<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
CLIFFS DRILLING COMPANY
-------------------------
(Name of Issuer)
Common Stock, $.01 par value
--------------------------------
(Title of Class of Securities)
18682C-10-0
------------------
(CUSIP Number)
N.L. Stevens III
333 Clay Avenue, Suite 800
Houston, Texas 77002
(713) 308-5774
------------------------------------------------------------
(Name, address and telephone number of person authorized
to receive notices and communications)
May 23, 1996
---------------------------------------------------------
(Date of event which requires filing of this xtatement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box: [ ]
Check the following box if a fee is being paid with this statement: [x]
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 18682C-10-0 PAGE 2
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Viking Supply Ships A.S
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Norway
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7 SOLE VOTING POWER
NUMBER OF
1,153,528
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
1,153,528
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,153,528
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
-----
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
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SCHEDULE 13D
CUSIP NO. 18682C-10-0 PAGE 3
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Christen Sveaas
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) /x/
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Norway
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
1,153,528
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
1,153,528
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,153,528
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
-----
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
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CUSIP NO. 18682C-10-0 Page 4
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, $0.01 par value (the
"Common Stock"), of Cliffs Drilling Company, a Delaware corporation (the
"Company"), whose principal executive offices are at 300 Citicorp Center,
Houston, Texas 77002.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is filed by Viking Supply Ships, A.S, a Norwegian
corporation ("Viking") and Christen Sveaas, a natural person ("Sveaas").
Sveaas beneficially owns approximately 90% of the outstanding shares of capital
stock of Viking.
(b) The address of the principal business and the principal office of
Viking and Sveaas is Ovre Slottsgt. 27, N-0128, Oslo 1, Norway.
(c) The principal business of Viking is the ownership and operation
of supply ships serving the offshore oil and gas exploration and production
industry. The present principal occupation of Sveaas is Chairman of Viking and
the management of his other investments.
(d) None of the persons referred to in Paragraph (a) above has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors).
(e) None of the persons referred to in Paragraph (a) above has,
during the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree, or final order in joining
future violations of, or prohibiting or mandating activities subject to,
Federal or State Securities laws, or finding any violation with respect to such
laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS.
The transaction giving rise to the acquisition of the Common Stock by
Viking was an acquisition of certain of Viking's assets by the Company for cash
and 1,153,528 shares of Common Stock. The assets acquired from Viking by the
Company were generally offshore drilling rigs and related property. The assets
acquired from Viking by the Company have been owned and operated by Viking as
part of its ordinary business for some time prior to the transaction.
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the acquisition of the Common Stock by Viking was to
take additional consideration, over and above the cash paid, for the assets
acquired from Viking by the Company. Viking currently intends to hold such
shares for investment until Viking determines that it is in the best interests
of Viking to liquidate some or all of its investment in the Company. Except as
set forth above, Viking has no plans or proposals which relate to, or could
result in, any of the matters referred to in Paragraphs (a)-(j), inclusive, of
Item 4 of Schedule 13D. Viking may, at any time and from time to time, review
or reconsider its position with respect to the Company, and formulate plans or
proposals with respect to any of such matters, but has no present intention of
doing so.
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CUSIP NO. 18682C-10-0 Page 5
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Viking is the beneficial owner of 1,153,528 shares of Common
Stock, which represents 15.6% of the issued and outstanding shares of the
Common Stock. Sveaas may be deemed to be the beneficial owner of the shares of
Common Stock owned by Viking by virtue of his ownership of the majority of the
common stock of Viking. Sveaas disclaims beneficial ownership of all shares of
Common Stock owned by Viking, and the filing of this Schedule 13D shall not be
construed as an admission thereof.
(b) Viking has the sole power to vote and the sole power to dispose
of all of the shares of Common Stock listed in Paragraph (a) above. Sveaas may
be deemed to have the sole power to vote and the sole power to dispose of all
of the shares of Common Stock listed in Paragraph (a) above by virtue of his
ownership of stock of Viking.
(c) None of the persons named in response to Paragraph (a) above has
effected any transactions in the Common Stock during the past 60 days.
(d) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale
of, the Common Stock acquired by Viking.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
There are no contracts, arrangements, understandings or relationships
among the persons named in Item 2 and between such persons and any person with
respect to any securities of the issuer, except for an agreement between Viking
and the Company pursuant to which Viking has agreed not to sell or otherwise
transfer the Common Stock in a transaction or series of related transactions to
any person who would, as a result of such transaction, beneficially own more
than five percent of the outstanding Common Stock of the Company, subject to
certain exceptions. This agreement is set forth in Section 9.3 of that certain
Acquisition Agreement among Viking, the Company, and others, a copy of which is
attached hereto as Exhibit 2.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 - Acquisition Statement pursuant to Rule 13d-1(f)(1).
Exhibit 2 - Acquisition Agreement by and among Southwestern Offshore
Corporation, Viking Supply Ships A.S, Ocean Master III Inc., Production Partner
Inc., Trivium Investments Limited, Helge Ringdal, and Cliffs Drilling Company,
Cliffs Drilling Asset Acquisition Company, and Cliffs Drilling Merger Company
dated May 13, 1996.
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CUSIP NO. 18682C-10-0 Page 6
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 3, 1996.
VIKING SUPPLY SHIPS A.S
BY: /s/ Ole Geir Hagen
--------------------------------
NAME: Ole Geir Hagen
---------------------------
TITLE: Chief Financial Officer
--------------------------
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CUSIP NO. 18682C-10-0 Page 7
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 3, 1996.
/s/ Christen Sveaas
------------------------------
CHRISTEN SVEAAS
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EXHIBIT INDEX
Exhibit 1 - Acquisition Statement pursuant to Rule 13d-1(f)(1).
Exhibit 2 - Acquisition Agreement by and among Southwestern Offshore
Corporation, Viking Supply Ships A.S, Ocean Master III
Inc., Production Partner Inc., Trivium Investments
Limited, Helge Ringdal, and Cliffs Drilling Company,
Cliffs Drilling Asset Acquisition Company, and Cliffs
Drilling Merger Company dated May 13, 1996.
<PAGE> 1
EXHIBIT 1
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13D-(1)(F)(1)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on
behalf of each of the undersigned without the necessity of filing additional
joint acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him or it contained therein, but
shall not be responsible for the completeness and accuracy of the information
concerning the others, except to the extent that he or it knows or has reason
to believe that such information is inaccurate.
Dated: June 3, 1996.
VIKING SUPPLY SHIPS A.S
BY: /s/ Ole Geir Hagen
------------------------------
NAME: Ole Geir Hagen
----------------------------
TITLE: Chief Financial Officer
---------------------------
/s/ Christen Sveaas
------------------------------
CHRISTEN SVEAAS
<PAGE> 1
EXHIBIT 2
ACQUISITION AGREEMENT
BY AND AMONG
SOUTHWESTERN OFFSHORE CORPORATION
VIKING SUPPLY SHIPS A.S.
OCEAN MASTER III INC.
PRODUCTION PARTNER INC.
TRIVIUM INVESTMENTS LIMITED
HELGE RINGDAL
AND
CLIFFS DRILLING COMPANY
CLIFFS DRILLING ASSET ACQUISITION COMPANY
CLIFFS DRILLING MERGER COMPANY
MAY 13, 1996
<PAGE> 2
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT (this "Agreement") is dated as of May 13,
1996, by and among SOUTHWESTERN OFFSHORE CORPORATION, a corporation organized
under the laws of the State of Delaware ("Southwestern"), VIKING SUPPLY SHIPS
A.S., a corporation organized under the laws of Norway ("Viking"), OCEAN MASTER
III INC., a corporation organized under the laws of Liberia ("Ocean"),
PRODUCTION PARTNER INC. a corporation organized under the laws of Liberia
("Partner"), TRIVIUM INVESTMENTS LIMITED, a corporation organized under the
laws of the British Virgin Islands ("Trivium"), (Southwestern, Viking, Ocean,
Partner and Trivium being collectively referred to herein as "Seller"), HELGE
RINGDAL, an individual residing in Norway ("Ringdal"), CLIFFS DRILLING COMPANY,
a corporation organized under the laws of the State of Delaware ("Cliffs"),
CLIFFS DRILLING ASSET ACQUISITION COMPANY, a corporation organized under the
laws of the State of Delaware ("Newco"), and CLIFFS DRILLING MERGER COMPANY, a
corporation organized under the laws of the State of Delaware ("Merger Sub")
(Cliffs, Newco and Merger Sub being collectively referred to herein as
"Buyer".)
W I T N E S S E T H:
WHEREAS, Seller and Trinidad (as hereinafter defined) collectively own
the Assets (as hereinafter defined) used in the operation of the Business (as
hereinafter defined) engaged in by Southwestern and Trinidad; and
WHEREAS, Buyer desires to acquire the Assets by purchase from Seller
(other than Trivium), by merger of Trivium with Merger Sub, and by acquisition
by Newco of the stock of Trinidad, respectively, all in consideration for the
payment by Buyer of the Cash Consideration (as hereinafter defined), the
issuance by Buyer of the Acquisition Shares (as hereinafter defined), and the
assumption by Buyer of the Assumed Liabilities (as hereinafter defined); and
WHEREAS, Viking (owner of all of the outstanding capital stock of
Southwestern, Ocean and Trivium and owner, directly and indirectly, of all of
the outstanding capital stock of Trinidad) desires to take such actions as are
necessary or appropriate to effect the transactions described herein, and to
cause Southwestern, Ocean and Trivium to effect the transactions described
herein, and in connection therewith, to guarantee the agreements and
obligations of Southwestern, Ocean and Trivium in and under this Agreement; and
WHEREAS, Ringdal (indirect owner of 82% of the outstanding capital
stock of Partner) desires to take such actions as are necessary or appropriate
to cause Partner to effect the transactions described herein, and in connection
therewith, to guarantee the agreements and obligations of Partner in and under
this Agreement; and
WHEREAS, Cliffs (owner of all of the outstanding capital stock of
Newco and Merger Sub) desires to take such actions as are necessary and
appropriate to effect the transactions
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described herein, and to cause Newco and Merger Sub to effect the transactions
described herein, and in connection therewith, to guarantee the agreements and
obligations of Newco and Merger Sub in and under this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual terms,
covenants and conditions herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms have the following
respective meanings:
"Acquisition Shares" has the meaning specified in Section 2.4.
"Affiliate" means (except as otherwise specified in Section 9.3(d)),
as to the person specified, any person controlling, controlled by or under
common control with such person, with the concept of control in such context
meaning the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of another, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" has the meaning specified in the preamble.
"Applicable Environmental Laws" means all Applicable Laws (as
hereinafter defined) pertaining to health, safety or the environment.
"Applicable Laws" means any applicable law, rule, regulation, code,
governmental determination, order, governmental certification requirement or
other public limitation.
"Assets" means, collectively, all the property, assets and rights,
tangible and intangible, (other than the Excluded Assets) of Seller or Trinidad
which are used in the Business and to be acquired by Buyer pursuant to this
Agreement, which consist of the following:
(a) (i) the following six offshore drilling rigs to be
acquired by Newco hereunder via asset purchase from
Viking:
SOUTHWESTERN 150
SOUTHWESTERN 151
SOUTHWESTERN 152
SOUTHWESTERN 153
SOUTHWESTERN 154
SOUTHWESTERN 200
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(ii) the following offshore drilling rig to be acquired by
Newco hereunder via asset purchase from Ocean:
SOUTHWESTERN 160
(iii) the following offshore drilling rig to be acquired by
Newco hereunder via asset purchase from Partner:
SOUTHWESTERN 180
(iv) the following offshore drilling rig to be acquired by
Merger Sub hereunder by operation of law via merger
of Trivium with and into Merger Sub (together with
items specified below, the "Merger Vessel"):
SOUTHWESTERN 100
(v) a partial, indirect ownership interest, to be
acquired by Newco hereunder via purchase of the
Trinidad Common Stock (as hereinafter defined), in
the following offshore drilling rig (together with
the items specified below, the "Joint Venture
Vessel"):
SOUTHWESTERN MARINE IV f/k/a SOUTHWESTERN 110
together with all their respective drilling machinery and equipment (including
without limitation, floor tools and blow- out preventers), engines, machinery,
mooring systems and equipment, boats, covers, anchors, chains, cables, tackle,
rigging, apparel, furniture, computers and computer equipment, computer
software, fittings and equipment, tools, pumps and pumping equipment, spare
components and parts, tubulars, drill pipe, drill collars, bunkers and
lubricating oils, racking, supporting inventory and stores (the "Vessel
Inventory"), living quarters located thereon and all other appurtenances
thereto appertaining or belonging, including without limitation that set forth
in Schedule 1(a); excluding, however, equipment described in Schedule 1(a)(i),
equipment and stores owned by third-party suppliers (such as catering
consumables, cement units or logging equipment) and equipment for which rental
agreements are listed on Schedule 1(e) (collectively, the "Vessels");
(b) the shore-based stocks owned by Seller or Trinidad of all
drilling machinery and equipment (including, without limitation, floor tools
and blow-out preventers), engines, machinery, mooring systems and equipment,
boats, covers, anchors, chains, cables, tackle, rigging, apparel, furniture,
computers, computer equipment and computer software, fittings and equipment,
tools, pumps and pumping equipment, spare components and parts, tubulars, drill
pipe, drill collars, racking, supporting inventory and stores (i) that are used
or maintained in connection with the Business, or (ii) to the extent not
described in the preceding clause, that are maintained by Seller under a
Drilling Contract (as hereinafter defined) or Other Contract (as hereinafter
defined), including without limitation that set forth on Schedule 1(b)
(collectively, "Shore-Based Inventory"), as such Shore-Based Inventory may be
reduced through consumption
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thereof, or increased through replacement thereof or addition thereto, in the
ordinary course of the maintenance and operation of the Vessels through the
Closing Date;
(c) all of the outstanding equity interest in Trinidad, which, in
turn, owns all of the Assets of Trinidad, including without limitation, the
benefit and burden, subsequent to the Closing Date, of all right, title and
interest of Trinidad under that certain Joint Venture Agreement dated April 18,
1996 establishing the Joint Venture;
(d) the benefit and burden, subsequent to the Closing Date, of all
right, title and interest of Seller or Trinidad under all drilling contracts or
other charters or arrangements and any amendments thereto for the employment of
the Vessels (the "Drilling Contracts") existing on the Closing Date, including
without limitation the Drilling Contracts identified on Schedule 1(d) existing
on the Closing Date (it being understood that Seller's right, title and
interest in Drilling Contracts entered into by the Joint Venture constitutes
only an indirect interest);
(e) the benefit and burden, subsequent to the Closing Date, of all
right, title and interest of Seller or Trinidad under all other contracts to
which Seller, Trinidad or any of their respective subsidiaries is a party
relating to the Vessels or the Business (the "Other Contracts") existing on the
Closing Date, including without limitation the Other Contracts identified on
Schedule 1(e) existing on the Closing Date (it being understood that Seller's
right, title and interest in Other Contracts entered into by the Joint Venture
constitutes only an indirect interest);
(f) the following tangible and intangible assets used or held for
use in connection with the Business, to the extent assignable by law and Seller
has the right to assign and transfer such assets:
(i) all Intellectual Property (as hereinafter defined)
owned by Seller or Trinidad relating to, or used in connection with
the operation of, the Business, and all rights to recover for
infringement thereon; and
(ii) the certificates, licenses, permits, consents,
operating authorities, orders, exemptions, franchises, approvals,
registrations and other authorizations and applications therefor
specifically associated with the maintenance and operation of each
Vessel and listed on Schedule 1(f)(ii) ("Permits"); and
(iii) all records to be delivered to Buyer pursuant to
Section 2.9; and
(iv) Seller's computer inventory and maintenance programs
and computer models used in connection with the maintenance and
operation of the Vessels; and
(g) other assets owned and used by Seller and Trinidad in the
operation of the Business or maintenance of the Vessels, including without
limitation, the items identified on Schedule 1(g), it being understood that the
term "Assets" as used in this Agreement includes (i) the assets of Trivium to
be acquired by Merger Sub pursuant to this Agreement by operation of law as a
result of the Merger, (ii) the assets of Trinidad, which will be indirectly
acquired by
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Newco via stock purchase pursuant to this Agreement, but title to which will
remain with Trinidad, and (iii) the assets of the Joint Venture, an indirect
interest in which Assets will be acquired by Newco pursuant to this Agreement,
but title to which will remain with the Joint Venture.
"Assumed Liabilities" has the meaning specified in Section 2.5.
"Benefit Plan" has the meaning specified in Section 4.19.
"Best Efforts" means a party's reasonable best efforts in accordance
with reasonable commercial practice and without the incurrence of unreasonable
expense.
"Business" means the offshore contract drilling, accommodation and
other oil and gas exploration and production related service businesses engaged
in by Seller and Trinidad as conducted by Southwestern on the date of this
Agreement and through the Closing Date.
"Business Day" means a day on which national banks are generally open
for the transaction of business in New York, New York.
"Buyer" has the meaning specified in the preamble.
"Buyer Basket" has the meaning specified in Section 12.2(a).
"Cash Consideration" has the meaning specified in Section 2.4.
"Change in Control" has the meaning specified in Section 9.3(c).
"Claims" means any and all losses, liabilities, claims, demands,
damages, costs and expenses (including reasonable attorney's fees and
disbursements) of every kind, nature and description.
"Cliffs SEC Filings" has the meaning specified in Section 5.10.
"Cliffs" has the meaning specified in the preamble.
"Cliffs Common Stock" means shares of common stock, $0.01 par value
per share, of Cliffs.
"Closing" means the consummation of the transactions contemplated by
Article II of this Agreement in accordance with the terms and upon the
conditions set forth in Article II.
"Closing Date" means the date on which the Closing is required to take
place as specified in Section 3.1.
"Competitive Business" has the meaning specified in Section 9.3(d).
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"Consent Required Contract" has the meaning specified in Section
2.8(a).
"Drilling Contracts" has the meaning specified in paragraph (d) of the
definition of Assets.
"Encumbrances" means liens (including without limitation maritime
liens), charges, pledges, options, mortgages, security interests, claims and
other encumbrances of every type and description, whether imposed by law,
agreement, understanding or otherwise.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Excluded Assets" means (i) any and all claims and rights of Seller
under contracts to the extent, but only to the extent, that such claims and
rights do not relate to the conduct of the Business after the close of business
on the Closing Date, including without limitation, accounts receivable of
Seller, and (ii) the items listed on Schedule 1(h).
"Financial Statements" has the meaning specified in Section 4.22(a).
"Financing Closing Date" means the date on which Buyer consummates one
or more financings pursuant to Section 8.2, the net proceeds of which aggregate
at least the Cash Consideration.
"General Assignment" has the meaning specified in Section 3.2(a).
"Governmental Entity" means any court or tribunal in any jurisdiction
or any public, governmental, or regulatory body, agency, department,
commission, board, bureau, or other authority or instrumentality.
"Intellectual Property" means patents, trademarks, service marks,
trade names, service names, brand names, copyrights, trade secrets, know-how,
inventions, computer software (including documentation and object and source
codes) and similar rights used in the Business, including without limitation,
all right, title and interest of Seller and its Affiliates in and to the name
"SOUTHWESTERN" and any derivative thereof, including without limitation,
"SOUTHWESTERN OFFSHORE CORPORATION," and all registrations, applications,
licenses and rights with respect to any of the foregoing, specifically
excluding, however, any right, title or interest of Seller or its Affiliates in
and to the name "VIKING" or any derivative thereof.
"Inventory" means Vessel Inventory and Shore-Based Inventory.
"Joint Venture" means the West Indies Drilling Joint Venture, of which
Well Services (Marine) Limited and Trinidad are venturers.
"Joint Venture Mortgage" means that certain First Preferred Mortgage
dated May 2, 1996, granted by the Joint Venture in favor of Citibank N.A.
covering the Joint Venture Vessel.
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"Joint Venture Vessel" has the meaning specified in paragraph (a)(v)
of the definition of Assets.
"Marad Restrictions" means the restrictions on any Vessel set forth in
an Approval Notice and Agreement or Transfer Order issued by the U.S.
Department of Transportation, Maritime Administration.
"Merger" means the merger of Trivium with and into Merger Sub.
"Merger Sub" has the meaning specified in the preamble.
"Merger Vessel" has the meaning specified in paragraph (a)(iv) of the
definition of Assets.
"Newco" has the meaning specified in the preamble.
"Nonassigned Contract" has the meaning specified in Section 2.8(b).
"Ocean" has the meaning specified in the preamble.
"Other Contracts" has the meaning specified in paragraph (e) of the
definition of Assets.
"Parent Guaranty" means that certain Guaranty dated May 2, 1996,
executed by Viking in favor of Citibank N.A., guarantying the repayment of
indebtedness not to exceed $4,250,000 in principal, plus accrued but unpaid
interest thereon and costs of collection, if any, payable by the Joint Venture
to Citibank N.A.
"Partner" has the meaning specified in the preamble.
"Permits" has the meaning specified in paragraph (f)(ii) of the
definition of Assets.
"Permitted Encumbrances" means (i) Encumbrances for taxes, assessments
and governmental charges not yet due and payable or the validity of which are
being diligently contested in good faith by appropriate proceedings; (ii)
statutory or maritime liens arising in the ordinary course of business relating
to obligations as to which there is no default on the part of Seller, excluding
any mortgage; (iii) the Drilling Contracts; (iv) the Other Contracts; (v) the
Joint Venture Mortgage; (vi) the Marad Restrictions; and (vii) any other
Encumbrances, title defects or imperfections or irregularities in title which
in the aggregate do not exceed $250,000; provided, however, that at the Closing
"Permitted Encumbrances" shall not include any Encumbrances for taxes,
assessments or governmental charges filed of record against the Assets, or
statutory or maritime liens filed of record against the Assets, unless any
such Encumbrances are being diligently contested in good faith by appropriate
proceedings.
"Preliminary Closing" has the meaning specified in Section 8.2.
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"Prohibited Person" has the meaning specified in Section 9.3(d).
"Ringdal" has the meaning specified in the preamble.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Seller" has the meaning specified in the preamble.
"Seller Basket" has the meaning specified in Section 12.1(a).
"Seller's Escrow Agent" means Gardere Wynne Sewell & Riggs L.L.P.,
acting in its capacity as escrow agent for Seller pursuant to that certain
Escrow and Proceeds Distribution Agreement by and among Seller and Gardere
Wynne Sewell & Riggs L.L.P. dated May, 1996, or such other escrow agent as may
be designated by Seller.
"Shore-Based Inventory" has the meaning specified in paragraph (b) of
the definition of Assets.
"Southwestern" has the meaning specified in the preamble.
"Surviving Corporation" has the meaning specified in Section 2.3.
"Taxes" means any income taxes or similar assessments, any social
security premiums or any sales, excise, occupation, use, ad valorem, property,
production, severance, transportation, employment, payroll, franchise, value
added or other tax imposed by any taxing authority, including any interest,
penalties or additions attributable thereto.
"Tax Return" means any return or report with respect to Taxes.
"Trinidad" means Viking Trinidad Limited, a corporation organized
under the laws of the Republic of Trinidad and Tobago.
"Trinidad Common Stock" means shares of common stock, $50.00 par value
per share, of Trinidad.
"Trivium" has the meaning specified in the preamble.
"Trivium Common Stock" means shares of common stock, 1.00 par value
per share, of Trivium.
"Vessels" has the meaning specified in paragraph (a) of the definition
of Assets, and "Vessel" means any one of the Vessels.
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"Vessel Inventory" has the meaning specified in paragraph (a) of the
definition of Assets.
"Viking" has the meaning specified in the preamble.
"Voting Securities" means the shares of Cliffs Common Stock and any
other securities of Cliffs entitled to vote generally for the election of
directors or any other securities (including, without limitation, rights,
warrants and options) convertible or exchangeable into, or exercisable for, any
of the foregoing (whether or not presently exercisable, convertible or
exchangeable).
ARTICLE II
ACQUISITION TRANSACTIONS
2.1 Asset Purchase. Upon the terms and subject to the conditions
set forth in this Agreement, on the Closing Date, Seller (other than Trivium)
shall sell, assign, transfer, deliver and convey to Newco, and Newco shall
purchase, acquire, accept and pay for, as hereinafter provided, the Assets
(other than Assets of the Joint Venture, Trinidad and Trivium), free and clear
of any Encumbrances other than Permitted Encumbrances.
2.2 Stock Purchase. Upon the terms and subject to the conditions
set forth in this Agreement, on the Closing Date, (a) Viking shall sell,
assign, transfer, deliver and convey to Newco, and Newco shall purchase,
acquire, accept and pay for, as hereinafter provided, 990 shares of Trinidad
Common Stock, constituting 99% of the outstanding equity interest in Trinidad,
free and clear of any Encumbrances, and (b) Viking shall cause Viking
Management A.S. to sell, transfer, deliver and convey to Cliffs, and Cliffs
shall purchase, acquire, accept and pay for, as hereinafter provided, 10 shares
of Trinidad Common Stock, constituting 1% of the outstanding equity interest in
Trinidad, free and clear of any Encumbrances.
2.3 Merger. Upon the terms and subject to the conditions set
forth in this Agreement, on the Closing Date, Trivium shall be merged with and
into Merger Sub, whereupon the separate corporate existence of Trivium shall
cease, and Merger Sub will be the surviving corporation (the "Surviving
Corporation"). As soon as practicable after satisfaction (or waiver) of all of
the conditions to the Merger, Trivium and Merger Sub will execute and file a
Certificate of Merger substantially in the form of Exhibit 2.3 with the
Secretary of State of Delaware and the Registrar of Companies of the British
Virgin Islands and make all other filings required by the laws of the State of
Delaware and of the British Virgin Islands in connection with the Merger in
order to cause the Merger to become effective on the Closing Date. From and
after the Closing Date, the Surviving Corporation shall possess all of the
properties, rights, privileges and powers, and shall be subject to all of the
liabilities and obligations, of Trivium and Merger Sub, all in accordance with
applicable laws of the State of Delaware and of the British Virgin Islands.
2.4 Consideration. The aggregate consideration for the
transactions provided for herein shall consist of (a) cash in the amount of
$110,000,000 (subject to adjustment as provided in Sections 8.7 and 8.8 (the
"Cash Consideration"), (b) 1,200,000 shares (the "Acquisition
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Shares") of Cliffs Common Stock (of which 300,000 shares shall be issued in
consideration of the Merger), and (c) the assumption by Buyer of the Assumed
Liabilities.
2.5 Assumed Liabilities. As of and after the Closing, subject to
Section 2.8, Newco shall assume and thereafter perform the obligations of
Seller (other than Trivium) under the Drilling Contracts and the Other
Contracts, including without limitation the Parent Guaranty, (specifically
excluding, however, the obligations of the Joint Venture, Trinidad or Trivium
under any Drilling Contracts and Other Contracts entered into by the Joint
Venture, Trinidad or Trivium, which shall remain obligations of the Joint
Venture or Trinidad, as applicable, or become obligations of the Surviving
Corporation, as applicable), to the extent, but only to the extent, that such
obligations relate to the conduct of the Business after the close of business
on the Closing Date (the "Assumed Liabilities").
2.6 Earnest Money Deposit. Within five days of execution and
delivery of this Agreement by all parties, Buyer shall deposit with Griggs &
Harrison P.C., as escrow agent, the sum of $1,000,000 as earnest money,
pursuant to an Escrow Agreement between Buyer, Seller and Griggs & Harrison
P.C. substantially in the form of Exhibit 2.6. Buyer shall have the option of
depositing with the escrow agent an additional amount of $1,000,000, thereby
increasing the earnest money deposit to $2,000,000, in order to prevent Seller
from terminating this Agreement pursuant to Section 11.1(d)(ii). At Buyer's
option, the earnest money deposit, plus interest earned thereon, if any, may be
applied toward payment of the Cash Consideration at Closing. Except as
otherwise provided in Section 11.3(a) with respect to the forfeiture of earnest
money as liquidated damages, the earnest money deposit, plus interest earned
thereon, if any, shall be refunded to Buyer in the event of termination of this
Agreement pursuant to Section 11.1 by Buyer or Seller.
2.7 Limitation of Liabilities. Notwithstanding anything herein to
the contrary, Buyer shall not assume or in any way be liable or responsible for
any liabilities or obligations of Seller or its Affiliates (other than the
liabilities and obligations of Trivium, for which Merger Sub will become
responsible by operation of law upon consummation of the Merger) except as
specifically provided herein, it being expressly acknowledged that it is the
intention of the parties hereto that all liabilities that Seller (other than
Trivium) has or may have in the future, whether fixed or contingent, and
whether known or unknown, not expressly described in the definition of Assumed
Liabilities shall be and remain the liabilities of Seller. Without limiting
the generality of the foregoing, except to the extent assumed by operation of
law pursuant to the Merger or specifically provided in Sections 2.4, 2.5 and
8.13, Buyer shall not assume (a) any liability or obligation of Seller under
any note, bond or other instrument whether or not secured by the Assets, (b)
any liability or obligation of Seller in respect of any express or implied
representation, warranty, agreement or guaranty made (or claimed to have been
made) by Seller or imposed or asserted to be imposed by operation of law
(except obligations or liabilities imposed on Buyer by operation of law after
the Closing) or (c) any liability or obligation to repay inter-company advances
or to satisfy outstanding accounts payable.
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2.8 Limitation on Assignments.
(a) Notwithstanding any other provision hereof, this Agreement
shall not constitute nor require an assignment to Buyer of any Drilling
Contract, Other Contract, Permit, license or other right if an attempted
assignment of the same without the consent of any party would constitute a
breach thereof or a violation of any law or any judgment, decree, order, writ,
injunction, rule or regulation of any Governmental Entity unless and until such
consent shall have been obtained. In the case of any such Drilling Contract,
Other Contract, Permit, license or other right that cannot be effectively
transferred to Buyer without such consent (a "Consent Required Contract"),
Seller agrees that between the date hereof and the Closing Date it will use its
Best Efforts to obtain or cause to be obtained the necessary consents to the
transfer of any Consent Required Contract. In this connection, Buyer agrees to
cooperate with Seller in obtaining such consents and to enter into such
arrangement of assumption as may be reasonably requested by Seller or the other
contracting party under a Consent Required Contract.
(b) In the event that Seller shall have failed prior to the
Closing Date to obtain consents to the transfer of any Consent Required
Contract, the terms of this Section 2.8(b) shall govern the transfer of the
benefits of each such contract. Seller and Buyer shall use their Best Efforts
after the Closing Date to obtain any required consent to the assignment to, and
assumption by, Buyer of each Consent Required Contract that is not transferred
to Buyer at the Closing (a "Nonassigned Contract"). Seller and Buyer shall
enter into an agreement on the Closing Date with respect to each Nonassigned
Contract providing that until the rights and obligations of Seller thereunder
are transferred to or assumed by Buyer, or, if earlier, until termination of
such Nonassigned Contract, Seller shall continue to perform its obligations
thereunder and Buyer shall provide such assistance, at the sole expense of
Buyer, as Seller may reasonably request for such purpose, including without
limitation the use of personnel and assets (by lease or otherwise) of Buyer and
its Affiliates of the type and quantity that Seller would have used to perform
such Nonassigned Contract had the transactions contemplated by this Agreement
not been consummated. Such agreement shall also provide that in consideration
of the provision of such assistance, Seller shall, promptly after payment of
any amounts to Seller by the other party to a Nonassigned Contract, pay such
amounts to Buyer after subtracting therefrom the reasonable direct costs and
expenses actually incurred by Seller as a result of its performance of the
Nonassigned Contract. To the extent any such expenses are not theretofore
reimbursed, Buyer shall, promptly upon request of Seller, reimburse Seller for
all reasonable direct costs and expenses actually incurred by Seller as a
result of its performance of any Nonassigned Contract.
(c) Notwithstanding any other provision hereof, this Agreement
shall not constitute nor require an assignment to Buyer of any Permit to the
extent such Permit is by its terms nontransferable and valid only in the hands
of the Seller. Buyer acknowledges that ownership and operation of the Assets
by Buyer may require the issuance of new Permits in the name of Buyer.
2.9 Delivery of Records. Viking represents that to its knowledge,
it has heretofore delivered to Southwestern all material, books, records,
papers and instruments relating to the Assets or the operation of the Business.
Buyer shall be entitled to all books, records, papers and
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instruments of Seller and Trinidad of whatever nature that relate to the Assets
or the operation of the Business which are located aboard the Vessels or in the
possession of Southwestern, Ocean, Partner, Trinidad or Trivium, including
without limitation all financial and accounting records, all records physically
located on the Vessels on the Closing Date and all books and records relating
to employees, the purchase of materials, supplies and services, research and
development, engineering drawings, designs, schematics, blueprints, instruction
manuals, flowsheets, models, maintenance schedules and similar technical
records, and dealings with customers, vendors and suppliers of the Business,
and including computerized books and records and other computerized storage
media and the software (including documentation and object and source codes)
used in connection therewith; provided that Seller shall be entitled to retain
all originals of its corporate, financial, accounting, legal, tax and auditing
records, and Seller shall be entitled to retain copies at its expense of any
such other books and records that are necessary for its tax, accounting or
legal purposes; and provided further, that with respect to the Joint Venture
Vessel and the other Assets of the Joint Venture, Buyer shall be entitled only
to those books, records, papers and instruments in the possession of Seller or
Trinidad or to which Seller or Trinidad has a right of possession.
2.10 Effect of Merger. The Certificate of Incorporation and Bylaws
of Merger Sub, as in effect immediately prior to the Closing Date, shall be the
Certificate of Incorporation and Bylaws of the Surviving Corporation following
consummation of the Merger, in each case until further amended as provided
therein and in compliance with applicable law. The directors and officers of
Merger Sub immediately prior to the Closing Date shall be the directors and
officers of the Surviving Corporation following consummation of the Merger, in
each case until their respective successors are duly elected and qualified.
ARTICLE III
THE CLOSING
3.1 Time and Place of Closing. Subject to the occurrence of the
Preliminary Closing and the notice thereof required pursuant to Section 8.2,
the Closing shall take place at the offices of Griggs & Harrison P.C., 1301
McKinney, Suite 3200, Houston, Texas 77010, at 9:00 a.m., local time, or at
such other place or time as the parties may agree in writing, on the Financing
Closing Date; provided that the Closing shall occur on a date on which banks
are generally open for business in New York, New York, in London, England, and
in Oslo, Norway.
3.2 Deliveries by Seller. At the Closing, Seller (other than
Trivium) shall deliver the following to Buyer:
(a) a duly executed General Conveyance, Assignment and Bill of
Sale and Transfer and Assumption of Liabilities (the "General Assignment") in
the form of Exhibit 3.2, together with such other bills of sale, assignments
and other instruments of transfer, assignment and conveyance, including without
limitation individual instruments of transfer for each of the Vessels (other
than the Joint Venture Vessel and the Merger Vessel), as Buyer shall reasonably
request to vest in Newco good and marketable title to the Assets;
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(b) the tangible assets conveyed by the General Assignment (which
tangible assets shall be deemed to be delivered at their then current location
on the Closing Date);
(c) copies of any consents obtained as contemplated by Section
2.8;
(d) stock certificates representing all of the outstanding shares
of Trinidad Common Stock duly endorsed in blank or accompanied by stock powers
duly executed in blank and otherwise in form acceptable to Buyer for effective
and lawful transfer of all of the equity interest in Trinidad;
(e) the certificate and opinion of counsel contemplated by
Sections 7.3 and 7.4, respectively; and
(f) such other certificates, instruments and documents as may be
reasonably requested by Buyer prior to the Closing Date to carry out the intent
and purposes of this Agreement.
3.3 Deliveries by Buyer. At the Closing, Buyer shall deliver the
following to Viking, on behalf of the Seller:
(a) the Cash Consideration by wire transfer of immediately
available funds to a bank account designated by Seller's Escrow Agent in any
bank in the continental United States;
(b) a certificate or certificates representing the Acquisition
Shares registered in the name of Seller in the denominations designated in
writing by Seller no less than three Business Days prior to Closing;
(c) a duly executed General Assignment and such other instruments
of transfer and assumption as Seller shall reasonably request in order to cause
an effective assignment to and assumption by Newco of the Assumed Liabilities;
(d) the certificate and opinion of counsel contemplated by
Sections 6.3 and 6.4, respectively;
(e) a duly executed Registration Rights Agreement covering the
Acquisition Shares substantially in the form of Exhibit 3.3(e);
(f) a Guaranty Agreement duly executed by Cliffs in favor of
Viking substantially in the form of Exhibit 3.3(f);
(g) A Letter of Credit in the original amount of $4,250,000,
supporting the aforesaid Guaranty Agreement substantially in the form of
Exhibit 3.3(g); and
(h) such other certificates, instruments and documents as may be
reasonably requested by Seller prior to the Closing Date to carry out the
intent and purposes of this Agreement.
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3.4 Conversion of Shares. On the Closing Date, each share of
Trivium Common Stock issued and outstanding immediately prior to the Closing
Date shall be converted into and become 3,000 shares of Cliffs Common Stock,
and each share of Trivium Common Stock held by Trivium as treasury stock shall
be canceled and no payment shall be made with respect thereto, it being
understood that an aggregate of 300,000 shares of Cliffs Common Stock shall be
issued in connection with the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller (other than Partner) hereby jointly and severally
represents and warrants to Buyer with respect to each such Seller (other than
Partner) and as applicable with respect also to Trinidad and the Joint Venture,
and Partner severally represents and warrants to Buyer with respect only to
Partner, as follows:
4.1 Organization and Existence.
(a) Southwestern is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, with all necessary corporate
power and authority to own and lease the assets it currently owns and leases
and to carry on its business as such business is currently conducted. Viking
is a corporation duly organized and validly existing under the laws of Norway,
with all necessary corporate power and authority to own and lease the Assets it
currently owns and leases and to carry on the Business as such Business is
currently conducted by it. Ocean is a corporation duly organized, validly
existing and in good standing under the laws of Liberia, with all necessary
corporate power and authority to own and lease the assets it currently owns and
leases and to carry on its business as such business is currently conducted.
Partner is a corporation duly organized, validly existing and in good standing
under the laws of Liberia, with all necessary corporate power and authority to
own and lease the assets it currently owns and leases and to carry on its
business as such business is currently conducted. Trinidad is a corporation
duly organized, validly existing and in good standing under the laws of the
Republic of Trinidad and Tobago, with all necessary corporate power and
authority to own and lease the assets it currently owns and leases and to carry
on its business as such business is currently conducted. Trivium is a
corporation duly organized, validly existing and in good standing under the
laws of the British Virgin Islands, with all necessary corporate power and
authority to own and lease the assets it currently owns and leases and to carry
on its business as such business is currently conducted.
(b) Neither Southwestern, Viking, Ocean, Partner, Trinidad nor
Trivium (i) has been dissolved, and no resolution to dissolve such company has
been adopted and there is no action or request pending to accomplish such a
dissolution; (ii) is a party to a merger, consolidation or other amalgamation
which has not become effective (other than the Merger contemplated by this
Agreement) and with respect only to Viking, that would have a material adverse
effect on its ownership of the Assets or the operation of the Business; (iii)
has been declared bankrupt,
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and to its knowledge, no action or request is pending to declare such company
bankrupt; or (iv) has filed for or been granted an official moratorium.
4.2 Qualification. To its knowledge, each Seller and Trinidad is
duly qualified or licensed to transact business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the assets
currently owned or leased by it or the nature of the business currently
conducted by it requires it so to be qualified or licensed, unless the failure
so to qualify or be licensed would not reasonably be expected to have a
material adverse effect on the Business taken as a whole or create an
Encumbrance on any of the Assets.
4.3 Articles of Association and Bylaws. Each Seller (other than
Viking) and Trinidad has made available to Buyer accurate and complete copies
of its articles of association and bylaws (certified by an appropriate official
of such entity's jurisdiction of incorporation and the secretary or an
assistant secretary of such entity, respectively) as currently in effect.
Neither any Seller nor Trinidad is in violation of any provision of its
articles of association or bylaws, other than violations which, individually or
in the aggregate, do not and will not have a material adverse effect on the
business, assets, results of operations, condition (financial or otherwise), of
such Seller or Trinidad, considered independently.
4.4 Authority, Etc. The execution and delivery of this Agreement
and all agreements, instruments and documents to be executed and delivered by
each Seller hereunder, the performance by each Seller of all the terms and
conditions hereof and thereof to be performed by it, and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action, including without limitation by all necessary
action of the board of directors (or similar body) of each Seller, and no other
corporate proceedings are necessary with respect thereto. All persons who have
executed and delivered this Agreement, and all persons who will execute and
deliver the other agreements, documents and instruments to be executed and
delivered hereunder by each Seller have been duly authorized to do so by all
necessary actions on the part of such Seller.
4.5 Enforceable Agreements. Assuming due compliance with the laws
of the State of Texas and the United States, this Agreement constitutes, and
each other agreement or instrument to be executed hereunder by any Seller, when
so executed and delivered, will constitute, the legal, valid and binding
obligation of such Seller enforceable against it in accordance with its terms,
except to the extent the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other laws relating to or
affecting creditors' rights generally, by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), by provisions generally applicable under Norwegian law in
respect of invalidation or revision of unfair contract terms, or by other
Norwegian public policy considerations.
4.6 No Violations. Except as set forth on Schedule 4.6, the
execution and delivery of this Agreement by each Seller, the fulfillment of and
compliance by it with the terms and conditions hereof and the consummation by
it of the transactions contemplated hereby will not:
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(a) violate any of the terms of the articles of incorporation,
bylaws or other charter documents of any Seller or Trinidad;
(b) (i) result in a breach of or constitute a default under
(whether with notice or the lapse of time or both) any note, bond, mortgage,
loan agreement, indenture or other instrument evidencing borrowed money to
which any Seller or Trinidad is a party or by which any Seller or Trinidad is
bound or to which any of the Assets is subject, which breach or default would
reasonably be expected to have a material adverse effect on the ownership of
the Assets or the operation of the Business, taken as a whole, or (ii) result
in the creation of any Encumbrance on any of the Assets, or otherwise give any
person the right to termination any Drilling Contract, Permit or Other
Contract; or
(c) to the knowledge of any Seller, violate any national or local
law, statute, rule or administrative regulation or any judgment, order,
injunction or decree of any Governmental Entity applicable to or binding upon
any Seller or Trinidad, or the assets of any Seller or Trinidad, which
violation would reasonably be expected to have a material adverse effect on the
ownership or operation of the Assets or the operation of the Business taken as
a whole, except that no representation is made as to the application of any
United States antitrust law or regulation to the transactions contemplated by
this Agreement.
4.7 Ownership of Assets. As of the date of this Agreement, Seller
collectively owns good and marketable title to the Assets (other than the
Assets of the Joint Venture and Trinidad, good and marketable title to which is
held by the Joint Venture or Trinidad, respectively), free and clear of all
Encumbrances except for Permitted Encumbrances and Encumbrances described in
Schedule 8.11. Subject to Section 4.9, at the Closing, Seller collectively
will own, and upon execution and delivery by Seller (other than Trivium) of the
General Assignment and appropriate bills of sale, upon transfer of the shares
of Trinidad Common Stock, and by operation of law upon consummation of the
Merger, Buyer will own, good and marketable title to the Assets (other than the
Assets of the Joint Venture and Trinidad, good and marketable title to which
will be held by the Joint Venture and Trinidad), free and clear of all
Encumbrances except for Permitted Encumbrances and Encumbrances, if any,
created or permitted to be imposed by Buyer.
4.8 Vessel Classifications and Certifications. The classification
of each Vessel and the flag under which it is documented is set forth on
Schedule 1(a). Set forth on Schedule 4.8 is a summary of the recommendations
to class for each of the Vessels based on the most recent survey received by
Seller for such Vessel as of the date of this Agreement, as well as a listing
of required certifications (including Det Norske Veritas, American Bureau of
Shipping, United States Coast Guard, Lloyd's Register of Shipping and Bureau
Veritas certifications) and the expiration date for each such certification.
Except as set forth on Schedule 4.8, each of the Vessels has in full force and
effect all required certifications necessary for its present operations (with
the exception of any thereof that may be affected by any loss or damage
referred to in Section 8.8). Except as disclosed by Seller or Trinidad to
Buyer in writing at or prior to the Closing, to the knowledge of Seller and
Trinidad, none of the Vessels has suffered any material
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damage to is condition (excepting normal wear and tear) since April 23, 1996,
the date of completion of Buyer's inspection of the Vessels.
4.9 Inventory.
(a) At the Closing, Seller collectively will own, and upon
execution and delivery by Seller (other than Trivium) of the General
Assignment, and by operation of law upon consummation of the Merger, Buyer will
own, good and marketable title to the Inventory (other than the Inventory
associated with the Joint Venture Vessel, which Inventory is and will be owned
by the Joint Venture), as such Inventory may be reduced through the consumption
thereof, or increased through replacement thereof or additions thereto, in the
ordinary course of the maintenance and operation of the Vessels through the
Closing Date, free and clear of all Encumbrances except for Permitted
Encumbrances and Encumbrances, if any, created or permitted to be imposed by
Buyer.
(b) On the date of this Agreement, Seller (or the Joint Venture,
as applicable) maintained Inventory with respect to each Vessel as specified on
Schedule 1(a), which Inventory is in such amounts and of such quality (i) as
would comply in all material respects with any applicable Drilling Contract or
Other Contract and (ii) as is consistent with past practice of Southwestern.
4.10 Certain Property on Vessels. Since April 23, 1996, the date
of completion of Buyer's inspection of the Vessels, subject to normal wear and
tear and consumption in the ordinary course of business, neither Seller nor
Trinidad has removed or, to its knowledge, permitted to be removed any tangible
property from any Vessel which tangible property has a value equal to or
greater than $100,000 in the aggregate for all the Vessels, except for any such
tangible property relocated from one Vessel to another Vessel or transferred to
Inventory; provided, however, that Seller shall have the right to take ashore
(i) crockery, plates, cutlery, linens and other articles bearing the Seller's
flag or name, provided that Seller replaces same with similar unmarked items,
(ii) library items and forms exclusively for use on Seller's vessels, and (iii)
captain's, officer's and crew's personal belongings including the slop chest.
4.11 Contracts. Seller has made available to Buyer for review
complete and correct copies of all the Drilling Contracts and Other Contracts.
Except as set forth on Schedule 4.11, each of the Drilling Contracts and Other
Contracts may be transferred to Buyer without the consent of any person. Each
of the Drilling Contracts and Other Contracts is valid, binding and in full
force and effect against Seller, Trinidad or the Joint Venture, as applicable,
and, to Seller's knowledge, is valid, binding and in full force and effect
against the other party thereto. Except as set forth on Schedule 4.11, neither
Seller, Trinidad nor the Joint Venture is in default in any material respect,
and no notice of alleged default has been received by Seller under any of the
Drilling Contracts or Other Contracts, and no other party thereto is, to the
knowledge of Seller, in default thereunder in any material respect, and, to the
knowledge of Seller, there exists no condition or event which, with or without
notice or lapse of time or both, would (i) constitute a material default under
any of the Drilling Contracts or Other Contracts by Seller or any other
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parties thereto, or (ii) otherwise give any other party to such a contract the
right to charge penalties or reduce the rates that would otherwise be payable
under such a contract.
4.12 Intellectual Property. Neither Seller nor Trinidad owns,
holds, uses or has pending any material Intellectual Property in connection
with the operation of the Assets or the Business. Seller and Trinidad
collectively own or have rights to use all Intellectual Property necessary for
the operation of the Assets and the Business as presently operated. Neither
Seller nor Trinidad is infringing upon the Intellectual Property of any third
party or has received any written notice or claim of any infringement,
violation, misuse or misappropriation in connection with the operation of the
Assets or the Business by such Seller or Trinidad of any Intellectual Property
owned or purported to be owned by any other person.
4.13 Performance Bonds; Letters of Credit. Set forth on Schedule
4.13 is a listing of all performance and similar bonds and letters of credit
currently posted by, or any certificate of financial responsibility or similar
evidence of financial accountability obtained or procured by, any Seller or
Trinidad for the purpose of operating the Vessels or otherwise conducting the
Business.
4.14 Seller's Insurance. Each Seller (and Trinidad and/or the
Joint Venture, as applicable) maintains with sound and reputable insurers, and
to the knowledge of each Seller, there are currently in full force and effect,
policies of insurance with respect to the Assets and Business against such
casualties and contingencies of such types and in such amounts as Seller
considers customary and reasonable for offshore drilling contractors of similar
size engaged in similar operations. All premiums due and payable with respect
to such policies have been timely paid. No written notice of cancellation of,
or written indication of any intention not to renew, any such policy has been
received by any Seller, or to the knowledge of any Seller, by Trinidad or the
Joint Venture. Set forth on Schedule 4.14 is a summary description of (i) the
insurance maintained by each Seller (and Trinidad and/or the Joint Venture, as
applicable) covering each of the Vessels and/or the operation of the Business
and (ii) all outstanding insurance claims associated with each of the Vessels.
4.15 Litigation.
(a) Except for litigation described on Schedule 4.15(a), there is
no litigation and there are no arbitration proceedings or governmental
proceedings, claims, suits or investigations pending, instituted or, to the
knowledge of any Seller, overtly threatened against any of the Assets or
against any Seller, Trinidad or the Joint Venture, which (i) seeks permanent
injunctive relief, (ii) if adversely determined would delay or prevent the
consummation of the transactions contemplated by this Agreement, or (iii) would
reasonably be expected to have a material adverse effect on any Seller,
Trinidad or the Business taken as a whole, or create an Encumbrance on, or
otherwise affect the ownership or operation of, any of the Assets.
(b) Except for matters described on Schedule 4.15(b), neither
Seller, Trinidad, the Joint Venture, nor any of the Assets, is subject to any
judicial or administrative judgment, order or decree in a manner that is
material and adverse to the Business taken as a whole, or that
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would create an Encumbrance on, or otherwise affect the ownership or operation
of, any of the Assets. Except as referred to on Schedule 4.15(b), neither
Seller, Trinidad, the Joint Venture, nor any Affiliate of any Seller or
Trinidad has received any notifications or charges in writing from any
Governmental Entity involving alleged violations of or alleged obligations to
remediate under occupational safety and health or water quality or other
environmental matters that materially and adversely affect the conduct of the
Business by such Seller, Trinidad or the Joint Venture, or that have not been
finally dismissed or otherwise disposed of.
4.16 Governmental Approval. To the knowledge of each Seller,
except for (i) the filing by Christen Sveaas of a Notification and Report form
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the expiration or early termination of the waiting period provided
for therein, (ii) the filing by Viking, Ocean and Partner, as applicable, with
the U.S. Department of Transportation, Maritime Administration, of a Request
for Transfer of Ownership, Registry and Flag of Foreign Flag Vessel under
Maritime Administration Contract with Foreign Owner on Form MA-29B, (iii) the
issuance of a Transfer Order by the Maritime Administration authorizing the
transfer of each of the Vessels as contemplated by this Agreement, (iv) the
filing by Viking, Ocean and Partner, as applicable, of a Request for Issuance
of a Certificate of Permission for Sale for the Purpose of Reregistration and
of a Bill of Sale covering each of the Vessels (other than the Joint Venture
Vessel and the Merger Vessel) with the Liberian Ship Registry, Vessel
Registration Division, and (v) the filing by Trivium of a Certificate of Merger
with Registrar of Companies of the British Virgin Islands, respectively, no
consent, approval, waiver, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made in connection with the execution and delivery of this Agreement by
Seller or the consummation by any Seller of the transactions contemplated
hereby.
4.17 Compliance With Laws.
(a) Except as set forth on Schedule 4.17(a), to the knowledge of
each Seller, neither Seller, Trinidad nor the Joint Venture is in violation of
or in default under any Applicable Law relating to the ownership of the Assets
or operation of the Business, including, without limitation, any applicable
maritime law relating to the Vessels, which violation or default materially and
adversely affects the ownership of the Assets or operation (as presently
conducted) of the Business taken as a whole, and no claim is pending or, to the
knowledge of any Seller, overtly threatened with respect to any such matters
which if determined adversely to such Seller, Trinidad or the Joint Venture
would have such effect.
(b) Without limiting Section 4.17(a) and except as set forth on
Schedule 4.17(b), to the knowledge of each Seller, each Seller, Trinidad and
the Joint Venture has conducted the Business in accordance in all material
respects with Applicable Environmental Laws, and neither Seller, Trinidad nor
the Joint Venture is subject to any pending or, to the knowledge of any Seller,
overtly threatened investigation or inquiry by any Governmental Entity, or to
any remedial obligations, under any Applicable Environmental Laws.
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<PAGE> 21
4.18 Employees.
(a) Set forth on Schedule 4.18(a) is a list of the name, social
security number (or the equivalent), and dates of employment by any Seller of
each employee of the Business on the date hereof, together with the position
held by such employee and the total amounts of salary, bonuses and other
compensation paid or payable by such Seller to each such person for the current
fiscal year and the immediately preceding fiscal year. Each Seller has
maintained adequate and suitable records regarding each person employed by such
Seller, and has made such records available to Buyer.
(b) Except as set forth on Schedule 4.18(b), no Seller is a party
to any employment agreement with any employees of the Business, and the
employment of each employee of the Business may be terminated by such Seller on
not more than 14 days notice to such employee without liability to such Seller,
subject to the Applicable Law. The consummation of the transactions
contemplated by this Agreement will not result in the incurring of any
severance pay obligations to any employee of the Business. Except as set forth
in Schedule 4.15(a), there are no outstanding claims asserted in writing
against any Seller by any person who is or was employed by any Seller in
relation to the Business or any dispute with any material number of class of
the employees.
4.19 Employee Benefits. Set forth on Schedule 4.19 is a list
identifying each employee benefit plan, policy, agreement or arrangement,
including without limitation, pension, stock option, share saving, deferred
compensation, profit sharing, incentive, bonus and severance pay plans and
arrangements, whether legally enforceable or not, which (i) is, has been or is
proposed to be entered into, administered, maintained or contributed to by any
Seller, or (ii) covers any employee or former employee of the Business (each, a
"Benefit Plan"). Each Benefit Plan has been maintained and contributed to in
compliance with the requirements of Applicable Law. Each Seller has paid and
discharged when due all obligations and liabilities arising under such plans
and Applicable Law of a character which, if not paid or discharged, are likely
to result in the imposition of an Encumbrance or the assertion of a liability
enforceable against the Assets.
4.20 Labor Relations.
(a) Except as disclosed on Schedule 4.20(a), (i) there are no
collective bargaining agreements or other similar agreements, arrangements, or
understandings, written or oral, with employees of the Business as a group to
or by which any Seller or Trinidad is a party or is bound; (ii) no employees of
the Business are represented by any labor organization, collective bargaining
representative or group of employees; (iii) no labor organization, collective
bargaining representative or group of employees claims to represent a majority
of the employees of the Business; (iv) neither Seller nor Trinidad has been
involved with any representational campaign by any union or other organization
or group seeking to become the collective bargaining representative of any
employees of the Business, or been subject to or, to the knowledge of any
Seller, overtly threatened with any strike or other concerted labor activity or
dispute; and (v) neither Seller nor Trinidad is obligated to bargain
collectively with respect to wages, hours and other terms and conditions of
employment with any recognized or certified
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<PAGE> 22
labor organization, collective bargaining representative or group of employees
with respect to employees of the Business.
(b) To the knowledge of each Seller, each Seller and Trinidad is
in compliance with all Applicable Laws pertaining to employment and employment
practices and wages, hours, and other terms and conditions of employment in
respect of all employees of the Business, and neither Seller nor Trinidad is
engaged in any unfair labor practices or unlawful employment practices with
respect to employees of the Business. There is no pending or, to the knowledge
of any Seller, overtly threatened action, claim, investigation or inquiry by or
before, and neither Seller nor Trinidad is subject to any judgment, order,
writ, injunction or decree of or inquiry from, any Governmental Entity in
connection with any current, former or prospective employees of the Business.
4.21 Tax Matters. Except as disclosed on Schedule 4.21 or as would
not have a material adverse effect on the Assets or the operations of the
Business:
(a) Each of Viking (with respect only to the Business),
Southwestern, Ocean, Partner, Trinidad and Trivium has (and as of the Closing
Date will have) duly filed all federal, state, local and foreign Tax Returns
required to be filed by or with respect to them with the applicable taxing
authority, and no extensions with respect to such Tax Returns have (or as of
the Closing Date will have) been requested or granted;
(b) Each of Viking (with respect only to the business),
Southwestern, Ocean, Partner, Trinidad and Trivium has (and as of the Closing
Date will have) paid all Taxes due, or claimed by any taxing authority to be
due, from or with respect to it, except Taxes that are being contested in good
faith by appropriate legal proceedings;
(c) There has been no issue raised or adjustment proposed (and
none is pending) by any taxing authority in connection with any of the Tax
Returns of Viking (with respect only to the Business), Southwestern, Ocean,
Partner, Trinidad or Trivium that has not been resolved or paid, and no such
issues raised could reasonably be expected to result in a proposed tax
deficiency to any such Seller or Trinidad for any other period not so examined;
(d) All Taxes that are required to be withheld or collected by
each of Viking (with respect only to the Business), Southwestern, Ocean,
Partner, Trinidad and Trivium have been duly withheld or collected and to the
extent required, have been paid or properly segregated or deposited as required
by Applicable Law. Each of Viking (with respect only to the Business),
Southwestern, Ocean, Partner, Trinidad and Trivium has (and as of the Closing
Date will have) made all deposits required with respect to Taxes;
(e) Neither Viking (with respect only to the Business),
Southwestern, Ocean, Partner, Trinidad nor Trivium has waived the statute of
limitations on the right of any taxing authority in connection with its Tax
Returns or otherwise made any special arrangements with any taxing authority.
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4.22 Financial Statements.
(a) Viking has delivered to Buyer accurate and complete copies of
its audited consolidated balance sheet as of December 31, 1994, and the related
audited consolidated statements of profit and loss and cash flows for the year
then ended, and the notes thereto, and of its unaudited preliminary balance
sheet as of December 31, 1995 and the related unaudited preliminary statements
of profit and loss and cash flows for the year then ended, and the notes
thereto; Southwestern has delivered to Buyer accurate and complete copies of
such Seller's audited consolidated balance sheet as of December 31, 1994 and
1995, and the related audited consolidated statements of income, stockholders'
equity, and cash flows/changes in financial position for the years then ended
and the year ended December 31, 1993, and the notes and schedules thereto,
together with the unqualified report thereon of independent public accountants
(collectively the "Financial Statements").
(b) The Financial Statements (i) have been prepared from the books
and records of such Seller in conformity with Norwegian generally recognized
accounting principles with respect to Viking, and United States generally
accepted accounting principles with respect to Southwestern, applied on a basis
consistent with preceding years throughout the periods involved, and (ii)
accurately, completely, and in accordance with such principles, fairly present
in all material respects such Seller's consolidated financial position as of
the respective dates thereof and its consolidated results of operations and
cash flows/changes in financial position for each of the periods then ended.
4.23 Books and Records. All of the books and records of Trivium,
Trinidad and the Joint Venture are substantially complete and correct, have
been maintained in accordance with good business practice and in material
compliance with all Applicable Laws, and, in the case of the books of account,
have been prepared and maintained in accordance with applicable generally
accepted accounting principles consistently applied. Such books and records
accurately and fairly reflect, in reasonable detail, all material transactions,
assets and liabilities of Trivium, Trinidad or the Joint Venture, as
applicable.
4.24 Liabilities and Commitments.
(a) Trivium was incorporated on April 18, 1996 for the sole
purpose of acquiring, owning and operating the Merger Vessel. Since the date
of its incorporation, Trivium has conducted no business other than to acquire,
own and operate the Merger Vessel. Trivium has no liabilities, obligations,
contracts or commitments (whether accrued, absolute, contingent, unliquidated,
or otherwise, whether or not known and whether due or to become due), except
liabilities, obligations, contracts and commitments reflected on Schedule
4.24(a).
(b) Trinidad was incorporated on March 13, 1996 for the sole
purpose of establishing and operating the Joint Venture. Since the date of its
incorporation, Trinidad has conducted no business other than to organize and
establish the Joint Venture. Trinidad has no liabilities, obligations,
contracts or commitments (whether accrued, absolute, contingent, unliquidated,
or otherwise, whether or not known and whether due or to become due), except
(i) liabilities and
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<PAGE> 24
obligations associated with its status as a general partner/venturer of the
Joint Venture, (ii) liabilities, obligations, contracts and commitments
associated with Drilling Contracts and Other Contracts entered into by
Trinidad, and (iii) liabilities, obligations, contracts and commitments
reflected on Schedule 4.24(b).
(c) The Joint Venture was established on April 18, 1996 for the
sole purpose of acquiring, owning and operating the Joint Venture Vessel.
Since its inception, the Joint Venture has conducted no business other than to
acquire, own and operate the Vessel. The Joint Venture has no liabilities,
obligations, contracts or commitments (whether accrued, absolute, contingent,
unliquidated, or otherwise, whether or not known and whether due or to become
due), except (i) liabilities, obligations, contracts and commitments associated
with Drilling Contracts and Other Contracts entered into by the Joint Venture,
and (ii) liabilities, obligations, contracts and commitments reflected on
Schedule 4.24(c)
4.25 Capitalization.
(a) The authorized capital stock of Trivium consists of 100 shares of
Trivium Common Stock, all of which shares are issued and outstanding and owned
beneficially and of record by Viking, free and clear of all Encumbrances. All
issued and outstanding shares of Trivium Common Stock are validly issued, fully
paid and nonassessable, and no holder thereof is entitled to preemptive rights.
There are no outstanding options, warrants or rights to purchase, and there are
no other outstanding securities convertible into or exchangeable for, any
shares of Trivium Common Stock.
(b) The authorized capital stock of Trinidad consists of 1,000
shares of Trinidad Common Stock, all of which shares are issued and
outstanding, 990 shares of which are owned beneficially and of record directly
by Viking, and 10 shares of which are owned beneficially and of record by
Viking Management A.S., a wholly-owned subsidiary of Viking, free and clear of
all Encumbrances. All issued and outstanding shares of Trivium Common Stock
are validly issued, fully paid and nonassessable, no holder thereof is entitled
to preemptive rights, and no such shares are subject to any restriction which
would prohibit or restrict the transfer of such shares to Newco as contemplated
by this Agreement. There are no outstanding options, warrants or rights to
purchase, and there are no other outstanding securities convertible into or
exchangeable for, any shares of Trinidad Common Stock.
4.26 Ordinary Course; Absence of Material Adverse Change. Since
April 8, 1996, the Business has been conducted only in the ordinary and usual
course, and there has been no material adverse change in the Assets,
operations, prospects or condition (financial or otherwise) of the Business,
taken as a whole. There is no fact, development or threatened development
known to any Seller that would materially adversely affect the Assets,
operations, or prospects of the Business, taken as a whole, other than such
conditions as may affect the economy or the offshore drilling business
generally.
4.27 No Brokers. Except for Simmons & Company International and
Ringdal Holding A.S. (whose fees in respect of transactions contemplated hereby
shall be paid solely by Seller),
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<PAGE> 25
no Seller has employed or authorized anyone to represent it as a broker or
finder in connection with the transactions contemplated by this Agreement, and
no broker or other person is entitled to any commission or finder's fee from
any Seller in connection with such transactions. Each Seller agrees to
indemnify and hold harmless Buyer from and against any and all losses, claims,
demands, damages, costs and expenses, including, without limitation, reasonable
attorneys' fees and expenses, which Buyer may sustain or incur as a result of
any claim for a commission or fee by a broker or finder acting on behalf of
such Seller.
4.28 Disclosure. No representation or warranty made by any Seller
in this Agreement and no statement of any Seller or its representatives
contained in any document, certificate or other writing furnished or to be
furnished by any Seller pursuant hereto or in connection herewith, taken as a
whole, contains or will contain, at the time of delivery, any untrue statement
of a material fact or omits or will omit, at the time of delivery, to state any
material fact (other than those facts generally recognized to be industry risks
normally associated with the contract drilling business) necessary in order to
make the statements contained therein, in light of the circumstances under
which they are made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 Organization and Existence. Each Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware,
with all necessary corporate power and authority to own and lease the assets it
currently owns and leases and to carry on its business as such business is
currently conducted.
5.2 Qualification. Each Buyer, to its knowledge, is duly
qualified or licensed to transact business as a foreign corporation and is in
good standing in all jurisdictions in which the character of the assets
currently owned or leased by it or the nature of the business currently
conducted by it requires it so to be qualified or licensed, unless the failure
so to qualify or be licensed would not reasonably be expected to have a
material adverse effect on the business or financial condition of such Buyer
and its subsidiaries taken as a whole.
5.3 Charter and Bylaws. Each Buyer has made available to Seller
or its representatives accurate and complete copies of the Certificate of
Incorporation and Bylaws of such Buyer as currently in effect.
5.4 Authority; Etc. The execution and delivery of this Agreement
and all agreements, instruments and documents to be executed and delivered by
each Buyer hereunder, the performance by each Buyer of all the terms and
conditions hereof and thereof to be performed by it, and the consummation of
the transactions contemplated hereby and thereby have been duly authorized and
approved by all necessary corporate action, including without limitation by all
necessary action of the board of directors of each Buyer, and no other
corporate proceedings of
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<PAGE> 26
any Buyer are necessary with respect thereto. All persons who have executed
and delivered this Agreement, and all persons who will execute and deliver the
other agreements, documents and instruments to be executed and delivered by
each Buyer hereunder, have been duly authorized to do so by all necessary
actions on the part of such Buyer.
5.5 Enforceable Agreement. This Agreement constitutes, and each
other agreement or instrument to be executed by any Buyer hereunder, when so
executed and delivered, will constitute, the legal, valid and binding
obligation of such Buyer, enforceable against it in accordance with its terms,
except to the extent the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other laws relating to or
affecting creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.6 No Violations. The execution and delivery of this Agreement
by each Buyer, the fulfillment of and compliance by it with the terms and
conditions hereof and the consummation by it of the transactions contemplated
hereby (including the financing contemplated by Section 8.2) will not:
(a) violate any of the terms of the certificate of incorporation
or bylaws of any Buyer;
(b) result in a breach of or constitute a default under (whether
with notice or the lapse of time or both) any note, bond, mortgage, loan
agreement, indenture or other instrument evidencing borrowed money to which any
Buyer is a party or by which any Buyer is bound or to which any of its assets
is subject or result in the creation of any Encumbrance on any of its assets,
which breach or default would reasonably be expected to have a material adverse
effect on such Buyer's business or financial condition or the results of its
operations or on its ability to perform its obligations hereunder; or
(c) to the knowledge of any Buyer, violate any federal or state
law, statute, rule or administrative regulation or any judgment, order,
injunction or decree of any Governmental Entity applicable to or binding upon
any Buyer or any of its subsidiaries, except that no representation is made as
to the application of any United States antitrust law or regulation to the
transactions contemplated by this Agreement, which violation would reasonably
be expected to have a material adverse effect on Buyer's business or financial
condition or the results of its operations or on its ability to perform its
obligations hereunder.
5.7 Governmental Approval. Except for (i) the filing by Cliffs of
a Notification and Report Form pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the expiration or early termination
of the waiting period provided for therein, (ii) the filing by Newco of an
Application for Registration as a Foreign Maritime Entity with the Minister of
Foreign Affairs of the Republic of Liberia, (iii) the filing by Merger Sub of a
certificate of merger with the Secretary of State of Delaware, and (iv) any
securities filings which may be required in connection with the financing
contemplated by Section 8.2 and the registration rights to be granted pursuant
to Section 3.3(e), respectively, no consent approval, waiver, order or
authorization of, or registration, declaration or filing with, any Governmental
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<PAGE> 27
Entity is required to be obtained or made in connection with the execution and
delivery of this Agreement by Buyer or the consummation by Buyer of the
transactions contemplated hereby.
5.8 Insurance. Buyer maintains with sound and reputable insurers,
and there are currently in full force and effect, policies of insurance with
respect to its assets and operations, in amounts and coverages as are customary
in the oil and gas contract drilling industry.
5.9 Litigation. There is no litigation and there are no
arbitration proceedings or governmental proceedings, suits or investigations
pending, instituted or, to the knowledge of Buyer overtly threatened against
any Buyer or its subsidiaries that could reasonably be expected to have a
material adverse effect on the business or financial condition of Buyer and its
subsidiaries taken as a whole or that, if adversely determined, would delay or
prevent the consummation of the transactions contemplated by this Agreement.
5.10 SEC Filings. Cliffs has 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 pursuant
to the Securities Act and the Exchange Act. Buyer has heretofore delivered to
Seller accurate and complete copies of all such reports, registration
statements and other filings filed by Cliffs with the Securities and Exchange
Commission since January 1, 1995 (the "Cliffs SEC Filings"). As of their
respective dates, the Cliffs SEC Filings did not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of Cliffs and its subsidiaries included in the Cliffs SEC
Filings present fairly, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of Cliffs as of the dates
thereof and its consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end audit adjustments in the case of
any unaudited interim financial statements).
5.11 Absence of Material Adverse Change. As of April 8, 1996,
Cliffs had conducted its business since the date of the then most current
Cliffs SEC Filings only in the ordinary and usual course, and there had been no
material change from and after the date of the then most current Cliffs SEC
Filings, in the operations, prospects or condition (financial or otherwise) of
its business, taken as a whole. As of April 8, 1996, there was no fact,
development or threatened development known to Cliffs that would materially,
adversely affect the operations or prospects of its business, taken as a whole,
other than such conditions as may affect the economy or the offshore drilling
business generally.
5.12 Capitalization. (a) The authorized capital stock of Cliffs
consists of (i) 15,000,000 shares of Cliffs Common Stock, of which 6,190,928
shares were outstanding on April 23, 1996, and (ii) 3,000,000 shares of
preferred stock, without par value, of which no shares were outstanding on
April 23, 1996. Except for stock options or deferred stock awarded pursuant to
Cliffs' Incentive Equity Plan, there are no outstanding options, warrants or
rights to purchase, and there are no other outstanding securities convertible
into or exchangeable for, any shares of
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<PAGE> 28
Cliffs Common Stock on the date of this Agreement. None of the outstanding
shares of Cliffs Common Stock are covered by any agreement granting
registration rights of any kind.
5.13 Acquisition Shares. The Acquisition Shares have been duly
authorized for issuance and, if and when issued and delivered by Cliffs in
accordance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable. The issuance of the Acquisition Shares under this
Agreement is not subject to any preemptive or similar rights.
5.14 No Brokers. Except for Jefferies & Co. (whose fee in respect
of the transactions contemplated hereby shall be paid solely by Buyer), no
Buyer has employed or authorized anyone to represent it as a broker or finder
in connection with the transactions contemplated by this Agreement, and no
broker or other person is entitled to any commission or finder's fee from any
Buyer in connection with such transactions. Each Buyer agrees to indemnify and
hold harmless Seller from and against any and all losses, claims, demands,
damages, costs and expenses, including, without limitation, reasonable
attorneys' fees and expenses, which Seller may sustain or incur as a result of
any claim for a commission or fee by a broker or finder acting on behalf of
such Buyer.
5.15 Disclosure. No representation or warranty made by any Buyer
in this Agreement and no statement of Buyer or its representatives contained in
any document, certificate or other writing furnished or to be furnished by any
Buyer pursuant hereto or in connection herewith, contains or will contain, at
the time of delivery, any untrue statement of a material fact or omits or will
omit, at the time of delivery, to state any material fact (other than those
facts generally recognized to be industry risks normally associated with the
contract drilling business) necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller to proceed with the Closing contemplated by
this Agreement are subject to the satisfaction, on or before the Closing Date,
of all the following conditions, any once or more of which may be waived, in
whole or in part, by Seller:
6.1 Accuracy of Representations and Warranties. The
representations and warranties of each Buyer contained in this Agreement shall
be true and correct in all material respects as of the Closing Date with the
same effect as though made on the Closing Date, except as otherwise
specifically contemplated by this Agreement.
6.2 Covenants and Agreements Performed. Each Buyer shall have
complied on or before the Closing Date in all material respects with each of
its covenants or agreements contained in this Agreement to be performed on or
before the Closing Date.
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<PAGE> 29
6.3 Officer's Certificate. Seller shall have received a
certificate in the form of Exhibit 6.3 hereto, dated as of the Closing Date, of
the President or a Vice President of Cliffs, on behalf of each Buyer,
certifying as to the matters specified in Sections 6.1 and 6.2.
6.4 Legal Opinion. Seller shall have received from Griggs &
Harrison P.C., counsel to each Buyer, an opinion dated the Closing Date,
substantially in the form of Exhibit 6.4 hereto.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to proceed with the Closing contemplated by
this Agreement are subject to the satisfaction, on or before the Closing Date,
of all the following conditions, any one or more of which may be waived, in
whole or in part, by Buyer:
7.1 Accuracy of Representations and Warranties. The
representations and warranties of each Seller contained in this Agreement shall
be true and correct in all material respects as of the Closing Date with the
same effect as though made on the Closing Date, except as otherwise
specifically contemplated by this Agreement.
7.2 Covenants and Agreements Performed. Each Seller shall have
complied on or before the Closing Date in all material respects with each of
its covenants or agreements contained in this Agreement to be performed on or
before the Closing Date.
7.3 Officer's Certificates.
(a) Buyer shall have received a certificate in the form of Exhibit
7.3(a) hereto, dated as of the Closing Date, of the Chairman of Viking, on
behalf of Viking, Southwestern, Ocean and Trivium, certifying as to the matters
specified in Sections 7.1 and 7.2 with respect to Viking, Southwestern and
Trivium.
(b) Buyer shall have received a certificate in the form of Exhibit
7.3(b) hereto, dated as of the Closing Date, of the President or Vice President
of Partner, certifying as to the matters specified in Sections 7.1 and 7.2 with
respect to Partner.
7.4 Legal Opinion.
(a) Buyer shall have received from Gardere Wynne Sewell & Riggs,
L.L.P., Texas counsel to each Seller, Trinidad and Ringdal, an opinion dated
the Closing Date, substantially in the form of Exhibit 7.4(a) hereto.
(b) Buyer shall have received from Gram Hambro & Garman, Norwegian
counsel to Viking, an opinion dated the Closing Date, substantially in the form
of Exhibit 7.3(b) hereto.
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(c) Buyer shall have received from Thommessen Krefting Greve Lund,
Norwegian counsel to Ringdal, an opinion dated the Closing Date, substantially
in the form of Exhibit 7.3(c) hereto.
(d) Buyer shall have received from Trinidadian counsel to
Trinidad, an opinion dated the Closing Date, in such form as may be acceptable
to Buyer.
7.5 Financing by Buyer. Buyer shall have obtained net proceeds of
financing for the purchase of the Assets, on terms acceptable to Buyer, in its
sole discretion, in an amount not less than the Cash Consideration.
7.6 Absence of Material Adverse Change. Since the date of this
Agreement, there shall not have occurred a material adverse change (other than
such conditions as may affect the economy or the offshore drilling business
generally) in the Assets, operations, prospects or condition (financial or
otherwise) of the Business, taken as a whole.
ARTICLE VIII
COVENANTS AND AGREEMENTS OF THE PARTIES BEFORE,
RELATING TO AND SUBSEQUENT TO THE CLOSING
Seller and Buyer hereby covenant and agree as follows:
8.1 Actions with Respect to Closing. Each Seller will use its
Best Efforts to obtain the satisfaction of the conditions to Closing applicable
to Seller set forth in Article VII as soon as practicable. Each Buyer will use
its Best Efforts to obtain the satisfaction of the conditions to Closing
applicable to Buyer set forth in Article VI as soon as practicable.
8.2 Action of Buyer Regarding Financing. Buyer shall promptly
after the date of this Agreement exercise its Best Efforts to obtain financing
in an amount not less than the Cash Consideration. Buyer shall keep Seller
informed from time to time as to the status of such financing. Seller shall
cooperate with Buyer, in Buyer's preparation of any registration statement,
offering memorandum or prospectus of Buyer relating to such financing, by
providing such information relating to Seller, the Assets, the Business, and
the transactions contemplated by this Agreement as may be reasonably requested
by Buyer. If Buyer obtains financing through an underwritten offering and sale
or a private placement of its securities, Buyer and Seller agree that a
preliminary closing of the transactions contemplated hereby shall be held on
the date on which Buyer enters into one or more underwriting agreements or
purchase agreements with its underwriters or sales agents, as applicable, for
the issuance of Buyer's securities, which date will be approximately four
Business Days prior to the Closing Date (the "Preliminary Closing"). Buyer
agrees to furnish Seller with three Business Days prior written notice of such
Preliminary Closing. At any such Preliminary Closing, the closing documents
under this Agreement shall be presented and examined by Buyer and Seller and
all documents deemed satisfactory shall be held in escrow until the Closing.
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8.3 Certain Financial Statements. Each Seller agrees to prepare,
or cause the preparation of, and to deliver to Buyer as soon as practicable
following the date of this Agreement for inclusion in any registration
statement, prospectus or offering memorandum of Buyer in connection with the
financing contemplated by Section 8.2 or in any Form 8-K or other form of Buyer
relating to the transactions contemplated hereby required to be filed with the
SEC, such financial statements relating to Seller, the Business or the Assets
as Buyer may reasonably request in writing from Seller. Such financial
statements may consist of (i) such audited balance sheets and audited
statements of operations, cash flows and changes in equity together with the
notes thereon and the manually signed accountants' report of Seller's
independent public accountants covering such financial statements pursuant to
Regulation S-X promulgated by the SEC, and (ii) such unaudited interim balance
sheets and unaudited interim statements of operations, cash flows and changes
in equity, if any, in each case as Buyer shall reasonably deem to be required
for the registration statement, prospectus or offering memorandum used by Buyer
in connection with such financing, by Paragraph (a) of Item 7 of Form 8-K or by
such other required form. Nothing in this Section 8.3 shall require Viking to
translate to English any documents the originals of which are in a language
other than English or to restate any accounting matter so as to conform it to
any accounting standards other than generally recognized accounting principles
in Norway. Buyer shall pay the fees of independent public accountants of
Seller directly relating to the audit of such financial statements and the
participation, if any, of such independent public accountants in the
preparation of the registration statements or other reports required to be
filed by Buyer with the SEC in connection with the transactions contemplated
hereby.
8.4 Access; Confidentiality. Until Closing, each Seller shall
give the officers, attorneys, accountants and other authorized representatives
of Buyer full access, during normal business hours upon Buyer's reasonable
prior notice to such Seller, to all of the records, properties and personnel of
such Seller and its Affiliates relating to the Business and the Assets. Any
such inspection of the Assets shall be at the sole risk and expense of Buyer,
and Buyer agrees to indemnify Seller from any and all claims associated with
such inspection by Buyer. Each Seller will furnish the representatives of
Buyer during such period with all information as such representatives may
reasonably request regarding the Business and the Assets and shall use its Best
Efforts to cause the employees, accountants and attorneys of such Seller to
cooperate fully with such representatives in connection with such review and
examination and to make full disclosure to Buyer of all material facts known to
them regarding the Assets and the Business; provided, however, that Buyer will
hold in strict confidence and not use for purposes other than those
contemplated by this Agreement the documents and information furnished
concerning Seller, the Business or the Assets. Such confidence shall be
maintained at all times prior to the Closing and for so long after the
termination of this Agreement as the information remains confidential and
generally unavailable to the public or others in the industry. If the
transactions contemplated by this Agreement shall not be consummated, all such
documents and all copies thereof shall immediately thereafter be returned to
Seller. The confidentiality obligations set forth in this Section 8.4 shall
not apply to information (i) in the public domain, (ii) obtained by Buyer from
a third party source with the right to disclose such information, or (iii) with
respect to which disclosure is required by law in the opinion of counsel
reasonably acceptable to Seller.
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8.5 Conduct of Business and Preservation of Assets. Until
Closing, Buyer and each Seller agree to cooperate with each other to effect an
orderly transition of the ongoing operation of the Assets (including jointly
contacting customers of the Business and informing them of this Agreement and
the transfer to Buyer of the Business), and each Seller shall use its Best
Efforts to preserve, maintain and protect the Business and the Assets, and to
maintain the relationships with such Seller's existing employees, customers and
suppliers relating to the Business and the Assets. From and after the date of
this Agreement and until the Closing Date, (a) each Seller will conduct its
Business, and each Seller (other than Partner) will cause Trinidad and the
Joint Venture to conduct their Business, only in the ordinary course, and (b)
without the prior express written consent of Buyer, no Seller will, and no
Seller will permit any of its Affiliates to, (i) make any material change in
the conduct of the ongoing operation of the Business, (ii) enter into any new
drilling contracts with respect to the Vessels, unless in such Seller's good
faith opinion such contracts may reasonably be expected to have a duration of
90 days or less, enter into any other contracts or agreements with respect to
the Vessels other than in the ordinary course of business, or amend, in any
respect materially adverse to Seller, Trinidad, the Joint Venture or Buyer, any
Drilling Contract, Chartered Vessel Contract or Other Contract, (iii) move the
SOUTHWESTERN 110 once it arrives in Trinidadian waters, out of Trinidadian
waters, move the SOUTHWESTERN 160 out of waters offshore Qatar, or move any
other Vessel out of the U.S. Gulf of Mexico, respectively, (iv) enter into or
permit any of its subsidiaries to enter into any joint venture, partnership or
the like pertaining in any respect to the Assets or the Business, (v) merge or
consolidate with or into another person or entity, or sell all or substantially
all of its assets, and with respect only to Viking, if such merger,
consolidation or sale would have a material adverse effect on the ownership of
the Assets or the operation of the Business, (vi) liquidate or dissolve or seek
protection from creditors under applicable bankruptcy law, or (vii) commit
itself to do any of the foregoing.
8.6 Capital Expenditures. Seller (other than Partner) has
provided to Buyer a copy of the authorization for expenditures dated February
27, 1996 specifying the anticipated costs associated with the refurbishment of
the SOUTHWESTERN 154, and Partner has provided to Buyer a copy of the
reactivation budget dated January 30, 1996 specifying the anticipated
refurbishment and reactivation costs associated with the SOUTHWESTERN 180.
Prior to Closing, each Seller shall deliver to Buyer accurate and complete
copies of such Seller's monthly reports reflecting the status of capital
expenditure payments with respect to the SOUTHWESTERN 154, the SOUTHWESTERN
160, the SOUTHWESTERN 110 and the SOUTHWESTERN 180.
8.7 Vessel Improvements.
(a) Seller (other than Partner) shall completely refurbish the
SOUTHWESTERN 160 in accordance with all specifications of, and so that said
Vessel is acceptable to, the operator in Qatar; provided, however, that in the
event that any such improvements with respect to the SOUTHWESTERN 160 have not
been completed as of the Closing Date, Buyer may complete such improvements
following the Closing Date at Seller's sole risk and expense. Buyer and Seller
agree that for purposes of this Agreement, the operator shall be deemed to have
accepted the Vessel as having been improved or modified in accordance with the
operator's specifications
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except to the extent that the operator has notified Buyer of any deficiencies
with respect to the Vessel within 60 days following commencement of drilling
operations by such Vessel. Notwithstanding the foregoing, Seller shall bear
the cost of any improvement of or modification to the SOUTHWESTERN 160 which is
expressly required pursuant to the terms of the current Drilling Contract
covering such Vessel, without regard to the date of notification of such
deficiency by the operator. Seller shall, promptly upon request of Buyer,
reimburse Buyer for all costs and expenses actually incurred by Buyer with
respect to the foregoing items.
(b) Seller (other than Partner) shall completely refurbish the
SOUTHWESTERN 154 in accordance with the authorization for expenditures dated
February 27, 1996 with respect to same, and Partner shall completely refurbish
the SOUTHWESTERN 180 in accordance with the reactivation budget dated January
30, 1996; provided, however, that in the event that any such improvements with
respect to the SOUTHWESTERN 154 or the SOUTHWESTERN 180 have not been completed
as of the Closing Date, each such Seller and Buyer agree that (i) the Cash
Consideration will be reduced (regardless of prior cost overruns with respect
to capital expenditure payments already incurred) (A) with respect to the
SOUTHWESTERN 154 by the amount allocated to the unfinished items as reflected
in the authorization for expenditures dated February 27, 1996, and (B) with
respect to the SOUTHWESTERN 180 by the amount of $4,786,150 as reflected in the
reactivation budget dated January 30, 1996, as applicable, and (ii) Seller
shall have no liability for failing to commence or complete such refurbishments
prior to the Closing Date or for the costs (including cost overruns) of
completing the unfinished refurbishments subsequent to the Closing Date. With
respect to the SOUTHWESTERN 154, Buyer and Seller (other than Partner) shall
attempt to agree, on or before three Business Days prior to the Closing Date,
on the items (or the portions thereof) which have not been completed. In the
event that Buyer and Seller (other than Partner) cannot timely reach agreement,
Seller shall engage Noble Denton & Associates, at its sole expense, to
ascertain the items (or portions thereof) which have not been completed, and
the determination of Noble Denton & Associates with respect to such items shall
be final and binding on Buyer and Seller for purposes of the aforementioned
reduction in the Cash Consideration payable by Buyer.
8.8 Vessel Loss. Each Seller (with respect to its Vessels) and
Viking (with respect to the Joint Venture Vessel) agrees to maintain, or cause
to be maintained, insurance on each such Vessel of a type and in an amount not
less than the amount set forth on Schedule 4.14 through the Closing Date.
Subject to the provisions of Sections 7.6 and 11.1(c)(ii):
(a) If any Vessel (other than the Joint Venture Vessel or the
Merger Vessel) shall become an actual, constructive, arranged or compromised
total loss (as determined by the applicable Seller's insurance underwriter's
marine surveyor) prior to the Closing Date, Newco shall not be required to
purchase such Vessel. If the Joint Venture Vessel shall become an actual,
constructive, arranged or compromised total loss (as determined by the Joint
Venture's insurance underwriter's marine surveyor) prior to the Closing Date,
Newco shall not be required to purchase the Trinidad Common Stock. If the
Merger Vessel shall become an actual, constructive, arranged or compromised
total loss (as determined by Trivium's insurance underwriter's marine surveyor)
prior to the Closing Date, Merger Sub shall not be required to consummate the
Merger. Additionally, in each case, (i) Buyer shall not be entitled to any
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proceeds of insurance associated with such loss, (ii) the Cash Consideration
shall be reduced by the amount allocated to such Vessel pursuant to Schedule
8.8(a), (iii) the term "Assets" shall be deemed not to include such Vessel, and
(iv) the other provisions of this Agreement shall continue to be in effect and
the Closing shall take place in the manner contemplated herein.
(b) If any Vessel sustains damage not amounting to an actual,
constructive, arranged or compromised total loss prior to the Closing Date,
either (i) the Seller of such Vessel (or Viking, with respect to the Joint
Venture Vessel and the Merger Vessel) shall repair or cause to be repaired the
damage to the Vessel at such Seller's own expense, or (ii) in the case of
damage to a Vessel in respect of which insurance proceeds are available, Buyer,
at its option, may require such Seller to assign to Buyer at the Closing the
rights such Seller has to receive insurance proceeds in respect of such loss or
damage and pay to Buyer the amount by which any such insurance proceeds
otherwise payable to Buyer are reduced by any deductible or deductibles under
the terms of the relevant policy or policies (offset by any amounts paid
through the Closing Date by such Seller for such repair), and, in the case of
either (i) or (ii) above, Buyer shall remain obligated to purchase the Assets
on the Closing Date and the Cash Consideration shall not be reduced; provided,
however, that if Buyer does not receive sufficient insurance proceeds as may be
reasonably necessary to restore the damaged Vessel to its prior condition, such
Seller shall restore the Vessel to its prior condition or pay to Buyer an
amount reasonably necessary to allow Buyer to restore the Vessel to its prior
condition.
8.9 Removal of Outstanding Recommendations. Prior to or promptly
following Closing, each Seller (with respect to its Vessels) and Viking (with
respect to the Joint Venture Vessel and the Merger Vessel) agrees to remove or
cause the removal at its expense of all outstanding recommendations to class
against any such Vessel (in each case including, without limitation, those
recommendations set forth on Schedule 4.8); provided, however, that outstanding
class recommendations with respect to the SOUTHWESTERN 110 and the SOUTHWESTERN
180 need not be removed by any Seller; and provided further, that with respect
to the SOUTHWESTERN 154, Seller shall not be required to furnish or bear the
cost of furnishing items which may be required to satisfy outstanding class
recommendations against the SOUTHWESTERN 154 for which a reduction in the Cash
Consideration has been taken at Closing pursuant to Section 8.7(b).
8.10 Maintenance of Inventory Levels. Each Seller (with respect to
its Vessels) and Viking (with respect to the Joint Venture Vessel) agrees that
through the Closing Date, it will maintain, or cause to be maintained,
Inventory with respect to each such Vessel, including spare components and
parts, supporting inventory and stores on board, in such amounts and of such
quality as would in all material respects be (i) in accordance with past
practice of Southwestern and comparable to historical levels, and (ii)
sufficient to comply with any applicable Drilling Contract or Other Contract.
8.11 Removal of Encumbrances. Each Seller (with respect to its
Vessels) and Viking (with respect to the Joint Venture Vessel and the Merger
Vessel) shall cause the Encumbrances referred to in Schedule 8.11 to be removed
and terminated on or before the Closing Date and
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shall furnish to Buyer at the Closing evidence of such removal and termination
reasonably satisfactory to Buyer.
8.12 Litigation. Until Closing, each Seller will promptly notify
Buyer of any action, suit, proceeding, claim or investigation that is commenced
or, to its knowledge, overtly threatened against such Seller or its Affiliates
which relates to or affects the Business, the Assets or this Agreement or the
transactions contemplated hereby, and Buyer will promptly notify Seller of any
action, suit, proceeding, claim or investigation that is commenced or, to its
knowledge, overtly threatened against Buyer which relates to and materially and
adversely affects Buyer and its business taken as a whole or affects this
Agreement or the transactions contemplated hereby.
8.13 Performance Bonds.
(a) On or before the Closing Date, (i) Buyer shall provide a bank
letter of credit or performance bond acceptable to Occidental Petroleum of
Qatar Ltd. in the format set forth in Exhibit G to that certain Offshore
Drilling Contract dated February 13, 1996, between Occidental Petroleum of
Qatar, Ltd. and Southwestern, and (ii) Buyer shall provide to the U.S.
Department of Transportation, Maritime Administration, a U.S. commercial surety
bond or other surety acceptable to the Maritime Administrator for purposes of
securing the obligations of Buyer pursuant to an Approval Notice and Agreement
issued by the U.S. Department of Transportation, Maritime Administration, and
executed by Buyer, with respect to each of the Vessels.
(b) With respect to any other performance or other similar bond or
letter of credit or any certificate of financial responsibility or similar
evidence of financial accountability described in Schedule 4.13 posted or
procured by any Seller in connection with such Seller's ownership or operation
of any of the Vessels or the performance under a Drilling Contract, Buyer and
such Seller shall cooperate with each other in order (i) for such Seller to
obtain the release of any such bond, letter of credit or certificate, and (ii)
to the extent required, for Buyer to obtain a substitute bond, letter of credit
or certificate or to assume the existing bond, letter of credit or certificate
of such Seller. Buyer shall reimburse such Seller for all out-of-pocket costs
incurred by such Seller as a result of its leaving a performance or similar
bond, letter of credit or certificate in place after the Closing Date in order
to permit Buyer to conduct the Business after the Closing Date; provided,
however, that such Seller shall not be required to maintain in force and effect
any such bond, letter of credit or certificate for more than 120 days after the
Closing Date.
8.14 Employees.
(a) Between the date of this Agreement and Closing, (i) no change
will be made in the rate of remuneration or the emoluments or pension benefits
of any employee of the Business, and (ii) no Seller will hire or terminate the
employment of any employee of the Business except in the ordinary course of
business consistent with past practice or as required under a Drilling
Contract.
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(b) No portion of the assets of any Benefit Plan, written or
unwritten, heretofore sponsored or maintained by any Seller (and no amount
attributable to any such Benefit Plan) shall be transferred to Buyer, and Buyer
shall not incur any liability in connection with, nor be required to continue,
any such Benefit Plan after the Closing Date. The amounts payable under any
Benefit Plan shall be determined with reference to the date of the event by
reason of which such amounts become payable, without regard to conditions
subsequent, and Buyer shall not be liable for any claim for insurance,
reimbursement or other benefits payable by reason of any event which occurs
prior to the Closing Date. All amounts payable directly to employees, or to
any fund, program, arrangement or plan maintained by any Seller therefor shall
be the responsibility and liability of such Seller.
(c) As of the Closing Date, Buyer will offer employment to
substantially all the employees of the Business who work on the Vessels and
substantially all of the general and administrative employees of the Business
at a salary and on other terms and conditions of employment which, when
considered in the aggregate, are not less favorable than those currently being
provided to such employees, including without limitation, plans (considered in
the aggregate) not less favorable than those listed on Schedule 4.19. To the
extent that service is relevant for purposes of eligibility, participation,
vesting, benefit contributions, benefit calculations or allowance (including
without limitation, entitlement to vacation and sick days) under any benefit
plan, program or arrangement established or maintained by Buyer for the benefit
of its employees, such plan, program or arrangement shall credit any employees
hired by Buyer pursuant to this Section for service on or prior to the Closing
Date with the Seller or any Affiliate thereof, to the extent allowed by
Applicable Law. Notwithstanding anything in this Agreement to the contrary,
nothing herein shall be construed as granting any employee of the Business any
right to employment with Buyer for any period of time or implying or creating
any terms or conditions of employment.
(d) Each Seller shall use its Best Efforts to assist Buyer in
employing as new employees of Buyer, all such persons presently engaged in the
Business that Buyer wishes to employ. Subject to Buyer's compliance with
Section 8.14(c), each Seller shall be solely responsible for and shall pay any
and all severance pay obligations due to any employees of the Business as a
result of the cessation of such Seller's employment of such employees.
8.15 Property Taxes. All ad valorem taxes, utility and other
service charges and other taxes, fees and expenses relating to the Business or
the Assets for all periods prior to the Closing shall be the obligation of
Seller, as applicable, and for all periods following the Closing shall be the
obligation of Buyer. Each Seller shall promptly pay to Buyer from time to time
the prorated share of all such taxes, fees and expenses for which such Seller
is responsible under this Section 8.15 upon Buyer's request accompanied by
appropriate documentation that such taxes, fees and expenses are due and
payable.
8.16 Other Taxes. Each Seller (with respect to its Assets) and
Viking (with respect to Assets of the Joint Venture) shall be liable for and
shall pay or cause to be paid all applicable sales, use, transfer, stamp,
recording, value added or similar taxes and assessments resulting from the
consummation of the transactions contemplated hereby which are levied by any
taxing
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authority based on the location of such Assets as of the Closing Date;
provided, that no Seller shall be liable for any such taxes or assessments
which are levied by any taxing authority into whose jurisdiction Buyer moves
the Assets subsequent to Closing. Buyer and Seller agree to cooperate to
obtain all available exemptions from such taxes. Seller and Buyer agree to
cooperate with each other in order to reduce the amount of taxes, import duties
or other assessments imposed on or charged to Seller or Buyer as a result of
the consummation of the transactions contemplated by this Agreement, including
by postponing the date of transfer of legal title to any Vessel until
completion of the Drilling Contract under which such a Vessel is operating on
the Closing Date; provided, that neither Seller nor Buyer shall be obligated to
take any action that it determines in its sole discretion may subject it to
additional taxes, liabilities or expenses.
8.17 Public Statements. Prior to issuing any news release or
otherwise making any public announcement concerning this Agreement or the
transactions contemplated hereby, Buyer and Seller shall consult with each
other regarding the proposed contents thereof (but no approval thereof shall be
required).
8.18 Books and Records. Seller and Buyer shall have the right, at
their own expense, at any time or from time to time within five years after the
Closing Date during reasonable business hours upon reasonable notice to
inspect, and make copies of or extracts from, any of the books and records
directly relating to the ownership of the Assets or operation of the Business
prior to the Closing Date in the possession of Seller or Buyer or their
respective Affiliates, as the case may be. None of the books and records in
the possession of Seller (other than Viking) or Buyer, as the case may be,
shall be destroyed prior to December 31, 2001 or five years after generated,
whichever is earlier, without the consent of the other unless first reproduced
by microfilm or any other similar process. In the event that either Seller
(other than Viking) or Buyer shall wish to destroy any of such books and
records at any time or from time to time after the Closing Date, such party
shall give not less than 60 days' notice to the other party and such other
party shall have the right, at its own expense, during reasonable business
hours to remove such books and records and to keep possession of the same.
8.19 Use of Southwestern Name. Buyer shall have the right but not
the obligation to conduct the Business acquired by it at the Closing under the
name "SOUTHWESTERN" or any derivative thereof, including without limitation
"SOUTHWESTERN OFFSHORE CORPORATION." Seller shall have the concurrent right to
use the name "SOUTHWESTERN" after the Closing only for so long as reasonably
necessary for, and solely in connection with, carrying out the winding down of
the Business and operations of Seller. Within 90 days after the Closing Date,
Buyer shall change the name of Trinidad to remove all references to "Viking" in
such name.
8.20 Post-Closing Collection, Payment and Administrative
Procedures.
(a) Buyer and Seller agree that amounts prepaid by Seller which
are attributable to periods extending beyond the Closing Date shall be prorated
between Seller and Buyer as of the Closing Date. Payment by Seller of any
obligations in connection with the Assets or the
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Business which relate in whole or in part to the period on or after the Closing
Date shall be adjusted between Seller and Buyer so that Seller shall be
reimbursed by Buyer for that portion of any obligation paid by Seller which
relates to the period from and after the Closing Date. Within ninety days of
the Closing Date, Seller shall prepare and submit to Buyer a schedule of
payments due to Seller hereunder, and Buyer shall promptly, and in any event
within fifteen days of receipt of such schedules, pay to Seller all undisputed
amounts contained in such schedule and notify Seller of any amounts contained
in the schedule which Buyer disputes, including a detailed description of the
nature of Buyers' dispute.
(b) With respect to Drilling Contracts and Other Contracts in
progress as of the Closing Date, Buyer and Seller agree that all revenues
earned and expenses incurred prior to midnight on the Closing Date shall be for
the account of Seller, and all revenues earned and expenses incurred subsequent
to the Closing Date shall be for the account of Buyer. Subsequent to Closing,
(i) Buyer agrees to deliver to Seller, within three Business Days of Buyer's
receipt of same, any and all (A) monies paid to or received by Buyer in respect
of amounts due Seller, including, but not limited to, payment of receivables,
refunds, rebates, and release of performance or similar bonds or letters of
credit, and (B) inquiries, correspondence or documents received by Buyer
related to such amounts; and (ii) Seller agrees to deliver to Buyer, within
three Business Days of Seller's receipt of same, any and all (A) monies paid to
or received by Seller in respect of amounts due Buyer, and (B) inquiries,
correspondence or documents received by Seller related to such amounts.
8.21 No Shop. Prior to the Closing Date, no Seller and no
Affiliate of any Seller, shall enter into or otherwise participate in
solicitations, negotiations or discussions either directly or through
representatives, with any other corporation, entity or person with respect to
(a) the sale by any such Seller of any of the Assets, or (b) the merger or
consolidation of any such Seller with any other entity and with respect only to
Viking, that would have a material adverse effect on its ownership of the
Assets or the operation of the Business. Each Seller agrees that the remedy at
law for a breach of this Section 8.21 is inadequate and that Buyer shall be
entitled to injunctive relief for any breach of this Section 8.21.
8.22 Continued Effectiveness of Representations and Warranties.
Each of Seller and Buyer shall use its Best Efforts to cause the
representations and warranties made by it herein to continue to be true and
correct on and as of the Closing Date as if made on and as of the Closing Date.
Each Seller and Buyer shall each advise the other promptly in writing of any
condition or circumstance, including without limitation, items which are (or
which should be) disclosed in the Schedules, occurring after the date hereof up
to and including the Closing Date that would cause the representations and
warranties made by it herein to become untrue in any material respect.
8.23 Further Assurances. At and after the Closing Date, and
without further consideration, each Seller shall execute and deliver any
certificates, instruments or agreements, and shall take and do any other
actions and things, as Buyer may reasonably request, to vest, perfect or
confirm of record or otherwise in Buyer any and all right, title and interest
in, to and under any of the Assets, and each Buyer shall execute and deliver
any certificates, instruments
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or agreements, and shall take and do any other actions and things, as Seller
may reasonably request, to perfect, confirm or otherwise assure Seller of the
assumption by Newco of the Assumed Liabilities.
8.24 Parent Guaranty. The Guaranty Agreement executed by Cliffs
pursuant to Section 3.3(e) to guarantee the obligation of Newco to pay, perform
and satisfy the obligations of Viking pursuant to the Parent Guaranty shall be
supported by a standby letter of credit procured by Cliffs, in the original
amount of $4,250,000, issued by a bank and in a form reasonably acceptable to
Viking. Such Guaranty Agreement and the supporting standby letter of credit
shall terminate and be of no further force and effect once Viking is released
by Citibank N.A. from its obligations under the Parent Guaranty. Each of Buyer
and Viking agrees to exercise its Best Efforts to promptly obtain the release
of Viking from the Parent Guaranty. When and if such release is obtained,
Viking agrees to execute and deliver any certificates, instruments or
agreements, and to take and do any other actions and things, as Cliffs may
reasonably request to terminate the Guaranty Agreement and the supporting
standby letter of credit.
8.25 Expenses. Except as otherwise specifically provided herein,
each of the parties hereto shall assume and bear all expenses, costs and fees
incurred or assumed by such party in the preparation and execution of this
Agreement and in compliance with and performance of the agreements and
covenants contained in this Agreement, regardless of whether the transactions
contemplated hereby are consummated.
ARTICLE IX
ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 Ownership of Securities. Each Seller represents and warrants
that, except as set forth on Schedule 9.1, neither it nor any of its Affiliates
has beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of any Cliffs Common Stock.
9.2 Investment Representations.
(a) Each Seller represents that it is acquiring the Acquisition
Shares for its own account for investment and not with a view to, or for sale
or other disposition in connection with, any distribution of all or any part
thereof, except (i) in an offering covered by a registration statement filed
with the SEC under the Securities Act covering the Acquisition Shares, or (ii)
pursuant to an applicable exemption under the Securities Act. In acquiring the
Acquisition Shares, no such Seller is offering or selling, or will offer or
sell, for Cliffs in connection with any distribution of the Acquisition Shares,
and no such Seller has a participation or will participate in any such
undertaking or in any underwriting of such an undertaking except in compliance
with applicable United States federal securities laws.
(b) Each Seller acknowledges that it or its representatives have
been furnished with substantially the same kind of information regarding Cliffs
and its business, assets, results of operations and financial condition as
would be contained in a registration statement prepared in
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connection with a public sale of the Acquisition Shares. Each Seller further
represents that it has had an opportunity to ask questions of and receive
answers from Cliffs regarding Cliffs and its business, assets, results of
operations and financial condition and the terms and conditions of the issuance
of the Acquisition Shares.
(c) Each Seller acknowledges that it can bear the economic risk of
its investment in the Acquisition Shares, and has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of an investment in the Acquisition Shares.
(d) Each Seller understands that the Acquisition Shares, when
issued, will not have been registered pursuant to the Securities Act, that the
Acquisition Shares will be characterized as "restricted securities" under U.S.
federal securities laws, and that under such laws and applicable regulations
the Acquisition Shares cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom. Each Seller
further understands that, following consummation of the transactions
contemplated by this Agreement, it may be an "affiliate" of Cliffs for purposes
of Rule 144 promulgated under the Securities Act. In this regard, each Seller
represents that it is familiar with Rule 144 promulgated under the Securities
Act, as currently in effect, and understands the resale limitations imposed
thereby and by the Securities Act. Stop transfer instructions may be issued to
the transfer agent for the Cliffs Common Stock in connection with shares of
Cliffs Common Stock owned by any Seller or its Affiliates.
(e) It is agreed and understood by each Seller that the
certificate representing the Acquisition Shares shall conspicuously set forth
on the face or back thereof, in addition to any legends required by applicable
law or other agreement, a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY BE SOLD OR OTHERWISE TRANSFERRED
ONLY (1) PURSUANT TO A REGISTRATION STATEMENT FILED UNDER SUCH ACT, OR
(2) IN ACCORDANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, UNLESS
CLIFFS DRILLING COMPANY (THE "CORPORATION") RECEIVES A WRITTEN OPINION
OF COUNSEL, WHICH OPINION AND COUNSEL ARE REASONABLY SATISFACTORY TO
THE CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
THE RIGHT TO SELL, TRANSFER OR OTHERWISE DISPOSE OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET
FORTH IN AN ACQUISITION AGREEMENT DATED MAY 13, 1996 BETWEEN THE
CORPORATION AND VIKING SUPPLY SHIPS A.S. ET. AL., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
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It is agreed and understood by Buyer that the first legend will be removed upon
the registration of the shares represented by such certificate under the
Securities Act or upon delivery to Buyer of a written opinion of counsel, which
opinion and counsel are reasonably satisfactory to Buyer, to the effect that
such legend is not required.
9.3 Restrictions on Certain Sales.
(a) Subject to subsections (b) and (c) below, each Seller agrees that
prior to the fifth anniversary of the Closing Date, it will not, directly or
indirectly, without the prior written consent of the Board of Directors of
Cliffs, sell, assign, transfer, pledge, encumber or otherwise dispose of shares
of Cliffs Common Stock held by it (including, without limitation, the
Acquisition Shares) in a single transaction or series of related transactions
to a transferee (including its Affiliates and any person or persons which are
to its knowledge, after due inquiry, part of any group, within the meaning of
Section 13(d) of the Exchange Act, which includes such transferee or any of its
Affiliates) which beneficially owns, or after giving effect to such sale would
beneficially own, five percent or more of the then outstanding Voting
Securities.
(b) The restrictions set forth in subsection (a) above shall not be
applicable to sales or other dispositions by any Seller of Cliffs Common Stock:
(i) Effected in the open market by a broker or market
maker;
(ii) After the date of a Change of Control of Cliffs;
(iii) Pursuant to a tender offer or an exchange offer;
(iv) As a result of or in connection with consummation of
a merger, consolidation or sale of all or substantially all the assets
of Cliffs;
(v) In connection with a bona fide lending arrangement
secured by such Cliffs Common Stock; or
(vi) To any person or entity other than a Prohibited
Person.
(c) For purposes of this Section 9.3, "Change of Control" means
the occurrence of either of the following events:
(i) A person or group (within the meaning of Section
13(d)(3) of the Exchange Act) shall attain the beneficial ownership
(within the meaning of rule 13d-3 promulgated under the Exchange Act)
of an equity interest representing at least 50 percent of the Voting
Securities, unless such attainment has been approved by the Board of
Directors of Cliffs; or
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(ii) Cliffs, directly or indirectly, consolidates or
merges with any other person or sells or leases its properties and
assets substantially in an entirety to any other person, unless
approved by the Board of Directors of Cliffs.
(d) As used in this Article IX, a "Prohibited Person" shall mean
any person or entity that (i) either (A) is engaged or is an Affiliate of a
person or entity engaged, or (B) was engaged at any time during the two year
period prior to such sale or disposition or is an Affiliate of a person or
entity that was engaged at any time during the two year period prior to such
sale or disposition, in the oilfield service or contract oil and gas drilling
business (a "Competitive Business"), and (ii) in the case of (A), at the time
of such sale or disposition of Cliffs Common Stock such entity that is engaged
in a Competitive Business has net assets in excess of $15,000,000, or, in the
case of (B), at the time such person ceased to be engaged in the Competitive
Business, such person or entity had net assets in excess of $15,000,000,
provided, however, that an entity engaged primarily in the oil and gas
exploration business shall not be considered to be engaged in a Competitive
Business. As used in this Article IX, an "Affiliate" of a person or entity
shall be limited to (i) an executive officer (as defined in Rule 3b-7 under the
Exchange Act) or director of such person or entity; (ii) a person or entity
that, directly or indirectly, beneficially owns 40% or more of such person or
entity's voting securities, or (iii) a person or entity 40% or more of whose
voting securities are, directly or indirectly, beneficially owned by such
person or entity.
9.4 Restrictions on Certain Actions. Each Seller hereby agrees
(subject to the occurrence of the Closing) that for a period of five years from
the Closing Date:
(a) No such Seller and no Affiliate of any such Seller shall
deposit any Voting Securities into a voting trust or, except as provided in
this Section, subject any Voting Securities to any agreement, arrangement or
understanding with respect to the voting of such Voting Securities or any
agreement having similar effect which entitles any Prohibited Person to
exercise any voting rights with respect to any Voting Securities.
(b) No such Seller and no Affiliate of any such Seller shall make
or in any way participate, directly or indirectly, with any Prohibited Person
in any "solicitation" of "proxies" (as such terms are defined in Regulation 14A
promulgated under the Exchange Act) to vote, or seek to advise or influence any
person with respect to the voting of, any Voting Securities in opposition to
the recommendation of the Board of Directors of Cliffs with respect to any
matter.
(c) No such Seller and no Affiliate of any such Seller shall form,
join, in any way participate in, or encourage the formation of, a partnership,
limited partnership, syndicate or other group (within the meaning of Section
13(d)(3) of the Exchange Act) which includes a Prohibited Person, or otherwise
act in concert with a Prohibited Person, for the purpose of acquiring, holding,
voting or disposing of Voting Securities.
(d) No such Seller and no Affiliate of any such Seller shall act
in concert with a Prohibited Person to seek to affect or influence the control
of management or the Board of Directors of Cliffs or the business, operations
or affairs of Cliffs; provided, however, that
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<PAGE> 43
actions taken solely by exercise of the right to vote Voting Securities of
which any such Seller or any of its Affiliates are the beneficial owners
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) shall not
violate this provision.
(e) Subject to the delivery by Cliffs of proper notice of such
meetings and the absence of a preliminary or permanent injunction or other
final order by any court barring such action, each such Seller and its
Affiliates that beneficially own Voting Securities shall, as stockholders of
Cliffs, be present in person or be represented by proxy at all meetings of
stockholders of Cliffs so that all Voting Securities of which it is the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) may be counted for the purpose of determining the presence of a
quorum at such meetings.
ARTICLE X
ADDITIONAL REPRESENTATIONS, WARRANTIES AND GUARANTEES
10.1 Cliffs Guarantee. Cliffs irrevocably and unconditionally
guarantees as primary obligor the due and punctual performance by each other
Buyer of the agreements and obligations of each such Buyer, and the
completeness and accuracy of the representations and warranties made by each
such Buyer, under this Agreement and all agreements and instruments to be
executed by each such Buyer hereunder, including, without limitation, Article
XII INDEMNIFICATION, and the instruments of assumption referred to in Section
3.3(c) with respect to the Assumed Liabilities. This guaranty shall survive
the Closing and any liquidation of any other Buyer.
10.2 Viking Guarantee. Viking irrevocably and unconditionally
guarantees as primary obligor the due and punctual performance by each Seller
(other than Partner) of the agreements and obligations of each such Seller
(other than Partner), and the completeness and accuracy of the representations
and warranties made by each such Seller (other than Partner), including
representations and warranties with respect to Trinidad and the Joint Venture,
under this Agreement and all agreements and instruments to be executed by each
such Seller hereunder, including, without limitation, Article XII
INDEMNIFICATION, and the instruments of conveyance referred to in Section
3.2(a). This guaranty shall survive the Closing and any liquidation of any
such Seller.
10.3 Ringdal Guarantee. Ringdal irrevocably and unconditionally
guarantees as primary obligor the due and punctual performance by Partner of
the agreements and obligations of Partner, and the completeness and accuracy of
the representations and warranties made by Partner, under this Agreement and
all agreements and instruments to be executed by Partner hereunder, including
without limitation, Article XII INDEMNIFICATION, and the instruments of
conveyance referred to in Section 3.2(a); provided, however, that in no event
shall Ringdal guaranty any obligation Partner may have with respect to
refurbishment of the SOUTHWESTERN 180. This guaranty shall survive the Closing
and the liquidation of Partner.
10.4 Ringdal Representations. Ringdal represents and warrants to
Buyer as follows:
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(a) Ringdal is an individual residing in Norway, with all
necessary power and authority to own and lease the assets he currently owns and
leases and to carry on his business as such business is currently conducted.
(b) Ringdal has all necessary legal capacity, power and authority
to execute and deliver this Agreement and all agreements, instruments and
documents to be executed and delivered hereunder by him, to consummate the
transactions contemplated hereby and to perform all terms and conditions hereof
to be performed by him.
(c) This Agreement constitutes, and each other agreement or
instrument to be executed hereunder by Ringdal, when so executed and delivered,
will constitute, the legal, valid and binding obligation of Ringdal enforceable
against him in accordance with its terms, except to the extent the
enforceability hereof and thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws relating to or affecting creditors'
rights generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) The execution and delivery of this Agreement by Ringdal, the
fulfillment of and compliance by him with the terms and conditions hereof and
the consummation by him of the transactions contemplated hereby will not:
(i) result in a breach of or constitute a default under
(whether with notice or the lapse of time or both) any note, bond,
mortgage, loan agreement, indenture or other instrument evidencing
borrowed money to which Ringdal is a party or by which Ringdal is
bound, or
(ii) to the knowledge of Ringdal, violate any national or
local law, statute, rule or administrative regulation or any judgment,
order, injunction or decree of any Governmental Entity applicable to
or binding upon Ringdal.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written consent of Buyer and Seller;
(b) by either Buyer or Seller, if there shall be any statute, rule
or regulation that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or a Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby, and such order, decree, ruling or other action shall have
become final and nonappealable;
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(c) by Buyer, if
(i) there has been a material breach by any Seller of any
covenant or agreement, or a material inaccuracy of any representation
or warranty of Seller contained in this Agreement which has rendered
the satisfaction of any condition to the obligations of Buyer
impossible and such breach or inaccuracy has not been cured by Seller
within five Business Days after receipt by Seller of notice thereof
from Buyer, or waived by Buyer; or
(ii) there shall have occurred a material adverse change
as described in Section 7.6; or
(iii) the Closing shall not have occurred on or before
August 21, 1996 (provided that the right to terminate this Agreement
under this clause (iii) shall not be available to Buyer if Buyer's
failure to fulfill any of its obligations under this Agreement or its
misrepresentation or breach of warranty hereunder has been the
principal cause thereof);
(d) by Seller if
(i) there has been a material breach by any Buyer of any
covenant or agreement, or a material inaccuracy of any representation
or warranty of Buyer contained in this Agreement which has rendered
the satisfaction of any condition to the obligations of Seller
impossible and such breach or inaccuracy has not been cured by Buyer
within five Business Days after receipt by Buyer of notice thereof
from Seller, or waived by Seller; or
(ii) the Closing shall not have occurred on or before June
22, 1996, and Buyer shall have failed to deposit additional earnest
money in an amount sufficient to increase the earnest money deposit to
$2,000,000 (provided that the right to terminate this Agreement under
this clause (ii) shall not be available to Seller if the failure by
Seller to fulfill any of its obligations under this Agreement on its
misrepresentation or breach of warranty hereunder has been the
principal cause thereof); or
(iii) the Closing shall not have occurred on or before
August 21, 1996 (provided that the right to terminate this Agreement
under this clause (iii) shall not be available to Seller if the
failure by Seller to fulfill any of its obligations under this
Agreement or its misrepresentation or breach of warranty hereunder has
been the principal cause thereof).
11.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 11.1 by Buyer or Seller, written notice
thereof shall forthwith be given to the other parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
become void and have no effect, except that the agreements contained in this
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Section 11.2 and in Sections 4.27, 5.14, 8.4, 8.25, and 11.3 shall survive the
termination hereof.
11.3 Liquidated Damages and Expense Reimbursement.
(a) Notwithstanding any other provision of this Agreement, if
Buyer has not satisfied the condition set forth in Section 7.5 and, as a result
thereof, this Agreement is terminated by Seller pursuant to Section 11.1(d)(ii)
or 11.1(d)(iii), then, unless Buyer is then entitled to terminate this
Agreement pursuant to Sections 11.1(c)(i) or 11.1(c)(ii), the earnest money
deposit shall be forfeited to Viking, on behalf of Seller, as liquidated
damages and not as a penalty. Upon payment of such liquidated damages, Buyer
shall have no other liability whatsoever to Seller under this Agreement, except
for liability based on the breach by Buyer of this Agreement, which breach is
unrelated to the inability of Buyer to obtain the financing contemplated by
Section 8.2.
(b) In the event that this Agreement is terminated by Buyer
pursuant to Section 11.1(c)(i) and Buyer is not then entitled to terminate this
Agreement pursuant to Section 11.1(c)(ii), Seller shall pay to Buyer within ten
Business Days following a request therefor, such amount as will fully reimburse
Buyer for all documented legal, accounting, consulting and investment advisory
fees and expenses incurred by Buyer in connection with the negotiation,
execution and delivery of this Agreement.
(c) In the event that this Agreement is terminated by Seller
pursuant to Section 11.1(d)(i) based on circumstances unrelated to the
inability of Buyer to obtain financing as contemplated by Section 8.2, Buyer
shall pay to Viking, on behalf of Seller, within ten Business Days following a
request therefor, such amount as will fully reimburse Seller for all documented
legal, accounting, consulting and investment advisory fees and expenses
incurred by Seller in connection with the negotiation, execution and delivery
of this Agreement.
(d) Nothing contained in this Section 11.3 shall relieve any party
from liability for damages (excluding consequential damages) actually incurred
as a result of any breach of this Agreement. Any appreciation or depreciation
in the value of the Assets and/or the Business which may occur after a breach
of the Agreement shall not constitute consequential damages for which a party
is precluded from recovering from any other party.
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification by Buyer.
(a) Each Buyer, jointly and severally, agrees to indemnify, defend
and hold Seller and its Affiliates harmless from and against any and all Claims
sustained after Closing by Seller or any of its Affiliates based upon, arising
out of or otherwise in respect of (i) the inaccuracy of any representation or
warranty, or the breach of any covenant or agreement, of Buyer
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contained in this Agreement or in any certificate, agreement, document or
instrument delivered pursuant to this Agreement, (ii) the Securities Act or any
other federal or state securities law, insofar as any such Claim is based upon,
arises out of or otherwise is in respect of the financing by Buyer contemplated
by Section 8.2, or (iii) the operation of the Business or the ownership,
management or use of the Assets after the Closing, unless and to the extent
that such Claim arises solely from any action of Seller or any of its
Affiliates after the Closing; provided, however, that Buyer shall have no
liability pursuant to this Section 12.1(a) for the first $100,000 of aggregate
Claims in respect of the matters described in clauses (i) or (iii) above
incurred by Seller or its Affiliates (the "Seller Basket") and Buyer shall be
responsible only for such amounts of such Claims as exceed the Seller Basket;
provided further, however, that Buyer shall have no liability pursuant to this
Section 12.1(a) in respect of the matters described in clause (ii) above to the
extent that any such Claim is based upon, arises out of or is otherwise in
respect of an untrue statement of material fact contained in, or an omission of
a material fact from, information prepared or furnished in writing by Seller or
its Affiliates expressly for use in any registration statement, prospectus or
offering memorandum of Buyer in connection with such financing. The foregoing
indemnification is given solely for the purpose of protecting Seller and its
Affiliates and shall not be deemed extended to, or interpreted in a manner to
confer any benefit, right or cause of action upon, any third party.
(b) Without limiting the generality of the indemnification
obligations set forth in subsection (a) of this Section 12.1, each Buyer,
jointly and severally, further agrees to indemnify, defend and hold Seller
harmless from and against any and all Claims sustained by Seller, irrespective
of the amount of such Claim (but subject to the Seller Basket, except as
otherwise provided in (ii), (iv) and (vi) below and subject to the limitations
set forth in Section 12.1(e)), based upon, arising out of or otherwise in
respect of any of the following:
(i) Any failure of Buyer to pay, perform or satisfy, or
cause to be paid, performed or satisfied, any of the Assumed
Liabilities other than the Parent Guaranty;
(ii) Any failure (without regard to the Seller Basket) of
Buyer to pay, perform or satisfy, or cause to be paid, performed or
satisfied, the Parent Guaranty;
(iii) Any Claim by any person who is an employee of Seller
or any of its Affiliates on the date of this Agreement that relates
solely to the employment of such employee by Buyer or any of its
Affiliates subsequent to the Closing;
(iv) Any failure (without regard to the Seller Basket) of
Buyer to remit funds to Seller or to reimburse Seller for costs as
required by Sections 2.8(b), 8.13(b), or 8.20;
(v) Any violation by Buyer or any of its Affiliates of,
or default by Buyer or any such Affiliate under, Applicable
Environmental Laws, or any remedial obligation under any Applicable
Environmental Laws, arising out of or related to the ownership or
operation of the Assets subsequent to Closing; and
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(vi) Any Claim (without regard to the Seller Basket) for
property taxes allocated to Buyer pursuant to Section 8.15.
(c) Seller shall notify Buyer within 45 Business Days of the
assertion of any purported third-party Claim or the discovery of any fact
(which fact has been brought to the attention of a responsible executive
officer of Seller) upon which Seller intends to base a claim for
indemnification hereunder; provided, however, that the failure of Seller to so
notify Buyer shall not relieve Buyer from any liability under this Agreement to
Seller with respect to such Claim unless Buyer is prejudiced or damaged by the
failure to receive timely notice. In the event of any purported third- party
Claim, Buyer, at its option, may assume (with legal counsel reasonably
acceptable to Seller) the defense of any claim, demand, lawsuit or other
proceeding brought against Seller, which claim, demand, lawsuit or other
proceeding may give rise to the indemnity obligation of Buyer under this
Section 12.1, and may assert any defense of Buyer or Seller; provided, however,
that Seller shall have the right at its own expense to participate jointly with
Buyer in the defense of any purported third-party Claim, demand, lawsuit or
other proceeding in connection with which Seller claims indemnification
hereunder. Notwithstanding the right of Seller so to participate, Buyer shall
have the sole right to settle or otherwise dispose of such purported
third-party Claim, demand, lawsuit or other proceeding on such terms as Buyer,
in its sole discretion, shall deem appropriate with respect to any issue
involved in such claim, demand, lawsuit or other proceeding as to which (i)
Buyer shall have acknowledged the obligation to indemnify Seller hereunder or
(ii) Seller shall have declined so to participate; provided, however, that no
such purported third-party Claim shall be settled by Buyer in any manner that
could reasonably be expected to have a material adverse effect on the business
of any Seller taken as a whole without the prior written consent of such
Seller.
(d) Notwithstanding anything herein to the contrary, except for
the obligation to indemnify set forth in Section 12.1(b)(ii) which shall
continue until all indebtedness covered by the Parent Guaranty has been paid,
Buyer shall not have any obligation to indemnify Seller or its Affiliates
pursuant to this Agreement, whether pursuant to the provisions of this Article
XII or otherwise, and such obligation of Buyer to indemnify Seller and its
Affiliates shall expire and terminate, unless Buyer shall have received written
notice of such claim for indemnity prior to the close of business on the
expiration of four (4) years after the Closing Date.
(e) Notwithstanding any provision herein to the contrary, the
indemnification obligations of Buyer hereunder shall be limited in the
aggregate to the amount of the Cash Consideration.
12.2 Indemnification by Seller.
(a) Each Seller (other than Partner), jointly and severally, with
respect to each such Seller (other than Partner), Trinidad and the Joint
Venture, respectively, and Partner severally but not jointly, with respect only
to Partner, agrees to indemnify, defend and hold Buyer and its Affiliates
harmless from and against any and all Claims sustained after Closing by Buyer
or any of its Affiliates based upon, arising out of or otherwise in respect of
(i) the inaccuracy of any representation or warranty, or the breach of any
covenant or agreement, of such Seller
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contained in this Agreement or in any certificate, agreement, document or
instrument delivered pursuant to this Agreement, (ii) the Securities Act or any
other federal or state securities law, insofar as any such Claim is based upon,
arises out of or otherwise is in respect of an untrue statement of material
fact contained in, or an omission of a material fact from, information prepared
or furnished in writing by such Seller or its Affiliates expressly for use in
any registration statement, prospectus or offering memorandum of Buyer in
connection with the financing by Buyer contemplated by Section 8.2, or (iii)
the operation of the Business or the ownership, management or use of the Assets
prior to the Closing unless and to the extent that such Claim shall have arisen
solely from any action of Buyer or any of its Affiliates prior to the Closing;
provided, however, that Seller shall have no liability pursuant to this Section
12.2(a) for the first $100,000 of aggregate Claims in respect of the matters
described in clauses (i) or (iii) above incurred by Buyer or its Affiliates
(the "Buyer Basket") and Seller shall be responsible only for such amounts of
such Claims as exceed the Buyer Basket. The foregoing indemnification is given
solely for the purpose of protecting Buyer and its Affiliates and shall not be
deemed extended to, or interpreted in a manner to confer any benefit, right or
cause of action upon, any third party.
(b) Without limiting the generality of the indemnification
obligations set forth in subsection (a) of this Section 12.2, each Seller
(other than Partner), jointly and severally, with respect to each such Seller
(other than Partner), Trinidad and the Joint Venture, respectively, and Partner
severally but not jointly, with respect only to Partner, further agrees to
indemnify, defend and hold Buyer harmless from and against any and all Claims
sustained by Buyer, irrespective of the amount of such Claim (but subject to
the Buyer Basket, except as otherwise provided in (ii), (ix), (xi), (xiii),
(xiv), and (xvi) below, and subject to the limitation set forth in Section
12.2(e)), based upon, arising out of or otherwise in respect of any of the
following:
(i) Any default under or breach by such Seller or any of
its Affiliates of the terms, conditions or provisions of any note,
bond, mortgage, loan agreement, indenture or other instrument
evidencing borrowed money to which such Seller or any such Affiliate
is a party or by which such Seller or any such Affiliate is bound or
to which any of the Assets is subject;
(ii) Any Encumbrance (including any Permitted Encumbrance
other than the Drilling Contracts, Other Contracts, the Joint Venture
Mortgage and the Marad Restrictions and without regard to the Buyer
Basket) affecting any Asset arising from conditions existing before
the Closing or resulting from the conduct of such Seller or any of its
Affiliates after the Closing;
(iii) Any termination prior to Closing by any person of any
Drilling Contract, Other Contract or Permit due to breach of the terms
thereof by such Seller or any of its Affiliates;
(iv) Any violation by such Seller or any of its Affiliates
of any law, statute, rule or administrative regulation or any
judgment, order, injunction or decree of any Governmental Entity
applicable to or binding upon such Seller or any such Affiliate or
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the Assets which affects the ownership or operation of the Assets or
results in any change in the Assumed Liabilities;
(v) Any litigation, arbitration proceedings or
governmental proceedings, suits or investigations before any
Governmental Entity relating to facts that existed before the Closing
which affects the ownership or operation by Buyer or its Affiliates of
the Assets or results in any change in the Assumed Liabilities;
(vi) Any violation by such Seller or any of its Affiliates
of or default by such Seller or any such Affiliate under any
Applicable Laws, including, without limitation, Applicable
Environmental Laws, which affects the ownership or operation of the
Assets or results in any change in the Assumed Liabilities, or any
remedial obligation under any Applicable Environmental Laws arising
out of or related to the ownership or operation of the Assets prior to
Closing;
(vii) Any Claim by any person who is an employee of such
Seller or any of its Affiliates on the date of this Agreement that
relates solely to any employment of such employee by such Seller or
any of its Affiliates prior to the Closing;
(viii) Any Claim related to the financial statements to be
delivered to Buyer by such Seller pursuant to Section 8.3 insofar as
such Claim is based upon, arises out of or otherwise is in respect of
an untrue statement of a material fact contained in, or an omission of
a material fact from, such financial statements;
(ix) With respect to each Seller (other than Partner), any
Claim (without regard to the Buyer Basket) which constitutes a
liability of Trivium (whether or not disclosed on Schedule 4.24(a)), a
liability of Trinidad other than those referred to in Section 4.24(b),
or a liability of the Joint Venture other than those referred to in
Section 4.24(c);
(x) Any Claim of any fiscal authority relating to Taxes
due by such Seller or Affiliates of such Seller or by any company or
enterprise that belongs to the same group of companies and enterprises
to which such Seller belongs;
(xi) Any Claim (without regard to the Buyer Basket) for
property taxes allocated to such Seller pursuant to Section 8.15;
(xii) Any Claim related to any of the matters set forth on
Schedules 4.11, 4.15(a), 4.15(b), 4.17(a), 4.17(b), 4.18(b), 4.19,
4.20(a), or 4.24(a);
(xiii) With respect to each Seller (other than Partner), any
Claim (without regard to the Buyer Basket) arising out of the
obligations of Viking set forth in that certain Term Sheet for
Agreements Resolving All Disputes between Viking Rigs A.S. and NR
Offshore Corporation signed November 17, 1994 and the related Plan of
Reorganization under Chapter 11 of the United States Bankruptcy Code
for NR Offshore Corporation, as amended by Amendment Nos. 1, 2 and 3,
confirmed by order of the United States
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<PAGE> 51
Bankruptcy Court for the Southern District of Texas in Case No.
94-45723-H1-11 on April 6, 1995;
(xiv) Any failure (without regard to the Buyer Basket) of
such Seller to remit funds to Buyer or to reimburse Buyer for costs
as required by Sections 2.8(b), 8.7(a) or 8.20;
(xv) Any Claim arising out of such Seller's use of the
name "SOUTHWESTERN" or any derivative thereof after the Closing Date;
and
(xvi) Any Claim (without regard to the Buyer Basket)
arising out of any Seller's failure to timely satisfy its obligations
to remedy outstanding recommendations to class against a Vessel
pursuant to Section 8.9
(c) Buyer shall notify each Seller within 45 Business Days of the
assertion of any purported third-party Claim or discovery of any fact (which
fact has been brought to the attention of a responsible executive officer of
Buyer) upon which Buyer intends to base a claim for indemnification hereunder;
provided, however, that the failure of Buyer to so notify such Seller shall not
relieve such Seller from any liability under this Agreement to Buyer with
respect to such Claim unless such Seller is prejudiced or damaged by the
failure to receive timely notice. In the event of any purported third-party
Claim, such Seller, at its option, may assume (with legal counsel reasonably
acceptable to Buyer) the defense of any claim, demand, lawsuit or other
proceeding brought against Buyer, which claim, demand, lawsuit or other
proceeding may give rise to the indemnity obligation of such Seller under this
Section 12.2, and may assert any defense of such Seller or Buyer; provided,
however, that Buyer shall have the right at its own expense to participate
jointly with such Seller in the defense of any purported third-party Claim,
demand, lawsuit or other proceeding in connection with which Buyer claims
indemnification hereunder. Notwithstanding the right of Buyer so to
participate, such Seller shall have the sole right to settle or otherwise
dispose of such purported third-party Claim, demand, lawsuit or other
proceeding on such terms as such Seller, in its sole discretion, shall deem
appropriate with respect to any issue involved in such claim, demand, lawsuit
or other proceeding as to which (i) such Seller shall have acknowledged the
obligation to indemnify Buyer hereunder or (ii) Buyer shall have declined so to
participate; provided, however, that no such purported third-party Claim shall
be settled by such Seller in a manner that could reasonably be expected to have
a material adverse effect on the business of Buyer taken as a whole without the
prior written consent of Buyer.
(d) Notwithstanding anything herein to the contrary, except for
the obligation to indemnify set forth in Section 12.2(b)(x) which shall
continue for a period of five years after the date on which all relevant tax
returns of each Seller for 1996 are filed, no such Seller shall have any
obligation to indemnify Buyer or its Affiliates pursuant to this Agreement,
whether pursuant to the provisions of this Article XII (other than Section
12.2(b)(x)) or otherwise, and such obligation of such Seller to indemnify Buyer
and its Affiliates shall expire and terminate, unless such Seller shall have
received written notice of such claim for indemnity prior to the close of
business on the expiration of four (4) years after the Closing Date.
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<PAGE> 52
(e) Notwithstanding any provision herein to the contrary, the
indemnification obligations of Seller hereunder shall be limited in the
aggregate to the amount of the Cash Consideration; provided, however, that the
aggregate limit may be allocated as reasonably agreed among Seller (other than
Partner), on the one hand, and Partner, on the other hand, as designated in
writing by each Seller on or before the Closing Date.
12.3 Limitation of Remedies. The indemnification obligations of
Buyer and Seller set forth in this Agreement, including in this Article XII,
shall be limited to indemnification for actual damages suffered and shall not
include incidental, consequential, special or indirect damages; provided,
however, that any such incidental, consequential, special or indirect damages
recovered by a third party against a party entitled to indemnity under this
Agreement shall be included in the damages recoverable pursuant to the
indemnities herein.
12.4 Applicability of Indemnification Obligation. EACH OF THE
AGREEMENTS TO INDEMNIFY, DEFEND OR HOLD HARMLESS CONTAINED IN SECTIONS 12.1 AND
12.2 SHALL APPLY IRRESPECTIVE OF WHETHER THE SUBJECT CLAIM IS BASED IN WHOLE OR
IN PART UPON THE SOLE OR CONTRIBUTORY NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR
GROSS), BREACH OF WARRANTY, OR BREACH OR VIOLATION OF ANY DUTY IMPOSED BY ANY
LAW OR REGULATION, ON THE PART OF THE BENEFICIARY OF THE AGREEMENT, EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.
12.5 Indemnification Between Viking and Partner. Viking and
Partner acknowledge that certain of Seller's covenants and agreements herein
can be breached or violated by the actions or omissions of Viking or Partner
acting alone and without fault of the other. In the event that either Viking
(including, for purposes of this paragraph only, any of Viking's subsidiaries)
or Partner breaches or violates such a covenant or agreement and the other does
not contribute to such breach or violation, the party breaching or violating
such covenant or agreement shall indemnify and hold the other harmless from and
against any and all losses, costs, damages, expenses and attorneys' fees
suffered or incurred by the other as a result of such breach or violation by
such party.
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ARTICLE XIII
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
13.1 Scope of Representations of Seller. SELLER MAKES NO
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE MAINTENANCE,
REPAIR, CONDITION, DESIGN OR MARKETABILITY OF THE VESSELS OR ANY PORTION
THEREOF OR PROPERTY THEREON, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR
EXPRESS WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IT
BEING THE EXPRESS AGREEMENT OF BUYER AND SELLER THAT, EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, BUYER WILL OBTAIN THE VESSELS IN THEIR CONDITION AND
STATE OF REPAIR ON THE CLOSING DATE, "AS IS" AND "WHERE IS." Buyer
acknowledges and affirms that it will have had the opportunity to complete its
own independent investigation, analysis and evaluation of the Business and the
prospects of the Business and that it has been afforded the opportunity to
inspect the Vessels and the other tangible Assets.
13.2 No Other Representation on Warranty. Except as set forth in
this Agreement or in any document, certificate or other writing furnished or to
be furnished by any Seller pursuant hereto, neither Seller nor any director,
officer, employee, agent, consultant or representative of Seller or its
Affiliates has made any further representation or warranty, and Seller
disclaims all liability and responsibility for any such other information
whether or not relied upon by Buyer.
13.3 Survival. Subject to the provisions of 12.1(d) and 12.2(d),
as applicable, all representations, warranties and covenants contained in this
Agreement (except to the extent any such agreement is limited by its terms)
shall remain operative and in full force and effect and shall survive
consummation of the transactions contemplated hereby at the Closing, including,
without limitation, the delivery of the Assets to Buyer hereunder.
ARTICLE XIV
MISCELLANEOUS
14.1 Notices. All notices and other communications required or
permitted to be given or made hereunder by either party hereto shall be in
writing and shall be deemed to have been duly given if delivered personally or
transmitted by first class registered or certified mail, postage prepaid,
return receipt requested, or sent by prepaid overnight delivery service, or
sent by cable, telegram, telefax or telex, to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
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<PAGE> 54
If to any Buyer:
Cliffs Drilling Company
1200 Smith Street, Suite 300
Houston, Texas 77002
Attention: Mr. Edward A. Guthrie
Telephone: (713) 651-9426
Telefax: (713) 951-0649
with a copy to:
Mr. W. Garney Griggs
Griggs & Harrison, P.C.
1301 McKinney, Suite 3200
Houston, Texas 77010
Telephone: (713) 651-0600
Telefax: (713) 651-1944
If to any Seller (other than Partner):
Viking Supply Ships A.S.
P.O. Box 9
N-4601 Kristiansand
Norway
Attention: Christen Sveaas
Telephone: 011-47-38-022-340
Telefax: 011-47-38-025-767
if prior to Closing, with a copy to:
Southwestern Offshore Corporation
Five Post Oak Park, Suite 1720
Houston, Texas 77027
Attention: William E. Chiles
Telephone: (713) 850-7057
Telefax: (713) 850-7433
and with a copy to:
Mr. N. L. Stevens III
Gardere Wynne Sewell & Riggs L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Telephone: (713) 308-5500
Telefax: (713) 308-5808
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<PAGE> 55
If to Partner:
Production Partner Inc.
c/o Southwestern Offshore Corporation
Five Post Oak Park, Suite 1720
Houston, Texas 77027
Attention: Mr. William E. Chiles
Telephone: (713) 850-7057
Telefax: (713) 850-7433
with a copy to:
Mr. N. L. Stevens III
Gardere Wynne Sewell & Riggs L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Telephone: (713) 308-5500
Telefax: (713) 308-5808
If to Ringdal:
Mr. Helge Ringdal
c/o Ringdal Holding A.S.
Niels Juelsgt. 14
0272 Oslo
Norway
Telephone: 011-47-22-55-7955
Telefax: 011-47-22-55-8244
with a copy to:
Mr. N. L. Stevens III
Gardere Wynne Sewell & Riggs L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Telephone: (713) 308-5500
Telefax: (713) 308-5808
14.2 Entire Agreement. This Agreement, including the Schedules,
Exhibits and other writings referred to herein or delivered pursuant hereto,
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof.
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<PAGE> 56
14.3 Amendments and Waiver; Rights and Remedies. This Agreement
may be amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of
either party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of either party
of any such right, power or privilege, or any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
of either party based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the
act, omission, occurrence or other state of facts upon which any claim of any
such inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement (or
in any other agreement between the parties) as to which there is no inaccuracy
or breach.
14.4 Jurisdiction; Venue; Governing Law. The parties agree that
all disputes in any way relating to, arising under, connected with, or incident
to this Agreement, and over which the United States federal courts have subject
matter jurisdiction, shall be litigated, if at all, exclusively in the United
States District Court for the Southern District of Texas, Houston Division,
and, if necessary, the corresponding appellate courts. The parties further
agree that all disputes in any way relating to, arising under, connected with,
or incident to this Agreement, and over which the United States federal courts
do not have subject matter jurisdiction, shall be litigated, if at all,
exclusively in the Courts of the State of Texas, in Harris County, and, if
necessary, the corresponding appellate courts. Each Seller and Ringdal
irrevocably submits itself to the personal jurisdiction of, and consents to
venue in, any such court, and hereby waives any claim it may otherwise have
that such court lacks personal jurisdiction over it or that such court is an
inconvenient forum, with respect to any matter or proceeding arising out of
this Agreement. Each Seller and Ringdal further agree to voluntarily appear
and to enter a general appearance in any proceeding arising out of this
Agreement which is brought in any such court. Each Seller and Ringdal hereby
irrevocably appoints N. L. Stevens III and/or Gardere Wynne Sewell & Riggs
L.L.P. of Houston, Texas as its agent for service of process in any matter or
proceeding arising out of this Agreement. The parties agree that Texas law
exclusively shall govern all terms of this Agreement, including this Section.
14.5 Binding Effect; Assignment; No Third Party Benefit.
(a) This Agreement and all the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns; provided, however, that neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either of the parties hereto (by operation of law or otherwise)
without the prior written consent of the other party, except that Buyer may
upon notice to Seller direct that title to all or part of the Assets be taken
in one or more of Buyer's other wholly owned subsidiaries (direct or indirect);
provided, however, that no such designation shall relieve Buyer of any of its
duties, liabilities or obligations hereunder.
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<PAGE> 57
(b) Nothing in this Agreement, express or implied, is
intended to or shall confer upon any person other than Buyer, Seller and
Ringdal any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
14.6 No Specific Performance. The parties hereto represent and
acknowledge that the remedies provided at law for any violation by either party
of its obligations set forth in this Agreement would be adequate and, as a
result, each party hereto hereby disclaims and waives any right to seek or
obtain specific performance for any violation of its rights set forth in this
Agreement. Notwithstanding the preceding sentence, the liquidated damages and
expense reimbursements provided for by Section 11.3 shall constitute the sole
remedy available to the parties with respect to the matters covered thereby,
and either party may seek specific performance of any obligation of another
party to pay such liquidated damages or expense reimbursements.
14.7 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same agreement.
14.8 References. All references in this Agreement to Articles,
Sections and other subdivisions refer to the Articles, Sections and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement," "herein," "hereof," "hereby," "hereunder" and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited.
14.9 Severability of Provisions. If any provision of this
Agreement is held to be unenforceable, this Agreement shall be considered
divisible and such provision shall be deemed inoperative to the extent it is
deemed unenforceable, and in all other respects this Agreement shall remain in
full force and effect; provided, however, that if any such provision may be
made enforceable by limitation thereof, then such provision shall be deemed to
be so limited and shall be enforceable to the maximum extent permitted by
applicable law.
14.10 Gender. Pronouns in masculine, feminine, and neuter genders
shall be construed to include any other gender, and words in the singular form
shall be construed to include the plural and vice versa, unless the context
otherwise requires.
14.11 Descriptive Headings. The descriptive headings herein are
inserted or convenience of reference only, do not constitute a part of this
Agreement, and shall not affect in any manner the meaning or interpretation of
this Agreement.
14.12 Currency. All dollar amounts in this Agreement are stated in
United States dollars.
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<PAGE> 58
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers hereunto duly authorized as of the date
first above written.
SOUTHWESTERN OFFSHORE CORPORATION
By: /s/ WILLIAM E. CHILES
-----------------------------------------
William E. Chiles, President
VIKING SUPPLY SHIPS A.S.
By: /s/ CHRISTEN SVEAAS
-----------------------------------------
Christen Sveaas, Chairman
OCEAN MASTER III INC.
By: /s/ OLE GEIR HAGEN
-----------------------------------------
Name: OLE GEIR HAGEN
--------------------------------
Title: COMPANY SECRETARY
-------------------------------
PRODUCTION PARTNER INC.
By: /s/ WILLIAM E. CHILE
-----------------------------------------
William E. Chiles, President
TRIVIUM INVESTMENTS LIMITED
By: /s/ JIM R. WISE
-----------------------------------------
Jim R. Wise, President
CLIFFS DRILLING COMPANY
By: /s/ EDWARD A. GUTHRIE
-----------------------------------------
Edward A. Guthrie, Vice President-Finance
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<PAGE> 59
CLIFFS DRILLING ASSET ACQUISITION
COMPANY
By: /s/ EDWARD A. GUTHRIE
-----------------------------------------
Edward A. Guthrie, Vice President
CLIFFS DRILLING MERGER COMPANY
By: /s/ EDWARD A. GUTHRIE
-----------------------------------------
Edward A. Guthrie, Vice President
/s/ HELGE RINGDAL
---------------------------------------------
HELGE RINGDAL
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