STOCK PURCHASE AGREEMENT
Between
SUPERIOR ENERGY SERVICES, INC.
and
XXXXX XXX XXXXX
XXX XXXXXXXXXX
XXXXXX XXXXXXXX
XXXXX XXXXX
XXXXXX X. XXXXXXX
XXXXXX XXXXXXXX
XXXXXX XXXX
XXXXX XXXXX, XX.
Dated as of October 31, 1997
TABLE OF CONTENTS
Page
ARTICLE 1 1
SALE AND PURCHASE OF SHARES; CLOSING 1
Section 1.1 Sale of Shares 1
Section 1.2 Purchase Price 1
Section 1.3 Closing 2
Section 1.4 Deliveries at Closing 2
ARTICLE 2 2
Section 2.1 Ownership 3
Section 2.2 Authority; Enforceability 3
Section 2.3 Organization; Qualification; Subsidiaries 3
Section 2.4 Capital Stock 4
Section 2.5 No Conflict 4
Section 2.6 Consent 4
Section 2.7 Legal Proceedings 4
Section 2.8 Charter and By-laws 4
Section 2.9 Financial Statements 5
Section 2.10 Accounts Receivable 5
Section 2.11 Absence of Certain Changes 5
Section 2.12 Suppliers and Customers 7
Section 2.13 Properties; Equipment 7
Section 2.14 Permits; Compliance with Laws 8
Section 2.15 Material Contracts 8
Section 2.16 Litigation 9
Section 2.17 Environmental Matters 9
Section 2.18 ERISA and Related Matters. 9
Section 2.19 Taxes. 11
Section 2.20 Transactions with Certain Persons 14
Section 2.21 Intellectual Property 14
Section 2.22 Insurance 15
Section 2.23 Safety and Health 15
Section 2.24 Books and Records 15
Section 2.25 Bank Accounts; Powers of Attorney 15
Section 2.26 Compensation Agreements 15
Section 2.27 Director and Officer Indemnification 16
Section 2.28 Documents and Written Materials 16
Section 2.29 Effectiveness of Representations and
Warranties 16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SESI 16
Section 3.1 Organization 16
Section 3.2 Authority; Enforceability 16
Section 3.3 Consents and Approvals; Conflicts 17
Section 3.4 Effectiveness of Representations and
Warranties 17
ARTICLE 4 17
COVENANTS 17
Section 4.1 Legal Requirements 17
Section 4.2 Access to Properties and Records 17
Section 4.3 Conduct of Business 18
Section 4.4 Public Statements 18
Section 4.5 No Solicitation 18
Section 4.6 Noncompetition 18
Section 4.7 Update Information 20
ARTICLE 5 20
CLOSING CONDITIONS 20
Section 5.1 Conditions Applicable to all Parties 20
Section 5.2 Conditions to Obligations of SESI 20
Section 5.3 Conditions to Obligations of Sellers 21
ARTICLE 6 21
TERMINATION AND AMENDMENT 21
Section 6.1 Termination 21
Section 6.2 Effect of Termination 22
Section 6.3 Amendment 22
Section 6.4 Extension; Waiver 22
ARTICLE 7 22
INDEMNIFICATION; REMEDIES 22
Section 7.1 Indemnification by Sellers 22
Section 7.2 Indemnification by SESI 23
Section 7.3 Notice and Defense of Third Party Claims 23
Section 7.4 Survival 24
Section 7.5 Allocation 24
Section 7.6 Limits 25
ARTICLE 8 25
DEFINED TERMS 25
Section 8.1 Definitions 25
ARTICLE 9 27
MISCELLANEOUS 27
Section 9.1 Bonus Pool 27
Section 9.2 Confidentiality 28
Section 9.3 Survival of Representations, Warranties and
Agreements 28
Section 9.4 Notices 28
Section 9.5 Headings; Gender 28
Section 9.6 Entire Agreement; No Third Party
Beneficiaries 29
Section 9.7 Governing Law 29
Section 9.8 Assignment 29
Section 9.9 Severability 29
Section 9.10 Counterparts 29
Exhibits
A - Form of Employment Agreement
B - Form of Promissory Note
C - Form of Disclosure Schedule
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of October 31,
1997 (this "Agreement"), is between Superior Energy Services,
Inc., a Delaware corporation ("SESI" or "Buyer"), and Xxxxx
Xxx Xxxxx, Xxx Xxxxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxx,
Xxxxxx X. XxXxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxx and Xxxxx
Xxxxx, Xx. (collectively, the "Sellers" and individually a
"Seller").
W I T N E S S E T H:
WHEREAS, Sellers are the owners of all of the issued and
outstanding shares of common stock, no par value, of Stabil
Drill Specialties, Inc., a Louisiana corporation ("Stabil
Drill");
WHEREAS, Sellers desire to sell to Buyer, and Buyer
desires to buy from Sellers, all of the issued and outstanding
shares of common stock of Stabil Drill that is owned by each
of the Sellers for the purchase price and subject to the terms
and conditions set forth in this Agreement; and
WHEREAS, in addition to the other defined terms used
herein, as used in this Agreement, certain terms are defined
in Article 8.
NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements set forth herein and in reliance upon
the undertakings, representations, warranties and indemnities
contained herein, Sellers and Buyer agree as follows:
ARTICLE 1
SALE AND PURCHASE OF SHARES; CLOSING
Section 1.1 Sale of Shares. Subject to the terms and
conditions herein stated, at the Closing Sellers agrees to
sell to Buyer, and Buyer agrees to purchase from Sellers, the
Shares, free and clear of all Liens, restrictions, and claims
of every kind.
Section 1.2 Purchase Price. In consideration of its
purchase of the Shares, Buyer shall (a) pay to Sellers the sum
of $17,500,000 by check and (b) execute and deliver to the
Sellers Notes providing for maximum payouts thereunder of
$7,500,000 plus interest allocated to each of the Sellers as
follows:
------------------------------------------
| Name | Cash | Note |
------------------------------------------
|Xxxxx Xxx Xxxxx |$14,350,000|$4,350,000|
------------------------------------------
|Xxx Xxxxxxxxxx | 625,000 | 625,000 |
------------------------------------------
|Xxxxxx Xxxxxxxx | 625,000 | 625,000 |
------------------------------------------
|Xxxxx Xxxxx | 750,000 | 750,000 |
------------------------------------------
|Xxxxxx X. | 500,000 | 500,000 |
|XxXxxxx | | |
------------------------------------------
|Xxxxxx Xxxxxxxx | 150,000 | 150,000 |
------------------------------------------
|Xxxxxx Xxxx | 250,000 | 250,000 |
------------------------------------------
|Xxxxx Xxxxx, Xx. | | |
| | 250,000 | 250,000 |
------------------------------------------
| Total |$17,500,000|$7,500,000|
------------------------------------------
The Sellers acknowledge that they have instructed SESI to
allocate the purchase price among the Sellers as set forth
above. Each Seller hereby acknowledges that the portion of
the purchase price allocated to such Seller set forth above
represents full payment by SESI for the Shares owned by such
Seller. Accordingly, SESI shall have no liability for the
amount of the purchase price actually received by any Seller
after delivery all of the components of the purchase price to
each Seller as specified above, and each Seller hereby
releases and discharges SESI from any such claim.
Section 1.3 Closing. Subject to satisfaction or waiver
of the conditions specified in Articles 5 and 6 hereof, the
Closing shall take place at such place and time as Buyer and
Sellers may agree.
Section 1.4 Deliveries at Closing. At the Closing (a)
Buyer shall pay or deliver to Sellers the cash payment and the
Note specified in Section 1.2, (b) Sellers shall deliver to
Buyer certificates representing the Shares duly endorsed to
SESI, which shall transfer to SESI good and marketable title
to the Shares free and clear of all Liens, restrictions, and
claims of every kind and (c) Sellers and Buyer shall each (i)
provide to the other such certificates, agreements and
instruments as are required to be delivered under Article 5,
(ii) provide to the other proof or indication of the
satisfaction or waiver of the conditions set forth in Article
5, and (iii) take such other action as is required to
consummate the transactions contemplated by this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the representations and warranties set forth
herein shall be separate and independent, and, except as
expressly provided herein, shall not be limited by reference
to any other representation or warranty or anything else in
this Agreement. Except as set forth in the Disclosure Schedule
that is attached hereto and that is numbered to correspond to
the applicable representation or warranty, Sellers represent
and warrant to Buyer as follows:
Section 2.1 Ownership. Each of the Sellers is, and at
the Closing Date will be, the sole record and beneficial owner
of the Shares, which are represented by the certificates
bearing the numbers, shown opposite his name in the Disclosure
Schedule. Each of the Sellers has and at the Closing Date will
have good and marketable title to the Shares and the absolute
right to deliver the Shares in accordance with the terms of
this Agreement, free and clear of all Liens. The transfer of
the Shares to SESI in accordance with the terms of this
Agreement will transfer good and marketable title to the
Shares owned by each Seller to SESI free and clear of all
Liens, restrictions and claims of every kind.
Section 2.2 Authority; Enforceability. Each of the
Sellers has full legal right, power and authority to execute,
deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of the Sellers and constitutes,
and each other agreement, instrument or documents executed or
to be executed by each of the Sellers in connection with the
transactions contemplated hereby has been, or when executed
will be, duly executed and delivered by each of the Sellers
and constitutes, or when executed and delivered will
constitute, a valid and legally binding obligation of each of
the Sellers, enforceable against each of the Sellers in
accordance with their respective terms, except that such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally and equitable principles
which may limit the availability of certain equitable remedies
in certain instances.
Section 2.3 Organization; Qualification; Subsidiaries.
(a) Stabil Drill and each of its subsidiaries is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Louisiana, having all
requisite corporate power and authority to own its property
and to carry on its business as it is now being conducted. No
actions or proceedings to dissolve Stabil Drill or any of its
subsidiaries are pending. Stabil Drill and each of its
subsidiaries is duly qualified or licensed to do business and
is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the conduct of its business
requires such qualification or licensing.
(b) Stabil Drill does not own, directly or
indirectly, any capital stock, equity interest or other
ownership interest in any corporation, partnership,
association, joint venture, limited liability company or other
entity, other than the ownership of all of the issued and
outstanding stock of Terrebonne Machine Shop, Inc., a
Louisiana corporation, which is Stabil Drill's only
subsidiary. All of the issued and outstanding shares of
capital stock of Terrebonne Machine Shop, Inc. have been
validly issued and are fully paid.
Section 2.4 Capital Stock.
(a) The authorized capital stock of Stabil Drill
consists exclusively of 10,000 shares of common stock, $1.00
par value, of which only the Shares are issued and are owned,
beneficially and of record, by the Sellers. All of such issued
shares have been validly issued and are fully paid. Sellers
will, by delivery to Buyer of certificates properly endorsed
representing the Shares at the Closing, have transferred,
delivered and vested in Buyer good and marketable (legal and
beneficial) title to the whole of the Shares free and clear of
all Liens.
(b) There are no existing options, warrants, calls,
commitments or other agreements or rights with respect to the
capital stock of Stabil Drill or any of its subsidiaries, and
there are no convertible or exchangeable securities
outstanding which, upon conversion or exchange, would require
the issuance of any shares of capital stock or other
securities of Stabil Drill or any of its subsidiaries.
Section 2.5 No Conflict. Neither the execution and the
delivery of this Agreement by Sellers, nor the consummation of
the transactions contemplated hereby do or will (a) violate,
conflict with, or result in a breach of any provisions of, (b)
constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, (c) result
in the termination of or accelerate the performance required
by, (d) result in the creation of any Lien upon the Shares or
any of Stabil Drill's or any of its subsidiaries properties or
assets under any of the terms, conditions or provisions of
Stabil Drill's or any of its subsidiaries articles of
incorporation or by-laws or any note, bond, mortgage,
indenture, deed of trust, lease, license, loan agreement or
other instrument or obligation to or by which Stabil Drill,
any of its subsidiaries or any of their respective assets are
bound, or (e) violate any Applicable Law binding upon Sellers,
Stabil Drill, any of its subsidiaries or any of their
respective assets.
Section 2.6 Consent. No consent, approval, order or
authorization of, or declaration, filing or registration with,
any Governmental Entity or other Person is required to be
obtained or made by Sellers, Stabil Drill or any of its
subsidiaries in connection with the execution, delivery or
performance by Sellers of this Agreement or the consummation
by any of them of the transactions contemplated hereby.
Section 2.7 Legal Proceedings. There are no
Proceedings pending or, to the knowledge of Sellers,
threatened seeking to restrain, prohibit or obtain damages or
other relief in connection with the execution, delivery or
performance of this Agreement or the transactions contemplated
hereby.
Section 2.8 Charter and By-laws. Sellers have made
available to SESI accurate and complete copies of (a) the
articles of incorporation and by-laws of Stabil Drill and each
of its subsidiaries, (b) the stock records of Stabil Drill and
each of its subsidiaries and (c) the minutes of all meetings
of the Board of Directors, any committees of such board and
the shareholders of Stabil Drill and any of its subsidiaries
(and all consents in lieu of such meetings). Such records,
minutes and consents accurately reflect the stock ownership of
Stabil Drill and each of its subsidiaries and all actions
taken by the Board of Directors, committees and shareholders.
Neither Stabil Drill nor any of its subsidiaries is in
violation of any provision of its articles of incorporation or
by-laws.
Section 2.9 Financial Statements. The Disclosure
Schedule contains true and complete copies of the Financial
Statements. The Financial Statements have been prepared from
the books and records of Stabil Drill and each of its
subsidiaries and are complete, correct and in accordance with
the books of account and records of Stabil Drill and each of
its subsidiaries. As of August 31, 1997, neither Stabil Drill
nor any of its subsidiaries had, and Stabil Drill's and each
of its subsidiaries' properties and assets were not subject
to, any liability, commitment, indebtedness or obligation of
any kind whatsoever (whether liquidated or unliquidated,
actual or contingent), which (a) is not shown and adequately
reserved against in the Financial Statements or (b) has not
been disclosed to Buyer in writing. Neither Stabil Drill nor
any of its subsidiaries has since August 31, 1997 incurred any
liability or obligation (whether accrued, absolute,
contingent, unliquidated or otherwise), except (a) liabilities
reflected in the Financial Statements, (b) current liabilities
which have arisen since the date of the Financial Statements
in the ordinary course of business (none of which is a
material liability for breach of contract, tort or
infringement) and (c) liabilities arising under executory
contracts entered into in the ordinary course of business
(none of which is a material liability for breach of
contract).
Section 2.10 Accounts Receivable. All of the accounts
receivable reflected on the Financial Statements or created
thereafter have arisen only from bona fide transactions in the
ordinary course of business, represent valid obligations owing
to Stabil Drill and its subsidiaries and have been accrued in
accordance with generally accepted accounting principles. All
such accounts receivable either have been collected in full or
will be collectible in full without any counterclaims, setoffs
or other defenses and without provision for any allowance for
uncollectible accounts in excess of any reserve provided for
in the Financial Statements.
Section 2.11 Absence of Certain Changes. Since August
31, 1997 there has been no event or condition of any character
that has had, or can reasonably be expected to have, a
material adverse effect on the financial condition, results of
operations, cash flow, business or prospects of Stabil Drill
and its subsidiaries. Neither Stabil Drill nor any of its
subsidiaries has since August 31, 1997:
(a) made any material change in the conduct of its
business and operations or failed to operate its business so
as to preserve its business organization intact and to
preserve the good will of its customers, suppliers and others
with whom it has significant business relations;
(b) entered into any agreement or transaction not in
the ordinary course of business;
(c) incurred any obligation or liability, absolute
or contingent, except trade or business obligations incurred
in the ordinary course of business or sales, income,
franchise, or ad valorem taxes accruing or becoming payable in
the ordinary course of business;
(d) declared or paid any dividend or other
distribution with respect to any of its capital stock or
purchased any of its capital stock;
(e) acquired or disposed of any assets material to
its business or operations;
(f) subjected any of its assets to any Lien;
(g) increased the rate of compensation (including
bonuses, contingent severance payments, retirement, profit
sharing, benefit or similar payments) payable or to become
payable to any of its officers or directors;
(h) adopted any employee welfare, pension,
retirement, profit sharing or similar plan or made any
material addition to or modification of existing plans;
(i) experienced any labor trouble or any controversy
or unsettled grievance involving any personnel;
(j) terminated or received notice of the termination
of any contract, commitment or transaction that is material to
it, or waived any right of material value to it;
(k) made any material change in any accounting
principle, procedure or practice followed by it;
(l) issued any stock or merged or consolidated with
any other business or agreed to do so;
(m) made any capital expenditure or entered into any
Lease;
(n) borrowed any money or guaranteed or assumed any
indebtedness of others;
(o) suffered any extraordinary losses or any
material damage, destruction or casualty with respect to its
assets, or experienced any events, conditions, losses or
casualties which have resulted in or might result in claims
under its insurance policies of an aggregate of $50,000 or
more;
(p) loaned any money to any Person;
(q) defaulted under any note, loan, mortgage,
guarantee or other instrument of indebtedness or any Material
Contract;
(r) received any notification, warning or inquiry
from or given any notification to or had any communication
with any Governmental Entity, with respect to any proposed
remedial action for any violation or alleged or possible
violation of any law, rule, regulation or order relating to or
affecting its business, nor are any facts known to the Sellers
that may reasonably be expected to give rise to any such
notification, warning or inquiry;
(s) transferred any asset, right or interest to, or
entered into any transaction with Sellers or any of his
Affiliates;
(t) amended its articles of incorporation or by-
laws;
(u) received notice or had knowledge or reason to
believe that any substantial customer has terminated or
intends to terminate its relationship;
(v) waived any right in connection with any aspect
of its business that could have a material effect on the
business of Stabil Drill and its subsidiaries; or
(w) made any agreement or commitment to do any of
the foregoing.
Section 2.12 Suppliers and Customers. To the knowledge of
Sellers, (a) no supplier providing products, materials or
services to Stabil Drill and its subsidiaries intends to cease
selling such products, materials or services to Stabil Drill
and its subsidiaries or to limit or reduce such sales to
Stabil Drill and its subsidiaries or materially alter the
terms or conditions of such sales and (b) no customer of
Stabil Drill and its subsidiaries intends to terminate, limit
or reduce its or their business relations with Stabil Drill
and its subsidiaries.
Section 2.13 Properties; Equipment.
(a) Stabil Drill and each of its subsidiaries has
good and marketable title to, or in the case of leased
property valid leasehold interests in, all property and assets
(whether real or personal, tangible or intangible) reflected
on the Financial Statements or used by it in the conduct of
the Company's business or acquired after August 31, 1997,
except for properties and assets sold since August 31, 1997 in
the ordinary course of business consistent with past practice.
None of such properties or assets is subject to any Liens.
(b) The Disclosure Schedule sets forth all of the
real property owned by Stabil Drill and each of its
subsidiaries. Neither Stabil Drill nor any of its
subsidiaries has ever owned any real property other than as
described in the Disclosure Schedule. Stabil Drill has good
title to all material properties and assets reflected in the
Disclosure Schedule, free and clear of any Liens.
(c) The Disclosure Schedule sets forth a complete
and correct list of all Leases, all of which are valid and
enforceable and in full force and effect. Complete and correct
copies of each Lease have been made available to SESI. Stabil
Drill is in full compliance with and has not received a notice
of default under any Lease and is not involved in any dispute
under any Lease, the effect of which would have a material
adverse effect on the business, assets or financial condition
of Stabil Drill and its subsidiaries.
(d) Except as described in the Disclosure Schedule,
there are no developments affecting any of Stabil Drill's or
any of its subsidiaries owned or leased properties or assets
pending or threatened which could materially detract from the
value of such property or assets, materially interfere with
any present or intended use of any such property or assets or
materially adversely affect the marketability of such
properties or assets.
Section 2.14 Permits; Compliance with Laws. Stabil Drill
and each of its subsidiaries (a) has all necessary permits,
licenses and governmental authorizations required for the
lease, ownership, occupancy or operation of its properties and
assets and the carrying on of its business, and (b) has
conducted its business in substantial compliance with and is
in substantial compliance with all applicable laws,
regulations, orders, permits, judgments, ordinances or decrees
of any Governmental Entity.
Section 2.15 Material Contracts. The Disclosure Schedule
lists and describes all Material Contracts. A complete and
correct copy of each Material Contract has been furnished to
or made available to SESI. Each Material Contract is valid,
binding and enforceable, except to the extent that enforcement
may be limited by bankruptcy, reorganization, insolvency and
other similar laws and court decisions relating to or
affecting the enforcement of creditors' rights generally and
by equitable principles. Stabil Drill, each of its
subsidiaries and each other party to each Material Contract
are in compliance in all material respects with the provisions
of such Material Contract.
Section 2.16 Litigation. There are no Proceedings pending
or threatened against Stabil Drill or any of its subsidiaries
and, to the knowledge of Sellers, there have been no events
and there are no facts or circumstances that could result in
any Proceedings.
Section 2.17 Environmental Matters. Stabil Drill is not in
violation of any Applicable Law relating to the environment
and is not a party to any proposed removal, response or
remedial action. Neither Stabil Drill nor any of its
subsidiaries has received any notice with respect to the
business, the leased or owned properties, or the use by third
parties of the assets of Stabil Drill or any of its
subsidiaries that (i) any investigation, administrative order,
consent order and agreement, removal or remedial action,
litigation or settlement with respect to any environmental
permit, law or regulation is proposed, threatened, anticipated
or in existence, (ii) any release of any hazardous substances,
pollutant or contaminant into the environment by Stabil Drill
or any of its subsidiaries has occurred or (iii) any exposure
of any person or property to any hazardous substance,
pollutant or contaminant has occurred. The properties
currently and previously leased or owned by Stabil Drill or
any of its subsidiaries are not and have never been on or
associated with any "national priorities" list or any
equivalent state list or any federal or state "superlien"
list. Stabil Drill and each of its subsidiaries has made
available to SESI all internal and external environmental
audits and studies relating to its leased or owned properties
and all correspondence on substantial environmental matters
relating to its leased or owned properties in its possession.
Section 2.18 ERISA and Related Matters.
(a) The Disclosure Schedule lists each Employee Plan
that Stabil Drill or any of its subsidiaries maintains,
administers, contributes to, or has any contingent liability
with respect thereto. Sellers has provided a true and complete
copy of each such Employee Plan, current summary plan
description, (and, if applicable, related trust documents) and
all amendments thereto and written interpretations thereof
together with (i) all annual reports, if any, that have been
prepared in connection with each such Employee Plan; (ii) all
material communications received from or sent to the Internal
Revenue Service or the Department of Labor within the last two
years (including a written description of any oral
communications); and (iii) the most recent Internal Revenue
Services determination letter with respect to each Employee
Plan and the most recent application for a determination
letter.
(b) The Disclosure Schedule identifies each Benefit
Arrangement that Stabil Drill or any of its subsidiaries
maintains or administers. Except as set forth in the
Disclosure Schedule, Stabil Drill and each of its subsidiaries
has made all contributions to and has no contingent liability
with respect to any of its Benefit Arrangements. Sellers has
furnished to SESI copies or descriptions of each Benefit
Arrangement. To the knowledge of Sellers, each Benefit
Arrangement has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable
to such Benefit Arrangement.
(c) Neither Stabil Drill nor any of its subsidiaries
maintains and has never maintained an "employee benefit plan"
(as defined in Section 3(3) of ERISA) which is or was (i) a
plan subject to Title IV of ERISA or (ii) a "multiemployer
plan" (as defined in Section 3(37) of ERISA).
(d) Benefits under any Employee Plan or Benefit
Arrangement are as represented in said documents and have not
been increased or modified (whether written or not written)
subsequent to the dates of such documents. Neither Stabil
Drill nor any of its subsidiaries has communicated to any
employee or former employee any intention or commitment to
modify any Employee Plan or Benefit Arrangement or to
establish or implement any other employee or retiree benefit
or compensation arrangement.
(e) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and to the knowledge of Sellers no event has occurred
since such adoption that would adversely affect such
qualification and each trust created in connection with each
such Employee Plan forming a part thereof is exempt from tax
pursuant to Section 501(a) of the Code. To the knowledge of
Sellers, each Employee Plan has been maintained and
administered in compliance with its terms and with the
requirements prescribed by any and all applicable statutes,
orders, rules and regulations, including but not limited to
ERISA and the Code.
(f) To the knowledge of Sellers, full payment has
been made of all amounts which Stabil Drill or any of its
subsidiaries is or has been required to have paid as
contributions to any Employee Plan or Benefit Arrangement
under applicable law or under the terms of any such plan or
any arrangement.
(g) To the knowledge of Sellers, neither Stabil
Drill, any of its subsidiaries nor their respective
shareholders, directors, officers or employers has engaged in
any transaction with respect to an Employee Plan that could
subject Stabil Drill to a tax, penalty or liability for a
prohibited transaction, as defined in Section 406 of ERISA or
Section 4975 of the Code.
(h) To the knowledge of Sellers, neither Stabil
Drill nor any of its subsidiaries has any current or projected
liability in respect of post-retirement or post-employment
welfare benefits for retired, current or former employees. No
health, medical, death or survivor benefits have been provided
under any Benefit Arrangement to any person who is not an
employee or former employee of Stabil Drill or any of its
subsidiaries or a dependent thereof.
(i) There is no litigation, administrative or
arbitration proceeding or other dispute pending or threatened
that involves any Employee Plan or Benefit Arrangement which
could reasonably be expected to result in a liability to
Stabil Drill, any of its subsidiaries or any of their
respective employees or directors, or any fiduciary (as
defined in ERISA Section 3(21)) of such Employee Plan or
Benefit Arrangement.
(j) No employee or former employee of Stabil Drill
or any of its subsidiaries will become entitled to any bonus,
retirement, severance, job security or similar benefit or
enhanced benefit (including acceleration of compensation, an
award, vesting or exercise of an incentive award) or any fee
or payment of any kind as a result of any of the transactions
contemplated hereby.
(k) Stabil Drill is not a party to any agreement,
contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G
of the Code (i.e., a golden parachute).
Section 2.19 Taxes.
(a) All Returns required to be filed by or on behalf
of Stabil Drill and each of its subsidiaries have been duly
filed on a timely basis and such Returns (including all
attached statements and schedules) are true, complete and
correct. All Taxes shown to be payable on the Returns or on
subsequent assessments with respect thereto have been paid in
full on a timely basis, and no other Taxes are payable by
Stabil Drill or any of its subsidiaries with respect to items
or periods covered by such Returns (whether or not shown on or
reportable on such Returns) or with respect to any period
prior to the Closing Date.
(b) Stabil Drill and each of its subsidiaries has
withheld and paid over all Taxes required to have been
withheld and paid over (including any estimated taxes), and
has complied with all information reporting and backup
withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts paid
or owing to any employee, creditor, independent contractor, or
other third party.
(c) There are no Liens on any of the assets of
Stabil Drill or any of its subsidiaries with respect to Taxes
other than Liens for Taxes not yet due and payable or for
Taxes that are being contested in good faith through
appropriate proceedings and for which appropriate reserves
have been established.
(d) Sellers has furnished or made available to SESI
true and complete copies of: (i) all federal and state income
and franchise tax returns of Stabil Drill and each of its
subsidiaries for all periods beginning on or after January 1,
1994, and (ii) all tax audit reports, work papers statements
of deficiencies, closing or other agreements received by
Stabil Drill or on Stabil Drill's behalf relating to Taxes.
(e) Except as disclosed on the Disclosure Schedule:
(i) The Returns of Stabil Drill and each of its
subsidiaries have never been audited by a governmental or
taxing authority, nor is any such audit in process, pending or
threatened (formally or informally).
(ii) No deficiencies exist or have been asserted
(either formally or informally) or are expected to be asserted
with respect to Taxes of Stabil Drill or any of its
subsidiaries, and there is no basis for the assertion of any
deficiency of Taxes of Stabil Drill or any of its
subsidiaries. No notice (either formally or informally) has
been received by Stabil Drill or any of its subsidiaries that
it has not filed a Return or paid Taxes required to be filed
or paid by it.
(iii) Neither Stabil Drill nor any of its
subsidiaries is a party to any pending action or proceeding
for assessment or collection of Taxes, nor has such action or
proceeding been asserted or threatened (either formally or
informally) against Stabil Drill or any of its subsidiaries or
any of their respective assets.
(iv) Except as reflected in the Returns or as
disclosed on the Disclosure Schedule, no waiver or extension
of any statute of limitations is in effect with respect to
Taxes or Returns of Stabil Drill or any of its subsidiaries.
(v) There are no requests for rulings,
subpoenas or requests for information pending with respect to
Stabil Drill or any of its subsidiaries.
(vi) No power of attorney has been granted by
Stabil Drill or any of its subsidiaries, with respect to any
matter relating to Taxes.
(vii) The amount of liability for unpaid Taxes of
Stabil Drill and each of its subsidiaries for all periods
ending on or before the Closing Date will not, in the
aggregate, exceed the amount of the current liability accruals
for Taxes (excluding reserves for deferred Taxes), as such
accruals are reflected on the balance sheets of Stabil Drill
and each of its subsidiaries as of the Closing Date.
(f) Except as disclosed on the Disclosure Schedule:
(i) Neither Stabil Drill nor any of its
subsidiaries has made an election, and is not required to
treat any asset as owned by another person for federal income
tax purposes or as tax-exempt bond financed property or tax-
exempt use property within the meaning of section 168 of the
Code.
(ii) Neither Stabil Drill nor any of its
subsidiaries has issued or assumed any indebtedness that is
subject to section 279(b) of the Code.
(iii) Neither Stabil Drill nor any of its
subsidiaries has entered into any compensatory agreements with
respect to the performance of services which payment
thereunder would result in a nondeductible expense to Section
280G of the Code or an excise tax to the recipient of such
payment pursuant to Section 4999 of the Code.
(iv) No consent under Section 341(f) of the Code
has been filed with respect to Stabil Drill or any of its
subsidiaries.
(v) Neither Stabil Drill nor any of its
subsidiaries has agreed, nor is Stabil Drill required to make,
any adjustment under Code Section 481(a) by reason of change
in accounting method or otherwise.
(vi) Neither Stabil Drill nor any of its
subsidiaries has disposed of any property that has been
accounted for under the installment method.
(vii) Neither Stabil Drill nor any of its
subsidiaries is a party to any interest rate swap, currency
swap or similar transaction.
(viii) Neither Stabil Drill nor any of its
subsidiaries is a United States real property holding
corporation within the meaning of Section 897(c)(2) of the
Code and SESI is not required to withhold tax on the
acquisition of the stock of Stabil Drill.
(ix) Neither Stabil Drill nor any of its
subsidiaries has participated in any international boycott as
defined in Code Section 999.
(x) Neither Stabil Drill nor any of its
subsidiaries is subject to any joint venture, partnership or
other arrangement or contract that is treated as a partnership
for federal income tax purposes.
(xi) Neither Stabil Drill nor any of its
subsidiaries has made any of the foregoing elections or is
required to apply any of the foregoing rules under any
comparable state or local income tax provisions.
(xii) Neither Stabil Drill nor any of its
subsidiaries has ever had a permanent establishment in any
foreign country, as defined in any applicable tax treaty or
convention between the United States and such foreign country.
(xiii) The transactions contemplated herein are
not subject to the tax withholding provisions of Section 3406
of the Code, or of Subchapter A of Chapter 3 of the Code, or
of any other provision of law.
(g) Set forth in the Disclosure Schedule is accurate
and complete information with respect to each of the following
for all tax periods beginning on or after January 1, 1994:
(i) Any tax elections in effect with respect to
Stabil Drill or any of its subsidiaries;
(ii) Any net operating loss carry overs of
Stabil Drill or any of its subsidiaries;
and
(iii) Any tax credit carry overs of Stabil Drill
or any of its subsidiaries.
Section 2.20 Transactions with Certain Persons. Except for
employment relationships in the ordinary course of business,
no employee of Stabil Drill or any of its subsidiaries or any
of the employees' Affiliates is presently a party to any
transaction with Stabil Drill or any of its subsidiaries,
including without limitation any contract, agreement or other
arrangement providing for the furnishing of services by or the
rental of real or personal property from any such person or
from any of their Affiliates.
Section 2.21 Intellectual Property. Stabil Drill and each
of its subsidiaries either owns or has valid licenses to use
all patents, copyrights, trademarks, software, databases, and
other technical information used in its business as presently
conducted, subject to limitations contained in the agreements
governing the use of same, which limitations are customary for
companies engaged in businesses similar to Stabil Drill or
such subsidiary. There are no limitations contained in any
such agreements which will alter any such rights, breach any
such agreement or any third-party vendor, or require payments
of additional sums thereunder. Stabil Drill and each of its
subsidiaries is in compliance with all such licenses and
agreements and there are no pending or, to the knowledge of
Sellers, threatened Proceedings challenging or questioning the
validity or effectiveness of any license or agreement relating
to such property or the right of Stabil Drill or any of its
subsidiaries to use, copy, modify or distribute the same.
Section 2.22 Insurance. SESI has been provided copies of
or access to all insurance policies or binders which relate to
the Company's Business. All premiums due under such policies
and binders have been paid or accrued for on the Financial
Statements and all such policies and binders are in full force
and effect and no notice of cancellation or nonrenewal of any
such policy or binder has been received by Stabil Drill or any
of its subsidiaries and no notice of disallowance of any claim
under any insurance policy or binder, whether or not currently
in effect, has been received by Stabil Drill or any of its
subsidiaries. To the knowledge of Sellers neither Stabil Drill
nor any of its subsidiaries has any liability for or exposure
to any premium expense for expired policies and there are no
current claims by Stabil Drill or any of its subsidiaries
under any such policy or binder as to which coverage has been
questioned, denied or disputed by the underwriters of such
policies, nor are there any insured losses for which claims
have not been made.
Section 2.23 Safety and Health. The property and assets of
Stabil Drill and each of its subsidiaries have been and are
being operated in compliance with all Applicable Laws designed
to protect safety or health, or both, including without
limitation, the Occupational Safety and Health Act and the
regulations promulgated pursuant thereto. Neither Stabil
Drill nor any of its subsidiaries has received any written
notice of any violations, deficiency, investigation or inquiry
from any Governmental Entity, employer or third party under
any such law and, to the knowledge of Sellers, no such
investigation or inquiry is planned or threatened.
Section 2.24 Books and Records. All of the books and
records of Stabil Drill and each of its subsidiaries,
including all personnel files, employee data and other
materials relating to employees, are substantially complete
and correct, have been maintained in accordance with good
business practice and all Applicable Laws. To the Sellers'
knowledge, such books and records accurately and fairly
reflect, in reasonable detail, all assets, liabilities and
material transactions of Stabil Drill and each of its
subsidiaries.
Section 2.25 Bank Accounts; Powers of Attorney. The
Disclosure Schedule sets forth with respect to each bank
account or cash account maintained by Stabil Drill and each of
its subsidiaries at any bank, brokerage or other financial
firm, the name of the institution at which such account is
maintained, the number of the account, and the names of the
individuals having authority to withdraw funds from such
account.
Section 2.26 Compensation Agreements. The Disclosure
Schedule lists all written employment, commission, bonus or
other compensation and consulting agreements to which Stabil
Drill and each of its subsidiaries is a party. Except as set
forth on the Disclosure Schedule, neither Stabil Drill nor any
of its subsidiaries is a party to any written or oral
employment, commission, bonus or other compensation or
consulting agreement which Stabil Drill or any of its
subsidiaries may not terminate without any payment or penalty,
at will, with or without cause, except to the extent that
employment at will may be limited by Applicable Law.
Section 2.27 Director and Officer Indemnification. The
directors and officers of Stabil Drill and each of its
subsidiaries are not entitled to indemnification by Stabil
Drill or any such subsidiary, except to the extent that
indemnification rights are provided for generally in Louisiana
and there are no pending claims for indemnification by any
such director or officer.
Section 2.28 Documents and Written Materials. Originals or
true and complete copies of all documents or other written
materials underlying items listed in the Disclosure Schedule
have been furnished or made available to SESI in the form in
which each of such documents is in effect, and will not be
modified in any material respect prior to the Closing Date
without SESI's prior written consent.
Section 2.29 Effectiveness of Representations and
Warranties. All of the representations and warranties of
Sellers in this Agreement shall be true in all material
respects on the Closing Date and shall be deemed to have been
made again by Sellers on and as of the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SESI
Each of the representations and warranties set forth
herein shall be separate and independent, and, except as
expressly provided herein, shall not be limited by reference
to any other representation or warranty or anything else in
this Agreement. SESI represents and warrants to and agrees
with Sellers as follows:
Section 3.1 Organization. SESI is a corporation duly
organized, validly existing and in good standing under the
laws of Louisiana and has all requisite corporate power and
authority to own its properties and carry on its business as
now being conducted.
Section 3.2 Authority; Enforceability. SESI has the
requisite corporate power and authority to execute and deliver
this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part
of SESI and no other corporate proceedings on the part of SESI
are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly
executed and delivered by SESI and constitutes a valid and
binding obligation of SESI, enforceable against SESI in
accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the enforcement of creditors'
rights generally and equitable principles which may limit the
availability of certain equitable remedies in certain
instances.
Section 3.3 Consents and Approvals; Conflicts. No filing
with or notice to, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the
execution and delivery by SESI of this Agreement or the
consummation by SESI of the transactions contemplated hereby.
Neither the execution and delivery of this Agreement by SESI,
nor the consummation of the transactions contemplated hereby,
will violate any of the provisions of the Certificate of
Incorporation or By-laws of SESI; or conflict with or result
in a breach of, or give rise to a right of termination of, or
accelerate the performance required by, any terms of any court
order, consent decree, note, bond, mortgage, indenture, deed
of trust, or any license or agreement binding on SESI or to
which SESI is subject or a party, or constitute a default
thereunder, or result in the creation of any Lien upon any of
the assets of SESI, except for any such conflict, breach,
termination, acceleration, default or Lien which would not
have a material adverse effect on (a) the business, assets or
financial condition of SESI or (b) SESI's ability to
consummate any of the transactions contemplated hereby.
Section 3.4 Effectiveness of Representations and
Warranties. All of the representations and warranties of SESI
in this Agreement shall be true in all material respects on
the Closing Date and shall be deemed to have been made again
by SESI on and as of the Closing Date.
ARTICLE 4
COVENANTS
Section 4.1 Legal Requirements. Subject to the conditions
set forth in Article 5 and to the other terms and provisions
of this Agreement, each of the parties to this Agreement
agrees to take, or cause to be taken, all reasonable actions
necessary to comply promptly with all legal requirements
applicable to it with respect to the transactions contemplated
by this Agreement and will promptly cooperate with and furnish
information to each other in connection with any such
requirements imposed upon any of them. Each of SESI and
Sellers will take all reasonable actions necessary to obtain,
and will cooperate with each other in obtaining, any consent,
authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private party, required
to be obtained or made by it or the taking or any action
contemplated by this Agreement.
Section 4.2 Access to Properties and Records. Until the
Closing Date, Sellers shall cause Stabil Drill to allow SESI
and its authorized representatives full access, during normal
business hours and on reasonable notice, to all of Stabil
Drill's properties, offices, vehicles, equipment, inventory
and other assets, documents, files, books and records, in
order to allow SESI a full opportunity to make such
investigation and inspection as it desires of Stabil Drill's
business and assets. Sellers shall further cause Stabil Drill
to use its best efforts to cause the employees, counsel and
regular independent certified public accountants of Stabil
Drill to be available upon reasonable notice to answer
questions of SESI's representatives concerning the business
and affairs of Stabil Drill, and shall further use their best
efforts to cause them to make available all relevant books and
records in connection with such inspection and examination,
including without limitation work papers for all audits and
reviews of financial statements of Stabil Drill.
Section 4.3 Conduct of Business. From and after the date
of this Agreement and until the Closing Date, Sellers shall
cause Stabil Drill to conduct its business, in the ordinary
course and consistent with past practice, except as expressly
required or otherwise permitted by this Agreement, and shall
not take or permit any action which would cause any of his
representations made in this Agreement not to be true and
correct on the Closing Date.
Section 4.4 Public Statements. Prior to the Closing Date,
none of the parties to this Agreement shall, and each party
shall use its best efforts so that none of its advisors,
officers, directors or employees shall, except with the prior
written consent of the other party, publicize, announce or
describe to any third person, except their respective advisors
and employees, the execution or terms of this Agreement, the
parties hereto or the transactions contemplated hereby, except
as required by law or as required pursuant to this Agreement
to obtain the consent of such third person; provided, in any
case, that SESI may make such disclosures and announcements as
may be necessary or advisable under applicable securities
laws.
Section 4.5 No Solicitation. Sellers will not prior to the
Closing Date or the termination of this Agreement pursuant to
Section 6.1, (nor will he permit any of his affiliates or any
of Stabil Drill's officers, directors or agents to) directly
or indirectly solicit or participate or engage in or initiate
any negotiations or discussions, or enter into or authorize
any agreement or agreements in principle, or announce any
intention to do any of the foregoing, with respect to any
offer or proposal to acquire all or any significant part of
Stabil Drill's business and properties or any Shares whether
by merger, purchase of assets, purchase of stock or otherwise.
Sellers will notify SESI promptly upon receipt of any inquiry,
offer or other communication from any third party regarding
any such activities.
Section 4.6 Noncompetition.
(a) In recognition of, among other things, the
nature and scope of the business and good will of Stabil
Drill, all the Shares of which will be acquired by SESI, the
substantial impairment of value to SESI if Sellers were to
compete with SESI or Stabil Drill following the Closing, the
consideration being paid for this covenant and the reasonable
restrictions and limitations imposed hereby, Sellers agrees
that from the Closing Date until the second anniversary of the
Closing Date, Sellers shall not:
(i) directly or indirectly, for himself or
others, own, manage, operate, control, be employed by, engage
or participate in, allow his skill, knowledge, experience or
reputation to be used by, or otherwise be connected in any
manner with the ownership, management, operation or control
of, any company or other business enterprise engaged in any
aspect of the Company's Business, within any parish or
municipality of the State of Louisiana (or any area offshore
in the Gulf of Mexico of such parish or municipality) set
forth of Appendix A to the Employment Agreement or the States
of Texas, Mississippi, Alabama and Florida (including any area
offshore in the Gulf of Mexico of such States); and
(ii) call upon any customer or potential
customer of Stabil Drill or its subsidiaries for the purpose
of soliciting, diverting or enticing away the business of such
person or entity, or otherwise disrupting any previously
established relationship existing between such person or
entity and Stabil Drill or its subsidiaries.
(b) Sellers acknowledges that a breach by Sellers of
paragraph (a) of this Section 4.6 would cause immediate and
irreparable harm to the Company for which an adequate monetary
remedy does not exist; hence, Sellers agrees that, in the
event of a breach or threatened breach by Sellers of the
provisions of paragraph (a) of this Section 4.6, SESI shall be
entitled to injunctive relief restraining Sellers from
violation of any such paragraph without the necessity of proof
of actual damage or the posting of any bond, except as
required by non-waivable, applicable law. Nothing herein shall
be construed as prohibiting SESI from pursuing any other
remedy at law or in equity to which SESI may be entitled under
applicable law in the event of a breach or threatened breach
of this Section 4.6 by Sellers including, but not limited to,
recovery of costs and expenses such as reasonable attorney's
fees incurred by reason of any such breach, actual damages
sustained by SESI as a result of any such breach.
(c) Any dispute regarding the reasonableness of the
covenants and agreements set forth in this Section 4.6, or the
territorial scope or duration thereof, or the remedies
available to SESI upon any breach of such covenants and
agreements, shall be governed by and interpreted in accordance
with the laws of the State of Louisiana and, with respect to
each such dispute, SESI and Sellers each hereby irrevocably
consent to the exclusive jurisdiction of the state and federal
courts sitting in the State of Louisiana for resolution of
such dispute, and agree to be irrevocably bound by any
judgment rendered thereby in connection with such dispute, and
further agree that service of process may be made upon him in
any legal proceeding relating to this Section 4.6 by any means
allowed under the laws of such state.
Section 4.7 Update Information. Each party hereto will
promptly disclose to the other any information contained in
its representations and warranties that because of an event
occurring after the date hereof is incomplete or no longer
correct; provided, however, that none of such disclosures will
be deemed to modify, amend, or supplement the representations
and warranties of such party, unless the other party consents
to such modification, amendment, or supplement in writing.
ARTICLE 5
CLOSING CONDITIONS
Section 5.1 Conditions Applicable to all Parties. The
respective obligations of each party to consummate the
transactions contemplated by this Agreement shall be subject
to the satisfaction or, where permissible, waiver by such
party of the following conditions at or prior to the Closing
Date:
(a) No statute, rule, regulation, executive order,
decree, preliminary or permanent injunction or restraining
order shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction or other
Governmental Entity which prohibits or restricts the
consummation of the transactions contemplated by this
Agreement, and no action, suit, claim or proceeding by a state
or federal Governmental Entity before any court or other
Governmental Entity shall have been commenced and be pending
which seeks to prohibit or restrict the consummation of the
transactions contemplated by this Agreement.
(b) Xxxxx Xxx Xxxxx, Xxx Xxxxxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxx Xxxxx, Xxxxxx X. XxXxxxx and Xxxxxx Xxxxxxxx
shall each have entered into an Employment Agreement.
Section 5.2 Conditions to Obligations of SESI. The
obligations of SESI to consummate the transactions
contemplated by this Agreement are subject to the satisfaction
of the following conditions unless waived by SESI:
(a) The representations and warranties of Sellers
set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date,
except as otherwise contemplated by this Agreement, and
Sellers shall have performed in all material respects all
obligations required to be performed by them under this
Agreement at or prior to the Closing Date.
(b) All consents and approvals of third parties
necessary for consummation of the transactions contemplated by
this Agreement shall have been obtained. Sellers shall have
used their best efforts to obtain all necessary permits,
authorizations, consents and approvals required by such
Governmental Entities prior to the Closing Date.
(c) SESI shall have had a full opportunity to
conduct inspections of the operating assets and books and
records of Stabil Drill. Sellers shall have provided SESI
certified copies of Stabil Drill's Articles of Incorporation
and By-laws and certificates of existence and good standing,
certified by the Secretary of State of the State of Louisiana.
(d) Any and all changes made to the Disclosure
Schedule or to the representations and warranties of Sellers
shall be satisfactory in all respects to SESI
(e) Sellers shall have provided to SESI such
certificates and other documents as SESI shall reasonably
request.
Section 5.3 Conditions to Obligations of Sellers. The
obligations of Sellers to consummate the transactions
contemplated by this Agreement are subject to the satisfaction
of the following conditions, unless waived by Sellers:
(a) The representations and warranties of SESI set
forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date,
except as otherwise contemplated by this Agreement, and SESI
shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or
prior to the Closing Date.
(b) Sellers shall have received a certificate of a
duly authorized officer of SESI, dated the Closing Date,
certifying as to the incumbency of any person executing this
Agreement or any certificates or other documents delivered in
connection with this Agreement and certifying such other
matters as Sellers may reasonably request.
ARTICLE 6
TERMINATION AND AMENDMENT
Section 6.1 Termination. This Agreement may be terminated
and may be abandoned at any time prior to the Closing Date:
(a) by mutual consent of SESI and Sellers;
(b) by SESI or Sellers, as the case may be, if (a)
there shall have been a material breach of any representation,
warranty, covenant or agreement on the part of either of the
Sellers or on the part of SESI, as the case may be, which
breach shall not have been cured prior to the earlier of (i)
20 days following notice of such breach and (ii) the Closing
Date; or (b) any permanent injunction or other order of a
court or other competent Governmental Entity preventing the
transactions contemplated by this agreement shall have become
final and nonappealable; or
(c) by SESI or Sellers if the transactions
contemplated by this Agreement shall not have been consummated
on or before November 30, 1997; provided, that the right to
terminate this Agreement under this Section 6.1(c) shall not
be available to any party whose breach of its representations
and warranties in this Agreement or whose failure to perform
any of its covenants and agreements under this Agreement has
resulted in the failure of the transactions contemplated by
this agreement to occur on or before such date.
Section 6.2 Effect of Termination. In the event of a
termination of this Agreement as provided in Section 6.1, this
Agreement shall forthwith become void and there shall be no
liability or obligation under any provisions hereof on the
part of SESI or Sellers, except (a) pursuant to the covenants
and agreements contained in Section 9.1 and this Section 6.2
and (b) to the extent that such termination results from the
willful material breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth
in this Agreement, in which case the non-breaching party shall
have a right to recover its damages caused thereby.
Section 6.3 Amendment. This Agreement may not be amended
except by an instrument in writing signed by each of the
parties hereto.
Section 6.4 Extension; Waiver. At any time prior to the
Closing Date, the parties hereto may, in their respective sole
discretion and to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other
acts of the other parties hereto; (b) waive any inaccuracies
in the representations and warranties contained herein or in
any document delivered pursuant thereto; and (c) waive
compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a
written instrument signed by or on behalf of such party.
ARTICLE 7
INDEMNIFICATION; REMEDIES
Section 7.1 Indemnification by Sellers. Except as
otherwise expressly provided in this Article 7, Sellers shall
in accordance with this Article 7 defend, indemnify and hold
harmless SESI and SESI's Affiliates (SESI and such Affiliates
collectively, "SESI's Indemnified Persons"), and shall
reimburse SESI's Indemnified Persons, for, from and against
each and every demand, claim, action, loss (which shall
include any diminution in value), liability, judgment, damage,
cost and expense (including, without limitation, interest,
penalties, costs of preparation and investigation, and the
reasonable fees, disbursements and expenses of attorneys,
accountants and other professional advisors) (collectively,
"Losses") imposed on or incurred by SESI's Indemnified
Persons, directly or indirectly, relating to, resulting from
or arising out of: (a) any inaccuracy in any representation
or warranty of Sellers in this Agreement or any certificate,
document or other instrument delivered or to be delivered
pursuant hereto in any respect or (b) any breach or
nonperformance of any covenant, agreement or other obligation
of Sellers under this Agreement or any certificate, document
or other instrument delivered or to be delivered pursuant
hereto; provided, however, that, except for a knowing and
intentional breach of any representation or warranty of
Sellers in this Agreement (as to which there shall be no
Minimum Amount), Sellers shall have no liability under Section
7.1 unless and until the aggregate of all Losses resulting
therefrom exceeds $100,000 (the "Sellers's Minimum Amount"),
in which event Sellers shall be liable for all Losses in
excess of Sellers's Minimum Amount.
Section 7.2 Indemnification by SESI. Except as otherwise
expressly provided in this Article 7, SESI shall defend,
indemnify and hold harmless Sellers and each of Sellers's
successors and assigns (Sellers and such persons,
collectively, "Sellers's Indemnified Persons"), and shall
reimburse Sellers's Indemnified Persons for, from and against
all Losses imposed on or incurred by Sellers's Indemnified
Persons, directly or indirectly, relating to, resulting from
or arising out of: (a) any inaccuracy in any representation
or warranty of SESI in this Agreement or any certificate,
document or other instrument delivered or to be delivered
pursuant hereto in any respect or (b) any breach or
nonperformance of any covenant, agreement or other obligation
of SESI under this Agreement or any certificate, document or
other instrument delivered or to be delivered pursuant hereto;
provided, however, that SESI shall have no liability under
this Section 7.2 unless and until the aggregate of all Losses
exceeds $100,000 ("SESI Minimum Amount"), in which event SESI
shall be liable for all Losses in excess of SESI's Minimum
Amount.
Section 7.3 Notice and Defense of Third Party Claims. If
any third party demand, claim, action or proceeding shall be
brought or asserted under this Article 7 against an
indemnified party or any successor thereto (the "Indemnified
Person") in respect of which indemnity may be sought under
this Article 7 from an indemnifying person or any successor
thereto (the "Indemnifying Person"), the Indemnified Person
shall give prompt written notice thereof to the Indemnifying
Person who shall have the right to assume its defense,
including the hiring of counsel reasonably satisfactory to the
Indemnified Person and the payment of all expenses; except
that any delay or failure to so notify the Indemnifying Person
shall relieve the Indemnifying Person of its obligations under
this Article 7 only to the extent, if at all, that it is
prejudiced by reason of such delay or failure. The Indemnified
Person shall have the right to employ separate counsel in any
of the foregoing actions, claims or proceedings and to
participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the Indemnified
Person unless both the Indemnified Person and the Indemnifying
Person are named as parties and the Indemnified Person shall
in good faith determine that representation by the same
counsel is inappropriate. In the event that the Indemnifying
Person, within ten days after notice of any such action or
claim, does not assume the defense thereof, the Indemnified
Person shall have the right to undertake the defense,
compromise or settlement of such action, claim or proceeding
for the account of the Indemnifying Person, subject to the
right of the Indemnifying Person to assume the defense of such
action, claim or proceeding with counsel reasonably
satisfactory to the Indemnified Person at any time prior to
the settlement, compromise or final determination thereof.
Anything in this Article 7 to the contrary notwithstanding,
the Indemnifying Person shall not, without the Indemnified
Person's prior consent, settle or compromise any action or
claim or consent to the entry of any judgment with respect to
any action, claim or proceeding for anything other than money
damages paid by the Indemnifying Person. The Indemnifying
Person may, without the Indemnified Person's prior consent,
settle or compromise any such action, claim or proceeding or
consent to entry of any judgment with respect to any such
action or claim that requires solely the payment of money
damages by the Indemnifying Person and that includes as an
unconditional term thereof the release by the claimant or the
plaintiff of the Indemnified Person from all liability in
respect of such action, claim or proceeding.
Section 7.4 Survival.
(a) The representations and warranties set forth in
Article 2 shall survive the Closing for a period of three
years, except that the representations and warranties
contained in Sections 2.1, 2.4, 2.17 and 2.19 shall survive
for the applicable statute of limitation.
(b) The representations and warranties set forth in
Article 3 shall survive the Closing for a period of three
years.
(c) Upon the expiration of the survival period of a
representation and warranty as described in Section 7.4(a) or
(b), such representation and warranty shall expire and
terminate and there shall be no liability or obligation
whatsoever in respect thereof whether such liability has
accrued prior to or will accrue after the expiration of such
representations and warranties unless prior to the expiration
thereof a specific, written indemnification claim is made with
respect thereto.
Section 7.5 Allocation. Notwithstanding anything to the
contrary in this Article 7, the obligation of the Sellers
(other than Xxxxx Xxx Xxxxx) to indemnify SESI's Indemnified
Persons shall be joint and proportionate to the number of
Shares owned by each Seller to the total number of Shares,
provided that the obligation of Xxxxx Xxx Xxxxx to indemnify
SESI's Indemnified Persons shall be joint, several and
solidary with each of the other Sellers with the intent of the
parties being that Xxxxx Xxx Xxxxx shall be liable under
Section 7.1 to SESI's Indemnified Persons for any amounts that
may be due thereunder and the other Sellers only liable for
their proportionate share.
Section 7.6 Limits. Notwithstanding anything to the
contrary in Article 7, in no event shall Sellers or SESI be
required to make payments pursuant to Sections 7.1 or 7.2,
respectively, that exceed $5,000,000 in the aggregate, except
to the extent that the claim for which indemnity is sought
relates to (a) a knowing and intentional breach of any
representation or warranty in this Agreement or (b) a breach
of any of the representations and warranties set forth in
Section 2.19.
ARTICLE 8
DEFINED TERMS
Section 8.1 Definitions. In addition to the other defined
terms used herein, as used in this Agreement, the following
terms when capitalized have the meanings indicated.
"Affiliate" shall have the meaning ascribed by Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as
amended.
"Applicable Law" shall mean any statute, law, rule or
regulation or any judgement, order, writ, injunction or decree
of any Governmental Entity to which a specified Person or its
property is subject.
"Agreement" shall mean this Stock Purchase Agreement,
including the Exhibits hereto, all as amended or otherwise
modified from time to time.
"Benefit Arrangement" shall mean any employment,
severance or similar contract, or any other contract, plan,
policy or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option or other
stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage (including
any self-insured arrangement), health or medical benefits,
disability benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health,
medical or life insurance benefits), other than the Employee
Plans, that is maintained, administered or contributed to by
the employer and covers any employee or former employee of the
employer.
"Closing" means the consummation of the Purchase and the
other transactions contemplated by this Agreement.
"Closing Date" shall mean the date on which the Closing
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Company's Business" means the sale and rental of oil
field tools used in the bottom hole assembly including
stabilizers, xxxxx, hole openers, drill rites and non-magnetic
drill collars.
"Disclosure Schedule" shall mean the disclosure schedules
and other documents attached hereto as Exhibit "C" prepared by
Sellers in accordance with the applicable provisions of this
Agreement.
"Employee Plan" means a plan or arrangement as defined in
Section 3(3) of ERISA, that (a) is subject to any provision of
ERISA, (b) is maintained, administered or contributed to by
the employer and (c) covers any employee or former employee of
the employer.
"Employment Agreement" shall mean the Employment
Agreement in the form attached hereto as Exhibit "A".
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated
thereunder.
"Financial Statements" shall mean, as the context may
require, the audited consolidated balance sheet and related
audited consolidated statements of income, stockholders'
equity and cash flows and the related notes thereto of Stabil
Drill as of and for the fiscal year ended August 31, 1997.
"Governmental Entity" shall mean any court or tribunal in
any jurisdiction or any public, governmental or regulatory
body, agency, department, commission, board, bureau or other
authority or instrumentality.
"Leases" shall mean any executory lease to which Stabil
Drill or any of its subsidiaries is subject having future
rental payments of more than $50,000 in the aggregate.
"Liens" shall mean pledges, liens, defects, leases,
licenses, equities, conditional sales contracts, charges,
claims, encumbrances, security interests, easements,
restrictions, chattel mortgages, mortgages or deeds of trust,
of any kind or nature whatsoever.
"Material Contract" means any executory contract,
agreement or other understanding, whether or not reduced to
writing, that is not cancelable within 30 days, to which
Stabil Drill or any of its subsidiaries or their respective
property is subject, which provides for future payments to
another Person by Stabil Drill or any of its subsidiaries of
more than $50,000 in the aggregate.
"Multiemployer Plan" means a plan or arrangement as
defined in Section 4001(a)(3) and 3(37) of ERISA.
"Note" shall mean Non-Negotiable Convertible Promissory
Note in the form attached hereto as Exhibit "B".
"Person" shall mean an individual, firm, corporation,
general or limited partnership, limited liability company,
limited liability partnership, joint venture, trust,
governmental authority or body, association, unincorporated
organization or other entity.
"Proceedings" means any suit, action, proceeding,
dispute or claim before or investigation by any Governmental
Entity.
"Purchase" shall mean the purchase by SESI of the Shares
for the consideration specified in Section 2.2 of this
Agreement.
"Returns" means all returns, reports, estimates,
declarations and statements of any nature relating to, or
required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup
withholding and other payments to third parties.
"Shares" shall mean all of the issued and outstanding
shares of common stock, no par value, of Stabil Drill.
"Taxes" shall mean any federal, state, local or other
taxes (including, without limitation, income, alternative
minimum, franchise, property, sales, use, lease, excise,
premium, payroll, wage, employment or withholding taxes),
fees, duties, assessments, withholdings or governmental
charges of any kind whatsoever (including interest, penalties
and additions to tax).
ARTICLE 9
MISCELLANEOUS
Section 9.1 Bonus Pool. SESI will cause Stabil Drill
following the Closing Date to establish an employee bonus pool
for its employees for the 12 month periods ending October 31,
1998, 1999 and 2000 in accordance with this Section 9.1. If
Stabil Drill's EBITDA (as defined and calculated in accordance
with the Note) exceeds $6,000,000 in any of these 12-month
periods, then a bonus pool of 20% of the amount over
$6,000,000 will be established for that period for the benefit
of Stabil Drill's employees to be allocated as determined by
Xxxxx Xxx Xxxxx in accordance with such procedures as he may
develop and paid within 30 days after EBITDA is determined for
each 12 month period.
Section 9.2 Confidentiality. Until the Closing Date and
subsequent to the termination of this Agreement pursuant to
Section 6.1, SESI will keep confidential and will not disclose
to any third party any information obtained by it from Sellers
in connection with this Agreement except (a) that information
may be disclosed by SESI to its advisors in connection with
the negotiation of and the activities conducted pursuant to
this Agreement, or (b) to the extent that such information is
or becomes generally available to the public through no act or
omission of SESI in violation of this Agreement.
Section 9.3 Survival of Representations, Warranties and
Agreements The representations, warranties, covenants and
agreements in this Agreement (or in any Exhibit hereto) or in
any instrument delivered pursuant to this Agreement shall
survive the Closing and shall not be limited or affected by
any investigation by or on behalf of any party hereto.
Section 9.4 Notices. All notices hereunder must be in
writing and shall be deemed to have been given upon receipt of
delivery by: (a) personal delivery to the designated
individual, (b) certified or registered mail, postage prepaid,
return receipt requested, (c) a nationally recognized
overnight courier service (against a receipt therefor) or (d)
facsimile transmission with confirmation of receipt. All such
notices must be addressed as follows or such other address as
to which any party hereto may have notified the other in
writing:
If to SESI, to:
0000 Xxxxxxxxx Xxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Facsimile transmission No.: 000-000-0000
If to Sellers, to:
P. O. Xxx 00000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxx Xxxxx
Facsimile transmission No.: 000-000-0000
Section 9.5 Headings; Gender. When a reference is made in
this Agreement to a section, exhibit or schedule, such
reference shall be to a section, exhibit or schedule of this
Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All personal pronouns used
in this Agreement shall include the other genders, whether
used in the masculine, feminine or neuter gender, and the
singular shall include the plural and vice versa, whenever and
as often as may be appropriate.
Section 9.6 Entire Agreement; No Third Party
Beneficiaries. This Agreement (including the documents,
exhibits and instruments referred to herein) (a) constitutes
the entire agreement and supersedes all prior agreements, and
understandings and communications, both written and oral,
among the parties with respect to the subject matter hereof,
and (b) is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 9.7 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
State of Louisiana without regard to any applicable principles
of conflicts of law.
Section 9.8 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the
other parties.
Section 9.9 Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by reason of any rule of law or public policy, all
other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated
hereby is not affected in any adverse manner to either party.
Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely
as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent
possible, and in any case such term or provision shall be
deemed amended to the extent necessary to make it no longer
invalid, illegal or unenforceable.
Section 9.10 Counterparts. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an
original and all of which taken together shall constitute one
and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed themselves or by their respective duly
authorized officers as of the date first written above.
SUPERIOR ENERGY SERVICES, INC.
By: /s/ Xxxxxx Xxxxxx
______________________________
Xxxxxx Xxxxxx, Chief
Financial Officer
SELLERS:
/s/ Xxxxx Xxx Xxxxx
Xxxxx Xxx Xxxxx
/s/ Xxx Xxxxxxxxxx
Xxx Xxxxxxxxxx
/s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxx
Xxxxx Xxxxx
/s/ Xxxxxx X. XxXxxxx
Xxxxxx X. XxXxxxx
/s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxx
Xxxxxx Xxxx
/s/ Xxxxx Xxxxx, Xx.
Xxxxx Xxxxx, Xx.
