptions.
(h) There are no pending Legal Proceedings which have been asserted or
instituted against any of the Employee Benefit Plans, the assets of any such
plans or the Partnership or any of the Corporations or the plan administrator or
any fiduciary of the Employee Benefit Plans with respect to the operation of
such plans (other than routine, uncontested benefit claims) which, either
individually or in the aggregate, could result in a Material Adverse Change.
(i) Each of the Employee Benefit Plans has been maintained, in all
material respects, in accordance with its terms and all provisions of applicable
Law. All amendments and actions required to bring each of the Employee Benefit
Plans into conformity in all material respects with all of the applicable
provisions of ERISA, the Code and other applicable Laws have been made or taken
except to the extent that such amendments or actions are not required by Law to
be made or taken until a date after the Closing Date.
(j) None of the Company, the Subsidiaries or any ERISA Affiliate maintains
a welfare benefit plan providing continuing benefits after the termination of
employment (other than as required by Section 4980B of the Code and at the
former employee's own expense) except as provided on SCHEDULE 6N and the
Company, its Subsidiaries and each of the ERISA Affiliates have complied in all
material respects with the notice and continuation requirements of Section 4980B
of the Code and the regulations thereunder.
(k) No Employee Benefit Plan will require the payment of severance
benefits, separation pay or any similar pay as a result of the consummation of
the transactions contemplated by this Agreement.
(l) The Company does not maintain or contribute to a trust under Sections
501(a) and 501(c)(9) of the Code.
6O. LABOR. (a) Neither the Company nor any of its Subsidiaries is party to
any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements which pertain to employees of the Company or
any of its Subsidiaries.
21
(b) No employees of the Company or any of its Subsidiaries are represented
by any labor organization. No labor organization or group of employees of the
Company or any of its Subsidiaries has made a pending demand for recognition,
and there are no representation proceedings or petitions seeking a
representation proceeding presently pending or, to the knowledge of the Company,
threatened to be brought or filed, with the National Labor Relations Board or
other labor relations tribunal. There is no organizing activity involving the
Company or any of its Subsidiaries pending or, to the knowledge of the Company,
threatened by any labor organization or group of employees of the Company or any
of its Subsidiaries.
(c) Except as described in Schedule 6H ,there are no labor or employment
related (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii)
material grievances or other material labor disputes pending or, to the
knowledge of the Company, threatened against or involving the Company or any of
its Subsidiaries. There are no unfair labor practice charges or grievances
pending or, to the knowledge of the Company, threatened by or on behalf of any
employee or group of employees of the Company or any of its Subsidiaries.
(d) There are no complaints, charges or claims against the Company or any
of its Subsidiaries pending or, to the knowledge of the Company, threatened to
be brought or filed with any Governmental Body based on, arising out of, in
connection with, or otherwise relating to the employment by the Company or any
of its Subsidiaries of any individual, including any claim for workers'
compensation (except as described in Section 6H), which could reasonably be
expected to result in a Material Adverse Change . To the knowledge of the
Company , the Company and its Subsidiaries are in compliance with all Laws and
Orders relating to the employment of labor, including all such Laws and Orders
relating to wages, hours, collective bargaining, discrimination, civil rights,
workers' compensation, pay equity and the collection and payment of withholding
and/or Social Security Taxes and similar Taxes, noncompliance with which could
result in a Material Adverse Charge.
6P. COMPLIANCE WITH LAWS; PERMITS. (a) Except as set forth on SCHEDULE 6P,
the Company and its Subsidiaries are in compliance in all material respects with
all Laws and Orders promulgated by any Governmental Body (including, without
limitation, the Commissioner of Customs and the U.S. Coast Guard) applicable to
the Company or any of its Subsidiaries or to the conduct of the business or
operations of the Company or any of its Subsidiaries or the use of any of their
properties (including any leased properties) and assets, noncompliance with
which could result in a Material Adverse Change. Except as set forth on SCHEDULE
6P, neither the Company nor any of its Subsidiaries has received, or knows of
the issuance of, any notices of any violation or alleged violation of any such
Law or Order of any Governmental Body. Except as set forth on SCHEDULE 6P, there
are no pending or, to the knowledge of the Company, threatened investigations by
any Governmental Body with respect to such business or operations of the Company
or any of its Subsidiaries which, either individually or in the aggregate, could
result in a Material Adverse Change.
(b) SCHEDULE 6P lists all Permits of the Company and its Subsidiaries
issued or granted by any Governmental Body, indicating, in each case, the
expiration date thereof, which are material to the business and operations of
the Company or any of its Subsidiaries. The Company and its Subsidiaries have
all Permits that are required to be obtained by each of them to permit the
operations of their respective businesses in the manner in which such operations
are currently and heretofore conducted, except to the extent that the failure to
have any such Permit could not, either individually or in the aggregate, cause a
Material Adverse Change. The Company and its Subsidiaries have complied with all
conditions of such Permits applicable to it, non-compliance with which could
result in a Material Adverse Effect. No default or violation, or event, that
with the lapse of time or giving of notice or both would become a default or
violation, has occurred in the due observance of any such Permit which could
reasonably be expected to have a Material Adverse Effect. To the
22
knowledge of the Company, all such Permits are in full force and effect without
further consent or approval of any Person except for such as would not have a
Material Adverse Effect.
6Q. ENVIRONMENTAL MATTERS. Except as would not have a Material Adverse
Effect, (i) the operations of the Company and its Subsidiaries are in compliance
with all Environmental Laws ; (ii) the Company and its Subsidiaries have all
Environmental Permits required for their operations ; all such Environmental
Permits are in full force and effect and in good standing, there are no Legal
Proceedings pending or, to the knowledge of the Company, threatened WITH RESPECT
TO any such Environmental Permit; the Company and its Subsidiaries are in
compliance with such Environmental Permits; (iii) the Company and its
Subsidiaries are not (x) subject to any outstanding written Order or, except as
set forth on SCHEDULE 6M, material Contract, including Environmental Liens, with
or in favor of any Governmental Body or Person relating to Environmental Laws,
Environmental Permits or Hazardous Materials or (y) to the knowledge of the
Company, subject to any federal, state or local investigation concerning any
Environ mental Laws or Environmental Claims; (iv) neither the Company nor any of
its Subsidiaries is subject to any Legal Proceeding alleging the violation of
any Environmental Law or Environmental Permit; (v) neither the Company nor any
of its Subsidiaries has received (nor, to the knowledge of the Company, has
there been issued) any written communication that alleges that either the
Company or any of its Subsidiaries is not in compliance with any Environmental
Law or Environmental Permit ; (vi) except as set forth on SCHEDULE 6Q, neither
the Company nor any of its Subsidiaries has caused or, to the best knowledge of
the Company after due inquiry, permitted any Hazardous Materials to remain or be
disposed of, either on or under real property owned or operated by the Company
or any of its Subsidiaries or on any real property not permitted to accept,
store or dispose of such Hazardous Materials; (vii) to the knowledge of the
Company, except as set forth on SCHEDULE 6Q, there is not now on or in the
Leased Property (A) any underground storage tanks or surface tanks, dikes or
impoundments; (B) any friable asbestos containing materials or (C) any
polychlorinated biphenyls.
6R. INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended.
6S. INSURANCE. SCHEDULE 6S sets forth a list of all policies of insurance
of any kind or nature covering the Company or any of its Subsidiaries or any of
their employees, properties or assets, including, without limitation, policies
of life, disability, fire, theft, workers compensation, employee fidelity and
other casualty and liability insurance. Except as set forth on Schedule 6S, all
such policies are in full force and effect. SCHEDULE 6S also sets forth, for
each such policy, the type of coverage, name of the insured (other than third
parties), the insurer, the expiration date of each policy, the amount of
coverage per occurrence and in the aggregate, and any deductible amount or other
form of self-insured retention. Such policies of insurance are valid,
enforceable and in full force and effect (and will continue to be valid,
enforceable and in full force and effect following the Closing) and, taken
together, provide the Company, its Subsidiaries, directors and officers with, in
the reasonable judgment of the Company, adequate coverage for all risks normally
insured against a Person carrying on the same businesses as the Company and its
Subsidiaries. Except as set forth on SCHEDULE 6S , neither the Company nor any
of its Subsidiaries has received any refusal of coverage or any notice that a
defense will be afforded with a reservation of rights or any notice of
cancellation or any other indication that any insurance policy is no longer in
full force or effect or will not be renewed or that the issuer of any policy is
not willing or able to perform its obligations thereunder. The Company has
delivered or otherwise made available to Purchaser complete and correct copies
of each policy listed on SCHEDULE 6S, together with all amendments,
modifications, supplements or side letters affecting the obligations of any
party thereunder.
23
6T. CUSTOMERS AND SUPPLIERS. SCHEDULE 6T lists the ten (10) largest
customers in terms of revenues and the ten (10) largest suppliers in terms of
purchases of the Company and its Subsidiaries taken as a whole during the year
ended December 31, 1996 and the approximate amount of sales to each such
customer and purchases from each such supplier during such year. Except as
expressly set forth on SCHEDULE 6T, (i) taken as a whole, the relationships of
the Company and its Subsidiaries with customers and suppliers have been entered
into and are conducted pursuant to arms' length transactions, and (ii) no
customer or supplier of the Company or any of its Subsidiaries has canceled,
otherwise terminated, altered, or threatened in writing to cancel, otherwise
terminate or alter, its relationship with the Company or any of its Subsidiaries
or withheld or delayed payment for, or shipment or provision of, any products or
services or threatened in writing to do so which, either individually or in the
aggregate, could result in a Material Adverse Effect.
6U. RELATED PARTY TRANSACTIONS. Except as set forth on SCHEDULE 6U, since
December 31, 1994 and as of the date hereof, neither the Company nor any of its
Subsidiaries has entered into any transaction with or is a party to any Contract
with any Affiliate of the Company. None of the Company's shareholders or any of
their respective Affiliates owns any direct or indirect interest of any kind in,
or controls or is a director, officer, employee or partner of, or consultant to,
or lender to or borrower from or has the right to participate in the profits of,
any Person which is a competitor, supplier, customer, landlord, tenant, creditor
or debtor of the Company or any of its Subsidiaries excluding ownership of
shares of publicly traded companies.
6V. ENTIRE BUSINESS. Except for the unavailability from time to time of
vessels or oil services machinery and equipment for charter or lease on the spot
market, the assets, properties and rights which will be owned, leased or
licensed by the Company and its Subsidiaries as of the Closing Date will
constitute all of the tangible and intangible property used by and necessary to
the Company and its Subsidiaries in connection with the conduct of their
businesses as now conducted .
6W. NO FINDER'S FEE. Other than fees payable by the Company to Xxxxxxx &
Company International, its financial adviser, there are no claims for brokerage
commissions, finders' fees or similar compensation payable by the Company and/or
its Affiliates in connection with the transactions contemplated by this
Agreement. The Company shall be solely responsible for the payment of such fees
to Xxxxxxx & Company International.
6X. DISCLOSURE. Neither this Agreement nor any of the exhibits,
schedules, attachments, documents, certificates supplied to the Purchaser by or
on behalf of the Company with respect to the transactions contemplated hereby
nor any of the Seller Documents contains any untrue statement of a material fact
or omit a material fact necessary to make each statement contained herein or
therein not misleading under the circumstances. There is no fact which the
Company has not disclosed to the Purchaser and of which any of its officers,
directors or key employees is aware and which has had or would reasonably be
anticipated to have a Material Adverse Effect.
7. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. As a material
inducement to the Purchaser to enter into this Agreement and purchase the
Company Shares and the Shareholder Shares, each of the Shareholders, severally,
hereby represents and warrants at the time of execution hereof that:
7A. TITLE TO SHARES. Such Shareholder has, and on the Closing Date will
have, good, valid and marketable title to all of such Shareholder's Shareholder
Shares to be sold to the Purchaser pursuant to this Agreement free and clear of
any Liens. Immediately upon completion of the Closing, the Purchaser will own,
and will have, good, valid and marketable title to, the Shareholder Shares free
and clear of any Liens. There are no Legal Proceedings pending or, to the
knowledge of such Shareholder, threatened against such
24
Shareholder or such Shareholder's businesses or assets that if adversely
determined, could reasonably be expected to have a material adverse effect on
such Shareholder's ability to perform its obligations under this Agreement or
the Seller Documents to which such Shareholder is a party or any action taken or
to be taken by such Shareholder in connection with the consummation of the
transactions contemplated hereby or thereby. No other Person has any direct or
indirect record or beneficial title or interest in or claim of any nature
whatsoever to any of such Shareholder's Shareholder Shares, and there are no
Contracts, commitments, undertakings, understandings or other restrictions to
which such Shareholder is a party which directly or indirectly restricts or
otherwise limits in any manner the voting, sale, transfer or other disposition
of such Shares except as set forth on SCHEDULE 7A.
7B. AUTHORITY RELATIVE TO THIS AGREEMENT. Such Shareholder has full legal
and, if applicable, corporate, partnership, trust or other organizational right,
power and authority to execute and deliver this Agreement and the other Seller
Documents to which such Shareholder is a party, to consummate the transactions
contemplated hereby and thereby, and to sell such Shareholder's Shareholder
Shares to Purchaser hereunder. The execution, delivery and performance of this
Agreement and the other Seller Documents to which such Shareholder is a party
have been duly authorized by all necessary corporate (including shareholder),
partnership, trust or other organizational action on the part of such
Shareholder. This Agreement and each other Seller Document to which such
Shareholder is a party have been duly and validly executed and delivered by, and
each such agreement constitutes a valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditor's rights generally (regardless of whether such
enforceability is considered in a proceeding at law or in equity). Each
Shareholder which is not an individual has delivered to the Purchaser true and
complete copies of such Shareholder's organizational documents. The execution
and delivery by such Shareholder of this Agreement and each other Seller
Document to which such Shareholder is a party, the offering and sale by such
Shareholder of Shareholder Shares, and the fulfillment of and compliance with
the terms of this Agreement and the other Seller Documents to which such
Shareholder is a party by such Shareholder, do not and shall not (a)(i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default or an event which with the giving of notice, passage of
time or both would constitute a default under, (iii) give rise to any right of
termination, cancellation or acceleration, (iv) result in a violation of, or (v)
require any consent, approval, waiver, Order, Permit or exemption or other
action by or notice, declaration or filing to or with any Governmental Body
pursuant to, the organizational documents of such Shareholder, if applicable, or
to the extent such conflict, breach, default, termination, cancellation,
acceleration, violation or failure to obtain such consent, approval, waiver,
order, permit or exemption could reasonably be expected to have a material
adverse effect on such Shareholder, any Law, Contract, Permit or Order, to which
such Shareholder, or any of such Shareholder's assets is subject, or (b) result
in the creation or imposition of any Lien upon the capital stock, property or
assets of such Shareholder.
8. PURCHASER'S REPRESENTATIONS AND WARRANTIES. As a material inducement to
the Company and the Shareholders to enter into this Agreement and sell the
Company Shares and Shareholder Shares, the Purchaser hereby represents and
warrants at the time of execution hereof that:
8A. ORGANIZATION AND CORPORATE POWER. The Purchaser is duly organized,
validly existing and in good standing under the laws of France and is duly
qualified or authorized to do business as a foreign corporation and is in good
standing in each of the jurisdictions where the Purchaser's ownership or lease
of property or conduct of business requires it to so qualify, except for those
jurisdictions where the failure to be so qualified or authorized would not have
a material adverse effect on the business, properties, results of
25
operations, prospects, operations, condition (financial or otherwise) of the
Purchaser and its Subsidiaries taken as a whole. The Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and each
other Seller Document to which it is a party, to consummate the transactions
contemplated hereby and thereby and to duly perform its obligations hereunder
and thereunder.
8B. AUTHORIZATION; NO BREACH. The execution, delivery and performance of
this Agreement and the other Seller Documents to which the Purchaser is a party
have been duly authorized by all necessary corporate action on the part of the
Purchaser. This Agreement and each other Seller Document to which the Purchaser
is a party has been duly and validly executed and delivered by, and constitutes
or, at the Closing, will constitute, a valid and binding obligation of, the
Purchaser enforceable against the Purchaser in accordance with its respective
terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditor's rights generally (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
The execution and delivery by the Purchaser of this Agreement and each other
Seller Document to which the Purchaser is a party and the fulfillment of, and
the compliance with, the respective terms of this Agreement and the other Seller
Documents to which the Purchaser is a party by the Purchaser, do not and shall
not (i) conflict with, or result in a breach of, the terms, conditions or
provisions of, (ii) constitute a default under or any event which with the
giving of notice, passage of time or both would constitute a default under, or
(iii) assuming compliance with the applicable requirements of the HSR Act and
EXFA, result in a violation of, require any consent, approval, waiver, Order,
Permit or exemption or other action by or notice, declaration or filing to or
with any Governmental Body pursuant to, the corporate organizational documents
of the Purchaser, or any Law to which the Purchaser is subject, or any Contract,
Permit or Order to which the Purchaser is a named party and subject, except for
consents or approvals set forth on SCHEDULE 8B.
8C. RESTRICTED SECURITIES. The Restricted Securities purchased hereunder
or acquired pursuant hereto are being acquired by the Purchaser for its own
account with the present intention of holding such securities for purposes of
investment, and that it has no present intention of selling or distributing such
securities in any transaction that would be in violation of the federal
securities laws or any applicable state securities laws; provided that nothing
contained herein shall prevent the Purchaser and subsequent holders of
Restricted Securities from transferring such securities in compliance with
applicable Law. The Purchaser understands that the Restricted Securities have
not been registered under the Securities Act or any state securities laws by
reason of their contemplated issuance hereunder in a transaction exempt from the
registration requirements of the Securities Act and applicable state securities
laws, and that the reliance of the Company and others upon these exemptions is
predicated in part upon this representation by the Purchaser. The Purchaser
further understands that the Restricted Securities may not be transferred or
resold without (i) registration thereof under the Securities Act and applicable
state securities laws, or (ii) the availability of an exemption from the
registration requirements of the Securities Act and applicable state securities
laws.
8D. NO FINDER'S FEE. Other than fees payable by the Purchaser to Xxxxxxxx,
Xxxxxxxx & Co. Incorporated, its financial adviser, there are no claims for
brokerage commissions, finders' fees or similar compensation payable by the
Purchaser and/or its Affiliates in connection with the transactions contemplated
by this Agreement. The Purchaser shall be solely responsible for the payment of
such fees to Xxxxxxxx, Wertheim &Co. Incorporated.
8E. PURCHASER INQUIRY. The Purchaser and its advisors have reviewed to
their satisfaction, solely for purposes of satisfying the exemption for the
issuance and sale of the Restricted Securities hereunder from the registration
requirements of the Secutities Act and applicable state securities laws,
business, management and financial information about the Company and have had an
opportunity to ask questions of, and receive
26
answers from, the Company concerning the business, management and financial
affairs of the Company which questions, if any, have been answered to their
satisfaction, solely for purposes of satisfying the exemption for the issuance
and sale of the Restricted Securities hereunder from the registration
requirements of the Secutities Act and applicable state securities laws,
including, without limitation, all material contracts and related material
described in SCHEDULE 6M, and have had an opportunity to obtain, and have
received, any additional information deemed necessary by them in order to form a
decision concerning the Purchaser's investment in the Company contemplated
herein; provided, however, that none of the foregoing shall limit, diminish or
constitute a waiver of any representation, warranty or covenant made under this
Agreement by the Company or any Shareholder or impair any rights which the
Purchaser may have with respect thereto under Section 12B hereof.
8F. QUALIFICATION AS AN ACCREDITED INVESTOR. The Purchaser is an
accredited investor within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act.
9. PUBLIC DISCLOSURE. No party shall disclose that the Purchaser is
acquiring an interest in the Company or the price or terms thereof in any press
release or any public announcement or in any document or material filed with any
Governmental Body or to any other Person, without the prior written consent of
the Company and the Purchaser (which consent shall not be unreasonably withheld,
delayed, or conditioned) unless such disclosure is required by applicable Law or
Rules of the Nasdaq Stock Market or by order of a court of competent
jurisdiction in which case prior to making such disclosure, the disclosing party
shall use its reasonable efforts to give written notice to the other party
describing in reasonable detail the proposed content of such disclosure and
shall use its reasonable efforts to permit the Company to review and comment
upon the form and substance of such disclosure. With respect to the transactions
contemplated by this Agreement, the Purchaser and the Company will coordinate
all communications, if any, to third parties.
10. DEFINITIONS. (a) For the purposes of this Agreement, the following
terms have the meanings set forth below:
"AFFILIATE" means, with respect to any Person, (i) any Person that
directly or indirectly controls, is controlled by or is under, common control
with, such Person, or (ii) any director, senior officer or partner of such
Person or any Person specified in Clause (i) above, or (iii) any Immediate
Family Member of any Person specified in clause (i) or (ii) above.
"BENEFICIAL OWNER" shall have the meaning set forth in Rule 13d-3 of the
U.S. Securities and Exchange Commission and "BENEFICIALLY OWNS" shall have a
correlative meaning.
"COASTWISE LAWS" means 46 U.S.C.ss.ss.289-883 and the rules and
regulations promulgated thereunder.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRACT" means any contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, franchise,
insurance policy, commitment or other arrangement or agreement.
"CUSTOMS COMMISSIONER" means the U.S. Commissioner of Customs, Office of
Regulations and Rulings.
"EMPLOYEE STOCK AGREEMENTS" means the Employee Stock Agreements entered
into from time to time between the Company and certain employees which provide
that the Company shall have a repurchase-option on such employee's shares of
Common Stock if the employee ceases to be employed by the Company.
27
"ENVIRONMENTAL CLAIM" means any notice of violation, pending or to the
knowledge of the Company, threatened court or administrative action, claim,
Lien, abatement, order or agency direction (conditional or otherwise) by any
Governmental Body or asserted by any Person pertaining to Environmental Matters.
"ENVIRONMENTAL LAW" means any Law, as existing as of the Closing Date,
concerning Releases into any part of the natural environment, or activities that
might result in damage to the natural environment, or any Law that is concerned
in whole or in part with the natural environment and with protecting or
improving the quality of the natural environment and includes, but is not
limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA") (42 U.S.C. xx.xx. 9601 ET SEQ.), the Hazardous
Materials Transportation Act (49 U.S.C. xx.xx. 1801 ET SEQ.), the Resource
Conservation and Recovery Act (42 U.S.C. xx.xx. 6901 ET SEQ.), the Clean Water
Act (33 U.S.C. xx.xx. 1251 ET SEQ.), the Clean Air Act (33 U.S.C. xx.xx. 7401 ET
SEQ.), the Toxic Substances Control Act (15 U.S.C. xx.xx. 2601 ET SEQ.), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. xx.xx. 136 ET
SEQ.), the Oil Pollution Act (33 X.X.X.xx.xx. 2701-2719), and the Louisiana
spill law (La. Rev. Stat. ss.30:2025) as such laws have been amended or
supplemented, and the regulations promulgated pursuant thereto, and any and all
analogous state or local statutes, and the regulations promulgated pursuant
thereto. "Environmental Laws" does not include the Occupational Safety and
Health Act or any other law related to worker safety or workplace conditions
which, for purposes of this Agreement, shall nevertheless still constitute a
Law.
"ENVIRONMENTAL MATTERS" means any matter arising out of or relating to the
production, storage, transportation, disposal or Release of any Hazardous
Material which could give rise to liability or require the expenditure of money
to address, and shall include, without limitation, the costs of investigating
and remediating any of the foregoing matters, any fines and penalties arising in
connection therewith, and any claim in respect thereof for damages for alleged
personal injury, property damage or damage to natural resources or injunctive
relief under common law or other Environmental Law.
"ENVIRONMENTAL PERMIT" means any Permit, approval, authorization, license
variance, registration, or permission required under any applicable
Environmental Laws and all supporting documents associated therewith.
"ERISA" means the Employee Retirement Income Security of 1974, as amended.
"ERT" means Energy Resource Technology, Inc., a direct wholly-owned
Subsidiary of the Company.
"EMPLOYEE SHAREHOLDERS" means employees who are shareholders of the
Company.
"EXFA" means the Exon-Xxxxxx Amendment to the Defense Production Act of
1950 and the rules and regulations promulgated thereunder.
"EXECUTIVES" means Xxxxxx X. Xxxxx, Xxxx Xxxxx and S. Xxxxx Xxxxxx.
"EXTRAORDINARY LOSS" means any extraordinary loss (as defined in Opinion
No. 30 of the Accounting Principles Board of the American Institute of Certified
Public Accountants and any amendments thereto).
"FACILITIES" means real property now or heretofore owned, leased or
operated by the Company or any of its Subsidiaries.
28
"FUNDS" means First Reserve Secured Energy Assets Fund, Limited
Partnership, First Reserve Fund V, Limited Partnership, First Reserve Fund V-2,
Limited Partnership, and First Reserve Fund VI, Limited Partnership.
"GAAP" means generally accepted accounting principles as in effect in the
United States of America from time to time.
"GOVERNMENTAL BODY" means any government or governmental or regulatory
body thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"HAZARDOUS MATERIALS" means any substance, material or waste which is
defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste," "subject waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law, including but not limited to, petroleum, petroleum products,
asbestos and polychlorinated biphenyls.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"IMMEDIATE FAMILY MEMBER" means, with respect to any Person, a spouse,
parent, child or sibling (whether natural or adopted) of such Person and any
trust or other mechanism established for estate or tax planning purposes solely
for the benefit of any such Person's Immediate Family Members.
"LAW" means any federal, state, local, foreign or supranational statute,
treaty, code, ordinance, rule, regulation or other requirement.
"LEGAL PROCEEDING" means any judicial, civil, criminal, equitable,
administrative or arbitral actions, suits, charges, complaints, demands,
proceedings (public or private), claims or governmental proceedings.
"LIEN" means any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
transfer restriction under any shareholder or similar agreement, encumbrance,
litigation or any other restriction or limitation whatsoever.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means any action,
event, circumstance, condition, change or effect which, individually or in the
aggregate, has resulted in, or could reasonably be expected to, result in a
material adverse change in and/or effect on the business, properties, results of
operations, prospects, operations, condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole.
"MCDERMOTT AGREEMENTS" means the Asset Purchase Agreements dated August
30, 1996 between the Company and J. Xxx XxXxxxxxx S.A. and between the Company
and J. Xxx XxXxxxxxx Inc. and all Contracts relating thereto.
"OFFICER'S CERTIFICATE" means, with respect to the Company or Purchaser, a
certificate signed by a chairman, president or its chief financial officer of
such Person, stating, among other things, that (i) the officer signing such
certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the best of such officer's knowledge, such
certificate does not misstate any material fact and does not omit to state any
29
fact necessary to make the certificate not misleading.
"ORDER" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"ORDINARY COURSE OF BUSINESS" shall mean either action consistent with
historical Company practice or consistent with oil service industry practice of
competitors or reasonably foreseeable trends therein.
"PERMITS" means any approvals, authorizations, consents, filings,
licenses, permits, registrations, qualifications or certificates, other than
Environmental Permits..
"PERSON"means an individual, a partnership, a corporation, an association,
a limited liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization, Governmental Body or any other entity, agency or
political subdivision thereof.
"PURCHASER COMMON STOCK" means (i) the Common Stock (a) issued to the
Purchaser pursuant to this Agreement by the Company and (b) sold to the
Purchaser by the Shareholders pursuant to this Agreement, and (ii) any
additional shares of Common Stock issued with respect to the Common Stock
referred to in clause (i) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other similar event.
"QUALIFIED PUBLIC OFFERING" means an underwritten public offering of
Common Stock of the Company under the Securities Act pursuant to which the
Company receives proceeds, net of underwriting discounts and commissions, of at
least $35,000,000.
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, or migration of a Hazardous
Material into the indoor or outdoor environment, or into or out of any property
owned, operated or leased by the Company or any of its Subsidiaries.
"REMEDIAL ACTION" means all actions, including, without limitation, any
capital expenditures, required by applicable Environmental Laws to (i) clean up,
remove or treat, Hazardous Material ; (ii) prevent the Release or threat of
Release, or minimize the further Release of any Hazardous Material ; (iii)
perform preremedial studies and investigations or post-remedial monitoring and
care; or (iv) bring any Facility into compliance with all Environmental Laws and
Environmental Permits.
"RESTRICTED SECURITIES" means (i) the Purchaser Common Stock issued
hereunder, and (ii) any securities issued with respect to the securities
referred to in clause (i) above, by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular Restricted Securities, such
securities shall cease to be Restricted Securities when they have (a) been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) become eligible for sale
pursuant to Rule 144 or Rule 144A (or any similar provision or provisions then
in force) under the Securities Act or (c) been otherwise transferred in
compliance with applicable securities laws and new certificates for them not
bearing a Securities Act restrictive legend set forth have been delivered by the
Company. Whenever any particular securities cease to be Restricted Securities,
the holder thereof shall be entitled to receive from the Company, without
expense, new securities of like tenor not bearing a Securities Act restrictive
legend.
"RULING LETTER" means the letter dated February 10, 1997 of Robins,
Kaplan, Xxxxxx & Xxxxxx, L.L.P., special counsel to the Company, to the Customs
Commissioner, a copy of which, together with the response thereto from the
Customs Commissioner, is set forth in EXHIBIT L..
30
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.
"SELLER DOCUMENTS" means this Agreement and each other Contract, document
or certificate contemplated by this Agreement in connection with the
consummation of the transactions contemplated by this Agreement.
"1995 SHAREHOLDERS AGREEMENT" means that certain Amended and Restated
Shareholders Agreement dated January 12, 1995 among the Company, the Funds, the
Executives, Xxxxxx X. Xxxxx and the Employee Shareholders.
"SOFTWARE" means any computer software program (exclusive of off-the-shelf
computer software available in the open market and related applications
thereof), program specification chart, procedure, source code, object code,
input data, routine, database, report layout, format, record file layout,
diagram, functional specification, narrative description, flow chart or other
related material which is material to the operations of the Company and its
subsidiaries.
"STOCK OPTION PLAN" means that certain 1995 Long Term Incentive Plan of
the Company.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association or other business entity of which fifty percent or more
of the total voting power of shares of capital stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof, or fifty percent or more of the equity interest
therein is at the time owned or controlled by any Person or one or more of the
Subsidiaries of such Person or a combination thereof.
"TAX RETURNS" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"TAXES" means all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any taxing authority (domestic or foreign)
and shall include any transferee liability in respect of Taxes.
"TRANSFER" means any transfer, sale, assignment, distribution, exchange,
mortgage, pledge, hypothecation or other disposition.
"TRUSTEES" means Xxxxxx X. Xxxxx, Xxxx Xxxxx and S. Xxxxx Xxxxxx acting in
their capacity as trustees of the Voting Trust Agreement.
"VOTING TRUST AGREEMENT" means that certain Voting Trust Agreement dated
as of July 27, 1990 by and among the Executives and certain employees of the
Company.
31
(b) The following capitalized terms are defined in the following Sections
of this Agreement:
TERM SECTION
Acquisition Transaction 5G
Agreement Preamble
Arbitration Notice 12J
Award 12J
Basket 12D
Business Cooperation Agreement 2J
Cap 12D
Closing 1B
Closing Date 1B
Committee 2G
Company Preamble
Company Shares Preamble
Discovery 12J
Dispute 12J
Employee Benefit Plans 6N
ERISA 6N
ERISA Affiliate 6N
Expenses 12D
Financial Statements 6D
Independent Arbitrator 12J
Intangible Property 6L
Intangible Property Licenses 6L
Latest Balance Sheet 6E
Lease Property 6I
Losses 12D
Multi Employer Plans 6N
PBGC 6N
Personal Property Leases 6K
Purchaser Preamble
Purchaser Indemnified Parties 12D
Qualified Plans 6N
Real Property Leases 6I
Registration Rights Agreement 2H
Registration Statement 12D
Representative 4
Reserves Report 6I
ROV Agreement 1A
Securities Act 12D
Seller Indemnifying Parties 12D
Shareholder Preamble
Shareholders Preamble
Shareholder Shares Premable
Shareholders Agreement 2I
Vessels 6J
32
(c) As used in this Agreement, all references to "Dollars" or "$" are to
U.S. dollars. As used in this Agreement, unless the context otherwise requires:
(1) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP; (2) "or" is not exclusive; and (3) words in the singular
include the plural, and in the plural include the singular.
11. POST-CLOSING ACTIVITIES. After the Closing, the parties shall execute
and deliver such other and further instruments and perform such other and
further acts as may be reasonably necessary or desirable for the implementation
of this Agreement or the consummation of the transactions contemplated hereby.
12. MISCELLANEOUS.
12A. EXPENSES. The Company will pay all of its expenses, including
attorneys' fees and the fees of Xxxxxxx & Company International, incurred in
connection with the negotiation of this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby. Except as otherwise provided in this paragraph relating to HSR Act
filing fees, Purchaser will pay all of its own expenses, including fees of
Xxxxxxxx Wertheim & Co. Incorporated, incurred in connection with the
negotiation of this Agreement, the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby. Purchaser and the
Company shall each pay one-half of the filing fees required in connection with
compliance with the HSR Act.
12B. REMEDIES. The Purchaser shall have all rights and remedies set forth
in this Agreement (including, without limitation, Section 12D) and the Company's
Articles of Incorporation and all rights and remedies which such holders may
have under any Law or Contract. Any Person having any rights under any provision
of this Agreement shall be entitled to enforce such rights specifically (without
the requirement of posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
12C. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement (including
the exhibits hereto) represents the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law.
12D. SURVIVAL OF REPRESENTATION AND WARRANTIES; INDEMNIFICATION. (a) The
representations and warranties contained in this Agreement or any of the
documents delivered at Closing pursuant to Sections 2C, 2N, 3C or 3K shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and continue in full force and effect,
regardless of any investigation made by the Purchaser or on its behalf, for a
period of three (3) years after the Closing Date ; PROVIDED, HOWEVER,
33
that (i) the representations and warranties of the Company contained in the
first and second sentences of Section 6C, the last sentence of Section 6E,
Section 6G, paragraph (b) of Section 6J, the first sentence of paragraph (c) of
Section 6K, the second sentence of Section 6L and Section 6N shall continue in
full force and effect until 60 days after any applicable statute of limitations
(taking into account any waiver or tolling thereof) with respect to any Legal
Proceeding which may arise thereunder or relate thereto shall have run; (ii) the
representations and warranties of the Company contained in Section 6Q shall
continue in full force and effect for a period of five (5) years after Closing
Date; (iii) the representations and warranties of the Shareholders contained in
the first sentence of Section 7A and the first, second and third sentences of
Section 7B and (iv) the representations and warranties of the Purchaser
contained in the first and second sentences of Section 8B and in Section 5 of
the ROV Agreement shall continue in full force and effect until 60 days after
any applicable statute of limitations (taking into account any waiver or tolling
thereof) with respect to any Legal Proceeding which may arise thereunder or
relate thereto shall have run. To the extent the survival periods specified
herein exceed an applicable statute of limitations, the provisions of this
Section 12D(a) shall constitute a waiver by the Company, the Shareholders or the
Purchaser, as applicable, of each such statute of limitations.
(b) The Company hereby agrees to indemnify and hold harmless the Purchaser
and its directors, officers, employees, Affiliates, agents, successors and
assigns (collectively, the "PURCHASER INDEMNIFIED PARTIES") from and against:
(i) subject to paragraph (a) of this Section 12D, any and all
losses, liabilities, obligations, damages, deficiencies, costs and expenses
("LOSSES") based upon, attributable to or resulting from any inaccuracy in or
breach of any representation or warranty on the part of the Company under this
Agreement or in any of the documents delivered by the Company at Closing
pursuant to Sections 2C or 2N;
(ii) any and all Losses based upon, attributable to or resulting
from (A) the breach of any covenant or agreement on the part of the Company
under this Agreement or (B) the enforcement of this Agreement (including,
without limitation, this Section 12D); and
(iii) any and all notices, actions, suits, proceedings, demands,
assessments, judgments, costs, penalties and expenses, including attorneys' and
other professionals, fees and disbursements (collectively, "EXPENSES") incident
to the foregoing;
PROVIDED, HOWEVER, that (x) the Company shall not have any liability for
indemnity hereunder until the aggregate amount of Losses and Expenses for which
the Purchaser Indemnified Parties would otherwise be entitled to receive
indemnification hereunder exceeds $350,000 (the "BASKET"), in which event the
Company shall be obligated to pay to the Purchaser Indemnified Parties the full
amount of such Losses and Expenses, inclusive of the Basket, and (y) the Company
shall not have any liability for indemnity hereunder in an aggregate amount in
excess of $35,000,000; provided, further, however, that notwithstanding clause
(x) above, the Basket shall not apply to restrict, reduce or limit any liability
of the Company for indemnity hereunder for any Losses and Expenses of the
Purchaser Indemnified Parties, based upon, attributable to or resulting from any
willful failures ("willful" to be defined as after having been given reasonable
notice and a 60 day period to cure such failure), to fully discharge any
covenant or agreement on the part of the Company under this Agreement which by
its terms are to be performed after the Closing Date.
(c) Each of the Shareholders hereby severally agrees to indemnify and hold
harmless the Purchaser Indemnified Parties from and against:
34
(i) subject to paragraph (a) of this Section 12D, any and all Losses
based upon, attributable to or resulting from any inaccuracy in or breach of any
representation or warranty by such Shareholder under Section 7 of this Agreement
or by such Shareholder in any of the documents delivered at Closing pursuant to
Section 2C or 2N of this Agreement; provided, however, that no Shareholder shall
be required to indemnify or hold harmless any Purchaser Indemnified Party under
paragraph (c) of this Section 12D for any inaccuracy or breach of representation
or warranty by any other Shareholder or the Company;
(ii) any and all Losses based upon, attributable to or resulting
from the enforcement of this Agreement against such Shareholder (including,
without limitation, paragraph (c) of this Section 12D); and
(iii) any and all Expenses incident to the foregoing;
PROVIDED, HOWEVER, that in no event shall the aggregate liability of any of the
Shareholders for indemnity under paragraph (c) of this Section 12D exceed the
product of (x) the aggregate number of shares of Common Stock sold by such
Shareholder hereunder multiplied by (y) $9.46.
(d) The Purchaser hereby agrees to indemnify and hold harmless the Company
and its directors, officers, employees, Affiliates, agents, successors and
assigns and the Shareholders (collectively, the "Seller Indemnified Parties")
from and against:
(i) subject to paragraph (a) of this Section 12D, any and all
"Losses" based upon, attributable to or resulting from any inaccuracy in or
breach of any representation or warranty on the part of the Purchaser under this
Agreement, the ROV Agreeement or in any of the documents delivered by the
Purchaser at Closing pursuant to Sections 3C or 3K;
(ii) any and all Losses based upon, attributable to or resulting
from (A) the breach of any covenant or agreement on the part of the Purchaser
under this Agreement or the ROV Agreement or (B) the enforcement of this
Agreement (including, without limitation , this Section 12D) or the ROV
Agreement; and
(iii) any and all "Expenses" incident to the foregoing.
PROVIDED, HOWEVER, that (x) the Purchaser shall not have any liability for
indemnity hereunder until the aggregate amount of Losses and Expenses for which
the Seller Indemnified Parties would otherwise be entitled to receive
indemnification hereunder exceeds the Basket, in which event the Purchaser shall
be obligated to pay to the Seller Indemnified Parties the full amount of such
Losses and Expenses inclusive of the Basket, and (y) the Seller shall not have
any liability for indemnity hereunder (A) to the Company or its directors,
officers, employees, Affiliates, agents, successors and assigns in an aggregate
amount in excess of $4,999,997.86 or (B) to any of the Shareholders in an
aggregate amount in excess of the product of (1) the aggregate number of shares
of Common Stock sold by such Shareholder hereunder multiplied by (2) $9.46;
provided, further, however, that notwithstanding clause (x) above, the Basket
shall not apply to restrict, reduce or limit any liability of the Purchaser for
indemnity hereunder for any Losses and Expenses of the Seller Indemnified
Parties, based upon, attributable to or resulting from any willful failures
("willful" to be defined as after having been given reasonable notice and a 60
day period to cure such failure), to fully discharge any covenant or agreement
on the part of the Purchaser under this Agreement which by its terms are to be
performed after the Closing Date.
35
(e) Subject to the limits on Losses and Expenses contained in Section 12D
(b) , (c) and (d) above, the Company, the Shareholders and the Purchaser agree
that any indemnification payment made hereunder will be treated by the parties
on their respective Tax Returns as an adjustment to the aggregate consideration
for the shares of Common Stock of the Company acquired by the Purchaser. If,
notwithstanding such treatment by the parties, any such indemnification payment
is determined to be taxable to the indemnified party by any taxing authority,
the indemnifying party shall also indemnify the indemnified party for any Taxes
and Related Costs payable by the indemnified party by reason of the receipt of
such indemnification payment.
(f) In the event that any Legal Proceedings shall be instituted or
asserted by any Person in respect of which payment may be sought under this
Section 12D, the indemnified party shall reasonably and promptly cause written
notice of the assertion of any Legal Proceeding of which it has knowledge which
is covered by the indemnities under this Section 12D to be forwarded to the
indemnifying party; provided, however, that the failure of the indemnified party
to give such reasonable and prompt notice shall not release, waive or otherwise
offset the indemnifying party's obligations hereunder with respect thereto
except to the extent that the indemnifying party can demonstrate actual loss and
prejudice as a result of such failure. The indemnifying party shall have the
right, at its sole option and expense, to be represented by counsel of its
choice, which must be reasonably satisfactory to the indemnified party which
consent shall not be unreasonably withheld, conditioned or delayed, and to
defend against, negotiate, settle or otherwise deal with any Legal Proceeding
which relates to any Losses or Expenses indemnified against hereunder; PROVIDED,
however, that (i) prior to assuming control of such defense, the indemnifying
party shall verify in writing to the indemnified party that the indemnifying
party will be fully responsible (with no reservation of any rights) for all
Liabilities and obligations relating to such claim for indemnification and that
it will provide full indemnification with respect thereto and (ii) no settlement
shall be made without the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld, conditioned or delayed. If the
indemnifying party elects to defend against, negotiate, settle or otherwise deal
with any Legal Proceeding which relates to any Losses indemnified against
hereunder, it shall within thirty (30) days (or sooner, if the nature of the
Legal Proceeding so requires) notify the indemnified party of its intent to do
so. If the indemnifying party elects not to defend against, negotiate, settle or
otherwise deal with any Legal Proceeding which relates to any Losses and
Expenses indemnified against hereunder, fails to notify the indemnified party of
its election as herein provided or contests its obligation to indemnify the
indemnified party for such Losses and Expenses under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Legal Proceeding. If the indemnified party defends any Legal Proceeding,
then the indemnifying party shall reimburse the indemnified party for the
reasonable Expenses of defending such Legal Proceeding upon submission of
periodic bills. The indemnified party may not settle any Legal Proceeding
without the prior written consent of the indemnifying party, which consent shall
not be unreasonably withheld, conditioned or delayed. If the indemnifying party
shall assume the defense of any Legal Proceeding, the indemnified party may
participate, at its own expense, in the defense of such Legal Proceeding;
PROVIDED, HOWEVER, such indemnified party shall be entitled to participate in
any such defense with separate counsel (other than the Nixon, Hargrave, Devans &
Xxxxx, LLP law firm) at the expense of the Indemnifying Party if (i) so
requested by the indemnifying party to participate or (ii) in the reasonable
opinion of counsel to the indemnified party, a conflict or potential conflict
exists between the indemnified party and the indemnifying party that would make
such separate representation advisable. The parties hereto agree to cooperate
fully with each other in connection with the defense, negotiation or settlement
of any such Legal Proceeding.
After any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and the
expiration of the time in which to appeal therefrom,
36
or a settlement shall have been consummated, or the indemnified party and the
indemnifying party shall have arrived at a mutually binding agreement with
respect to a Legal Proceeding hereunder, the indemnified party shall forward to
the indemnifying party notice of any sums due and owing by the indemnifying
party pursuant to this Agreement with respect to such matter and the
indemnifying party shall be required to pay all of the sums so due and owing to
the indemnified party by wire transfer of immediately available funds within
five business days after the date of such notice.
12E. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchaser's benefit as a
purchaser or holder of Common Stock are also for the benefit of, and enforceable
by, any Purchaser Party, including any subsequent holder of such Common Stock.
12F. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
12G. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, and all such counterparts taken together shall constitute one and the
same Agreement.
12H. TABLE OF CONTENTS AND SECTION HEADINGS; INTERPRETATION. The table of
contents and section headings of this Agreement are inserted for convenience
only, do not constitute a part of this Agreement and are to be given no effect
in the construction or interpretation of this Agreement. The use of the word
"including" in this Agreement shall be by way of example rather than by
limitation.
12I. GOVERNING LAW; SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) Except as expressly provided in Section 12J, the internal law, and
not the conflict of laws principles, of the State of New York shall govern this
Agreement as well as the construction, validity and interpretation of this
Agreement and the exhibits and schedules hereto.
(b) Solely to the extent permitted by Section 12J hereof, each of
the parties hereto hereby irrevocably submit for itself or himself and its or
his property to the non-exclusive jurisdiction of any federal or state court
located within the State of New York over any Dispute (as hereinafter defined)
and each party hereby irrevocably agrees that all claims in respect of such
Dispute or any action, suit or proceeding related thereto, solely to the extent
expressly permitted by Section 12J hereof, may be heard and determined in such
courts. The parties hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the laying
of venue of any Dispute brought in such court or any defense of inconvenient
forum for the maintenance of such Dispute, provided that relief sought in any
action, suit or proceeding relating thereto is of the nature expressly permitted
by Section 12J hereof to be sought in such court. Each of the parties hereto
agrees that an Award or a judgment in any such Dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(c) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding of the
nature expressly permitted by Section 12J hereof by the delivery or mailing of a
copy thereof; in accordance with the provisions of Section 12K.
37
(d) Nothing in this Section 12I shall affect the rights of the
parties to commence any action, suit or proceeding of the nature expressly
permitted by Section 12J hereof in any other forum or to serve process in any
such action, suit or proceeding in any other manner permitted by law.
12J. ARBITRATION. (a) Any claim, dispute or other disagreement (each, a
"DISPUTE") between a Purchaser Indemnified Party, on the one hand, and the
Company or any of the Shareholders, on the other hand, arising out of or
relating to this Agreement or any of the transactions contemplated hereby shall
be finally settled by arbitration in accordance with the terms of this Section
12J; provided that any party shall in any event have the right to seek and
obtain equitable relief during the pendency of such Dispute pursuant to Section
12J(b) hereof. In the event of any Dispute, any party may serve written notice
of such Dispute on any other party and each party to such Dispute shall
undertake in good faith to resolve such Dispute. If the parties cannot agree to
resolve such Dispute within 15 days after such written notice, any party to such
Dispute may, by further written notice (the "ARBITRATION NOTICE") to the other
party, commence an arbitration proceeding by bringing the Dispute to an
arbitration panel selected as provided below. The Arbitration Notice shall be
filed simultaneously with the International Chamber of Commerce in New York, New
York, and shall contain a description of the amount in controversy, the nature
of the Dispute and the paragraph(s) of this Agreement to which such Dispute
relates. Disputes shall be decided by an arbitration panel comprised of three
arbitrators (each of whom shall be a practicing lawyer knowledgeable and
experienced in matters of corporate, mergers and acquisitions and securities
law), one arbitrator to be selected by the Purchaser Indemnified Party, a second
arbitrator to be selected by the Company, and the third arbitrator (the
"INDEPENDENT ARBITRATOR"), who will be the Chairman of the arbitration panel, to
be appointed by the first two arbitrators. In the event the first two
arbitrators fail to agree on the appointment of the Independent Arbitrator
within 15 days, the Independent Arbitrator shall be appointed by the
International Chamber of Commerce in New York, New York. In the event that any
arbitrator shall resign, be unable or otherwise fail to perform his or her
duties, each party shall immediately notify the other parties of such
resignation, inability or failure, and a replacement shall immediately be
selected by the party who selected such arbitrator in the first instance, or, if
the arbitrator to be replaced is the Independent Arbitrator, then the parties
shall attempt in good faith to appoint a mutually agreeable replacement
Independent Arbitrator. If the parties fail to agree on such replacement within
15 days, either party may request that the International Chamber of Commerce in
New York, New York appoint such replacement Independent Arbitrator. The
arbitration panel shall conduct the arbitration in accordance with the Rules of
Arbitration of the International Chamber of Commerce then in effect, except to
the extent such rules are inconsistent with the provisions of this Section 12J.
The parties shall prepare in writing a statement of their positions, together
with counterclaims, with supporting facts, data, and affidavits, if any, for the
arbitration panel and shall submit such statement to the arbitration panel
within 15 days after it is selected, but, in any event, within 60 days after
service of the Arbitration Notice. The arbitration panel shall give all parties
the opportunity to make an oral presentation to the arbitration panel in the
presence of the other party if either party so requests. The parties shall have,
for a period of 180 days after service of the Arbitration Notice (the "DISCOVERY
PERIOD"), all rights of discovery provided by the New York Civil Practice Law
and Rules then obtaining, except, unless otherwise agreed, that all responses to
discovery requests shall be served within 10 days of such discovery request, and
no discovery request may be served after the date 10 days before the termination
of the Discovery Period. Subject to the proviso in the first sentence of this
Section 12J(a) and to Section 12J(b) hereof, the arbitration panel shall assume
exclusive jurisdiction over the Dispute, may order interim equitable relief
(which shall be specifically enforceable as if it were a final Award, as
hereinafter defined), and shall be required to make a final binding
determination (the "AWARD"). The Award shall not be subject to appeal to or
review by any court or administrative body except as set forth in Section 10(a)
of the Federal Arbitration Act, codified as 9 U.S.C.A. ss.10(a) (West Supp.
1997). The Award shall determine (i) whether each party's obligations under this
Agreement were met and
38
(ii) what damages or remedies (which may include final equitable relief) are due
to the Purchaser Indemnified Party, on the one hand, or the Company or
Shareholder on the other hand, under the terms of this Agreement. The agreement
to arbitrate contained in this Section 12J shall be specifically enforceable
under the prevailing arbitration law, and shall survive termination of this
Agreement. Judgment upon the Award rendered by the arbitration panel may be
entered in accordance with applicable law in any court having jurisdiction
therefor. Each party shall bear its own costs and expenses for arbitration,
subject to reimbursement as determined by the arbitration panel in the Award.
Arbitration shall, unless the parties otherwise agree in writing, take place in
New York, New York.
(b) Nothing contained in this Section 12J shall preclude, or be
deemed, construed or interpreted to preclude, any party from seeking interim
equitable relief from a court of competent jurisdiction against the other party,
where circumstances so require, except that no party shall be entitled to seek a
stay of any arbitration proceeding brought hereunder. The parties agree that,
upon the application of any of the parties, and whether or not an arbitration
proceeding has yet been initiated pursuant to this Section 12J, all courts
having jurisdiction are hereby authorized to (i) issue and enforce in any lawful
manner such temporary restraining orders, preliminary injunctions and other
interim measures of relief as may be necessary to prevent harm to a party's
interests or as otherwise may be appropriate pending the conclusion of
arbitration proceedings pursuant to this Section 12J, and/or (ii) enter into and
enforce in any lawful manner such judgments for permanent equitable relief as
may be necessary to prevent harm to a party's interests or as otherwise may be
appropriate following the issuance of the Award.
12K. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable express courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Purchaser and to the Company at the
addresses indicated below:
If to the Purchaser:
Coflexip
00 Xxxxxx xx Xxxxxxx
00000 Xxxxx, Xxxxxx
Attention: Chairman
Facsimile No.: 33 1 40 67 60 03
with a copy to:
Coflexip
00 Xxxxxx xx Xxxxxxx
00000 Xxxxx, Xxxxxx
Attention: General Counsel
Facsimile No.: 33 1 40 67 60 07
and to:
Nixon, Hargrave, Devans & Xxxxx LLP
39
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Facsimile No.: (000) 000-0000
If to the Company:
Cal Dive International, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx Xxxxx, President
Facsimile No: (000) 000-0000
with a copy to:
Cal Dive International, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx, General Counsel
Facsimile No.: (000) 000-0000
If to the Shareholders:
Xx. Xxxx Xxxxx
c/o Cal Dive International, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile No: (000) 000-0000
and
First Reserve Partnerships
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Facsimile No: (000) 000-0000
with a copy to:
Simpson, Thacher & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Facsimile No: (000) 000-0000
or to such other address or to the attention of such other Person as the
recipient party has specified by prior
40
written notice to the sending party.
12L. FURTHER ASSURANCES. The Company, the Shareholders and the Purchaser
each agree to execute and deliver such other documents or agreements as may be
reasonably necessary or desirable for the implementation of this Agreement and
the consummation of the transactions contemplated hereby.
12M. INTERPRETATION. The parties acknowledge and agree that: (i) each
party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto,
regardless of which party was generally responsible for the preparation of this
Agreement.
13. CONSENT TO SALE. The Executives, individually and as Trustees, Xxxxxx
Xxxxx and the Funds hereby consent to the sale of Common Stock provided for
herein, and hereby waive any prior rights they may have under all documents to
purchase such Common Stock.
14. TERMINATION OF AGREEMENT. This Agreement may be terminated prior to
the Closing without liability of any party as follows:
(a) At the election of either Purchaser, the Company or Shareholders, on
or after April 10, 1997 if the Closing shall not have occurred by the close of
business on such date;
(b) by mutual written consent of the Purchaser, the Company and the
Shareholders;
(c) by either the Purchaser, the Company or the Shareholders, if there
shall be in effect a final nonappealable Order of a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(d) by the Purchaser if any of the conditions set forth in Section 2
hereof becomes incapable of fulfillment and is not waived by the Purchaser; and
(e) by the Company and the Shareholders, if any of the conditions set
forth in Section 3 hereof becomes incapable of fulfillment and is not waived by
the Company and the Shareholders, on behalf of the Shareholders.
15. SURVIVAL AFTER TERMINATION. If this Agreement is terminated in
accordance with Section 14 and the transactions contemplated hereby are not
consummated, this Agreement shall become null and void and of no further force
and effect, except (i) for this Section 15, (ii) for the provisions of Section 9
and (iii) that the termination of this Agreement for any cause shall not relieve
any party hereto from any liability the benefit of which at the time of
termination had already accrued to any other party hereto or which thereafter
may accrue in respect of any act or omission of such party prior to such
termination it being acknowledged by all parties hereto that for all purposes at
the Closing, all documents (including this Agreement) will be deemed to have
been executed simultaneously.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first written above.
COFLEXIP CAL DIVE INTERNATIONAL, INC.
41
By: ________________________________ By: ________________________________
Pierre Xxxxx Xxxxxxxx, Chairman and Xxxx Xxxxx, President
Chief Executive Officer
____________________________________
Xxxxxx X. Xxxxx
EXECUTIVES
____________________________________
Xxxxxx X. Xxxxx
____________________________________
Xxxx Xxxxx
____________________________________
S. Xxxxx Xxxxxx
42
SHAREHOLDERS
____________________________________
Xxx Xxxx
____________________________________
Xxxx Xxxxxx
____________________________________
Xxxxx Xxxxxx
____________________________________
Xxxx Xxxxxxxxx
____________________________________
Xxxxx Xxxxxxx
____________________________________
Xxxxx Xxxxxxxx
____________________________________
Xxxxx Xxxxxxx
____________________________________
Xxxxxxxx Xxxxx
____________________________________
Xxxxxxx Xxxxx
____________________________________
Xxxx Xxxxxx
____________________________________
Xxxx Xxxxxxxxx
43
____________________________________
Xxx Xxxx
____________________________________
Xxxxx Xxxxxx
____________________________________
Xxxxxx Xxxxxxxxx
____________________________________
Xxxxxxx Xxxxxx
____________________________________
Xxxxx Xxxxxxx
44
FIRST RESERVE SECURED ENERGY
ASSETS FUND, LIMITED PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as General Partner
By: ________________________________
Xxxxx X. Xxxxxxx, Managing Director
FIRST RESERVE FUND V, LIMITED
PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as General Partner
By: ________________________________
Xxxxx X. Xxxxxxx, Managing Director
FIRST RESERVE FUND V-2, LIMITED
PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as General Partner
By: ________________________________
Xxxxx X. Xxxxxxx, Managing Director
FIRST RESERVE FUND VI, LIMITED
PARTNERSHIP
By: FIRST RESERVE CORPORATION,
as General Partner
By: ________________________________
Xxxxx X. Xxxxxxx, Managing Director
45
