EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Among
SUPERIOR ENERGY SERVICES, INC.,
SUPERIOR CARDINAL ACQUISITION COMPANY, INC.,
CARDINAL HOLDING CORP.,
FIRST RESERVE FUND VII, LIMITED PARTNERSHIP, and
FIRST RESERVE FUND VIII, LIMITED PARTNERSHIP
Dated as of April 20, 1999
TABLE OF CONTENTS
ARTICLE 1 DEFINED TERMS 1
Section 1.1 DEFINITIONS 1
ARTICLE 2 THE CLOSING; THE MERGER; EFFECTS OF THE MERGER 7
Section 2.1 CLOSING 7
Section 2.2 THE MERGER 8
Section 2.3 EFFECTS OF THE MERGER; CERTIFICATE OF INCORPORATION;
DIRECTORS AND OFFICERS 8
ARTICLE 3 MERGER CONSIDERATION; CONVERSION OF SHARES 8
Section 3.1 CONVERSION OF SHARES 8
Section 3.2 EXCHANGE OF STOCK CERTIFICATES; RECORD DATE 9
Section 3.3 NO FURTHER RIGHTS IN CARDINAL COMMON STOCK 10
ARTICLE 4 REPRESENTATIONS AND WARRANTIESOF CARDINAL 10
Section 4.1 ORGANIZATION; QUALIFICATION 10
Section 4.2 CAPITAL STOCK; SUBSIDIARIES 11
Section 4.3 CORPORATE AUTHORIZATION; ENFORCEABILITY 12
Section 4.4 NO CONFLICT 12
Section 4.5 CONSENTS 12
Section 4.6 CARDINAL FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES 13
Section 4.7 ACCOUNTS RECEIVABLE 13
Section 4.8 ABSENCE OF CERTAIN CHANGES 13
Section 4.9 MATERIAL CONTRACTS 14
Section 4.10 VESSELS 14
Section 4.11 REAL PROPERTY 15
Section 4.12 REAL PROPERTY LEASES 15
Section 4.13 PERSONAL PROPERTY 15
Section 4.14 COMPLIANCE WITH LAWS 16
Section 4.15 PERMITS 16
Section 4.16 LITIGATION 16
Section 4.17 ENVIRONMENTAL COMPLIANCE 17
Section 4.18 ERISA AND RELATED MATTERS 18
Section 4.19 TAXES 20
Section 4.20 CUSTOMERS AND SUPPLIERS 22
Section 4.21 INSURANCE 22
Section 4.22 SAFETY AND HEALTH 23
Section 4.23 LABOR MATTERS 23
Section 4.24 TRANSACTIONS WITH CERTAIN PERSONS 24
Section 4.25 PROPRIETY OF PAST PAYMENTS 24
Section 4.26 INTELLECTUAL PROPERTY 24
Section 4.27 DIRECTOR AND OFFICER INDEMNIFICATION 24
Section 4.28 BROKERS' AND FINDERS' FEE 25
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SESI 25
Section 5.1 ORGANIZATION; QUALIFICATION 25
Section 5.2 CAPITAL STOCK; SUBSIDIARIES 25
Section 5.3 CORPORATE AUTHORIZATION; ENFORCEABILITY 26
Section 5.4 NO CONFLICT 27
Section 5.5 CONSENTS 27
Section 5.6 SESI FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES 27
Section 5.7 ACCOUNTS RECEIVABLE 28
Section 5.8 ABSENCE OF CERTAIN CHANGES 28
Section 5.9 MATERIAL CONTRACTS 28
Section 5.10 CITIZENSHIP 29
Section 5.11 REAL PROPERTY 29
Section 5.12 REAL PROPERTY LEASES 29
Section 5.13 PERSONAL PROPERTY 30
Section 5.14 COMPLIANCE WITH LAWS 30
Section 5.15 PERMITS 30
Section 5.16 LITIGATION 30
Section 5.17 ENVIRONMENTAL COMPLIANCE 31
Section 5.18 ERISA AND RELATED MATTERS 31
Section 5.19 TAXES 34
Section 5.20 CUSTOMERS AND SUPPLIERS 36
Section 5.21 INSURANCE 36
Section 5.22 SAFETY AND HEALTH 37
Section 5.23 LABOR MATTERS 37
Section 5.24 TRANSACTIONS WITH CERTAIN PERSONS 37
Section 5.25 PROPRIETY OF PAST PAYMENTS 37
Section 5.26 INTELLECTUAL PROPERTY 38
Section 5.27 DIRECTOR AND OFFICER INDEMNIFICATION 38
Section 5.28 BROKERS' AND FINDERS' FEE 38
Section 5.29 COMMISSION FILINGS: FINANCIAL STATEMENTS 38
ARTICLE 6 COVENANTS 39
Section 6.1 LEGAL REQUIREMENTS 39
Section 6.2 STOCKHOLDER APPROVALS 39
Section 6.3 PROXY STATEMENT 40
Section 6.4 EQUITY CONTRIBUTION TO CARDINAL 41
Section 6.5 FINANCING 41
Section 6.6 REPAYMENT OF CERTAIN INDEBTEDNESS 42
Section 6.7 XXXX-XXXXX-XXXXXX 42
Section 6.8 ACCESS TO PROPERTIES AND RECORDS 42
Section 6.9 CONSULTATION AND REPORTING 42
Section 6.10 CONDUCT OF BUSINESS BY BOTH PARTIES PRIOR TO THE CLOSING
DATE 43
Section 6.11 PUBLIC STATEMENTS 45
Section 6.12 NO SOLICITATION 45
Section 6.13 RESTRICTION ON FUNDS 46
Section 6.14 UPDATE INFORMATION 46
Section 6.15 MAINTENANCE OF POLICIES 47
Section 6.16 DIRECTOR'S AND OFFICER'S INDEMNIFICATION AND INSURANCE 47
Section 6.17 NASDAQ FILING 47
Section 6.18 SESI EMPLOYEE BENEFITS 47
ARTICLE 7 CLOSING CONDITIONS 47
Section 7.1 CONDITIONS APPLICABLE TO ALL PARTIES 47
Section 7.2 CONDITIONS TO OBLIGATIONS OF SESI 49
Section 7.3 CONDITIONS TO OBLIGATIONS OF CARDINAL 49
ARTICLE 8 TERMINATION AND AMENDMENT 50
Section 8.1 TERMINATION 50
Section 8.2 EFFECT OF TERMINATION 51
ARTICLE 9 MISCELLANEOUS 52
Section 9.1 NOTICES 52
Section 9.3 HEADINGS; GENDER 52
Section 9.4 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES 52
Section 9.5 GOVERNING LAW 52
Section 9.6 ASSIGNMENT 52
Section 9.7 SEVERABILITY 53
Section 9.8 COUNTERPARTS 53
Section 9.9 AMENDMENT 53
Section 9.10 EXTENSION; WAIVER 53
Section 9.11 EXPENSES 53
Exhibits
A - Cardinal Disclosure Schedules
B - Superior Disclosure Schedules
C - Registration Rights Agreement - The Funds
D - Registration Rights Agreement - Other Cardinal Stockholders
E - Stockholders' Agreement
F - Agreement and Release
G - Superior Stock Incentive Plan
H - Form of Opinion of Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
I - Form of Opinion of Jones, Walker, Waechter, Poitevent, Carrere &
Xxxxxxx, LLP
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of April 20, 1999 is by
and among Superior Energy Services, Inc., a Delaware corporation ("SESI"),
Superior Cardinal Acquisition Company, Inc., a Delaware corporation and a
wholly-owned subsidiary of SESI ("Sub"), Cardinal Holding Corp., a Delaware
corporation ("Cardinal"), and First Reserve Fund VII, Limited Partnership
and First Reserve Fund VIII, Limited Partnership, each of which is a
Delaware limited partnership (together, the "Funds").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Cardinal and the Board of Directors
of SESI have determined it to be desirable and mutually advantageous to
enter into a business combination to be effected by a merger of Sub with
and into Cardinal as a result of which the separate existence of Sub shall
cease and Cardinal shall be the surviving corporation, on the terms and
subject to the conditions set forth herein (the "Merger"); and
WHEREAS, the parties hereto intend that, for federal income tax
purposes, the Merger will constitute a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of
1986, as amended, and that this Agreement constitutes a plan of
reorganization.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as
follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 DEFINITIONS. In addition to the other defined terms
used herein, as used in this Agreement, the following terms when
capitalized have the meanings indicated.
"Affiliate" shall have the meaning ascribed by Rule 12b-2 promulgated
under the Exchange Act.
"Agreement" shall mean this Agreement and Plan of Merger, including
the Exhibits hereto, all as amended or otherwise modified from time to
time.
"Agreement and Release" shall mean the Agreement and Release to be
executed by the Cardinal Stockholders substantially in the form attached
hereto as Exhibit F.
"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.
"Business Day" shall mean a day other than a Saturday, a Sunday or a
day on which national banks in New York are closed.
"Cardinal Annual Financial Statements" shall mean the audited
consolidated balance sheet and related audited consolidated statements of
income, stockholders equity and cash flows, and the related notes thereto
of Cardinal and its Subsidiaries as of and for the fiscal years ended
December 31, 1997 and 1998.
"Cardinal Benefit Program or Agreement" shall have the meaning
ascribed to it in Section 4.18(a) hereof.
"Cardinal Common Stock" shall mean any shares of the authorized common
stock of Cardinal that are issued and outstanding, at the time hereof or at
the Effective Time, including without limitation the common stock, $.01 par
value per share, denominated as either Class A or Class B Common Stock.
"Cardinal Disclosure Schedules" shall mean the disclosure schedules
and other documents attached to such schedules prepared by Cardinal in
connection with this Agreement and attached hereto as Exhibit A.
"Cardinal Financial Statements" shall mean the Cardinal Annual
Financial Statements and the Cardinal Interim Financial Statements,
collectively.
"Cardinal Interim Financial Statements" shall mean the unaudited
consolidated balance sheet and the related unaudited consolidated
statements of income and cash flows of Cardinal and its Subsidiaries as of
and for the two-month period ended February 28, 1999.
"Cardinal Leased Properties" shall have the meaning ascribed to it in
Section 4.12(a) hereof.
"Cardinal Owned Properties" shall have the meaning ascribed to it in
Section 4.11(a) hereof.
"Cardinal Policies" shall have the meaning ascribed to it in Section
4.21(a) hereof.
"Cardinal Preferred Stock" shall mean any shares of the authorized
preferred stock of Cardinal that are at the time hereof, or become prior to
the Closing, issued and outstanding, including without limitation the
Cardinal Class C preferred stock, $.10 par value per share.
"Cardinal Services" shall mean Cardinal Services, Inc., a Louisiana
corporation.
"Cardinal Stockholders" shall mean the Funds and the other holders of
Cardinal Common Stock and Cardinal Preferred Stock listed on Section 3.1 of
the Cardinal Disclosure Schedules, as it may be amended at Closing in
accordance with Sections 6.4, 6.13 and 7.1(l) hereof.
"Certificate of Merger" shall have the meaning ascribed to it in
Section 2.1(b) hereof.
"Charter Amendment" shall have the meaning ascribed to it in Section
6.2(a) hereof.
"Class A Group Shares" shall mean (i) the shares of Cardinal Class A
Common Stock issued and outstanding at the Effective Time and the
Management Common Shares, and (ii) the shares of Cardinal Class C Preferred
Stock, if any, issued and outstanding at the Effective Time and the
Management Preferred Shares (each share of which for purposes of Article 3
shall be deemed to be equivalent to a like number of shares of Cardinal
Class A Common Stock.
"Class A Group Exchange Ratio" shall mean the quotient, rounded to
four decimal places, of (a) (X) the number of Merger Shares less (Y) the
number of shares of SESI Common Stock into which shares of Cardinal Class B
Common Stock are convertible pursuant to Section 3.1, divided by (b) the
number of Class A Group Shares issued and outstanding at the Effective
Time.
"Closing" shall have the meaning ascribed to it in Section 2.1(a)
hereof.
"Closing Date" shall have the meaning ascribed to it in Section 2.1(a)
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended. All
citations to the Code shall include any amendments or any substitute or
successor provisions thereto.
"DGCL" shall mean the Delaware General Corporation Law.
"Effective Date" and "Effective Time" shall have the meanings ascribed
to them in Section 2.1(b) hereof.
"Employee Plan" shall mean 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.
"Environmental Laws" shall mean all Applicable Laws relating to
pollution or the protection of the environment.
"Equity Contribution" shall have the meaning ascribed to it in Section
6.4(a) hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Extended Coverage Policy" shall have the meaning ascribed to it in
Section 6.16(b) hereof.
"Financing" shall have the meaning ascribed to it in Section 6.5(a)
hereof.
"GAAP" means generally accepted accounting principles.
"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.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"HSR Form" shall mean the notification and report form required to be
filed under the HSR Act.
"Knowledge" of any Person means the actual knowledge of such Person's
executive and financial officers in each case after reasonable inquiry of
such other officers of such Person with direct responsibility for the
Person's business relating to such knowledge.
"Leases" shall mean any executory lease having future rental payments
of more than $200,000 in the aggregate.
"Liens" shall mean pledges, liens, defects, leases, licenses,
conditional sales contracts, charges, claims, encumbrances, security
interests, easements, restrictions, chattel mortgages, mortgages or deeds
of trust, of any kind or nature whatsoever.
"Management Common Shares" shall mean shares of Cardinal Class A
Common Stock that certain management personnel of Cardinal and Cardinal
Services have the right to acquire pursuant to the Cardinal Holding Corp.
Stock Plan, as more fully described in Section 3.1 of the Cardinal
Disclosure Schedules.
"Management Preferred Shares" shall mean shares of Cardinal Class C
Preferred Stock that certain management personnel of Cardinal and Cardinal
Services have the right to acquire pursuant to the Cardinal Holding Corp.
Stock Plan, as more fully described in Section 3.1 of the Cardinal
Disclosure Schedules.
"March Contribution" shall have the meaning ascribed to it in Section
6.4(a) hereof.
"Material Adverse Effect" shall mean, with respect to a Person, any
fact, circumstance, event or condition that has or would have a material
adverse effect on the business, operations, assets, or financial condition
of such Person and its Subsidiaries, taken as a whole, or on such Person's
ability to carry out the transactions contemplated hereby, except for
changes affecting the United States economy or the energy services industry
generally.
"Material Contract" shall mean any executory contract, agreement or
other understanding, whether or not reduced to writing, to which a party
hereto or its property is subject, which provides for future payments by
such party of more than $200,000 in the aggregate.
"Merger Shares" shall mean a number of shares of SESI Common Stock
equal to 51% of the SESI Common Stock outstanding immediately after the
Effective Time (including without limitation giving effect to the issuance
of shares of SESI Common Stock pursuant to the Merger) calculated based on
the number of shares of SESI Common Stock used by SESI in calculating its
fully diluted earnings per share in accordance with GAAP for the quarter
ended June 30, 1999.
"Multiemployer Plan" shall mean a plan or arrangement as defined in
Section 4001(a)(3) and 3(37) of ERISA.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
"Permitted Liens" shall mean (a) Liens other than for borrowed money
that do not materially reduce the value or materially interfere with the
present use by the applicable Person of the property subject thereto or
affected thereby, (b) Liens for taxes, assessments or similar governmental
charges, which in each case constitute a Lien not yet due and payable or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained by the applicable
party on their books in accordance with GAAP, and (c) mechanic's,
workmen's, landlord's, operator's, materialmen's, maritime or other similar
Liens with respect to amounts not yet due and payable or which are being
contested in good faith by appropriate proceedings with adequate reserves
with respect thereto maintained on the applicable Person's books in
accordance with GAAP.
"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.
"Personal Property" shall mean all machinery, equipment, furniture,
fixtures and other corporeal or incorporeal (tangible or intangible)
personal property used by Cardinal Services or SESI, as the case may be, to
carry on its business as presently conducted.
"Pre-Closing Periods" shall mean all Tax periods ending on or before
the Closing Date and, with respect to any Tax period that includes but does
not end on the Closing Date, the portion of such period that ends on and
includes the Closing Date.
"Proceedings" shall mean any suit, action, proceeding, dispute or
claim before or investigation by any Governmental Entity.
"Proxy Statement" shall have the meaning ascribed to it in Section 6.3
hereof.
"Registration Rights Agreements" shall mean (a) the Registration
Rights Agreement to be executed between SESI and the Funds in the form
attached hereto as Exhibit C, and the Registration Rights Agreement to be
executed between SESI and certain other stockholders of Cardinal in the
form attached hereto as Exhibit D.
"Returns" shall mean all returns, declarations, reports, estimates,
declarations and statements of any nature required to be filed in respect
of Taxes for any Pre-Closing Period, and any claims for refund of Taxes,
including any amendments or supplements to any of the foregoing. The term
"Return" means any of the foregoing Returns.
"Sale Transaction" shall mean with respect to SESI, Cardinal and
Cardinal Services (for purposes of this definition, each an "issuer") (a)
the acquisition (by direct issuance from the issuer, from existing security
holders or otherwise), by any Person or group of Persons deemed a "person"
under Section 13(a)(3) of the Exchange Act, of beneficial ownership of
securities representing a majority of the combined voting power of the
outstanding capital stock of the applicable issuer, generally or as a
separate class or series or together with one or more class or series of
shares or stock, in the election of directors of such issuer, the result of
which would give such Person or Persons (or group) the ability to elect a
majority of the Board of Directors of such issuer, (b) a reorganization,
recapitalization, merger, consolidation or similar business combination or
transaction involving the applicable issuer (unless the holders of the
outstanding securities of such issuer entitled to vote in the election of
directors prior to such transaction continue to own securities of the
entity resulting from or surviving such transaction (a "Surviving Entity")
entitled to vote in the election of directors sufficient to allow such
holders to elect a majority of the board of directors of the Surviving
Entity upon the completion of such transaction) or (c) a sale or other
disposition (in a single transaction or a series of related transactions)
of assets with an asset value in excess of 25% of the market value of the
assets of the applicable issuer and its Subsidiaries as a whole; provided,
however, such term shall not include the Equity Contribution or the
transactions contemplated by this Agreement, the Registration Rights
Agreements or the Stockholders' Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SESI Annual Financial Statements" shall mean the audited consolidated
balance sheet and related audited consolidated statements of income,
stockholders' equity and cash flows, and the related notes thereto of SESI
and its Subsidiaries as of and for the fiscal years ended December 31, 1997
and 1998.
"SESI Annual Meeting" shall have the meaning ascribed to it in Section
6.2(a) hereof.
"SESI Benefit Program or Agreement" shall have the meaning ascribed to
it in Section 5.18(a) hereof.
"SESI Commission Filings" shall have the meaning ascribed to it in
Section 5.29 hereof.
"SESI Common Stock" shall mean the shares of common stock, $.001 par
value per share, of SESI.
"SESI Financial Statements" shall mean the SESI Annual Financial
Statements and the SESI Interim Financial Statements, collectively.
"SESI Interim Financial Statements" shall mean the unaudited
consolidated balance sheet and the related unaudited consolidated
statements of income and cash flows of SESI and its Subsidiaries as of and
for the two-month period ended February 28, 1999.
"SESI Leased Properties" shall have the meaning ascribed to it in
Section 5.12(a) hereof.
"SESI Owned Properties" shall have the meaning ascribed to it in
Section 5.11 hereof.
"SESI Policies" shall have the meaning ascribed to it in Section
5.21(a) hereof.
"SESI Stock Incentive Plan" means the 1999 Stock Incentive Plan to be
adopted by SESI following the SESI Annual Meeting in the form attached
hereto as Exhibit G.
"Settlement Agreement" shall mean that certain Settlement Agreement
executed effective as of March 16, 1999 by and among Cardinal Holding
Corp., the Funds and the other Persons specified therein.
"Stockholders' Agreement" shall mean the Stockholders' Agreement to be
executed by and among SESI and the Funds in the form attached hereto as
Exhibit E.
"Subsidiary" means, with respect to a Person, any corporation,
partnership, joint venture or other legal entity that is consolidated with
the Person in the Person's financial statements prepared using GAAP.
"Superior Disclosure Schedules" shall mean the disclosure schedules
and other documents attached to such schedules prepared by SESI in
connection with this Agreement and attached hereto as Exhibit B.
"Surviving Corporation" shall have the meaning ascribed to it in
Section 2.2 hereof.
"Taxes" shall mean any federal, state, local, foreign or other taxes
(including, without limitation, income, corporation, alternative minimum,
gross receipts, profits, capital stock, franchise, property, sales, use,
lease, excise, premium, payroll, wage, employment or withholding taxes,
estimated or other similar tax), fees, duties, assessments, withholdings or
governmental charges of any kind whatsoever in the nature of or in lieu of
any tax (including interest, penalties and additions to tax) and any
liability in respect of any tax as a result of being a member of any
affiliated, consolidated, combined, unitary or similar group.
"Vessels" shall have the meaning ascribed to it in Section 4.10
hereof.
ARTICLE 2
THE CLOSING; THE MERGER; EFFECTS OF THE MERGER
Section 2.1 CLOSING. (a) The closing of the transactions
contemplated herein (the "Closing") will take place, assuming satisfaction
or waiver of each of the conditions set forth in Article 7 hereof, at the
offices of Jones, Walker, Waechter, Poitevent, Carrre & Xxxxxx,
L.L.P., 000 Xx. Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxx, at 10:00 A.M.
(Central Time) on such date as may be mutually agreed upon between the
parties following satisfaction of the latest to occur of the conditions set
forth in Section 7.1, or if no date has been agreed to, on any date
specified by one party to the others upon three days' notice following
satisfaction of such conditions, provided, in each case, that the other
conditions set forth in Article 7 shall have been satisfied or waived as
provided in Article 7 at or prior to the Closing (the date of the Closing
being referred to herein as the "Closing Date").
(b) At the Closing, the parties shall (i) deliver the documents,
certificates and opinions required to be delivered by Article 7 hereof,
(ii) provide written evidence, if applicable, of the satisfaction or waiver
of each of the conditions to the other party's obligations set forth in
Article 7 hereof, (iii) cause the appropriate officer of Cardinal to
execute and deliver the certificate of merger in accordance with the
provisions of the DGCL (the "Certificate of Merger"), and (iv) consummate
the Merger by causing to be filed such properly executed Certificate of
Merger with the Secretary of State of the State of Delaware in accordance
with the provisions of the DGCL. The Merger shall be effective as of the
date and time the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware, or at such later time as may be specified
in the Certificate of Merger (such date and time being hereinafter referred
to respectively as the "Effective Date" and the "Effective Time").
Section 2.2 THE MERGER. Subject to the terms and conditions of this
Agreement, Sub shall be merged with and into Cardinal at the Effective
Time. Following the Merger, the separate corporate existence of Sub shall
cease and Cardinal shall be the surviving corporation in accordance with
the provisions of the DGCL (the "Surviving Corporation").
Section 2.3 EFFECTS OF THE MERGER; CERTIFICATE OF INCORPORATION;
DIRECTORS AND OFFICERS.
(a) The Merger shall have the effects specified in the DGCL.
(b) The certificate of incorporation of Cardinal, as in effect
at the Effective Time, shall be amended in its entirety in the Certificate
of Merger to conform to the certificate of incorporation of Sub in every
respect except for the name of the corporation, which shall remain
"Cardinal Holding Corp.," and as so amended shall be the certificate of
incorporation of the Surviving Corporation thereafter unless and until
amended in accordance with its terms and as provided by the DCGL.
(c) The bylaws of Sub as in effect at the Effective Time shall
be the bylaws of the Surviving Corporation thereafter unless and until
amended in accordance with its terms, the terms of the certificate of
incorporation of the Surviving Corporation and as provided by law.
(d) The directors and officers of Sub at the Effective Time
shall be the directors and officers of the Surviving Corporation
thereafter, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation until their
respective successors are duly elected and qualified.
ARTICLE 3
MERGER CONSIDERATION; CONVERSION OF SHARES
Section 3.1 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger and without
any further action on the part of SESI, Sub, Cardinal or the Surviving
Corporation, or any holder of any of the following securities:
(i) each share of common stock of Sub issued and
outstanding at the Effective Time shall be converted
into one share of the common stock of the Surviving
Corporation;
(ii) each of the Class A Group Shares shall be converted
into the right to receive a number of shares of SESI
Common Stock equal to the Class A Group Exchange Ratio;
(iii)all outstanding shares of Cardinal Class B Common Stock
shall be converted into the right to receive an
aggregate of 1 million shares of SESI Common Stock
(subject to adjustment for any stock splits,
combinations or recapitalizations relating to SESI
Common Stock effected after the date hereof); and
(iv) each issued share of Cardinal Common Stock that is held
in treasury by Cardinal or held by any subsidiary of
Cardinal shall be canceled and no stock of SESI or
other consideration shall be delivered in exchange
therefor.
(b) Upon conversion of the shares of the Class A Group Shares
and Cardinal Class B Common Stock into the right to receive the Merger
Shares in the manner described in paragraph 3.1(a) above, each holder of
shares of Class A Group Shares and Cardinal Class B Common Stock shall have
the right to receive in exchange therefor a certificate representing such
whole number of Merger Shares as is determined in accordance with the
exchange ratio applicable to such shares.
(c) In lieu of the issuance of fractional shares of Superior
Common Stock, each holder of record of issued and outstanding shares of
Class A Group Shares or Cardinal Class B Common Stock as of the Effective
Time that would otherwise be entitled to a fractional share pursuant to the
exchange ratio applicable to such shares shall be entitled to receive a
cash payment (without interest) equal to the fraction of a share of
Superior Common Stock to which such holder would be entitled but for this
provision multiplied by the closing price of the Superior Common Stock on
Nasdaq on the Effective Date.
Section 3.2 EXCHANGE OF STOCK CERTIFICATES; RECORD DATE.
(a) After the Closing Date, each holder of certificates
representing shares of Class A Group Shares and Cardinal Class B Common
Stock that were converted into Merger Shares pursuant to Section 3.1 hereof
shall surrender such certificates for cancellation to SESI, together with a
duly executed letter of transmittal in form and substance reasonably
satisfactory to SESI. In exchange therefor, SESI shall issue and deliver
to such holder of Class A Group Shares and Cardinal Class B Common Stock a
certificate representing the whole number of Merger Shares that such holder
has the right to receive pursuant to the provisions of Section 3.1(b) and a
check for any cash payment in lieu of a fractional Merger Share pursuant to
Section 3.1(c); provided, however, that (i) the holders of the Management
Common Shares or Management Preferred Shares shall not be required to
deliver a transmittal letter or stock certificates representing such
Management Common Shares or Management Preferred Shares, and (ii) SESI
shall deliver to such escrow agent as a holder of Class A Group Shares may
direct such portion of that Person's Merger Shares as the holder may
direct. The certificates representing shares of Class A Group Shares and
Cardinal Class B Common Stock so surrendered shall be canceled by SESI.
(b) In the event any certificate representing shares of Class A
Group Shares or Cardinal Class B Common Stock shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such certificate to be lost, stolen or destroyed, SESI shall cause
to be issued in exchange for such lost, stolen or destroyed certificate the
number of Merger Shares issuable in exchange therefor pursuant to Section
3.1(b) and to make any cash payment in lieu of a fractional Merger Share
pursuant to Section 3.1(c). The Board of Directors of SESI may, in its
discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate to indemnify SESI
against any claim that may be made against SESI with respect to the
certificate alleged to have been lost, stolen or destroyed.
(c) After the Closing Date, the Surviving Corporation shall
deliver to SESI a stock certificate (issued in the name of SESI and dated
as of the Effective Date) representing 1,000 shares of the common stock of
the Surviving Corporation in exchange for SESI's shares of Sub that were
converted into shares of the Surviving Corporation at the Effective Time in
the manner described in Section 3.1(a)(i). The certificate representing
the shares of Sub shall be canceled by SESI.
Section 3.3 NO FURTHER RIGHTS IN CARDINAL COMMON STOCK. As of the
Effective Time, all shares of Class A Group Shares and Cardinal Class B
Common Stock outstanding prior to the Effective Time shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing shares of Class A
Group Shares and Cardinal Class B Common Stock as of the Effective Time
shall cease to have any rights with respect thereto, except the right to
receive the number of Merger Shares into which such shares shall have been
converted upon surrender of such certificate as provided in Section 3.2.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF CARDINAL
Cardinal represents and warrants to SESI as follows with respect to
the matters set forth below.
Section 4.1 ORGANIZATION; QUALIFICATION. Each of Cardinal and
Cardinal Services is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has the
requisite corporate power and authority to own its property and to carry on
its business as it is now being conducted. No actions or proceedings to
dissolve either Cardinal or Cardinal Services are pending. Section 4.1 of
the Cardinal Disclosure Schedules sets forth the jurisdictions in which
each of Cardinal and Cardinal Services is qualified to do business as a
foreign corporation. Copies of the certificate or articles of
incorporation and by-laws of each of Cardinal and Cardinal Services, with
all amendments to the date hereof, have been furnished to SESI or its
representatives, and such copies are accurate and complete as of the date
hereof. Cardinal and Cardinal Services have made available to SESI
accurate and complete copies of the minutes of all meetings of their
respective boards of directors, any committees of such boards and
stockholders (and all consents in lieu of such meetings). Such records,
minutes and consents accurately reflect in all material respects all
actions taken by their respective boards of directors, committees and
stockholders as of the date hereof. Neither Cardinal nor Cardinal Services
is in violation of any provision of its certificate or articles of
incorporation or its by-laws other than such violations, that in the
aggregate, would not have a Material Adverse Effect on Cardinal.
Section 4.2 CAPITAL STOCK; SUBSIDIARIES.
(a) As of the date of this Agreement, the authorized capital
stock of Cardinal consists of 1,100,000 shares of Cardinal Common Stock, of
which 18,473.907 shares are issued and outstanding, 17,473.907 shares of
which are denominated as Class A, 1,000 shares of which are denominated as
Class B, and none are held in its treasury, and 47,500 shares of Cardinal
Preferred Stock, of which 23,123.616 shares are issued and outstanding and
denominated as Class C Preferred Stock and none are held in its treasury.
All issued and outstanding shares of Cardinal Common Stock and Cardinal
Preferred Stock have been duly authorized and are validly issued, fully
paid and non-assessable. All outstanding shares of Cardinal Common Stock
and Cardinal Preferred Stock are held of record and beneficially by the
Persons set forth in Section 3.1 of the Cardinal Disclosure Schedules, as
it may be amended as of the Closing Date in accordance with Sections 6.4,
6.13 and 7.1(l) hereof.
(b) The authorized capital stock of Cardinal Services consists
of 300,000 shares of Cardinal Services common stock (consisting of 150,000
shares designated as voting common stock and 150,000 shares designated as
non-voting common stock), of which 120,000 shares of voting common stock
are issued and outstanding, no shares of non-voting common stock are issued
and outstanding and none are held in its treasury. All issued and
outstanding shares of Cardinal Services common stock have been duly
authorized and are validly issued, fully paid and non-assessable, and are
held of record and beneficially by Cardinal.
(c) Except as set forth in Section 4.2 of the Cardinal
Disclosure Schedules, there are no outstanding stock options or other
rights to acquire any shares of the capital stock of Cardinal or Cardinal
Services or any security convertible into Cardinal Common Stock, and except
as contemplated by Sections 6.4, 6.13 or 7.1(l) hereof or as set forth in
Section 4.2 of the Cardinal Disclosure Schedules, neither Cardinal nor
Cardinal Services has any obligation or other commitment to issue, sell or
deliver any of the foregoing or any shares of its capital stock. All
issued and outstanding shares of Cardinal Common Stock and Cardinal
Services common stock have been issued in compliance with all legal
requirements and without violation of any preemptive or similar rights.
(d) Cardinal owns, directly or indirectly, no interest in any
Person other than Cardinal Services. Cardinal Services has no interest in
any other Person.
(e) Cardinal (i) was formed solely to own the Cardinal Services
common stock and engage in financing transactions relative to its
acquisition of Cardinal Services common stock, (ii) has never conducted any
business operations, (iii) has never had any employees, (iv) owns no assets
(other than the Cardinal Services common stock) and (v) has no material
liabilities that are not reflected in the Cardinal Financial Statements.
Section 4.3 CORPORATE AUTHORIZATION; ENFORCEABILITY.
(a) The execution, delivery and performance of this Agreement by
Cardinal has been duly authorized by the board of directors of Cardinal.
Upon an affirmative vote or consent of the holders of a (i) majority of the
outstanding Cardinal Common Stock, (ii) a majority of the outstanding
shares of Cardinal Common Stock designated as Class B voting as a separate
class and (iii) 80% of any outstanding shares of Cardinal Preferred Stock
voting as a separate class, approving this Agreement and the transactions
contemplated hereunder, and the conversion of the Cardinal Preferred Stock
into shares of Cardinal Common Stock as contemplated hereunder (or approval
by the holders of any outstanding shares of Cardinal Preferred Stock as
provided in subsection (a)(iii) above), no further vote or consent of
stockholders or directors of Cardinal and no further corporate acts or
other corporate proceedings are required of Cardinal for the due and valid
authorization, execution, delivery and performance of this Agreement or the
consummation of the Merger.
(b) This Agreement is the legal, valid and binding obligation of
Cardinal enforceable against it in accordance with its terms, except that
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and equitable principles which may limit the availability
of certain equitable remedies in certain instances.
Section 4.4 NO CONFLICT. Except as set forth in Section 4.4 of the
Cardinal Disclosure Schedules, neither the execution, delivery or
performance of this Agreement by Cardinal nor the consummation of the
transactions contemplated hereby will (a) if the requisite Cardinal
stockholder approval is obtained, conflict with or result in any breach of
the provisions of the certificate or articles of incorporation or by-laws
of Cardinal or Cardinal Services, (b) result in the violation or breach of,
or constitute (with or without due notice or the lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, or any material license, contract,
agreement or other instrument or obligation to which either of Cardinal or
Cardinal Services is a party or by which either of them or their respective
properties or assets may be bound, except for such violations, breaches or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect on Cardinal, or (c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Cardinal or Cardinal
Services or any of their respective properties or assets, except for such
violations, that in the aggregate, would not have a Material Adverse Effect
on Cardinal.
Section 4.5 CONSENTS. 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
Cardinal or Cardinal Services in connection with the execution, delivery or
performance by Cardinal or Cardinal Services of this Agreement or the
consummation by either Cardinal or Cardinal Services of the transactions
contemplated hereby except for (a) those required by the HSR Act, (b) as
set forth in Section 4.5 of the Cardinal Disclosure Schedules, (c) the
requisite Cardinal Stockholder approval and action set forth in Section
4.3(a) hereof and (d) such other consents, approvals, orders,
authorizations, declarations, filings, or registrations, the failure of
which to obtain or make would not have, in the aggregate, a Material
Adverse Effect on Cardinal.
Section 4.6 CARDINAL FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) The Cardinal Annual Financial Statements have been audited
by Ernst & Young, LLP, independent accountants, in accordance with
generally accepted auditing standards, have been prepared in accordance
with GAAP applied on a basis consistent with prior periods, and present
fairly the financial position of Cardinal and its Subsidiaries at such
dates and the results of operations and cash flows for the periods then
ended.
(b) The Cardinal Interim Financial Statements have been prepared
in accordance with GAAP on a basis consistent with the prior periods and
reflect all adjustments, consisting only of normal, recurring adjustments,
that are necessary for a fair statement of the results for the interim
period presented therein. To the Knowledge of Cardinal, except as
disclosed in Section 4.6 of the Cardinal Disclosure Schedules, none of
Cardinal, Cardinal Services, nor any of their respective assets, is subject
to any liability, commitment, debt or obligation that would be required to
be disclosed in financial statements prepared in accordance with GAAP,
except (i) as and to the extent reflected on the Cardinal Interim Financial
Statements, or (ii) as may have been incurred or may have arisen since the
date of the Cardinal Interim Financial Statements in the ordinary course of
business and that are permitted by this Agreement, or, in the aggregate,
would not have a Material Adverse Effect on Cardinal.
Section 4.7 ACCOUNTS RECEIVABLE. All of the accounts receivable
reflected on the Cardinal Interim Financial Statements or created
thereafter (a) have arisen only from bona fide transactions in the ordinary
course of business, (b) represent valid obligations owing to Cardinal
Services, (c) except as may be reserved against in the Cardinal Interim
Financial Statements, are subject to no material valid counterclaims or
setoffs, and (d) have been accrued in accordance with GAAP. Section 4.7 of
the Cardinal Disclosure Schedules sets forth a summary listing of all
accounts receivable of Cardinal Services as of the date specified therein
and reflects receivables aged less than 90 days from the date of invoice as
a group and sets forth all receivables aged more than 90 days individually
by customer, invoice and amount. No representation or warranty is made
that any account receivable will be collected when due or thereafter.
Section 4.8 ABSENCE OF CERTAIN CHANGES.
(a) Since February 28, 1999, Cardinal Services has operated in
the ordinary course of business consistent with past practice and 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 Cardinal.
(b) Except as set forth in Section 4.8 of the Cardinal
Disclosure Schedules, since February 28, 1999, Cardinal Services has not
taken any actions of a type referred to in Section 6.10 that would have
required the consent of SESI if such action were to have been taken during
the period between the date hereof and the Closing Date.
Section 4.9 MATERIAL CONTRACTS.
(a) Section 4.9 of the Cardinal Disclosure Schedules contains a
list and brief description (including the names of the parties and the date
and nature of the agreement) of each Material Contract to which either
Cardinal or Cardinal Services is a party, or to which any of their
respective properties is subject. SESI has been provided a complete and
accurate copy of each Material Contract listed on Section 4.9 of the
Cardinal Disclosure Schedules. Except as set forth in Section 4.9 of the
Cardinal Disclosure Schedules, each such Material Contract is a legal,
valid, binding and enforceable obligation of Cardinal or Cardinal Services,
as the case may be, except to the extent that enforcement may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the enforcement of creditors' rights
generally and (ii) general equitable principles.
(b) Except as set forth in Section 4.9 of the Cardinal
Disclosure Schedules, neither Cardinal nor Cardinal Services is in material
breach of or default (and, to the Knowledge of Cardinal, no event has
occurred which, with due notice or lapse of time or both, would constitute
such a breach or default) under any Material Contract except where any such
breaches or defaults, in the aggregate, would not have a Material Adverse
Effect on Cardinal, and no party to any Material Contract has given
Cardinal or Cardinal Services written notice of or made a claim in writing
with respect to any breach or default under any such Material Contract.
Section 4.10 VESSELS. Section 4.10 of the Cardinal Disclosure
Schedules sets forth a list of all vessels owned, leased, chartered or
managed by Cardinal Services on the date hereof (such vessels being
referred to herein as the "Vessels"). Cardinal Services has good and
marketable title to each Vessel free and clear of all Liens, except for (a)
Liens set forth in Section 4.10 of the Cardinal Disclosure Schedules (b)
Liens that collateralize indebtedness that is reflected in the Cardinal
Interim Financial Statements, and (c) Permitted Liens. All of the Vessels
are U.S. flagged vessels and are qualified to engage in the coastwise
trade. At all relevant times each of Cardinal Services and Cardinal has
been "a citizen of the United States" within the meaning of Section 2 of
the Shipping Act of 1916, as amended, and is qualified to own and operate
vessels in the coastwise trade. The Vessels are duly documented in the
name of Cardinal Services with the U.S. Coast Guard (to the extent
required) and each of the Vessels has current certificates of inspection
and documentation issued by the U.S. Coast Guard and all other certificates
and documentation required by any Governmental Entity to operate offshore
in the U.S. Gulf of Mexico, in each case free of reportable exceptions or
notations of record and each of the Vessels is currently operating within
the U.S. Gulf of Mexico. Except as provided in Section 4.10 of the
Cardinal Disclosure Schedules or where the failure to be in such condition
would not have a Material Adverse Effect on Cardinal, the Vessels taken as
a whole are in a good state of repair and operating condition, ordinary
wear and tear excepted, which is adequate to enable such Vessels to perform
the functions for Cardinal Services for which they have been historically
used and operated in the ordinary course of business.
Section 4.11 REAL PROPERTY.
(a) Section 4.11 of the Cardinal Disclosure Schedules sets forth
a true and complete list of all real property owned in fee simple title by
Cardinal Services (collectively, the "Cardinal Owned Properties"). Except
as set forth in Section 4.11 of the Cardinal Disclosure Schedules, Cardinal
Services has good and marketable title to all Cardinal Owned Properties.
Except as disclosed in Section 4.11 of the Cardinal Disclosure Schedules,
none of the Cardinal Owned Properties is subject to any Liens, except for
(i) Liens that collateralize indebtedness that is reflected in the Cardinal
Interim Financial Statements and (ii) Permitted Liens.
(b) Except as set forth in Section 4.11 of the Cardinal
Disclosure Schedules, all improvements on the Cardinal Owned Properties and
the operations therein conducted conform in all material respects to all
applicable health, fire, safety, zoning and building laws, ordinances and
administrative regulations, except for possible nonconforming uses or
violations which do not materially interfere with the present use,
operation or maintenance thereof or access thereto by Cardinal Services,
and, individually or in the aggregate, would not otherwise have a Material
Adverse Effect on Cardinal. The operating condition and state of repair of
all buildings, structures, improvements and fixtures on the Cardinal Owned
Properties are sufficient to permit the use and operation of all such
buildings, structures, improvements and fixtures as now used or operated by
Cardinal Services except where the failure to be in such condition would
not have a Material Adverse Effect on Cardinal.
Section 4.12 REAL PROPERTY LEASES.
(a) Section 4.12 of the Cardinal Disclosure Schedules sets
forth a list of all Leases with respect to all real properties in which
Cardinal Services has a leasehold, subleasehold, or other occupancy
interest (the "Cardinal Leased Properties"). Complete and accurate copies
of all such Leases and all amendments thereto have been provided to SESI.
All of the Leases for the Cardinal Leased Properties are valid and
effective against Cardinal Services in accordance with their respective
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
(ii) general equitable principles.
(b) Cardinal Services has not received written notice that it
is in material breach of or default (and, to the Knowledge of Cardinal, no
event has occurred, that, with due notice or lapse of time or both, would
constitute such a breach or default) under any Lease.
(c) Except as set forth in Section 4.12 of the Cardinal
Disclosure Schedules, no Cardinal Leased Property is subject to any
material sublease, license or other agreement granting to any Person any
right to the use, occupancy or enjoyment of Cardinal Leased Property or any
portion thereof through Cardinal Services.
Section 4.13 PERSONAL PROPERTY.
(a) Except as set forth in Section 4.13 of the Cardinal
Disclosure Schedules, Cardinal Services has good title to all Personal
Property (other than the Vessels) owned by Cardinal Services, free and
clear of all Liens other than (i) Liens that collateralize indebtedness
that is reflected in the Cardinal Interim Financial Statements and (ii)
Permitted Liens.
(b) Except as set forth in Section 4.13 of the Cardinal
Disclosure Schedules, Cardinal Services holds valid leaseholds in all of
the Personal Property leased by it, which leases are enforceable against
Cardinal Services in accordance with their respective terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally, and (ii) general equitable
principles.
(c) Except as set forth in Section 4.13 of the Cardinal
Disclosure Schedules, Cardinal Services is not in breach of or default
(and, to the Knowledge of Cardinal, no event has occurred that, with due
notice or lapse of time or both, would constitute such a lapse or default)
under any lease of any item of Personal Property leased by it, except for
any such breach or default that would not, individually or in the
aggregate, have a Material Adverse Effect on Cardinal.
(d) Except as set forth in Section 4.13 of the Cardinal
Disclosure Schedules, the Personal Property (other than the Vessels) now
owned, leased or used by Cardinal Services is sufficient and adequate to
carry on its business as presently conducted and the operating condition
and the state of repair thereof is sufficient to permit Cardinal Services
to carry on its business as presently conducted except where the failure to
be in such condition would not have a Material Adverse Effect on Cardinal.
Section 4.14 COMPLIANCE WITH LAWS. Except as set forth in Sections
4.14, 4.17, 4.22 or 4.23 of the Cardinal Disclosure Schedules, neither
Cardinal nor Cardinal Services is in violation of any Applicable Law, nor
is it in default with respect to any order, writ, judgment, award,
injunction or other decree of any Governmental Entity applicable to it or
any of its respective assets, properties or operations except such
violations or defaults that, in the aggregate, would not have a Material
Adverse Effect on Cardinal.
Section 4.15 PERMITS. Except as set forth in Sections 4.15 or
4.17 of the Cardinal Disclosure Schedules, Cardinal Services has all
permits, licenses and governmental authorizations that are required for the
lease, ownership, occupancy or operation of its properties and assets and
the carrying on of its business except where the failure to have any such
permits, licenses or authorizations would not, in the aggregate, have a
Material Adverse Effect on Cardinal.
Section 4.16 LITIGATION.
(a) Except as set forth in Section 4.16 of the Cardinal
Disclosure Schedules, there are no Proceedings pending or, to the Knowledge
of Cardinal, threatened, against either Cardinal or Cardinal Services (i)
for which an indemnification claim has been asserted, (ii) that could
reasonably be expected to have a Material Adverse Effect on Cardinal or
(iii) that seeks to prohibit or restrict consummation of the transactions
contemplated by this Agreement.
(b) Except as set forth in Section 4.16 of the Cardinal
Disclosure Schedules, neither Cardinal, Cardinal Services nor any of their
respective assets or properties is subject to any material order, writ,
judgment, award, injunction or decree of any Governmental Entity.
Section 4.17 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth in Section 4.17 of the Cardinal
Disclosure Schedules, to the Knowledge of Cardinal, Cardinal Services
possesses all licenses, permits and other approvals and authorizations that
are required under, and at all times for the past two years has been in
compliance with, all Environmental Laws, including all Environmental Laws
governing the generation, use, collection, treatment, storage,
transportation, recover, removal, discharge or disposal of hazardous
substances or wastes, and all Environmental Laws imposing record-keeping,
maintenance, testing, inspection, notification and reporting requirements
with respect to hazardous substances or wastes except where noncompliance
would not, individually or in the aggregate, have a Material Adverse Effect
on Cardinal, and, to the Knowledge of Cardinal, except as set forth in
Section 4.17 of the Cardinal Disclosure Schedules, there is no condition
that would materially interfere with such compliance in the future. For
purposes of this Agreement, "hazardous substances" and "hazardous wastes"
are materials defined as "hazardous substances," "hazardous wastes," or
"hazardous constituents" in (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601-9675, as
amended by the Superfund Amendments and Reauthorization Act of 1986, and
any amendments thereto and regulations thereunder; (ii) the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901-6992, as
amended by the Hazardous and Solid Waste Amendments of 1984, and any
amendments thereto and regulations thereunder; (iii) the Oil Pollution Act
of 1990, 33 U.S.C. Sections 2701-2761, and any amendments thereto and
regulations thereunder; and (iv) any other applicable Environmental Law.
(b) Except as set forth in Section 4.17 of the Cardinal
Disclosure Schedules, for the past two years neither Cardinal nor Cardinal
Services has been subject to any Proceeding pursuant to, or has received
any notice of any violation of, or claim alleging liability under, any
Environmental Laws. To the Knowledge of Cardinal, no facts or
circumstances exist that would reasonably be likely to result in a claim,
citation or allegation against either Cardinal or Cardinal Services for a
violation of, or alleging liability under any Environmental Laws, except
such violations or liabilities that would not, individually or in the
aggregate, have a Material Adverse Effect on Cardinal.
(c) Except as set forth in Section 4.17 of the Cardinal
Disclosure Schedules, to the Knowledge of Cardinal, there are no
underground tanks of any type (including tanks storing gasoline, diesel
fuel, oil or other petroleum products) or disposal sites for hazardous
substances, hazardous wastes or any other regulated waste, located on or
under the Cardinal Owned Properties or Cardinal Leased Properties.
(d) Except as set forth in Section 4.17 of the Cardinal
Disclosure Schedules, to the Knowledge of Cardinal, except in the ordinary
course of business, and in all cases in material compliance with all
Environmental Laws, Cardinal Services has not engaged any third party to
handle, transport or dispose of hazardous substances or wastes (including
for this purpose, gasoline, diesel fuel, oil or other petroleum products,
or bilge waste) on its behalf.
Section 4.18 ERISA AND RELATED MATTERS.
(a) Section 4.18 of the Cardinal Disclosure Schedules provides a
list of each of the following which Cardinal or Cardinal Services or any
corporation, trade, business or entity under common control with Cardinal
or a Cardinal Services within the meaning of section 414(b), (c), (m) or
(o) of the Code sponsors, maintains or contributes to, or has contingent
liability with respect thereto for the benefit of its current or former
employees, officers or directors as of the Closing Date:
(i) each Employee Plan; and
(ii) each personnel policy, stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan or
arrangement, vacation policy, severance pay plan, policy or agreement,
deferred compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment agreement
and each other employee benefit plan, agreement, arrangement, program,
practice or understanding that is not described in Section 4.18(a)(i)
("Cardinal Benefit Program or Agreement").
True and complete copies of each of the Employee Plans, Cardinal
Benefit Programs or Agreements, current summary plan descriptions, related
trusts, if applicable, and all amendments thereto, have been or on request
will be furnished to SESI. Further, a copy of the most recent annual
report, if applicable, for each Employee Plan, Cardinal Benefit Program or
Agreement and all material communications received from or sent to the
Internal Revenue Service or the Department of Labor in the last two years
regarding any Employee Plan, Cardinal Benefit Program or Agreement will be
provided to SESI upon request.
(b) Benefits under any Employee Plan or Cardinal Benefit Program
or Agreement 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 Cardinal nor Cardinal Services has
communicated to any employee or former employee any intention or commitment
to modify any Employee Plan or Cardinal Benefit Program or Agreement or to
establish or implement any other employee or retiree benefit or
compensation arrangement.
(c) Neither Cardinal or Cardinal Services, nor any trade or
business under common control with Cardinal or Cardinal Services within the
meaning of Section 414(b) or (c) of the Code prior to the Closing Date
maintains or has ever maintained or become obligated to contribute to any
employee benefit plan (i) that is subject to Title IV of ERISA, (ii) to
which Section 412 of the Code applies, (iii) that is a Multiemployer Plan,
or (iv) in connection with any trust described in Section 501(c)(9) of the
Code. Neither Cardinal nor Cardinal Services has within the last five
years engaged in, or is a successor corporation to an entity that has
engaged in, a transaction described in Section 4069 of ERISA.
(d) Except as otherwise set forth in Section 4.18 of the
Cardinal Disclosure Schedules:
(i) each Employee Plan and each Cardinal Benefit Program or
Agreement has been administered, maintained and operated in all material
respects in accordance with the terms thereof and in compliance with its
governing documents and Applicable Law (including where applicable, ERISA
and the Code);
(ii) each of the Employee Plans intended to be qualified
under section 401 of the Code (A) satisfies in form the requirements of
such section except to the extent amendments are not required by law to be
made until a date after the Closing Date, (B) has received a favorable
determination letter from the Internal Revenue Service regarding such
qualified status, (C) has not, since receipt of the most recent favorable
determination letter, been amended, and (D) has not been operated in a way
that would adversely affect its qualified status;
(iii) no act, omission or transaction has occurred which
would result in the imposition on Cardinal or Cardinal Services of a breach
of fiduciary duty liability or damages under Section 409 of ERISA, a civil
penalty assessed pursuant to Subsections (c), (i) or (l) of Section 502 of
ERISA or a Tax imposed pursuant to Chapter 43 of Subtitle D of the Code;
(iv) neither Cardinal or Cardinal Services, nor any of their
directors, officers or employees has engaged in any transaction with
respect to an Employee Plan that could subject Cardinal or Cardinal
Services to a Tax, penalty or liability for a prohibited transaction, as
defined in Section 406 of ERISA or Section 4975 of the Code. None of the
assets of any Employee Plan are invested in employer securities or employer
real property.
(v) full payment has been made of all amounts which
Cardinal Services is or has been required to have paid as contributions to
or benefits due under any Employee Plan or Cardinal Benefit Program or
Agreement under Applicable Law or under the terms of any such plan or any
arrangement; and
(vi) there is no Proceeding or other dispute pending or, to
the Knowledge of Cardinal, threatened that involves any Employee Plan or
Cardinal Benefit Program or Agreement that could reasonably be expected to
result in a material liability to Cardinal or Cardinal Services.
(e) Except as set forth in Section 4.18 of the Cardinal
Disclosure Schedules, in connection with the consummation of the
transactions contemplated in this Agreement, no employee or former employee
of Cardinal or Cardinal Services will become entitled to any bonus,
retirement, severance, job security or similar benefit or enhanced benefit
(including acceleration of an award, vesting or exercise of an incentive
award) or any fee or payment of any kind solely as a result of any of the
transactions contemplated hereby, and no such disclosed payment constitutes
a parachute payment described in Section 280G of the Code.
(f) All group health plans of Cardinal or Cardinal Services have
at all times fully complied in all material respects with all applicable
notification and continuation coverage requirements of Section 4980B(f) of
the Code and Section 601 of ERISA. Neither Cardinal nor Cardinal Services
has any current or projected liability in respect of post-retirement or
post-employment welfare benefits for retired, current or former employees,
or for any stockholder or director who is not an employee, former employee
or beneficiary thereof, except to the extent otherwise required by the
continuation requirements of Section 4980B(f) of the Code and Section 601
of ERISA.
(g) All group health plans (within the meaning of Section
5000(b)(1) of the Code) of Cardinal or Cardinal Services have at all times
fully complied in all material respects with, and have been maintained and
operated in all material respects in accordance with (i) the health care
requirements relating to portability, access, and renewability of Sections
9801 through 9803 of the Code and Part 7 of Title I, Subtitle B of ERISA,
(ii) the health care requirements relating to the benefits for mothers and
newborns under Section 9811 of the Code and Section 711 of ERISA, and (iii)
the health care requirements relating to the parity provisions applicable
to mental health benefits under Section 9812 of the Code and Section 712 of
ERISA.
(h) Except as set forth in Section 4.18 of the Cardinal
Disclosure Schedules, no employee or former employee, officer or director
of Cardinal or Cardinal Services is or will become entitled to receive any
award under Cardinal's discretionary or other bonus plans except for
amounts reflected on the Cardinal Financial Statements.
Section 4.19 TAXES.
(a) Except as set forth in Section 4.19 of the Cardinal
Disclosure Schedules, all Returns required to be filed by or on behalf of
Cardinal and Cardinal Services have been duly filed and such Returns
(including all attached statements and schedules) are true, complete and
correct in all material respects. All Taxes due have been paid in full on
a timely basis, and no other Taxes are payable by Cardinal or Cardinal
Services 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) Except as set forth in Section 4.19 of the Cardinal
Disclosure Schedules, each of Cardinal and Cardinal Services has withheld
and paid over all Taxes required to have been withheld and paid over
(including any estimated taxes and Taxes pursuant to Section 1441 or 1442
of the Code or similar provisions under any foreign laws), and has complied
in all material respects 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) Except as set forth in Section 4.19 of the Cardinal
Disclosure Schedules, there are no Liens on any of the assets of Cardinal
or Cardinal Services with respect to Taxes, other than Permitted Liens.
(d) Each of Cardinal and Cardinal Services has furnished or made
available to SESI true and complete copies of: (i) all federal and state
income and franchise tax returns of Cardinal and Cardinal Services for all
periods beginning on or after January 1, 1996, and (ii) all tax audit
reports, work papers, statements of deficiencies, closing or other
agreements received by Cardinal or Cardinal Services or on their behalf
relating to Taxes for all periods beginning on or after January 1, 1996.
(e) Except as disclosed in Section 4.19 of the Cardinal
Disclosure Schedules:
(i) The Returns of Cardinal and Cardinal Services have
never been audited by a Governmental Entity, nor is any such audit in
process, pending or, to the Knowledge of Cardinal, threatened (formally or
informally) except with respect to Returns where audits have been concluded
or for periods for which the applicable statutes of limitations have not
run.
(ii) No deficiencies exist or have been asserted (either in
writing or verbally, formally or informally) or, to the Knowledge of
Cardinal, are expected to be asserted with respect to Taxes of Cardinal or
Cardinal Services, and no notice (either formal or informal) has been
received by Cardinal or Cardinal Services that it has not filed a Return or
paid Taxes required to be filed or paid by it.
(iii) Neither Cardinal nor Cardinal Services is a party to
any pending Proceeding for assessment or collection of Taxes, nor has such
Proceeding been asserted or, to the Knowledge of Cardinal, threatened
(either formally or informally), against it or any of its assets.
(iv) Except as reflected in the Returns, no waiver or
extension of any statute of limitations is in effect with respect to Taxes
or Returns of Cardinal or Cardinal Services.
(v) There are no requests for rulings, subpoenas or
requests for information pending with respect to Cardinal or Cardinal
Services.
(vi) No power of attorney has been granted by Cardinal or
Cardinal Services with respect to any matter relating to Taxes.
(vii) The amount of liability for unpaid Taxes of Cardinal
or Cardinal Services 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 consolidated balance sheet of Cardinal as of
the Closing Date.
(f) Except as disclosed in Section 4.19 of the Cardinal
Disclosure Schedules:
(i) Neither Cardinal nor Cardinal Services has issued or
assumed any indebtedness that is subject to section 279(b) of the Code.
(ii) Neither Cardinal nor Cardinal Services has entered into
any compensatory agreements with respect to the performance of services
which payment thereunder would result in a nondeductible expense pursuant
to Section 280G or 162(m) of the Code or an excise tax to the recipient of
such payment pursuant to Section 4999 of the Code.
(iii) No election has been made under Section 338 of the
Code with respect to either Cardinal or Cardinal Services and no action has
been taken that would result in any income tax liability to either Cardinal
or Cardinal Services as a result of deemed election within the meaning of
Section 338 of the Code.
(iv) No consent under Section 341(f) of the Code has been
filed with respect to either Cardinal or Cardinal Services.
(v) Neither Cardinal nor Cardinal Services has agreed, nor
is it required, to make any adjustment under Code Section 481(a) by reason
of a change in accounting method or otherwise.
(vi) Neither Cardinal nor Cardinal Services has disposed of
any property that has been accounted for under the installment method.
(vii) Neither Cardinal nor Cardinal Services has made any of
the foregoing elections and is not required to apply any of the foregoing
rules under any comparable state or local income tax provisions.
(viii) Neither Cardinal nor Cardinal Services is a party to
any tax sharing or allocation agreement nor does either Cardinal or
Cardinal Services owe any amount under any tax sharing or allocation
agreement.
(ix) Neither Cardinal nor Cardinal Services has ever been
(or has any liability for unpaid Taxes because it once was) a member of an
affiliated group within the meaning of Section 1502 of the Code during any
part of any consolidated return year during any part of which year any
corporation other than Cardinal and Cardinal Services was also a member of
such affiliated group.
(g) Cardinal is not an investment company. For purposes of this
representation, the term "investment company" means a regulated investment
company, a real estate investment trust, or a corporation 50% or more of
the value of whose total assets are stock and securities and 80% or more of
the value of whose total assets are assets held for investment. In making
the 50% and the 80% determinations under the preceding sentence, stock and
securities in any subsidiary corporation will be disregarded and the parent
corporation will be deemed to own its ratable share of the subsidiary's
assets.
(h) Cardinal is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
Section 4.20 CUSTOMERS AND SUPPLIERS. Section 4.20 of the
Cardinal Disclosure Schedules sets forth a complete and correct list of all
customers whose purchases exceeded 5% of the aggregate net sales of
Cardinal Services for the fiscal year ended December 31, 1998.
Section 4.21 INSURANCE.
(a) Section 4.21 of the Cardinal Disclosure Schedules sets
forth a true and complete list of all policies of hull and machinery
insurance, increased value, protection and indemnity, title insurance,
liability and casualty insurance, property insurance, auto insurance,
business interruption insurance, tenant's insurance, workers' compensation,
life insurance, disability insurance, excess or umbrella insurance,
directors' and officers' liability insurance and any other type of
insurance insuring the properties, assets, employees or operations of
Cardinal Services (collectively the "Cardinal Policies"). Cardinal has
made available to SESI a true, complete and accurate copy of all Cardinal
Policies.
(b) All Cardinal Policies are in full force and effect except
where failures to have any Cardinal Policies in full force and effect would
not, in the aggregate, have a Material Adverse Effect on Cardinal.
(c) There is no claim by Cardinal or any other Person pending
under any of the Cardinal Policies as to which, to the Knowledge of
Cardinal, coverage has been denied or disputed by the underwriters or
issuers of such Cardinal Policies. Neither Cardinal Services nor Cardinal
has received any notice of default, and Cardinal Services is not in
default, under any provision of the Cardinal Policies where any such
defaults, in the aggregate, would have a Material Adverse Effect on
Cardinal.
(d) Cardinal has not since January 1, 1999 received any written
notice from or on behalf of any insurance carrier or other issuer issuing
such Cardinal Policies that insurance rates or other annual premiums or
fees in effect as of the date hereof will hereafter be materially
increased, that there will be a non-renewal, cancellation or increase in a
deductible (or a material increase in premiums in order to maintain an
existing deductible) of any of the Cardinal Policies in effect as of the
date hereof, or that material alteration of any equipment or any
improvements to any Vessel, the Cardinal Owned Properties or the Cardinal
Leased Properties, purchase of additional material equipment, or material
modification of any of the methods of doing business of Cardinal Services
will be required after the date hereof.
Section 4.22 SAFETY AND HEALTH. Except as set forth in Section
4.22 of the Cardinal Disclosure Schedules, to the Knowledge of Cardinal,
the property and assets of Cardinal Services have been and are being
operated in compliance in all respects 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, except for any violations or deficiency that would not
have a Material Adverse Effect on Cardinal. Neither Cardinal nor Cardinal
Services 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 Cardinal, no such
investigation or inquiry is planned or threatened, which, if adversely
determined would, individually or in the aggregate, have a Material Adverse
Effect on Cardinal.
Section 4.23 LABOR MATTERS.
(a) Set forth in Section 4.23 of the Cardinal Disclosure
Schedules is a list of all: (i) outstanding employment, consulting or
management agreements or contracts with officers, directors or employees of
Cardinal Services (other than those that are terminable on no more than 30
days notice) that provide for the payment of any bonus or commission; (ii)
agreements, policies or practices that require Cardinal Services to pay
termination or severance pay to salaried, non-exempt or hourly employees in
excess of 30 days' salary and benefits to any employee upon termination of
such employee's employment (other than as required by law); and (iii)
collective bargaining agreements or other labor union contracts applicable
to persons employed by Cardinal Services. Cardinal Services has made
available to SESI complete and correct copies of all such employment and
labor agreements. Except as set forth in Section 4.23 of the Cardinal
Disclosure Schedules, to the Knowledge of Cardinal, Cardinal Services has
not breached or otherwise failed to comply in any material respect with any
provisions of any employment or labor agreement, and there are no
grievances outstanding thereunder.
(b) Except as set forth in Section 4.23 of the Cardinal
Disclosure Schedules: (i) Cardinal Services is in compliance in all
material respects with all Applicable Laws relating to employment and
employment practices, wages, hours, and terms and conditions of employment;
(ii) there is no unfair labor practice charge or complaint against Cardinal
Services pending before any Governmental Entity; (iii) there is no labor
strike, material slowdown or material work stoppage or lockout actually
pending or, to the Knowledge of Cardinal, threatened, against or affecting
Cardinal Services; (iv) there is no representation claim or petition
pending before any Governmental Entity; (v) there are no charges with
respect to or relating to Cardinal Services pending before any Governmental
Entity responsible for the prevention of unlawful employment practices; and
(vi) Cardinal Services has not had formal notice from any Governmental
Entity responsible for the enforcement of labor or employment laws of an
intention to conduct an investigation of Cardinal Services and, to the
Knowledge of Cardinal, no such investigation is in progress.
Section 4.24 TRANSACTIONS WITH CERTAIN PERSONS. Except as set
forth in Sections 4.23 or 4.24 of the Cardinal Disclosure Schedules, no
director, officer or employee of either Cardinal, Cardinal Services or any
of their respective Affiliates is presently a party to any transaction with
Cardinal Services, including 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 its Affiliates.
Section 4.25 PROPRIETY OF PAST PAYMENTS. Except as set forth in
Section 4.25 of the Cardinal Disclosure Schedules, neither Cardinal nor
Cardinal Services nor any director, officer, employee or agent of Cardinal
or Cardinal Services has (a) used any funds for unlawful contributions,
gifts, entertainment or other unlawful payments or expenses relating to
political activity or (b) made any bribe, rebate, payoff, influence
payment, kick-back or other unlawful payment that is in violation of
Applicable Law.
Section 4.26 INTELLECTUAL PROPERTY. Cardinal Services 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 Cardinal Services. Cardinal Services is
in compliance with all such licenses and agreements except where any
noncompliance would not, in the aggregate, have a Material Adverse Effect
on Cardinal, and there are no pending or, to the Knowledge of Cardinal,
threatened Proceedings challenging or questioning the validity or
effectiveness of any license or agreement relating to such property or the
right of Cardinal Services to use, copy, modify or distribute the same.
Section 4.27 DIRECTOR AND OFFICER INDEMNIFICATION. The directors,
officers and employees of Cardinal and Cardinal Services are not entitled
to indemnification by either Cardinal or Cardinal Services, except to the
extent that indemnification rights are provided for generally by Applicable
Law or such corporation's charter, by-laws or directors' and officers'
liability insurance policies described in Section 4.21 of the Cardinal
Disclosure Schedules or in employment agreements described in Section 4.23
of the Cardinal Disclosure Schedules, and there are no pending claims for
indemnification by any such director, officer or employee.
Section 4.28 BROKERS' AND FINDERS' FEE. Except for Xxxxxxx &
Company International, no agent, broker, person or firm acting on behalf of
Cardinal or Cardinal Services or the Funds is or will be entitled to any
commission or brokers' or finders' fees payable by Cardinal or Cardinal
Services in connection with any of the transactions contemplated herein.
Section 4.29 NO OTHER REPRESENTATIONS OR WARRANTIES. There are no
representations or warranties, express or implied, made by or on behalf of
Cardinal, with respect to the assets of Cardinal and Cardinal Services,
except for the representations and warranties contained in this Agreement,
including, except as otherwise specifically provided for in this Agreement,
any representation or warranty with respect to the present condition of
Cardinal's and Cardinal Services' assets or the present or future
suitability thereof for any intended use by SESI. Cardinal and the Funds
make no representation or warranty except as expressly contained in this
Agreement (including the Cardinal Disclosure Schedules).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF XXXX
XXXX represents and warrants to Cardinal and the Funds as follows
(each of the representations and warranties made with respect to SESI,
unless stated to the contrary, includes all of SESI's Subsidiaries).
Section 5.1 ORGANIZATION; QUALIFICATION. Each of SESI and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the 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 SESI are pending.
Copies of the certificates of incorporation and by-laws of each of SESI and
Sub with all amendments to the date hereof, have been furnished to Cardinal
or its representatives, and such copies are accurate and complete as of the
date hereof. SESI has made available to Cardinal access to the minutes of
all meetings of its board of directors, any committees of such board and
stockholders (and all consents in lieu of such meetings). Such records,
minutes and consents accurately reflect in all material respects all
actions taken by the board of directors, committees and stockholders as of
the date hereof. Neither SESI nor Sub is in violation of any provision of
its certificate of incorporation or bylaws except for any such violations
that, in the aggregate, would not have a Material Adverse Effect on SESI.
Section 5.2 CAPITAL STOCK; SUBSIDIARIES.
(a) (i) As of the date of this Agreement, the authorized capital
stock of SESI consists of 40,000,000 shares of SESI Common Stock, of which
28,792,523 shares of SESI Common Stock are issued and outstanding and
474,500 shares are held in its treasury, and 5,000,000 shares of preferred
stock, $.01 par value per share, none of which are issued and outstanding
and none are held in its treasury. All issued and outstanding shares of
SESI Common Stock have been duly authorized and are validly issued, fully
paid and non-assessable.
(ii) Except as set forth in Section 5.2 of the SESI
Disclosure Schedules, there are no outstanding options or other rights to
acquire any shares of SESI Common Stock or any security convertible into
SESI Common Stock and SESI has no obligation or other commitment to issue,
sell or deliver any of the foregoing or any shares of SESI Common Stock.
Except as set forth in Section 5.2 of the SESI Disclosure Schedules, no
Person has any registration rights with respect to any of SESI's capital
stock.
(iii) All issued and outstanding shares of common stock of
SESI's Subsidiaries have been duly authorized and are validly issued, fully
paid and non-assessable. All outstanding capital stock of SESI's
Subsidiaries are held of record and beneficially by SESI.
(iv) All shares of SESI Common Stock to be issued pursuant
to this Agreement will be, when issued in exchange for shares of Cardinal
Common Stock upon consummation of the Merger, duly authorized, validly
issued, fully paid and non-assessable.
(b) (i) The authorized capital stock of Sub consists of 1,000
shares of common stock, all of which are issued and outstanding and none
are held in its treasury. All issued and outstanding shares of Sub common
stock have been duly authorized and are validly issued, fully paid and non-
assessable and held by SESI.
(ii) There are no outstanding options or other rights to
acquire any shares of Sub common stock or any security convertible into Sub
common stock and Sub has no obligation or other commitment to issue, sell
or deliver any of the foregoing or any shares of Sub common stock.
(iii) Sub was formed solely for the purpose of engaging in
the transactions contemplated hereby, has engaged in no other business
activities and has conducted its operations only as contemplated hereby.
(c) Section 5.2 of the SESI Disclosure Schedules contains a list
of all of SESI's Subsidiaries. Except for its Subsidiaries, SESI owns,
directly or indirectly, no interest in any other Person.
Section 5.3 CORPORATE AUTHORIZATION; ENFORCEABILITY.
(a) The execution, delivery and performance of this Agreement by
SESI has been duly authorized by the board of directors of SESI. Upon an
affirmative vote of the holders of a majority of the outstanding shares of
SESI Common Stock present or represented at the SESI Annual Meeting
approving this Agreement and the transactions contemplated hereby, no
further vote or consent of stockholders or directors of SESI and no further
corporate acts or other corporate proceedings are required of SESI for the
due and valid authorization, execution, delivery and performance of this
Agreement or the consummation of the Merger.
(b) This Agreement is, and the Stockholders' Agreement and the
Registration Rights Agreements when executed by SESI in accordance with the
terms hereof will be, the legal, valid and binding obligations of SESI
enforceable against it in accordance with their respective terms, except
that enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and equitable principles which may limit the availability
of certain equitable remedies in certain instances.
(c) The execution, delivery and performance of this Agreement by
Sub has been duly authorized by the board of directors of Sub and approved
by SESI as sole stockholder of Sub and no further vote or consent of
stockholders or directors of Sub and no further corporate acts or other
corporate proceedings are required of Sub for the due and valid
authorization, execution, delivery and performance of this Agreement or the
consummation of the Merger.
Section 5.4 NO CONFLICT. Except as set forth in Section 5.4 of
the SESI Disclosure Schedules, neither the execution, delivery or
performance of this Agreement, the Stockholders' Agreement or the
Registration Rights Agreements by SESI, nor the consummation of the
transactions contemplated hereby or thereby, will (a) if the requisite SESI
stockholder approval set forth in Section 5.39a) is obtained, conflict with
or result in any breach of the provisions of the certificate of
incorporation or by-laws of SESI, (b) result in the violation or breach of,
or constitute (with or without due notice or the lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, or any material license, contract,
agreement or other instrument or obligation to which SESI is a party or by
which its properties or assets may be bound, except for such violations,
breaches or defaults that would not, individually or in the aggregate, have
a Material Adverse Effect on SESI, or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to SESI or any
of its respective properties or assets, except for such violations that, in
the aggregate, would not have a Material Adverse Effect on SESI.
Section 5.5 CONSENTS. Except as set forth in Section 5.5 of the
SESI Disclosure Schedules, 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 SESI in connection with
the execution, delivery or performance by SESI of this Agreement or the
consummation by SESI of the transactions contemplated hereby except for (a)
those required by the HSR Act and (b) any filings required to be made under
the Securities Act (i) in connection with the Financing or (ii) in
compliance with the Registration Rights Agreements, (c) the requisite SESI
stockholder approval set forth in Section 5.3(a) and (d) such other
consents, approvals, orders, authorizations, declarations, filings or
registrations, the failure of which to obtain or make would not have, in
the aggregate, a Material Adverse Effect on SESI.
Section 5.6 SESI FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) The SESI Annual Financial Statements have been audited by
KPMG Peat Marwick, LLP, independent accountants, in accordance with
generally accepted auditing standards, have been prepared in accordance
with GAAP applied on a basis consistent with prior periods, and present
fairly the financial position of SESI at such dates and the results of
operations and cash flows for the periods then ended.
(b) The SESI Interim Financial Statements have been prepared in
accordance with GAAP on a basis consistent with the prior periods and
reflect all adjustments, consisting only of normal, recurring adjustments,
that are necessary for a fair statement of the results for the interim
period presented therein. Neither SESI nor any of its assets are subject
to any liability, commitment, debt or obligation that would be required to
be disclosed in financial statements prepared in accordance with GAAP,
except (i) as and to the extent reflected on the SESI Interim Financial
Statements, or (ii) as may have been incurred or may have arisen since the
date of the SESI Interim Financial Statements in the ordinary course of
business and that are permitted by this Agreement, or, in the aggregate,
would not have a Material Adverse Effect on SESI.
Section 5.7 ACCOUNTS RECEIVABLE. All of the accounts receivable
reflected on the SESI Interim Financial Statements or created thereafter
(a) have arisen only from bona fide transactions in the ordinary course of
business, (b) represent valid obligations owing to SESI, (c) except as may
be reserved against in the SESI Interim Financial Statements, are subject
to no valid material counterclaims or setoffs, and (d) have been accrued in
accordance with GAAP. Section 5.7 of the SESI Disclosure Schedules sets
forth a summary listing of all accounts receivable of SESI as of the date
specified therein and reflects receivables aged less than 90 days from the
date of invoice as a group and sets forth all receivables aged more than 90
days individually by customer, invoice and amount. No representation or
warranty is made that any account receivable will be collected when due or
thereafter.
Section 5.8 ABSENCE OF CERTAIN CHANGES.
(a) Since February 28, 1999, SESI has operated in the ordinary
course of business consistent with past practice and 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 SESI.
(b) Since February 28, 1999, SESI has not taken any actions of
a type referred to in Section 6.10 that would have required the consent of
Cardinal if such action were to have been taken during the period between
the date hereof and the Closing Date.
Section 5.9 MATERIAL CONTRACTS.
(a) Section 5.9 of the SESI Disclosure Schedules contains a list
and brief description (including the names of the parties and the date and
nature of the agreement) of each Material Contract to which SESI is a party
or to which any of its properties is subject. Cardinal has been provided a
complete and accurate copy of each Material Contract listed on Section 5.9
of the SESI Disclosure Schedules. Each such Material Contract is a legal,
valid, binding and enforceable obligation of SESI except to the extent that
enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the enforcement
of creditors' rights generally and (ii) general equitable principles.
(b) Except as set forth in Section 5.9 of the SESI Disclosure
Schedules, SESI is not in material breach of or default (and, to the
Knowledge of SESI, no event has occurred which, with due notice or lapse of
time or both, would constitute such a breach or default) under any Material
Contract except where any such breaches or defaults, in the aggregate,
would not have a Material Adverse Effect on SESI, and no party to any
Material Contract has given SESI written notice of or made a claim in
writing with respect to any breach or default under any such Material
Contract.
Section 5.10 CITIZENSHIP. SESI is "a citizen of the United
States" within the meaning of Section 2 of the Shipping Act of 1916, as
amended, and is qualified to own and operate vessels in the coastwise
trade.
Section 5.11 REAL PROPERTY.
(a) Section 5.11 of the SESI Disclosure Schedules sets forth a
true and complete list of all real property owned in fee simple title by
SESI (collectively, the "SESI Owned Properties"). SESI has good and
marketable title to all SESI Owned Properties. None of the SESI Owned
Properties is subject to any Liens, except for (i) Liens that collateralize
indebtedness that is reflected in the SESI Interim Financial Statements and
(ii) Permitted Liens.
(b) Except as set forth in Section 5.11 of the SESI Disclosure
Schedules, all improvements on the SESI Owned Properties and the operations
therein conducted conform in all material respects to all applicable
health, fire, safety, zoning and building laws, ordinances and
administrative regulations, except for possible nonconforming uses or
violations which do not materially interfere with the present use,
operation or maintenance thereof or access thereto by SESI, and,
individually or in the aggregate, would not otherwise have a Material
Adverse Effect on SESI. The operating condition and state of repair of all
buildings, structures, improvements and fixtures on the SESI Owned
Properties are sufficient to permit the use and operation of all such
buildings, structures, improvements and fixtures as now used or operated by
SESI except where the failure to be in such condition would not have a
Material Adverse Effect on SESI.
Section 5.12 REAL PROPERTY LEASES.
(a) Section 5.12 of the SESI Disclosure Schedules sets forth a
list of all Leases with respect to all real properties in which SESI has a
leasehold, subleasehold, or other occupancy interest (the "SESI Leased
Properties"). Complete and accurate copies of all such Leases and all
amendments thereto have been provided to Cardinal. Except as set forth in
Section 5.12 of the SESI Disclosure Schedules, all of the Leases for the
SESI Leased Properties are valid and effective against SESI in accordance
with their respective terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles.
(b) SESI has not received written notice that it is in material
breach of or default (and, to SESI's Knowledge, no event has occurred,
that, with due notice or lapse of time or both, would constitute such a
breach or default) under any Lease.
(c) Except as set forth in Section 5.12 of the SESI Disclosure
Schedules, no SESI Leased Property is subject to any material sublease,
license or other agreement granting to any Person any right to the use,
occupancy or enjoyment of Leased Property or any portion thereof through
SESI.
Section 5.13 PERSONAL PROPERTY.
(a) Except as set forth in Section 5.13 of the SESI Disclosure
Schedules, SESI has good title to all Personal Property owned by SESI, free
and clear of all Liens other than (i) Liens that collateralize indebtedness
that is reflected in the SESI Interim Financial Statements and (ii)
Permitted Liens.
(b) Except as set forth in Section 5.13 of the SESI Disclosure
Schedules, SESI holds valid leaseholds in all of the Personal Property
leased by it, which leases are enforceable against SESI in accordance with
their respective terms, except that the enforcement thereof may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally,
and (ii) general equitable principles.
(c) Except as set forth in Section 5.13 of the SESI Disclosure
Schedules, SESI is not in breach of or default (and no event has occurred
that, with due notice or lapse of time or both, would constitute such a
lapse or default) under any lease of any item of Personal Property leased
by it, except for any such breach or default that would not, individually
or in the aggregate, have a Material Adverse Effect on SESI.
(d) Except as set forth in Section 5.13 of the SESI Disclosure
Schedules, the Personal Property now owned, leased or used by SESI is
sufficient and adequate to carry on its business as presently conducted and
the operating condition and the state of repair thereof is sufficient to
permit SESI to carry on its business as presently conducted except where
the failure to be in such condition would not have a Material Adverse
Effect on SESI.
Section 5.14 COMPLIANCE WITH LAWS. Except as set forth in
Sections 5.14, 5.17, 5.22 or 5.23 of the SESI Disclosure Schedules, SESI is
not in violation of any Applicable Law, nor is it in default with respect
to any order, writ, judgment, award, injunction or other decree of any
Governmental Entity applicable to it or any of its respective assets,
properties or operations except such violations or defaults that, in the
aggregate, would not have a Material Adverse Effect on SESI.
Section 5.15 PERMITS. Except as set forth in Sections 5.15 or
5.17 of the SESI Disclosure Schedules, SESI has all permits, licenses and
governmental authorizations that are required for the lease, ownership,
occupancy or operation of its properties and assets and the carrying on of
its business, except where the failure to have any such permits, licenses
or authorizations would not, in the aggregate, have a Material Adverse
Effect on SESI.
Section 5.16 LITIGATION.
(a) Except as set forth in Section 5.16 of the SESI Disclosure
Schedules, there are no Proceedings pending or, to the Knowledge of the
SESI, threatened, against SESI (i) for which an indemnification claim has
been asserted, (ii) that could reasonably be expected to have a Material
Adverse Effect on SESI or (iii) that seeks to prohibit or restrict
consummation of the transactions contemplated by this Agreement.
(b) Except as set forth in Section 5.16 of the SESI Disclosure
Schedules, neither SESI nor any of its assets or properties is subject to
any material order, writ, judgment, award, injunction or decree of any
Governmental Entity.
Section 5.17 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth in Section 5.17 of the SESI Disclosure
Schedules, to the Knowledge of SESI, SESI possesses all licenses, permits
and other approvals and authorizations that are required under, and at all
times for the past two years has been in compliance with, all Environmental
Laws, including all Environmental Laws governing the generation, use,
collection, treatment, storage, transportation, recover, removal, discharge
or disposal of hazardous substances or wastes and all Environmental Laws
imposing record-keeping, maintenance, testing, inspection, notification and
reporting requirements with respect to hazardous substances or wastes
except where noncompliance would not, individually or in the aggregate,
have a Material Adverse Effect on SESI, and, to the Knowledge of SESI,
there is no condition that would materially interfere with compliance in
the future.
(b) Except as set forth in Section 5.17 of the SESI Disclosure
Schedules, for the past two years SESI has not been subject to any
Proceeding pursuant to, nor has it received any notice of any violation of,
or claim alleging liability under, any Environmental Laws. To the
Knowledge of SESI, no facts or circumstances exist that would reasonably
be likely to result in a claim, citation or allegation against SESI for a
violation of, or alleging liability under any Environmental Laws, except
such violations or liabilities that would not, individually or in the
aggregate, have a Material Adverse Effect on SESI.
(c) Except as set forth in Section 5.17 of the SESI Disclosure
Schedules, to the Knowledge of SESI, there are no underground tanks of any
type (including tanks storing gasoline, diesel fuel, oil or other petroleum
products) or disposal sites for hazardous substances, hazardous wastes or
any other regulated waste, located on or under the SESI Owned Properties or
SESI Leased Properties.
(d) Except as set forth in Section 5.17 of the SESI Disclosure
Schedules, to the Knowledge of SESI, except in the ordinary course of
business, and in all cases in material compliance with all Environmental
Laws, SESI has not engaged any third party to handle, transport or dispose
of hazardous substances or wastes (including for this purpose, gasoline,
diesel fuel, oil or other petroleum products, or bilge waste) on its
behalf.
Section 5.18 ERISA AND RELATED MATTERS.
(a) Section 5.18 of the SESI Disclosure Schedules provides a
list of each of the following which SESI or any corporation, trade,
business or entity under common control with SESI within the meaning of
section 414(b), (c), (m) or (o) of the Code sponsors, maintains or
contributes to, or has contingent liability with respect thereto for the
benefit of its current or former employees, officers or directors as of the
Closing Date:
(i) each Employee Plan; and
(ii) each personnel policy, stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan or
arrangement, vacation policy, severance pay plan, policy or agreement,
deferred compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment agreement
and each other employee benefit plan, agreement, arrangement, program,
practice or understanding that is not described in Section 5.18(a)(i)
("SESI Benefit Program or Agreement").
True and complete copies of each of the Employee Plans, SESI
Benefit Programs or Agreements, current summary plan descriptions, related
trusts, if applicable, and all amendments thereto, have been or on request
will be furnished to Cardinal. Further, a copy of the most recent annual
report, if applicable, for each Employee Plan, SESI Benefit Program or
Agreement and all material communications received from or sent to the
Internal Revenue Service or the Department of Labor in the last two years
regarding any Employee Plan, SESI Benefit Program or Agreement will be
provided to Cardinal upon request.
(b) Benefits under any Employee Plan or SESI Benefit Program or
Agreement 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. SESI has not communicated to any employee or former
employee any intention or commitment to modify any Employee Plan or SESI
Benefit Program or Agreement or to establish or implement any other
employee or retiree benefit or compensation arrangement.
(c) Neither SESI nor any trade or business under common control
with SESI within the meaning of Section 414(b) or (c) of the Code prior to
the Closing Date maintains or has never maintained or become obligated to
contribute to any employee benefit plan (i) that is subject to Title IV of
ERISA, (ii) to which Section 412 of the Code applies, (iii) that is a
Multiemployer Plan, or (iv) in connection with any trust described in
Section 501(c)(9) of the Code. SESI has not within the last five years
engaged in, and is not a successor corporation to an entity that has
engaged in, a transaction described in Section 4069 of ERISA.
(d) Except as otherwise set forth in Section 5.18 of the SESI
Disclosure Schedules:
(i) each Employee Plan and each SESI Benefit Program or
Agreement has been administered, maintained and operated in all material
respects in accordance with the terms thereof and in compliance with its
governing documents and Applicable Law (including where applicable, ERISA
and the Code);
(ii) each of the Employee Plans intended to be qualified
under section 401 of the Code (A) satisfies in form the requirements of
such section except to the extent amendments are not required by law to be
made until a date after the Closing Date, (B) has received a favorable
determination letter from the Internal Revenue Service regarding such
qualified status, (C) has not, since receipt of the most recent favorable
determination letter, been amended, and (D) has not been operated in a way
that would adversely affect its qualified status;
(iii) no act, omission or transaction has occurred which
would result in the imposition on SESI of a breach of fiduciary duty
liability or damages under Section 409 of ERISA, a civil penalty assessed
pursuant to Subsections (c), (i) or (l) of Section 502 of ERISA or a Tax
imposed pursuant to Chapter 43 of Subtitle D of the Code;
(iv) neither SESI nor any of its directors, officers or
employees has engaged in any transaction with respect to an Employee Plan
that could subject SESI to a Tax, penalty or liability for a prohibited
transaction, as defined in Section 406 of ERISA or Section 4975 of the
Code. None of the assets of any Employee Plan are invested in employer
securities or employer real property.
(v) full payment has been made of all amounts which SESI is
or has been required to have paid as contributions to or benefits due under
any Employee Plan or SESI Benefit Program or Agreement under Applicable Law
or under the terms of any such plan or any arrangement; and
(vi) there is no Proceeding or other dispute pending or, to
the Knowledge of SESI, threatened that involves any Employee Plan or SESI
Benefit Program or Agreement that could reasonably be expected to result in
a material liability to SESI.
(e) In connection with the consummation of the transactions
contemplated in this Agreement, no employee or former employee of SESI will
become entitled to any bonus, retirement, severance, job security or
similar benefit or enhanced benefit (including acceleration of an award,
vesting or exercise of an incentive award) or any fee or payment of any
kind solely as a result of any of the transactions contemplated hereby, and
no such disclosed payment constitutes a parachute payment described in
Section 280G of the Code.
(f) All group health plans of SESI have at all times fully
complied in all material respects with all applicable notification and
continuation of coverage requirements of Section 4980B(f) of the Code and
Section 601 of ERISA. SESI does not have any current or projected
liability in respect of post-retirement or post-employment welfare benefits
for retired, current or former employees, or for any stockholder or
director who is not an employee, former employee or beneficiary thereof,
except to the extent otherwise required by the continuation requirements of
Section 4980B(f) of the Code and Section 601 of ERISA.
(g) All group health plans (within the meaning of Section
5000(b)(1) of the Code) of SESI have at all times fully complied in all
material respects with, and have been maintained and operated in all
material respects in accordance with (i) the health care requirements
relating to portability, access, and renewability requirements of Sections
9801 through 9803 of the Code and Part 7 of Title I, Subtitle B of ERISA,
(ii) the health care requirements relating to the benefits for mothers and
newborns under Section 9811 of the Code and Section 711 of ERISA, and (iii)
the health care requirements relating to the parity provisions applicable
to mental health benefits under Section 9812 of the Code and Section 712 of
ERISA.
(h) No employee or former employee, officer or director of SESI
is or will become entitled to receive any award under SESI's discretionary
or other bonus plans except for amounts reflected on the SESI Financial
Statements.
Section 5.19 TAXES.
(a) Except as set forth in Section 5.19 of the SESI Disclosure
Schedules, all Returns required to be filed by or on behalf of SESI have
been duly filed and such Returns (including all attached statements and
schedules) are true, complete and correct in all material respects. All
Taxes due have been paid in full on a timely basis, and no other Taxes are
payable by SESI 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) Except as set forth in Section 5.19 of the SESI Disclosure
Schedules, SESI has withheld and paid over all Taxes required to have been
withheld and paid over (including any estimated taxes and Taxes pursuant to
Section 1441 or 1442 of the Code or similar provisions under any foreign
law), and has complied in all material respects 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) Except as set forth in Section 5.19 of the SESI Disclosure
Schedules, there are no Liens on any of the assets of SESI with respect to
Taxes, other than Permitted Liens.
(d) SESI has furnished or made available to Cardinal true and
complete copies of: (i) all federal and state income and franchise tax
returns of SESI for all periods beginning on or after January 1, 1996, and
(ii) all tax audit reports, work papers, statements of deficiencies,
closing or other agreements received by SESI or on its behalf relating to
Taxes for all periods beginning on or after January 1, 1996.
(e) Except as disclosed in Section 5.19 of the SESI Disclosure
Schedules:
(i) The Returns of SESI have never been audited by a
Governmental Entity, nor is any such audit in process, pending or, to the
Knowledge of the SESI, threatened (formally or informally) except with
respect to Returns where audits have been concluded or for Periods for
which the applicable statutes of limitations have not run.
(ii) No deficiencies exist or have been asserted (either in
writing or verbally, formally or informally) or, to the Knowledge of SESI,
are expected to be asserted with respect to Taxes of SESI and no notice
(either formal or informal) has been received by SESI that it has not filed
a Return or paid Taxes required to be filed or paid by it.
(iii) SESI is not a party to any pending Proceeding for
assessment or collection of Taxes, nor has such Proceeding been asserted
or, to the Knowledge of the SESI, threatened (either formally or
informally), against it or any of its assets.
(iv) Except as reflected in the Returns, no waiver or
extension of any statute of limitations is in effect with respect to Taxes
or Returns of SESI.
(v) There are no requests for rulings, subpoenas or
requests for information pending with respect to SESI.
(vi) No power of attorney has been granted by SESI with
respect to any matter relating to Taxes.
(vii) The amount of liability for unpaid Taxes of SESI 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 consolidated balance sheet of SESI as of the Closing Date.
(f) Except as disclosed in Section 5.19 of the SESI Disclosure
Schedules:
(i) SESI has not issued or assumed any indebtedness that is
subject to section 279(b) of the Code.
(ii) SESI has not entered into any compensatory agreements
with respect to the performance of services which payment thereunder would
result in a nondeductible expense pursuant to Section 280G or 162(m) of the
Code or an excise tax to the recipient of such payment pursuant to Section
4999 of the Code.
(iii) No election has been made under Section 338 of the
Code with respect to SESI and no action has been taken that would result in
any income tax liability to either SESI as a result of deemed election
within the meaning of Section 338 of the Code.
(iv) No consent under Section 341(f) of the Code has been
filed with respect to SESI.
(v) SESI has not agreed, nor is it required, to make any
adjustment under Code Section 481(a) by reason of a change in accounting
method or otherwise.
(vi) SESI has not disposed of any property that has been
accounted for under the installment method.
(vii) SESI has not made any of the foregoing elections and
is not required to apply any of the foregoing rules under any comparable
state or local income tax provisions.
(viii) SESI is not a party to any tax sharing or allocation
agreement nor does SESI owe any amount under any tax sharing or allocation
agreement.
(ix) SESI has never been (nor has any liability for unpaid
Taxes because it once was) a member of an affiliated group within the
meaning of Section 1502 of the Code during any part of any consolidated
return year during any part of which year any corporation other than SESI
was also a member of such affiliated group.
(g) SESI is not an investment company. For purposes of this
representation, the term "investment company" means a regulated investment
company, a real estate investment trust, or a corporation 50% or more of
the value of whose total assets are stock and securities and 80% or more of
the value of whose total assets are assets held for investment. In making
the 50% and the 80% determinations under the preceding sentence, stock and
securities in any subsidiary corporation will be disregarded and the parent
corporation will be deemed to own its ratable share of the subsidiary's
assets.
(h) SESI is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
Section 5.20 CUSTOMERS AND SUPPLIERS. Section 5.20 of the SESI
Disclosure Schedules sets forth a complete and correct list of all
customers whose purchases exceeded 5% of the aggregate net sales of SESI
for the fiscal year ended December 31, 1998.
Section 5.21 INSURANCE.
(a) Section 5.21 of the SESI Disclosure Schedules sets forth a
true and complete list of all policies of machinery insurance, increased
value, protection and indemnity, title insurance, liability and casualty
insurance, property insurance, auto insurance, business interruption
insurance, tenant's insurance, workers' compensation, life insurance,
disability insurance, excess or umbrella insurance, directors' and
officers' liability insurance and any other type of insurance insuring the
properties, assets, employees or operations of SESI (collectively the "SESI
Policies"). SESI has made available to Cardinal a true, complete and
accurate copy of all SESI Policies.
(b) All SESI Policies are in full force and effect except where
failures to have any SESI Policies in full force and effect would not in
the aggregate, have a Material Adverse Effect on SESI.
(c) Except as described in Section 5.21 of the SESI Disclosure
Schedules, there is no claim by SESI or any other Person pending under any
of the SESI Policies as to which coverage has been denied or disputed by
the underwriters or issuers of such SESI Policies. SESI has not received
any notice of default, and is not in default, under any provision of the
SESI Policies.
(d) SESI has not since January 1, 1999 received any written
notice from or on behalf of any insurance carrier or other issuer issuing
such SESI Policies that insurance rates or other annual premiums or fees in
effect as of the date hereof will hereafter be materially increased, that
there will be a non-renewal, cancellation or increase in a deductible (or a
material increase in premiums in order to maintain an existing deductible)
of any of the SESI Policies in effect as of the date hereof, or that
material alteration of any equipment or any improvements to the SESI Owned
Properties or the SESI Leased Properties, purchase of additional material
equipment, or material modification of any of the methods of doing business
of SESI will be required after the date hereof.
Section 5.22 SAFETY AND HEALTH. To the Knowledge of SESI, the
property and assets of SESI have been and are being operated in compliance
in all respects 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, except for
any violations or deficiency that would not have a Material Adverse Effect
on SESI. SESI has not received any written notice of any violations,
deficiency, investigation or inquiry from any Governmental Entity, employer
or third party under any such law and, to the Knowledge of SESI, no such
investigation or inquiry is planned or threatened, which, if adversely
determined would, individually or in the aggregate, have a Material Adverse
Effect on SESI.
Section 5.23 LABOR MATTERS.
(a) Set forth in Section 5.23 of the SESI Disclosure Schedules
is a list of all: (i) outstanding employment, consulting or management
agreements or contracts with officers, directors or employees of SESI
(other than those that are terminable on no more than 30 days notice) that
provide for the payment of any bonus or commission; (ii) agreements,
policies or practices that require SESI to pay termination or severance pay
to salaried, non-exempt or hourly employees in excess of 30 days' salary
and benefits to any employee upon termination of such employee's employment
(other than as required by law); and (iii) collective bargaining agreements
or other labor union contracts applicable to persons employed by SESI.
SESI has made available to Cardinal complete and correct copies of all such
employment and labor agreements. SESI has not breached or otherwise failed
to comply in any material respect with any provisions of any employment or
labor agreement, and there are no grievances outstanding thereunder.
(b) Except as set forth in Section 5.23 of the SESI Disclosure
Schedules: (i) SESI is in compliance in all material respects with all
Applicable Laws relating to employment and employment practices, wages,
hours, and terms and conditions of employment; (ii) there is no unfair
labor practice charge or complaint against SESI pending before any
Governmental Entity; (iii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or, to the Knowledge of
SESI threatened, against or affecting SESI; (iv) there is no representation
claim or petition pending before any Governmental Entity; (v) there are no
charges with respect to or relating to SESI pending before any Governmental
Entity responsible for the prevention of unlawful employment practices; and
(vi) SESI has not had formal notice from any Governmental Entity
responsible for the enforcement of labor or employment laws of an intention
to conduct an investigation of SESI and, to the Knowledge of SESI, no such
investigation is in progress.
Section 5.24 TRANSACTIONS WITH CERTAIN PERSONS. Except as set
forth in Section 5.24 of the Disclosure Schedules, no director, officer or
employee of SESI or any of its respective Affiliates is presently a party
to any transaction with SESI, including 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 its
Affiliates.
Section 5.25 PROPRIETY OF PAST PAYMENTS. Neither SESI or any of
its Subsidiaries nor any director, officer, employee or agent of SESI or
any of its Subsidiaries has (a) used any funds for unlawful contributions,
gifts, entertainment or other unlawful payments or expenses relating to
political activity or (b) made any bribe, rebate, payoff, influence
payment, kick-back or other unlawful payment that is in violation of
Applicable Law.
Section 5.26 INTELLECTUAL PROPERTY. SESI 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 SESI. SESI is in compliance with all such licenses
and agreements except where any noncompliance would not, in the aggregate,
have a Material Adverse Effect on SESI and there are no pending or, to the
Knowledge of SESI, threatened Proceedings challenging or questioning the
validity or effectiveness of any license or agreement relating to such
property or the right of SESI to use, copy, modify or distribute the same.
Section 5.27 DIRECTOR AND OFFICER INDEMNIFICATION. The directors,
officers and employees of SESI are not entitled to indemnification by SESI
except to the extent that indemnification rights are provided for generally
by Applicable Law or SESI's charter, by-laws or directors' and officers'
liability insurance policies as described in Section 5.21 of the SESI
Disclosure Schedules or in employment agreements described in Section 5.23
of the SESI Disclosure Schedules, and there are no pending claims for
indemnification by any such director, officer or employee.
Section 5.28 BROKERS' AND FINDERS' FEE. Except for the firm of
Xxxxxxx Xxxx & Company LLC, no agent, broker, person or firm acting on
behalf of SESI is or will be entitled to any commission or brokers' or
finders' fees payable by SESI in connection with any of the transactions
contemplated herein.
Section 5.29 COMMISSION FILINGS: FINANCIAL STATEMENTS. SESI has
timely filed all reports, registration statements and other filings,
together with any amendments required to be made with respect thereto, that
it has been required to file with the SEC under the Securities Act and the
Exchange Act. All reports, registration statements and other filings
(including all notes, exhibits and schedules thereto and documents
incorporated by reference therein) filed by SESI with the SEC since January
1, 1997 through the date of this Agreement, together with any amendments
thereto, are sometimes collectively referred to as the "SESI Commission
Filings." As of the respective dates of their filing with the Commission,
the SESI Commission Filings complied in all material respects with the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the SEC thereunder, and did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 5.30 TAKEOVER LAWS. The Board of Directors of Superior has
taken all action required to be taken by it in order to exempt this
Agreement, and the transactions contemplated hereby from, and this
Agreement and the transactions contemplated hereby are exempt from, the
requirements of any "moratorium," "control share," "fair price," "affiliate
transaction," "business combination" or other antitakeover laws and
regulations of any state, including, without limitation, the State of
Delaware, and including, without limitation, Section 203 of the DGCL and as
a result, any requirements of such antitakeover laws and regulations are
inapplicable to this Agreement and the transactions contemplated by this
Agreement.
Section 5.31 NO OTHER REPRESENTATIONS OR WARRANTIES. There are no
representations or warranties, express or implied, made by or on behalf of
SESI with respect to the assets of SESI except for the representations and
warranties contained in this Agreement, including, except as otherwise
specifically provided for in this Agreement, any representation or warranty
with respect to the present condition of SESI's assets or the present or
future suitability thereof for any intended use by SESI. SESI makes no
representation or warranty except as expressly contained in this Agreement
(including the SESI Disclosure Schedules).
ARTICLE 6
COVENANTS
Section 6.1 LEGAL REQUIREMENTS. Subject to the conditions set
forth in Section 7 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. Without limiting the preceding sentence, each of SESI, Cardinal and
the Funds agrees to take all reasonable actions necessary to (a) obtain,
and 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 of any action contemplated by this Agreement, including, without
limitation, preparation of any registration statement under the Securities
Act that may be filed in connection with the Financing, and (b) effect the
Merger at the earliest possible date.
Section 6.2 STOCKHOLDER APPROVALS.
(a) As soon as practicable following the date of this Agreement,
SESI shall convene an annual meeting of its stockholders (the "SESI Annual
Meeting") for the purposes of: (i) approving the adoption of this
Agreement, (ii) approving the amendment of SESI's certificate of
incorporation to (A) increase the number of authorized shares of SESI
Common Stock to 125 million shares and (B) impose limits on ownership of
SESI Common Stock by non-U.S. citizens as required by Section 2 of the
Shipping Act of 1916, as amended (the "Charter Amendment"), (iii) approving
the SESI Stock Incentive Plan, and (iv) electing the slate of directors as
shall have been nominated pursuant to the procedures described in Section
6.2(b) hereof to the Board of Directors of SESI. Subject to the terms and
conditions of Section 6.13, the Board of Directors of SESI shall (i)
recommend at such SESI Annual Meeting that the stockholders of SESI adopt
and approve all such matters; (ii) use its reasonable efforts to solicit
from the stockholders of SESI proxies in favor of such adoption and
approval; and (iii) take all other actions reasonably necessary to secure a
vote of its stockholders in favor of adoption and approval of all such
other matters. SESI shall give notice to Cardinal and the Funds by
facsimile transmission of the outcome of the vote of its stockholders no
later than the end of business on the day of the SESI Annual Meeting.
(b) Prior to the SESI Annual Meeting, the Board of Directors of
SESI shall nominate a slate of directors to be elected at the SESI Annual
Meeting which shall consist of (i) two individuals designated by SESI, one
of whom shall be the Chief Executive Officer of SESI, (ii) two individuals
designated by Cardinal, and (iii) two individuals who shall be independent
of both SESI and Cardinal and who shall be designated by Cardinal. If at
any time prior to the Effective Time any individual who is nominated
pursuant to the provisions hereof shall be unable or unwilling to serve as
a director at the Effective Time, the party that designated such individual
as provided herein shall designate a replacement for such individual.
(c) As soon as practicable after the date of this Agreement,
Cardinal shall submit this Agreement for approval by the Cardinal
Stockholders at either a special meeting of stockholders or by written
consent in lieu of a meeting. Subject to the terms and conditions of
Section 6.12 hereof, the Board of Directors of Cardinal shall recommend
that the Cardinal Stockholders approve the adoption of this Agreement and
take all other actions reasonably necessary to secure a vote of the
Cardinal Stockholders in favor of adoption of this Agreement. Cardinal
shall give notice to SESI by facsimile transmission of the outcome of the
vote of the Cardinal Stockholders, no later than the end of business on the
day the special meeting is held or the consent is executed.
(d) In connection with the stockholder approvals provided for
herein, each party agrees to cooperate with the other and take all actions
reasonably necessary or appropriate to obtain such approvals.
(e) In the event the SESI stockholders approve the SESI Stock
Incentive Plan and the Charter Amendment at the SESI Annual Meeting, SESI
shall adopt the SESI Stock Incentive Plan and shall cause the Charter
Amendment to be effected in accordance with the DGCL.
Section 6.3 PROXY STATEMENT.
(a) As soon as practicable after the date of this Agreement,
SESI shall prepare and file with the Commission under the Exchange Act, and
shall use its reasonable efforts to have cleared by the Commission, a proxy
statement with respect to the SESI Annual Meeting (the "Proxy Statement").
SESI shall cause the Proxy Statement (except with respect to information
concerning Cardinal and Cardinal Services furnished in writing by or on
behalf of Cardinal specifically for use therein, for which information
Cardinal shall be responsible) to comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations adopted thereunder, and the Proxy Statement (except with
respect to the information concerning Cardinal furnished in writing by or
on behalf of Cardinal specifically for use therein, for which information
Cardinal shall be responsible) to not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein necessary to make the statements therein not misleading. SESI will
advise Cardinal promptly in writing if prior to the Closing Date it shall
obtain Knowledge of any facts that would make it necessary to amend or
supplement the Proxy Statement in order to make the statements therein not
misleading or to comply with Applicable Law.
(b) In connection with the Proxy Statement, Cardinal shall
cooperate in good faith and take all actions reasonably necessary or
appropriate, including providing necessary information with respect to
Cardinal, to assist SESI in preparing the Proxy Statement.
(c) None of the information to be supplied by Cardinal for
inclusion in the Proxy Statement will, (i) at the time the Proxy Statement
is filed, (ii) at the time the Proxy Statement, or any amendment or
supplement thereto, is first mailed to the stockholders of SESI, or (iii)
at the time such stockholders vote on approval and adoption of this
Agreement, contain any untrue statement of a material fact or omit to state
any material fact required to be made therein or necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading.
Section 6.4 EQUITY CONTRIBUTION TO CARDINAL.
(a) In March 1999, Cardinal completed an offering of $5 million
of equity to the current holders of Cardinal Common Stock and Cardinal
Preferred Stock (the "March Contribution"). Between the date hereof and
the Closing Date, Cardinal shall complete an offering (or offerings) of an
aggregate of $45 million of equity to the current holders of Cardinal
Common Stock and Cardinal Preferred Stock or other institutional investors
on a private placement basis (the "Equity Contribution"), all of the net
proceeds of which Equity Contribution and March Contribution shall be used
to reduce Cardinal's indebtedness at Closing, and Section 3.1 of the
Cardinal Disclosure Schedules shall be amended accordingly to reflect the
results of such Equity Contribution. Prior to Cardinal's accepting the
Equity Contribution, Cardinal and the Funds shall notify SESI of the terms
and conditions of the proposed Equity Contribution, and Cardinal shall not
accept such Equity Contribution unless its terms and conditions are
reasonably acceptable to SESI.
(b) In connection with the Equity Contribution SESI shall
cooperate in good faith and take all actions reasonably necessary or
appropriate, including providing necessary information with respect to
SESI, to assist Cardinal in completing the offering in connection with the
Equity Contribution, including (i) providing prompt assistance in the
preparation of an offering or information memorandum and other materials
for the Equity Contribution, (ii) providing all information about SESI
reasonably deemed necessary by Cardinal to complete the Equity
Contribution, (iii) assisting the participants in the Equity Contribution
in connection with their confirmation of the accuracy and completeness of
the materials and information referenced in clauses (i) and (ii) above, and
(iv) causing SESI's senior management to participate in meetings and
conference calls with potential participants in the Equity Contribution at
such times and places as Cardinal may reasonably request.
Section 6.5 FINANCING.
(a) Prior to the Closing, SESI shall obtain a new credit
facility, which may be in the form of an offering of senior notes, or
secured or unsecured bank debt, or any other form reasonably satisfactory
to Cardinal and the Funds, containing usual and customary covenants, and on
terms that are mutually agreed upon by SESI and Cardinal, in a principal
amount (the "Financing") that will produce proceeds sufficient to repay or
refinance the indebtedness referred to in Section 6.6 hereof.
(b) Cardinal and Cardinal Services agree to provide, and will
cause their respective officers, employees and advisors to provide, all
reasonable cooperation in connection with the arrangement of the Financing,
including (i) providing prompt assistance in the preparation of any
offering or information memorandum and other offering materials for the
Financing, (ii) providing all information reasonably deemed necessary by
any syndication agent to complete the Financing, (iii) assisting the
providers of the Financing in connection with their confirmation of the
accuracy and completeness of the materials and information referenced in
clauses (i), (ii) above, and (iv) causing Cardinal's and Cardinal Services'
senior management to participate in meetings and conference calls with
potential participants in the Financing at such times and places as any
syndication agent for the Financing may reasonably request.
Section 6.6 REPAYMENT OF CERTAIN INDEBTEDNESS. Prior to the
Closing, SESI shall either repay or refinance all outstanding indebtedness
(together with any applicable premium) of Cardinal and Cardinal Services
specified in Section 6.6 of the Cardinal Disclosure Schedules and the
indebtedness of SESI specified in Section 6.6 of the SESI Disclosure
Schedules, together with all accrued and unpaid interest thereon, with the
proceeds of the Financing and the Equity Contribution.
Section 6.7 XXXX-XXXXX-XXXXXX.
(a) Cardinal, the Funds and SESI shall cooperate in good faith
and take all actions reasonably necessary or appropriate to file, and
expeditiously and diligently prosecute to a favorable conclusion, the HSR
Forms required to be filed by each of them in connection herewith with the
Federal Trade Commission and the Department of Justice pursuant to the HSR
Act.
(b) Cardinal, the Funds and SESI agree that from the date of
this Agreement through the Effective Time, neither party nor any of its
subsidiaries or Affiliates shall enter into any transaction with a third
party or take any other action that would have the effect of impeding the
ability to obtain HSR Act clearance for the transactions contemplated by
this Agreement.
Section 6.8 ACCESS TO PROPERTIES AND RECORDS. Until the Closing
Date, each of SESI and Cardinal shall, and shall cause each of its
Subsidiaries to, allow the other party and its authorized representatives
full access, during normal business hours and on reasonable notice, to all
of its properties, offices, vehicles, equipment, inventory and other
assets, documents, files, books and records, in order to allow the other
party a full opportunity to make such investigation and inspection as the
other party desires of its business and assets. Each of SESI and Cardinal
shall, and shall cause each of its Subsidiaries to, (a) further use its
reasonable best efforts to cause its employees, counsel and regular
independent certified public accountants to be available upon reasonable
notice to answer questions of the other party's representatives concerning
its business and affairs and (b) further use its reasonable 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 its financial statements.
Section 6.9 CONSULTATION AND REPORTING. During the period from
the date of this Agreement to the Closing Date, each of Cardinal and SESI
will, subject to any applicable legal or contractual restrictions, confer
on a regular and frequent basis with the other to report material
operational matters and to report on the general status of ongoing
operations. Each of Cardinal and SESI will notify the other of any
unexpected emergency or other change in the normal course of its business
or in the operation of its properties and of any governmental complaints,
investigations, adjudicatory proceedings or hearings (or communications
indicating that the same may be contemplated) and will keep the other fully
informed of such events and permit its representatives prompt access to all
materials prepared by or on behalf of such party or served on them, in
connection therewith. Immediately following the Effective Time, the Funds
shall escrow or cause to be escrowed 892,000 shares of SESI Common Stock in
accordance with the terms of the Settlement Agreement.
Section 6.10 CONDUCT OF BUSINESS BY BOTH PARTIES PRIOR TO THE
CLOSING DATE. During the period from the date of this Agreement to Closing
Date, Cardinal and SESI shall each use its reasonable best efforts to
preserve the goodwill of suppliers, customers and others having business
relations with it and its Subsidiaries and to do nothing knowingly to
impair its ability to keep and preserve its business as it exists on the
date of this Agreement. Without limiting the generality of the foregoing,
except as otherwise specifically provided in this Agreement, during the
period from the date of this Agreement to the Closing Date neither SESI
(and SESI shall cause its Subsidiaries not to) nor Cardinal shall (and
Cardinal shall cause Cardinal Services not to), without the prior written
consent of the other:
(a) except for dividends that Cardinal may be required to pay
in kind pursuant to obligations set forth in Section 4.2 of the Disclosure
Schedule, declare, set aside, increase or pay any dividend (including any
stock dividends), or declare or make any distribution on, or directly or
indirectly combine, redeem, reclassify, purchase, or otherwise acquire, any
shares of its capital stock;
(b) other than as contemplated by Section 6.2 hereof or as
described in Section 6.10 of the Cardinal Disclosure Schedules, amend its
certificate or articles of incorporation or by-laws, or adopt or amend any
resolution or agreement concerning indemnification of its directors,
officers, employees or agents;
(c) commit any act which act would cause any representation or
warranty contained in this Agreement to become untrue in any material
respect, as if each such representation and warranty were continuously made
from and after the date hereof;
(d) violate any Applicable Law that would have a Material
Adverse Effect on such party;
(e) fail to maintain its books, accounts and records in the
usual manner on a basis consistent with that heretofore employed in all
material respects;
(f) fail to pay, or to make adequate provision in all material
respects for the payment of, all Taxes, interest payments and penalties due
and payable (for all periods up to the Closing Date, including that portion
of its fiscal year to and including the Closing Date) to any city, parish,
state, the United States, foreign or any other taxing authority, except
those being contested in good faith by appropriate proceedings and for
which sufficient reserves have been established, or make any elections with
respect to Taxes;
(g) make any material change in the conduct of its businesses
and operations or enter into any transaction other than in the ordinary
course of business consistent with past practices;
(h) except for the Equity Contribution and the conversion, if
any, of Cardinal Preferred Stock into Cardinal Common Stock in accordance
with Section 7.1(l) hereof, issue any additional shares of capital stock or
equity securities or grant any option, warrant or right to acquire any
capital stock or equity securities; issue any security convertible into or
exchangeable for its capital stock; alter any material term of any of its
outstanding securities or make any change in its outstanding shares of
capital stock or other ownership interests or its capitalization, whether
by reason of exchange or readjustment of shares, stock dividend or
otherwise; PROVIDED, HOWEVER, that SESI may issue shares of SESI Common
Stock pursuant to the exercise of options, if any, set forth in Section 5.2
of the SESI Disclosure Schedules, and Cardinal may issue shares of Cardinal
Common Stock and Cardinal Preferred Stock pursuant to obligations set forth
in Section 4.2 of the Cardinal Disclosure Schedules;
(i) except for the Financing, incur, assume or guarantee any
indebtedness for borrowed money or any other obligation of any other
Person, issue any notes, bonds, debentures or other corporate debt
securities or grant any option, warrant or right to purchase any thereof
other than for working capital under an existing line of credit and to fund
capital expenditures disclosed in such party's Disclosure Schedules;
(j) make any sale, assignment, transfer, abandonment or other
conveyance of any of its material assets or any part thereof, except
transactions pursuant to existing contracts set forth in such party's
Disclosure Schedules and dispositions of worn-out or obsolete equipment for
fair or reasonable value in the ordinary course of business consistent with
past practices;
(k) subject any of its assets or properties to a Lien other
than a Permitted Lien;
(l) make or commit to make capital expenditures that in the
aggregate are in excess of $500,000 except as described in Section 6.10(l)
of either party's Disclosure Schedules;
(m) except for loans by Cardinal to Cardinal Services or by SESI
to one or more of its Subsidiaries, make any loan, advance or capital
contribution to or investment in, or sell, transfer or lease any properties
or assets to, or enter into any agreement or arrangement with, any of its
Affiliates other than in the ordinary course of business;
(n) make any change in any method of accounting or accounting
principle, method, estimate or practice except for any such change required
by reason of a concurrent change in generally accepted accounting
principles or write down the value of any inventory or write off as
uncollectible any accounts receivable except in the ordinary course of
business consistent with past practices;
(o) enter into or modify any employment, severance or similar
agreement or arrangement with any director or employee, or grant any
increase in the rate of wages, salaries, bonuses or other compensation or
benefits of any executive officer or other employee other than increases in
wages, salaries, bonuses, compensation or benefits (i) required by
contracts, agreements, policies or collective bargaining agreements set
forth in Sections 4.2, 4.18 and 4.23 of the Cardinal Disclosure Schedules
with respect to Cardinal and Cardinal Services, and Sections 5.18 and 5.23
of the SESI Disclosure Schedules with respect to SESI, or (ii) to field or
operating employees made in the ordinary course of business;
(p) enter into any new line of business;
(q) make any Tax election that is inconsistent with any
corresponding election made on a prior Return or settle or compromise any
Tax liability for an amount in excess of the liability therefor that is
reflected on the Cardinal Financial Statements or the SESI Financial
Statements, as the case may be; or
(r) authorize any of, or agree or commit to do any of, the
foregoing actions.
Section 6.11 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 consent of the other parties, which consent
shall not be unreasonably withheld, 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 that SESI may make such disclosures and
announcements as may be necessary or advisable under applicable securities
laws after giving reasonable prior notice to Cardinal of any such
disclosure or announcement and allowing Cardinal to comment on the same.
Section 6.12 NO SOLICITATION.
(a) None of SESI and its Subsidiaries, Cardinal and Cardinal
Services will (nor will they permit any of their respective Affiliates,
officers, directors, representatives, or agents to), prior to the earlier
of the Closing Date or the termination of this Agreement pursuant to
Section 8.1, directly or indirectly, (i) solicit, initiate or encourage the
submission of any proposal for a Sale Transaction, (ii) enter into any
agreement with respect to any Sale Transaction or give any approval with
respect to any Sale Transaction, or (iii) participate in any discussions or
negotiations regarding, or furnish to any Person any information with
respect to or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to
lead to, any Sale Transaction or any proposal for a Sale Transaction.
Notwithstanding the preceding sentence, if at any time the Board of
Directors of SESI or Cardinal determines in good faith, based on the advice
of outside counsel, that it is necessary to do so in order to comply with
its fiduciary duties to its stockholders under Applicable Law, SESI or
Cardinal (and their respective officers, directors, representatives or
agents) may in response to a written proposal for a Sale Transaction not
solicited on or after the date hereof, subject to compliance with Section
6.12(c), (A) furnish information with respect to itself or a Subsidiary
pursuant to a customary confidentiality agreement to any Person making such
proposal, and (B) participate in negotiations regarding such proposal.
Without limiting the foregoing, it is understood that any violations of the
restrictions set forth in this Section 6.12(a) by any of a party's
officers, directors, representatives, agents, Affiliates or Subsidiaries,
whether or not such Person is purporting to act on behalf of such party or
any of its Subsidiaries or otherwise, shall be deemed to be a breach of
this Section 6.12(a) by such party.
(b) Neither of the Boards of Directors of SESI or Cardinal shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to the approval (including, without limitation, the Board of
Directors' resolution providing for such approval) of this Agreement or the
transactions contemplated hereby or (ii) approve or recommend, or propose
to approve or recommend, any Sale Transaction, except in the event the
Board of Directors of a party determines in good faith, based on the advice
of outside counsel, that it is necessary to do so in order to comply with
its fiduciary duties to its stockholders under Applicable Law, and then
only at or after the termination of this Agreement pursuant to Section
8.1(f) or 8.1(g).
(c) In addition to the obligations set forth in subsections (a)
and (b) of this Section 6.12, each party promptly shall advise the others
orally and in writing of any request for information or of any proposed
Sale Transaction or any inquiry with respect to or which could reasonably
be expected to lead to any proposed Sale Transaction, the identity of the
Person making any such request, proposed Sale Transaction or inquiry and
the terms and conditions thereof. Each party will keep the others fully
informed of the status and details (including amendments or proposed
amendments) of any such request, proposed Sale Transaction or inquiry, and
each party shall keep confidential such information provided to it by
another party pursuant to this Section 6.12(c), subject to any judicial or
other legal order, directions or obligations to disclose such information.
(d) Nothing contained in this Section 6.12 shall prohibit SESI
from taking and disclosing to its stockholders a position contemplated by
Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act.
Section 6.13 RESTRICTION ON FUNDS.
(a) Each of the Funds hereby covenants and agrees that, prior to
the Closing, it shall not sell, transfer or otherwise dispose of all or any
part of the shares of Cardinal Common Stock owned by it or grant any proxy
relating thereto other than to existing Cardinal Stockholders as of the
date hereof. In the event of any transfer by operation of law with respect
to the Cardinal Common Stock owned by the Funds, the provisions of this
Section 6.13 are intended to be binding upon the transferee, and such
transferee will be bound hereby. If any transfers of Cardinal Common Stock
are made pursuant to this Section 6.13, Section 3.1 of the Cardinal
Disclosure Schedules shall be amended accordingly.
(b) So long as this Agreement remains in effect, the Funds agree
and undertake to vote or cause to be voted all of the shares of Cardinal
Common Stock as to which the Funds have voting power at any meeting or
meetings (including any adjournments thereof) before which, or on any
written consents with respect to which, the Agreement or any similar
agreement may come for consideration by the Cardinal Stockholders, in favor
of the approval of this Agreement and against any similar agreement unless
SESI then is in breach or default in any material respect with respect to
any covenant, representation or warranty to an extent that would permit
Cardinal to terminate this Agreement.
Section 6.14 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 except as
contemplated by Sections 6.4, 6.13 and 7.1(l) hereof relative to Section
3.1 of the Cardinal Disclosure Schedules, 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. Each party shall promptly advise the
other party orally and in writing of any change or event having or which
insofar as reasonably can be foreseen would have, a Material Adverse Effect
on the party providing such notification.
Section 6.15 MAINTENANCE OF POLICIES. SESI and Cardinal shall
maintain the coverage under the SESI Policies and the Cardinal Policies
respectively, in full force and effect until the Closing Date.
Section 6.16 DIRECTOR'S AND OFFICER'S INDEMNIFICATION AND
INSURANCE.
(a) For four years after the Effective Time, SESI shall
indemnify and hold harmless the present and former officers and directors
of Cardinal or Cardinal Services in respect of acts or omissions prior to
the Effective Time to the fullest extent provided under Cardinal's
Certificate of Incorporation in effect on the date hereof or pursuant to
any agreements set forth in Section 4.23 of the Disclosure Schedule;
PROVIDED THAT such indemnification shall be subject to any limitation
imposed from time to time under Applicable Law.
(b) SESI shall pay the insurance premiums required for any
extension of Cardinal's officers' and directors' liability insurance policy
that is in force at the date hereof following the Closing Date for a
"discovery" period elected under such insurance policy covering the
officers and directors of Cardinal (the "Extended Coverage Policy") for a
period of four years or shall provide substantially similar coverage for
the same period under SESI's directors' and officers' insurance policy for
all directors and officers of Cardinal or Cardinal Services.
Section 6.17 NASDAQ FILING. SESI shall timely file with Nasdaq
the notice of issuance of the Merger Shares as required pursuant to NASD
Rule 4310(c)(17), and in connection therewith, remit the fee specified in
NASD Rule 4510(b)(2).
Section 6.18 SESI EMPLOYEE BENEFITS. As soon as practicable after
the Effective Time, those employees of Cardinal and Cardinal Services who
become employees of the Surviving Corporation or a Subsidiary of the
Surviving Corporation or SESI or an SESI Subsidiary shall be entitled to
participate in all employee benefit plans of SESI, including, without
limitation, its 401(k) savings plan, in respect of their service after the
Effective Time to the same extent that employees of SESI who are employed
in comparable positions are entitled to participate. SESI and Cardinal
further agree that any such employees shall be credited for their service
with Cardinal or Cardinal Services, as the case may be, for purposes of
eligibility, benefit entitlement and vesting in the plans provided by SESI.
Such employees' benefits under the SESI's medical benefit plan shall not be
subject to any exclusions for any pre-existing conditions (to the extent
such exclusions did not apply under Cardinal's medical benefit plan), and
credit shall be received for any deductibles or out-of-pocket amounts
previously paid.
ARTICLE 7
CLOSING CONDITIONS
Section 7.1 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
Proceeding shall have been commenced and be pending which seeks to prohibit
or restrict the consummation of the transactions contemplated by this
Agreement.
(b) The SESI stockholders shall have met and (i) approved this
Agreement, the Charter Amendment and the SESI Stock Incentive Plan, and
(ii) elected the slate of directors designated pursuant to Section 6.2(b)
hereof.
(c) The Cardinal Stockholders shall have approved this
Agreement.
(d) SESI and Cardinal shall have received an opinion of Jones,
Walker, Waechter, Poitevent, Carrre & Xxxxxx L.L.P. to the effect
that the Merger constitutes a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code, that the Cardinal Stockholders
will recognize no gain or loss for federal income tax purposes with respect
to SESI Common Stock received by them in connection with the Merger, and
that no gain or loss for federal income tax purposes will be recognized by
SESI or Cardinal as a result of the Merger.
(e) SESI shall have completed the Financing on terms reasonably
acceptable to Cardinal.
(f) Cardinal shall have received the Equity Contribution on
terms reasonably acceptable to SESI.
(g) SESI and the Funds shall have executed and delivered to each
other the Stockholders' Agreement.
(h) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(i) All Cardinal Stockholders as of the Closing Date shall have
executed and delivered the Agreement and Release to SESI.
(j) All consents and approvals of third parties necessary for
consummation of the transactions contemplated by this Agreement shall have
been obtained.
(k) The Merger Shares shall have been approved for listing,
subject to notice of official issuance, on the Nasdaq National Market.
(l) All issued and outstanding shares of Cardinal Preferred
Stock shall have been either redeemed by Cardinal or converted into
Cardinal Common Stock by the holders of such Cardinal Preferred Stock, and
there shall be no shares of Cardinal Preferred Stock issued and outstanding
at the Effective Time and Section 3.1 of the Cardinal Disclosure Schedules
shall have been amended to reflect any such conversion, or the holders
thereof shall have approved this Agreement as provided in Section 6.2(c).
(m) The Escrow Agreement (as defined in the Settlement
Agreement) shall have been executed and delivered and arrangements shall
have been made to escrow thereunder 892,000 shares of SESI Common Stock
issued in connection with the Merger.
Section 7.2 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) Each of the representations and warranties of Cardinal and
the Funds set forth in this Agreement that is qualified as to materiality
shall be true and correct, and each of such representations and warranties
that is not so qualified as to materiality 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 Cardinal and the Funds 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) SESI shall have received an opinion of Gardere, Wynne,
Xxxxxx & Xxxxx, L.L.P., counsel for Cardinal, substantially in the form
attached hereto as Exhibit F.
Section 7.3 CONDITIONS TO OBLIGATIONS OF CARDINAL. The
obligations of Cardinal to consummate the transactions contemplated by this
Agreement are subject to the satisfaction for the following conditions,
unless waived by Cardinal and the Funds:
(a) Each of the representations and warranties of SESI set forth
in this Agreement that is qualified as to materiality shall be true and
correct, and each of such representations and warranties that is not so
qualified as to materiality 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 it under this Agreement on or
prior to the Closing Date.
(b) Cardinal shall have received an opinion of Jones, Walker,
Waechter, Poitevent, Carrre & Xxxxxx, L.L.P., counsel for SESI,
substantially in the form attached hereto as Exhibit G.
(c) SESI shall have executed and delivered the Registration
Rights Agreements.
(d) Cardinal shall have received evidence satisfactory to them
that the Extended Coverage Policy is in force.
(e) SESI shall have fulfilled the covenants contained in Section
6.2(e).
ARTICLE 8
TERMINATION AND AMENDMENT
Section 8.1 TERMINATION. This Agreement may be terminated and
abandoned at any time prior to the Closing Date:
(a) by mutual consent of SESI and Cardinal;
(b) by SESI, if there shall have been a breach of any
representation, warranty, covenant or agreement on the part of Cardinal or
the Funds that is qualified as to materiality, or a material breach of any
such representation, warrant, covenant or agreement that is not so
qualified as to materiality, which breach shall not have been cured prior
to the earlier of (i) 30 days following notice of such breach and (ii) the
Closing Date;
(c) by Cardinal, if there shall have been a breach of any
representation, warranty, covenant or agreement on the part of SESI that is
qualified as to materiality, or a material breach of any such
representation, warrant, covenant or agreement that is not so qualified as
to materiality, which breach shall not have been cured prior to the earlier
of (i) 30 days following notice of such breach and (ii) the Closing Date;
(d) by either SESI on the one hand, or Cardinal on the other
hand, if 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;
(e) by either SESI on the one hand, or Cardinal on the other
hand, if the transactions contemplated by this Agreement shall not have
been consummated on or before October 15, 1999; provided, that the right to
terminate this Agreement under this Section 8.1(e) 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;
(f) by SESI, if (i) the Board of Directors of Cardinal
withdraws, modifies or changes its recommendation of this Agreement or the
Merger or shall have resolved to do any of the foregoing or the Board of
Directors of Cardinal shall have recommended to the stockholders of
Cardinal any proposed Sale Transaction or resolved to do so; (ii) a tender
offer or exchange offer for 30% or more of the outstanding shares of
Cardinal Common Stock is commenced and the Board of Directors of Cardinal,
within 10 Business Days after such tender offer or exchange offer is so
commenced, either fails to recommend against acceptance of such tender or
exchange offer by its stockholders or takes no position with respect to the
acceptance of such tender or exchange offer by its stockholders; or (iii)
except as contemplated by this Agreement, any person shall have acquired
beneficial ownership or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under Section 13(d) of the Exchange
Act and the regulations promulgated thereunder), shall have been formed
which beneficially owns, or has the right to acquire beneficial ownership
of, 30% or more of the then outstanding shares of Cardinal Common Stock;
(g) by Cardinal if (i) the Board of Directors of SESI withdraws,
modifies or changes its recommendation of this Agreement or the Merger or
shall have resolved to do any of the foregoing or the Board of Directors of
SESI shall have recommended to the stockholders of SESI any proposed Sale
Transaction or resolved to do so; (ii) a tender offer or exchange offer for
30% or more of the outstanding shares of SESI Common Stock is commenced and
the Board of Directors of SESI, within 10 Business Days after such tender
offer or exchange offer is so commenced, either fails to recommend against
acceptance of such tender or exchange offer by its stockholders or takes no
position with respect to the acceptance or such tender or exchange offer by
its stockholders; or (iii) except as contemplated by this Agreement, any
person shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
Section 13(d) of the Exchange Act and the regulations promulgated
thereunder), shall have been formed which beneficially owns, or has the
right to acquire beneficial ownership of, 30% or more of the then
outstanding shares of SESI Common Stock;
(h) by either SESI on the one hand, or Cardinal on the other
hand, if
(i) Cardinal accepts a proposed Sale Transaction, which
shall have been approved by Cardinal's Board of Directors in accordance
with Section 6.12(b);
(ii) SESI accepts a proposed Sale Transaction, which shall
have been approved by SESI's Board of Directors in accordance with Section
6.12(b);
(iii) if the required approval of the stockholders of SESI
of this Agreement is not received at the SESI Annual Meeting; or
(iv) if the required approval of the Cardinal stockholders
of this Agreement is not obtained.
Section 8.2 EFFECT OF TERMINATION. (a) Except as provided in
this Section 8.2, in the event of a termination of this Agreement as
provided in Section 8.1, this Agreement shall forthwith become void, the
representations and warranties shall not survive, and there shall be no
further liability or obligation under any provisions hereof on the part of
the parties hereto or their respective officers, directors or stockholders.
(b) To the extent that a termination of this Agreement pursuant
to Section 8.1(b) or (c) results from a willful breach of any of a party's
representations, warranties, covenants or agreements set forth in this
Agreement, the injured party shall have a right to recover its damages
caused thereby, provided, however, that such injured party, shall not be
entitled to consequential or punitive damages.
(c) In the event of a termination of this Agreement pursuant to
Sections 8.1(b), 8.1(f) or 8.1(h)(iv) and within three months of any such
termination, Cardinal accepts a written offer or enters into a written
agreement to consummate a Sale Transaction and such Sale Transaction is
ultimately consummated, then Cardinal shall at the closing of such Sale
Transaction (and as a condition of such closing) pay to SESI a termination
fee equal to $3 million.
(d) In the event of a termination of this Agreement pursuant to
Sections 8.1(c), 8.1(g) or 8.1(h)(iii) and within three months of any such
termination, SESI accepts a written offer or enters into a written
agreement to consummate a Sale Transaction and such Sale Transaction is
subsequently consummated, then SESI shall at the closing of such Sale
Transaction (and as a condition of such closing) pay to Cardinal a
termination fee equal to $3 million.
(e) In the event of a termination of this Agreement pursuant to
Section 8.1(h)(i) or (ii) hereof, then the party who has accepted a
proposed Sale Transaction shall pay to the other immediately a termination
fee equal to $3 million.
ARTICLE 9
MISCELLANEOUS
Section 9.1 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing or by telex, telephone or facsimile
transmission with subsequent written confirmation, and may be personally
served or sent by United States mail and shall be deemed to have been given
upon receipt by the party notified. For purposes hereof, the addresses of
the parties hereto (until notice of a change thereof is delivered as
provided in this Section 9.1) shall be as set forth opposite each party's
name on the signature page hereof.
Section 9.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties shall not survive the
Closing.
Section 9.3 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 9.4 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) except
as provided in Section 6.16 hereof, is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 9.5 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without
regard to any applicable principles of conflicts of law.
Section 9.6 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 9.7 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 9.8 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.
Section 9.9 AMENDMENT. This Agreement may not be amended except
by an instrument in writing signed by each of the parties hereto.
Section 9.10 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.
Section 9.11 EXPENSES. Except as provided in Section 8.2, whether
or not the transactions contemplated herein are consummated, payment for
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be made by the party incurring such
costs and expenses.
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.
Address: SUPERIOR ENERGY SERVICES, INC.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx By: /S/ XXXXXXX X. XXXX
Fax: 000-000-0000 Xxxxxxx X. Xxxx
President
Address: SUPERIOR CARDINAL ACQUISITION
0000 Xxxxxx Xxxx COMPANY, INC.
Xxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx By: /S/ XXXXXXX X. XXXX
Fax: 000-000-0000 Xxxxxxx X. Xxxx
President
Address: CARDINAL HOLDING CORP.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxx
Fax: 713-224-077l By: /S/ XXX X. XXXXX
Xxx X. Xxxxx
Interim Chief Executive Officer
Address: FIRST RESERVE FUND VII,
600 Travis, Suite 6000 LIMITED PARTNERSHIP
Xxxxxxx, Xxxxx 00000 By: First Reserve GP VII, L.P., its General
Partner
Attn: Xxx X. Xxxxx
Fax: 000-000-0000 By: First Reserve Corporation, its
General Partner
By: /S/ XXX X. XXXXX
Xxx X. Xxxxx
President
Address: FIRST RESERVE FUND VIII,
600 Travis, Suite 6000 LIMITED PARTNERSHIP
Xxxxxxx, Xxxxx 00000 By: First Reserve GP VIII, L.P., its General
Partner
Attn: Xxx X. Xxxxx
Fax: 000-000-0000 By: First Reserve Corporation, its
General Partner
By: /S/ XXX X. XXXXX
Xxx X. Xxxxx
President
