1
Conformed Copy
STOCKHOLDER AGREEMENT
This Stockholder Agreement dated as of April 16, 1996 is between Xxxxx
Xxxxxx Incorporated, a Delaware corporation ("Xxxxx Xxxxxx") and DRLX Partners,
L.P., a Delaware limited partnership (the "Stockholder").
WHEREAS, Xxxxx Xxxxxx, Xxxxx Xxxxxx Merger, Inc., a Delaware corporation
and a wholly owned subsidiary of Xxxxx Xxxxxx ("Sub"), and Drilex International
Inc. ("Drilex"), a Delaware corporation, are entering into an Agreement and Plan
of Merger dated as of the date hereof (as amended from time to time pursuant
thereto, the "Merger Agreement");
WHEREAS, the Stockholder is the record and beneficial owner of 4,119,207
shares of Common Stock, par value $0.01 per share, of Drilex (the "Drilex Common
Stock") (such shares of Drilex Common Stock, together with any shares of capital
stock of the Drilex acquired by the Stockholder after the date hereof and during
the term of this Agreement, being collectively referred to herein as the
"Stockholder Shares");
WHEREAS, as a condition to the willingness of Xxxxx Xxxxxx to enter into
the Merger Agreement, and as an inducement to it to do so, the Stockholder has
agreed for the benefit of Xxxxx Xxxxxx as set forth in this Agreement; and
WHEREAS, the Board of Directors of Drilex has approved the Stockholder's
entering into this Agreement, the form of this Agreement and the transactions
contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereby agree as follows (terms defined in the Merger Agreement and used but not
defined herein having the meanings assigned to such terms in the Merger
Agreement):
ARTICLE I
THE OPTION
Section 1.01. Grant of the Option. The Stockholder hereby grants to Xxxxx
Xxxxxx an irrevocable option (the "Option") to purchase, on the terms and
subject to the conditions set forth herein, at a per share cash exercise price
of $16.00 (the "Exercise Price"), up to 1,665,839 Stockholder Shares, together
with (i) any additional shares of capital stock of the Drilex or any securities
or other property that the Stockholder is or becomes entitled to receive from
Drilex by reason of being a record holder of such number of Stockholder Shares,
(ii) any capital stock, securities or other property into which any such number
of Stockholder Shares shall have been or shall be converted or changed, whether
by amendment to the Certificate of Incorporation of the Company, merger,
consolidation, reorganization, capital change or otherwise, (iii) any additional
Drilex Common Stock acquired by the Stockholder as the result of the
Stockholder's exercising an option, warrant or other right to acquire shares of
capital stock from Drilex issued with respect to such number of Stockholder
Shares (all of the foregoing hereinafter collectively referred to as the
"Additional Stockholder Shares"), and (iv) any shares of capital stock,
securities or property referred to in clauses (i), (ii), and (iii) above that
are issued or issuable in respect of Additional Stockholder Shares (such
Stockholder Shares, the Additional Stockholder Shares and any shares, securities
or property referred to in clause (iv) above being collectively referred to
herein as the "Option Shares").
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Section 1.02. Exercise of the Option. (a) Subject to the conditions set
forth in Section 1.03, the Option may be exercised in whole at any time, and in
part from time to time, after the occurrence of a Triggering Event but prior to
the Termination Date.
(b) For purposes hereof, a "Triggering Event" means:
(i) the termination of the Merger Agreement pursuant to Section 7.1(e)
or Section 7.1(f), or pursuant to Sections 7.1(b) (i) or (iii) or 7.1(c)
(i) or (ii) after the public announcement of, or the disclosure to the
Board of Directors of Drilex of, an Acquisition Proposal; or
(ii) the occurrence of any event giving Xxxxx Xxxxxx the right to
terminate the Merger Agreement pursuant to Section 7.1(e) thereof.
For purposes hereof, the "Termination Date" means the first to occur of (1) the
Effective Time of the Merger and (2) the close of business on the date 45 days
after the termination of the Merger Agreement, provided such date shall be
extended (but in no event beyond October 31, 1997) if an Acquisition Proposal is
pending until the close of business on the third business day after the
Stockholder gives Xxxxx Xxxxxx notice of the consummation, withdrawal or
termination of the Acquisition Proposal if at such time no other Acquisition
Proposal is pending.
(c) In the event Xxxxx Xxxxxx wishes to exercise the Option, Xxxxx Xxxxxx
will send a written notice to the Stockholder specifying a place, date (not less
than two business days nor more than 10 calendar days after the date such notice
is given) and time for the closing of the purchase of such Option Shares (the
"Closing").
(d) The purchase price payable to the Stockholder with respect to any
exercise of the Option will be the product of (i) the Exercise Price and (ii)
the number of Option Shares to be purchased upon such exercise.
(e) In the event of any change in the number of issued and outstanding
shares of Drilex Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, conversion, exchange of shares or other change in
the corporate or capital structure of Drilex, the number and kind of shares
subject to the Option and the Exercise Price shall be adjusted appropriately.
If, on or after the date hereof, Drilex should declare or pay any cash or stock
dividend or other distribution or issue any rights with respect to the Drilex
Common Stock, payable or distributable to stockholders of record on a date prior
to the transfer to the name of Xxxxx Xxxxxx or its nominee on Ship's stock
transfer books of the Option Shares, and the Option is exercised, then (a) the
exercise price per Option Share will be reduced by the amount of any such cash
dividend or cash distribution, and (b) the whole of any such non-cash dividend,
distribution or right which would have been payable with respect to each Option
Share purchased by Xxxxx Xxxxxx if such shares were outstanding on the record
date for such distribution will be promptly remitted and transferred by the
Stockholder to Xxxxx Xxxxxx. Upon exercise of the Option, to the extent
consistent with law, pending such remittance, Xxxxx Xxxxxx will be entitled to
all rights and privileges as owner of any such non-cash dividend, distribution
or right with respect to each Option Share purchased.
Section 1.03. Closing. (a) At the Closing, the Stockholder will deliver to
Xxxxx Xxxxxx a certificate or certificates representing the Option Shares being
purchased, duly endorsed for transfer or accompanied by appropriate stock powers
duly executed in blank, and Xxxxx Xxxxxx will pay the purchase price in
immediately available funds by wire transfer to an account designated by the
Stockholder. Transfer taxes, if any, imposed as a result of the exercise of the
Option and the transfer of any Option Shares will be paid by the Stockholder.
(b) The obligations of Xxxxx Xxxxxx and the Stockholder to consummate the
purchase and sale of the Option Shares pursuant to this Article I will be
subject to the fulfillment of the following conditions:
(i) The expiration or termination of the waiting period applicable to
the consummation of such transactions under the HSR Act; and
(ii) Neither of the parties hereto shall be subject to any order of
injunction of a court of competent jurisdiction which prohibits the
consummation of such transactions.
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Each of the parties will promptly make, and will use all reasonable efforts to
cause each of their respective affiliates to make, all such filings and take all
such actions as may be reasonably required in order to permit the lawful
exercise of the Option, as promptly as possible. The date of any Closing may be
extended, if required, to the next business day following (1) the date that any
applicable waiting period under the HSR Act shall have expired or been earlier
terminated (but not beyond August 31, 1997 unless Drilex shall not have complied
with its obligations under the Merger Agreement with respect thereto), (2) the
date that all other necessary governmental approvals for the sale of the Option
Shares for which the Option shall have been exercised shall have been obtained,
and (3) the satisfaction of any other condition to the Closing; provided that
any delay pursuant to clauses (2) or (3) shall not exceed 10 business days.
Section 1.04. Registration Rights Agreement. If Xxxxx Xxxxxx purchases any
Option Shares, the Option Shares so purchased shall be "Registrable Securities"
and Xxxxx Xxxxxx shall become a "Holder" for purposes of the Restated
Registration Rights Agreement dated as of June 14, 1996 among Drilex and the
stockholders party thereto, and Xxxxx Xxxxxx shall be entitled to the benefits
of such Agreement notwithstanding any restrictions on transfer or assignment
contained in Section 11(j) thereof. This Agreement shall, to the extent
necessary, be deemed an amendment to such registration rights agreement to
effectuate the provisions of this Section.
ARTICLE II
COVENANTS OF THE STOCKHOLDER
Section 2.01. Agreement to Vote. At any meeting of the stockholders of
Drilex held prior to the earlier of (i) the Effective Time of the Merger and
(ii) the termination of the Merger Agreement (such earlier time being herein
referred to as the "Voting Termination Date"), however called, and at every
adjournment or postponement thereof prior to the Voting Termination Date, or in
connection with any written consent of the stockholders of Drilex given prior to
the Voting Termination Date, the Stockholder shall vote or cause to be voted the
Stockholder Shares in favor of the approval of the Merger and each of the other
transactions contemplated by the Merger Agreement and in favor of the approval
and adoption of the Merger Agreement, and any actions required in furtherance
hereof and thereof. The Stockholder shall not enter into any agreement or
understanding with any person prior to the Voting Termination Date, directly or
indirectly, to vote, grant any proxy or give instructions with respect to the
voting of the Stockholder Shares in any manner inconsistent with the preceding
sentence.
Section 2.02. Proxies and Voting Agreements. The Stockholder hereby revokes
any and all previous proxies granted with respect to matters set forth in
Section 2.01. Prior to the Voting Termination Date, the Stockholder shall not,
directly or indirectly, except as contemplated hereby, grant any proxies or
powers of attorney with respect to matters set forth in Section 2.01, deposit
any of the Stockholder Shares or enter into a voting agreement with respect to
any of the Stockholder Shares.
Section 2.03. No Solicitation.
(a) From and after the date hereof until the termination of the Merger
Agreement, the Stockholder will not, and will not authorize or permit any of its
officers, directors, employees, partners, agents, affiliates or other
representatives (collectively, "Stockholder Representatives") to, directly or
indirectly, solicit or encourage (including by way of providing information) any
prospective acquiror or the invitation or submission of any inquiries, proposals
or offers or any other efforts or attempts that constitute, or may reasonably be
expected to lead to, an Acquisition Proposal.
(b) The Stockholder shall immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by the Stockholder or any
Stockholder Representatives with respect to any Acquisition Proposal existing on
the date hereof.
(c) Prior to the termination of the Merger Agreement, the Stockholder will
promptly notify Xxxxx Xxxxxx of any requests for information made to the
Stockholder or any Stockholder Representative or the
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receipt of any Acquisition Proposal made to the Stockholder or any Stockholder
Representative, including the identity of the person or group engaging in such
discussions or negotiations, requesting such information or making such
Acquisition Proposal, and the material terms and conditions of any Acquisition
Proposal.
(d) Prior to the termination of the Merger Agreement, the Stockholder shall
not enter into any agreement with any person that provides for, or in any way
facilitates, an Acquisition Proposal.
(e) The provisions of this Section 2.03 do not prohibit any Stockholder
Representative who is also a Drilex Representative from taking actions permitted
by Section 4.2 of the Merger Agreement.
Section 2.04. Transfer of Option Shares by the Stockholder. Prior to the
Termination Date, the Stockholder shall not (a) subject any of the Option Shares
to, or suffer to exist on any of the Option Shares, any lien, pledge, security
interest, charge or other encumbrance or restriction, other than pursuant to
this Agreement or the terms of the existing partnership agreement of the
Stockholder (the "Partnership Agreement"), or (b) sell, transfer, assign, convey
or otherwise dispose of any of the Option Shares (including any such action by
operation of law), other than a disposition by operation of law pursuant to the
Merger. Prior to the record date for the Drilex stockholder meeting to vote on
the Merger Agreement, the Stockholder will not sell, transfer, assign, convey or
otherwise dispose of any of the Stockholder Shares (including any such action of
operation of law).
Section 2.05. Other Actions. Prior to the Termination Date, the Stockholder
shall not take any action that would in any way restrict, limit, impede or
interfere with the performance of its obligations hereunder or the transactions
contemplated hereby or by the Merger Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
OF THE STOCKHOLDER
The Stockholder represents, warrants and covenants to Xxxxx Xxxxxx that:
Section 3.01. Ownership. The Stockholder is as of the date hereof the
beneficial and record owner of the Stockholder Shares, the Stockholder has the
sole right to vote the Stockholder Shares and there are no restrictions on
rights of disposition or other lien, pledge, security interest, charge or other
encumbrance or restriction pertaining to the Stockholder Shares other than the
terms of the Partnership Agreement. Except as provided in the terms of the
Partnership Agreement, none of the Stockholder Shares is subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting
of the Stockholder Shares, and no proxy, power of attorney or other
authorization has been granted with respect to any of the Stockholder Shares.
Upon delivery of any Option Shares upon exercise of the Option, Xxxxx Xxxxxx
will acquire good title to such shares, free and clear of all liens, pledges,
security interests, charges or other encumbrances or restrictions.
Section 3.02. Authority and Non-Contravention. The Stockholder is a limited
partnership duly formed and validly existing under the laws of the State of
Delaware. The Stockholder has the right, power and authority, and the
Stockholder has been duly authorized by all necessary action (including
consultation, approval or other action by or with any other person), to execute,
deliver and perform this Agreement and consummate the transactions contemplated
hereby. Such actions by the Stockholder (a) require no action by or in respect
of, or filing with, any Governmental Entity with respect to the Stockholder,
other than any required filings under Section 13 of the Exchange Act or under
the HSR Act, and (b) do not and will not contravene or constitute default under
any provision of applicable law or regulation or any agreement, judgment,
injunction, order, decree or other instrument binding on the Stockholder or
result in the imposition of any lien, pledge, security interest, charge or other
encumbrance or restriction on any of the Stockholder Shares (other than as
provided in this Agreement with respect to Stockholder Shares).
Section 3.03. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar
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laws relating to creditors' rights generally and by equitable principles to
which the remedies of specific performance and injunctive and similar forms of
relief are subject.
Section 3.04. Total Shares. The Stockholder Shares are the only shares of
capital stock of Drilex owned beneficially or of record as of the date hereof by
the Stockholder, and the Stockholder does not have any option to purchase or
right to subscribe for or otherwise acquire any securities of Drilex and has no
other interest in or voting rights with respect to any other securities of
Drilex.
Section 3.05. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Drilex, Xxxxx Xxxxxx or Sub in respect of
this Agreement based upon any arrangement or agreement made by or on behalf of
the Stockholder, except as otherwise provided in the Merger Agreement.
Section 3.06. Reasonable Efforts. Prior to the Termination Date, the
Stockholder shall use reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with Xxxxx
Xxxxxx in doing, all things necessary, proper or advisable to consummate and
make effective the Merger and the other transactions contemplated by the Merger
Agreement and this Agreement. Subject to Section 5.17 of the Merger Agreement,
Xxxxx Xxxxxx shall use reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
Stockholder in doing, all things necessary, proper or advisable to allow the
Stockholder to sell publicly shares of Xxxxx Xxxxxx Common Stock received in the
Merger without any unreasonable delay or restrictions.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF XXXXX XXXXXX
Xxxxx Xxxxxx represents, warrants and covenants to the Stockholder that:
Section 4.01. Corporate Power and Authority. Xxxxx Xxxxxx has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by Xxxxx Xxxxxx
of this Agreement and the consummation by Xxxxx Xxxxxx of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Xxxxx Xxxxxx.
Section 4.02. Binding Effect. This Agreement has been duly executed and
delivered by Xxxxx Xxxxxx and is a valid and binding agreement of Xxxxx Xxxxxx,
enforceable against Xxxxx Xxxxxx in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and by equitable principles
to which the remedies of specific performance and injunctive and similar forms
of relief are subject.
ARTICLE V
MISCELLANEOUS
Section 5.01. Expenses. Each party hereto shall pay its own expenses
incident to preparing for entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
Section 5.02. Further Assurances. From time to time, at the request of the
other party, each party shall execute and deliver or cause to be executed and
delivered such additional documents and instruments and take all such further
action as may be necessary or desirable to consummate the transactions
contemplated by this Agreement.
Section 5.03. Specific Performance. The Stockholder agrees that Xxxxx
Xxxxxx would be irreparably damaged if for any reason the Stockholder fails to
perform any of the Stockholder's obligations under this Agreement, and that
Xxxxx Xxxxxx would not have an adequate remedy at law for money damages in such
event. Accordingly, Xxxxx Xxxxxx shall be entitled to seek specific performance
and injunctive and other equitable relief to enforce the performance of this
agreement by the Stockholder. This provision is without prejudice to any other
rights that Xxxxx Xxxxxx may have against the Stockholder for any failure to
perform its obligations under this Agreement.
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Section 5.04. Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder:
(a) if to Xxxxx Xxxxxx or Sub, to:
Xxxxx Xxxxxx Incorporated
0000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X'Xxxxxxx, III
Facsimile: 000-000-0000
with a copy to:
J. Xxxxx Xxxxxxxx, Jr.
Xxxxx & Xxxxx, L.L.P.
0000 Xxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
(b) if to Stockholder, to:
DRLX Partners, L.P.
c/o SCF Partners, L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: L. E. Simmons
Facsimile: 000-000-0000
with a copy to:
Xxxxxx X. Xxxx
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
Section 5.06. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the word "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." Unless the context otherwise requires, "or" is disjunctive but not
necessarily exclusive, and words in the singular include the plural and in the
plural include the singular. The term "person" is to be interpreted broadly to
include any corporation, partnership, trust, limited liability company,
government or other entity and any group (as used with respect to Section 13(d)
of the Exchange Act).
Section 5.07. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
Section 5.08. Entire Agreement; No Third Party Beneficiaries. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
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with respect to the subject matter hereto and (b) is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
Section 5.09. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.
Section 5.10. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) except to the partners of the
Stockholder as permitted herein without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
Section 5.11. Amendments; Termination. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.
Section 5.12. Certain Events. (a) The Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Stockholder Shares
beneficially owned by such Stockholder and shall be binding upon any person to
which legal or beneficial ownership of such shares shall pass, whether by
operation of law or otherwise; provided that if the Stockholder distributes any
Stockholder Shares other than Option Shares to its limited partners, then
Section 2.01 only shall be binding on such limited partners and if a limited
partner publicly sells such shares, this Agreement shall cease to apply to such
shares.
(b) If any Stockholder Shares other than Option Shares are distributed to
the limited partners of the Stockholder prior to 30 days prior to the Effective
Time, no limited partner who beneficially owns shares of Drilex Common Stock
(excluding Option Shares retained by the Stockholder) representing less than 10%
of the outstanding Drilex Common Stock shall be treated as an Affiliate for
purposes of Section 5.7 of the Merger Agreement.
Section 5.13. Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid but if any provision or portion of any provision of this
agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision, and this Agreement will be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision or portion of
any provision had never been contained herein. The parties shall endeavor in
good faith negotiations to replace any invalid, illegal or unenforceable
provision with a valid provision the effects of which come as close as possible
to those of such invalid, illegal or unenforceable provision.
Section 5.14. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
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IN WITNESS WHEREOF, Xxxxx Xxxxxx and the Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
DRLX PARTNERS, L.P.
By: SCF Partners, L.P., general
partner
By: X. X. Xxxxxxx & Associates,
Incorporated, general
partner
By /s/ L. E. SIMMONS
-----------------------------------
L. E. Simmons
President
XXXXX XXXXXX INCORPORATED
By /s/ XXXX X. XXXXXXX
-----------------------------------
Xxxx X. Xxxxxxx
Senior Vice President and
Chief Financial Officer
Consented to for purposes of Section
1.04:
DRILEX INTERNATIONAL INC.
By: /s/ L. E. SIMMONS
--------------------------------
L. E. Simmons
Chairman of the Board
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