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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 29, 1997
CLIFFS DRILLING COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-16703 76-0248934
(Commission File Number) (IRS Employer Identification No.)
1200 SMITH STREET, SUITE 300
HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
(713) 651-9426
(Registrant's Telephone Number, Including Area Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Cliffs Drilling Company (the "Company") completed the transaction
associated with the Asset Purchase Agreement dated as of December 29, 1997 by
and among Cliffs Drilling Trinidad Offshore Limited, a Trinidad and Tobago
private limited company ("Purchaser") which is wholly owned by the Company and
one of its affiliates, Well Services (Marine) Ltd., a Trinidad and Tobago
private limited company ("Seller"), Charles A. Brash of San Fernando, Trinidad,
W.I. and Phillip A. Pollonais of San Fernando, Trinidad, W.I.
The Purchaser acquired 2 offshore platform drilling rigs, one
self-propelled jack-up drilling/workover rig and substantially all of the assets
used in the offshore contract drilling business in Trinidad previously operated
by the Seller. The total cost of the acquisition included cash of $23.5 million
and the issuance by the Company of 437,939 shares of the Company's Common Stock,
$0.01 par value per share. An additional $3.0 million of contingent cash
consideration may be paid to the Seller if certain post-closing criteria are
met. The outcome of the contingency is not determinable at this time, and
relates to the ultimate valuation of the assets acquired. As such, the
contingent consideration, if paid, would be an adjustment to the purchase price
of the assets acquired. The purchase price was based on the fair market value of
the assets. The Company used available cash to fund the cash portion of the
purchase price.
The 2 platform rigs and the jack-up drilling/workover rig are currently
operating under contracts in Trinidad. Substantially all of the employees of the
Seller used in its offshore business have become employees of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
None.
(b) Pro forma financial information.
None.
(c) Exhibits.
2.4 Asset Purchase Agreement dated as of December 29, 1997 by and
among Cliffs Drilling Trinidad Offshore Limited, Well Services
(Marine) Ltd., Charles A. Brash and Phillip A. Pollonais.
4.9 Registration Rights Agreement dated as of December 29, 1997 by
and among Cliffs Drilling Company, Well Services (Marine) Ltd.,
Charles A. Brash and Phillip A. Pollonais.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CLIFFS DRILLING COMPANY
Date January 13, 1998 By /s/ Edward A. Guthrie
------------------------- -----------------------------
Edward A. Guthrie
Vice President - Finance
Date January 13, 1998 By /s/ Cindy B. Taylor
------------------------- -----------------------------
Cindy B. Taylor
Vice President - Controller
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
2.4 Asset Purchase Agreement dated as of December 29, 1997 by and among
Cliffs Drilling Trinidad Offshore Limited, Well Services (Marine)
Ltd., Charles A. Brash and Phillip A. Pollonais.
4.9 Registration Rights Agreement dated as of December 29, 1997 by and
among Cliffs Drilling Company, Well Services (Marine) Ltd., Charles A.
Brash and Phillip A. Pollonais.
</TABLE>
4
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EXHIBIT 2.4
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ASSET PURCHASE AGREEMENT
AMONG
CLIFFS DRILLING TRINIDAD OFFSHORE LIMITED
AND
WELL SERVICES (MARINE) LTD.
CHARLES A. BRASH
AND
PHILLIP A. POLLONAIS
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Dated: December 29, 1997
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TABLE OF CONTENTS
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ARTICLE I
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Agreement to Purchase and Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(A) Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(1) Drilling Rigs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(2) Rig Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(3) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(4) Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(5) General Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(6) Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(7) Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(8) Scheduled Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(9) Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(10) Insurance Proceeds, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(11) Computers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(12) Other Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(13) Other Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(B) Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(C) Liabilities After Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.03 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.04 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.05 Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(A) Rig 1 Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(B) Rig 2 Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(C) Post Closing Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(D) Good Faith Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(E) Post Closing Expenses for Classification of Rig 2. . . . . . . . . . . . . . . . . . . . . 14
(F) Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.06 Limited Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(A) Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(B) Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(C) Third Party Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(D) 1997 Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.07. Instruments of Transfer; Closing Deliveries; Further Assurances . . . . . . . . . . . . . . . . . . 15
1.08 Value Assigned to the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.09 Conditions Precedent to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(A) Performance of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 18
(B) No Suit or Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(C) Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(D) Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(E) Operator Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(F) Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.10 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.11 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.12 Condition of the Rigs; Spares; Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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1.13 Risk of Loss; Rig Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(A) Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(B) Loss of a Rig or Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(C) Termination Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(D) Election to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(E) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(F) Rig 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.14 Pre-Closing Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.15 Other Loss or Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.16 Pre-Closing Seller Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II
REPRESENTATIONS AND WARRANTIES; RESTRICTIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.01 Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(A) Organization and Good Standing of Seller . . . . . . . . . . . . . . . . . . . . . . . . . 22
(B) Consents, Authorizations and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 22
(1) No Consents Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(2) Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(3) Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(4) Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(C) Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(D) Title and Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(1) Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(2) Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(3) Asset Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) At Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) As Is/Where Is . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(c) Leased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Assets Being Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(E) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(F) Litigation and Compliance With Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . 25
(G) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(H) Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(I) Instruments in Full Force and Effect; Possession under Leases . . . . . . . . . . . . . . . 26
(J) Employee Plans and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(K) Labor and Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(1) No Collective Bargaining Agreement . . . . . . . . . . . . . . . . . . . . . . . . 27
(2) No Unions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(3) No Pending Grievances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(4) No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(5) Affected Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(6) Responsibility for Grievances . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(L) Absence of Certain Changes, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(M) Material Contracts, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(N) Non-Competition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(O) Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(P) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(1) No Violations of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(2) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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(Q) Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(R) Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(S) Competing Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(T) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(1) Information Provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(2) No Untrue Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(3) No Material Adverse Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(4) Seller's Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(5) Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(U) Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(1) Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(2) Review and Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(3) Economic Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(4) Unregistered Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(5) Stock Certificate Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.02 Representations and Warranties of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.03 Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(A) Reasonableness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(B) Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(C) Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(D) Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(E) Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.04 Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE III
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.01 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.02 Notice, Participation and Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.03 Indemnification if Negligence of Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.04 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.05 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.06 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IV
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.01 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.02 No Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.03 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.04 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.05 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.07 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(A) Arbitration Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(B) Securities Law Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(C) Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.08 Arbitration and Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(A) Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(B) Powers and Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(C) Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(D) Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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(E) Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(F) Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.09 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.10 Waivers and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.11 Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.12 Illegalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.14 Survival; Exclusively of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.15 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.16 Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.17 Cost of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.18 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.19 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.20 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.21 Consequential Damages Disallowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.22 Owners' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.23 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
<PAGE> 6
EXHIBIT 2.4
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into effective as of December 29, 1997, (the "Effective Date"), by and among
CLIFFS DRILLING TRINIDAD OFFSHORE LIMITED, OR ITS NOMINEE, a Trinidad and
Tobago private limited company ("Purchaser"), having its principal place of
business at San Fernando, Trinidad, W.I., WELL SERVICES (MARINE) LTD., a
Trinidad and Tobago private limited company ("Seller"), having its principal
place of business in San Fernando, Trinidad, W.I., CHARLES A. BRASH of San
Fernando, Trinidad, W.I. and PHILLIP A. POLLONAIS, of San Fernando, Trinidad,
W.I.
WHEREAS, Seller is engaged, among other things, in the business of
providing oil and gas offshore drilling services for the oil and gas industry
offshore Trinidad and Tobago;
WHEREAS, one hundred percent (100%) of the common shares and voting
control of Seller is owned by Charles A. Brash and Phillip A. Pollonais,
(collectively, "Owners"); and
WHEREAS, Seller desires to sell to Purchaser all of the offshore
drilling rigs, equipment and other assets in connection therewith used by
Seller in its offshore oil and gas drilling business (collectively, the
"Business"), and Purchaser desires to purchase the Business upon the terms and
conditions hereinafter set forth and on condition that the Owners enter into
this Agreement for the purpose of providing the representations and warranties
and agreeing to the matters hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
and the representations and warranties, conditions and promises herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
GENERAL
1.01 DEFINITIONS. Unless otherwise stated in this Agreement, the
following terms shall have the following meanings (the following definitions to
be equally applicable to both the singular and plural forms of any of the terms
herein defined):
AAA: American Arbitration Association
Additional Cash: As defined in Section 1.05(C).
Affected Employee(s): As defined in Section 4.15(B).
<PAGE> 7
Affiliate(s): Any Person that, directly or indirectly, controls,
or is controlled by, or under common control with,
another Person. For the purposes of this
definition, "control" (including the terms
"controlled by" and "under common control with"),
as used with respect to any Person, means the
power to direct or cause the direction of the
management and policies of such Person, directly
or indirectly, whether through the ownership of
voting securities or by contract or otherwise.
Agreed Amortization Period: As defined in Section 1.16(A).
Agreement: As defined in the opening paragraph of this
Agreement.
Amoco: Amoco Trinidad Oil Company.
Asset(s): As defined in Section 1.02.
Assumed Obligations: The duties, obligations, debts and liabilities of
Seller assumed by Purchaser under Section 1.06(C).
Brash Charles A. Brash of San Fernando, Trinidad.
Business: As defined in the recitals of this Agreement.
Claim: As defined in Section 3.02(A).
Cliffs: Cliffs Drilling Company, a Delaware corporation,
and ultimate parent owning entity of Purchaser.
Closing Adjustment: As defined in Section 1.05.
Closing Date: As defined in Section 1.09.
Closing Deliveries: As defined in Section 1.07.
Consulting Agreement: As defined in Section 1.02(D).
Current Amoco Rate: As defined in Section 1.05(A).
Current Contract(s): With respect to either Rig 1 or Rig 2, as defined
in Section 1.05(C).
Current Trinmar Rate: As defined in Section 1.05(B).
<PAGE> 8
Customer Data: All of Seller's customer lists, sales records and
other customer data (including credit data)
relating to the Business.
Damages: As defined in Section 3.01(A).
Delivery Condition: As defined in Section 1.12.
Dollars or $: Legal currency of the United States of America.
Drilling Contracts: As defined in Section 1.02(A)(8)(a)(i).
Effective Date: As defined in the opening paragraph of this
Agreement.
Employee(s): As defined in Section 4.15(A).
Environmental Laws: As defined in Section 2.01(P)(y).
Equipment: Refers to either General Equipment or Rig
Equipment.
Excluded Assets: As defined in Section 1.02(B).
Five-Day Average: A dollar amount equal to the average daily closing
price of the shares of common voting stock of
Cliffs, as quoted on the New York Stock Exchange
for the five (5) days immediately preceding (but
not including) a specific named date under the
terms of this Agreement. General Conveyance,
Transfer and Assignment: As defined in Section
1.07(B).
General Conveyance,
Transfer and Assignment: As defined in Section 1.07(B).
General Equipment: As defined in Section 1.02(A)(5).
Governmental Body: Any court or any federal, state, municipal or
other governmental department, commission, board,
bureau, agency or instrumentality, domestic or
foreign.
Indemnitee: As defined in Section 3.02(A).
Indemnitor: As defined in Section 3.02(A).
Inspection Date: October 1, 1997, the date Purchaser inspected the
Rigs and Assets.
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<PAGE> 9
Instruments: As defined in Section 2.01(I).
Insurance Loss Proceeds
Agreement: As defined in Section 1.13(D).
Intangible Assets: As defined in Section 1.02(A)(7).
Inventories: As defined in Section 1.02(A)(3).
Known or Knowledge: Whenever a statement regarding the existence or
absence of facts in this Agreement is qualified by
a phrase such as "to such Person's knowledge" or
"known to such Person," it is intended by the
parties that the only information to be attributed
to such Person is information actually or
constructively known to
(a) the Person in the case of an individual,
or
(b) in the case of a corporation or other
entity, an officer or employee as a
result of his employment by Seller. A
Person has "constructive knowledge" of
those matters which the individual
involved could reasonably be expected to
have as a result of undertaking an
investigation of such a scope and extent
as a reasonably prudent man would
undertake concerning the particular
subject matter.
Lien: All mortgages, deeds of trust, liens, security
interests, pledges, leases, conditional sale
contracts, claims, rights of first refusal,
options, charges, liabilities, obligations,
agreements, privileges, liberties, easements,
rights-of-way, limitations, reservations,
restrictions and other encumbrances of any kind.
Material Adverse Effect: Material Adverse Effect means (a) any change,
development or effect (individually or in the
aggregate) in the general affairs, management,
Business, results of operations, condition
(financial or otherwise), assets, liabilities or
prospects (whether or not the result thereof
- 4 -
<PAGE> 10
would be covered by insurance) that would be
material and adverse to Seller or (b) any fact or
development that would (individually or in the
aggregate), impair Seller's ability or obligations
to perform on a timely basis any material
obligations it has under this Agreement.
Materials of Environmental
Concern: As defined in Section 2.01(P)(x).
Operative Documents: This Agreement and all other agreements,
instruments, documents, and certificates to be
executed and delivered by or on behalf of Seller
or Purchaser at or before the Effective Date
pursuant to this Agreement (including, without
limitation, the Software Purchase Agreement.)
Order: Any order, writ, injunction, decree, judgment,
award or determination of any court or
Governmental Body.
Owners: As defined in the recitals of this Agreement.
Party(ies): Refers to any of Purchaser, Seller, Brash or
Pollonais.
Permits: All bonds, certificates, licenses, consents,
permits, authorizations, approvals, orders,
registrations, variances, exemptions,
rights-of-way, franchises, privileges, immunities,
grants, ordinances, licenses and other rights of
every kind and character in connection with the
Business and the maintenance and operation of any
Rig whether:
(a) under any
(1) national, state, county, local or
foreign statute, ordinance or
regulation;
(2) Order; or
(3) contract with any Governmental
Body;
or
(b) granted by any Governmental Body.
Permitted Encumbrances: (a) The Liens described or referred to
in Appendix 1.01 to Seller's Disclosure
Letter; or
- 5 -
<PAGE> 11
(b) Liens for current Taxes and assessments not
yet due and payable, including, but not
limited to, Liens for nondelinquent ad
valorem Taxes, nondelinquent statutory Liens
arising other than by reason of any default
on the part of Seller.
Person: An individual, partnership, joint venture,
corporation, bank, trust, unincorporated
organization or a Governmental Body.
Plan(s): As defined in Section 2.01(J).
Pollonais: Phillip A. Pollonais of San Fernando, Trinidad.
Post Closing Increased Rate: As defined in Section 1.05(C).
Pre-Closing Inspection: As defined in Section 1.14.
Purchase Price: As defined in Section 1.03.
Purchaser: As defined in the opening paragraph of this
Agreement.
Purchaser Indemnitees: As defined in Section 3.01(A).
Records: As defined in Section 1.02(A)(9).
Release: Any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the
environment (including the abandonment or
discarding of barrels, containers, and other
closed receptacles containing any hazardous
substance or pollutant or contaminant).
Rig or Rigs: The drilling rigs and all of their associated
inventory, tools and equipment sold as part of the
Assets and more particularly described in Section
1.02(A)(1) hereto.
Rig 1: Offshore platform drilling rig "Marine 1,"
described in Section 1.02(A)(1).
Rig 2: Jack up workover rig "Well Services Marine 2,"
described in Section 1.02(A)(1).
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<PAGE> 12
Rig 3: Offshore platform drilling rig "Marine 3,"
described in Section 1.02(A)(1).
Rig 16: Land drilling rig "Rig 16," described in Section
1.02(A)(1).
Rig 1 Increased Rate: As defined in Section 1.16(A).
Rig 1 Increased Rate Period: As defined in Section 1.16(A).
Rig 2 Increased Rate: As defined in Section 1.16(B).
Rig 2 Increased Rate Period: As defined in Section 1.16(B).
Rig Equipment: As defined in Section 1.02(A)(2).
San Fernando Premises: As defined in Section 1.07(E).
Scheduled Contracts: As defined in Section 1.02(A)(8)(c).
Seller: As defined in the opening paragraph of this
Agreement.
Seller Site: As defined in Section 2.01(P)(1).
Seller Indemnitees: As defined in Section 3.01(B).
Seller's Disclosure Letter: The disclosure letter delivered by Seller and
Owners to Purchaser on or before the Closing Date,
which letter will be deemed to be incorporated
into and a part of this Agreement.
Service(s): All oil and gas drilling services, engineering
services and other technical services.
Shore Base Facility: Seller's office and warehouse located at Galeota,
Trinidad, which is rented from Petrotrin on a
monthly basis.
Stock Portion: As defined in Section 1.04.
Strict Liability: As defined in Section 1.06(B)(1).
Sub-tenancy(ies): As defined in Section 1.07(E).
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<PAGE> 13
Supplier Data: All of Seller's lists and other supplier data
relating to the purchase of raw materials,
utilities and other supplies used in connection
with the Business.
Tax Obligations: As defined in Section 1.06(B)(3).
Taxes: As defined in Section 1.06(B)(3).
Territory: As defined in Section 2.03(B).
Transaction(s): The sale and purchase of the Assets, assignment
and assumption of certain liabilities, and
performance of covenants, in each case as
contemplated by this Agreement.
Trinidad: The Republic of Trinidad and Tobago, W.I.
Trinmar: Trinmar Limited.
U.S.: The United States of America.
Vehicles: As defined in Section 1.02(A)(4).
1.02 AGREEMENT TO PURCHASE AND SELL. On and subject to the terms
and conditions of this Agreement, Seller agrees to sell, convey, transfer,
assign and deliver to Purchaser, and Purchaser agrees to purchase from Seller,
or its successors and assigns, the drilling rigs, equipment, inventory, assets,
rights, franchises and properties described in Section 1.02(A) below (all such
drilling rigs, equipment, inventories, assets, rights, franchises and
properties being herein sometimes collectively referred to as the "Assets" and
individually referred to as an "Asset"), free and clear of all Liens other than
Permitted Encumbrances; provided, however, that the Assets shall not include
the Excluded Assets.
(A) Assets. Subject to Section 1.02(B), the Assets shall
consist of all assets of the Business on the Closing Date described in the
following clauses (1) through (13):
(1) Drilling Rigs. The following drilling rigs:
1500 h.p. Gardner Denver 1100E modular
offshore workover/drilling platform rig known
as "Marine 1";
100 foot self-propelled jack-up
workboat/drilling rig, known as "Well
Services Marine 2";
- 8 -
<PAGE> 14
3000 h.p. National 1625 VE modular offshore
drilling platform rig, known as "Marine 3";
and
2000 h.p. land drilling rig, known as
"Rig 16";
together with all their respective drilling machinery and equipment (including,
without limitation, floor tools and blow-out preventers), derricks, drawworks,
engines, machinery, dynamic positioning systems and equipment, mooring systems
and equipment, riser tensioner systems and equipment, tanks, boats, covers,
anchors, chains, cables, tackle, rigging, apparel, furniture, computers and
computer equipment, computer software, fittings and equipment, pumps and
pumping equipment, spare components and parts, tools, drill pipe, drill
collars, bunkers and lubricating oils, racking, supporting inventory and
stores, living quarters located thereon and all other appurtenances thereto
appertaining or belonging thereto, whether on board, on shore or on order,
including, without limitation, that set forth in Exhibit 1.02(A)(1); excluding,
however, 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 Appendix 1.02(B) to Seller's Disclosure Letter
(collectively, the "Rigs").
(2) Rig Equipment. The shore-based stocks owned
by Seller, wherever located, of all drilling machinery and equipment
(including, without limitation, floor tools and blow-out preventers), engines,
machinery, dynamic positioning systems and equipment, mooring systems and
equipment, riser tensioner systems and equipment, boats, covers, anchors,
chains, cables, tackle, rigging, apparel, furniture, computers, computer
equipment and computer software, fittings and equipment, pumps and pumping
equipment, spare components and parts, 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 required to be maintained by Seller under a Drilling Contract (as
hereinafter defined), whether on shore or on order (collectively, "Rig
Equipment"), as such Rig Equipment may be reduced through consumption thereof,
or increased through replacement thereof or addition thereto, in the ordinary
course of the maintenance and operation of the Rigs through the Closing Date.
(3) Inventories. All of Seller's inventories
wheresoever located insofar as any of the foregoing relates to the Business,
including, without limitation, bunkers, lubricants, drawings, and other
inventories (the "Inventories").
(4) Vehicles. All the automobiles, trucks,
trailers and other certificated vehicles described in Appendix 1.02(A)(4) to
the Seller's Disclosure Letter (the "Vehicles").
(5) General Equipment. All of Seller's fixtures,
furniture, equipment (including, but not limited to, general office equipment
in or at the San Fernando Premises), machinery, apparatus, appliances,
vehicles, implements, spare parts, supplies, leasehold improvements and all
other tangible personal property of every kind and description (other than
- 9 -
<PAGE> 15
the Vehicles) wheresoever located insofar as any of the foregoing relates to
the Business (the "General Equipment"). The General Equipment includes,
without limitation, all of the items listed in Appendix 1.02(A)(5) to the
Seller's Disclosure Letter.
(6) Permits. All right, title and interest of
Seller in, to and under all Permits relating to the Business or all or any of
the Assets, including, without limitation, those listed in Appendix 1.02(A)(6)
to the Seller's Disclosure Letter.
(7) Intangible Assets. All right, title and
interest of Seller in, to and under all intellectual property, patents,
trademarks, technology, know-how, data, copyrights, tradenames, servicemarks,
licenses, covenants by others not to compete, rights and privileges used in the
conduct of the Business and the right to recover for infringement thereon and
all goodwill associated with the Business in connection with which the marks
are used (the "Intangible Assets"). The Intangible Assets include, without
limitation, all of the items listed in Appendix 1.02(A)(7) to the Seller's
Disclosure Letter.
(8) Scheduled Contracts. All right, title and
interest of Seller in, to and under the benefits and burdens, subsequent to the
Closing Date, of all right, title and interest of Seller in
(a) all drilling contracts or other
charters or arrangements and any
amendments thereto for the
employment of the Rigs (the
"Drilling Contracts") existing on
the Closing Date, including, without
limitation, the Drilling Contracts
identified under the list of
Scheduled Contracts (as hereinafter
defined) existing on the Closing
Date listed on Appendix 1.02(A)(8)
of the Seller's Disclosure Letter;
(b) that certain joint venture agreement
between Seller and Cliffs Drilling
Trinidad Limited dated March 18,
1996, as amended by First Amendment
to Joint Venture Agreement dated
April 1, 1996 and as further amended
by Purchase and Sale and Joint
Venture Amendment Agreement dated as
of July 23, 1997; and
(c) all other contracts and agreements
existing on the Closing Date to
which Seller or any of its
Subsidiaries is a party relating to
the Rigs or the Business existing on
the Closing Date, including, without
limitation, all such other contracts
identified under the list of
contracts in Appendix 1.02(A)(8) to
the Seller's Disclosure Letter ((a),
(b) and (c) of this Section
1.02(A)(8), collectively, the
"Scheduled Contracts").
- 10 -
<PAGE> 16
(9) Books and Records. All of Seller's books,
records, papers and instruments of whatever nature and wherever located that
relate to the Business or the Assets or which are required or necessary in
order for Purchaser to conduct the Business from and after the Effective Date
in the manner in which it is presently being conducted, including, without
limitation, plats, maps, surveys, magnetic tapes, data (however such data is
stored), accounting and financial records, personnel and labor relations
records, environmental records and reports, sales and property Tax records and
returns, sales records, the Customer Data and the Supplier Data, but excluding
income Tax records and returns and corporate minute book and stock records
(collectively the "Records").
(10) Insurance Proceeds, Etc. All insurance
proceeds and insurance claims of Seller relating to all or any part of the
Assets and, to the extent transferable, the benefit of and the right to enforce
the covenants and warranties, if any, that Seller is entitled to enforce with
respect to the Assets against Seller's predecessors in title to the Assets.
(11) Computers. All right, title and interest of
Seller in computer equipment and hardware, including, without limitation, all
central processing units, terminals, disk drives, tape drives, electronic
memory units, printers, keyboards, screens, peripherals (and other input/output
devices), modems and other communication controllers, and any and all parts and
appurtenances thereto, together with all intellectual property used by Seller
in the operation of such computer equipment and hardware, including, without
limitation, all software, all of Seller's rights under any licenses related to
Seller's use, at any time, of such computer equipment, hardware or software,
and all leases pursuant to which Seller leases any computer equipment, hardware
or software; insofar and only insofar as any of the foregoing relates to the
Business, including same in or at the San Fernando Premises.
(12) Other Intangibles. All right, title and
interest of Seller in, to and under all rights, privileges, claims, causes of
action, and options relating or pertaining to the Business or the foregoing
Assets.
(13) Other Property. All other or additional
privileges, rights, interests, properties and assets of Seller of every kind
and description and wherever located that are used or intended for use in
connection with, or that are necessary to the continued conduct of, the
Business as presently being conducted.
(B) Excluded Assets. The Assets shall not include any of
the assets of Seller, as of the Effective Date, set forth on Appendix 1.02(B)
to the Seller's Disclosure Letter (collectively, the "Excluded Assets").
(C) Liabilities After Closing Date. Seller agrees to
assign to Purchaser, and Purchaser agrees to assume, perform and discharge, all
of the liabilities, duties and obligations of Seller which arise after the
Closing Date under all Scheduled Contracts.
- 11 -
<PAGE> 17
1.03 PURCHASE PRICE. The purchase price for the Assets (the
"Purchase Price") shall be:
(A) the sum of FORTY-SEVEN MILLION AND NO/100 DOLLARS
($47,000,000), exclusive of value added tax, minus,
(B) the amount of the Closing Adjustment, as hereinafter
defined.
1.04 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be
payable to Seller as follows:
At the Closing, Purchaser shall deliver to Seller the
following: (i) by check or wire transfer, in immediately available funds, the
amount of TWENTY THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($23,500,000) of
the Purchase Price, (ii) such number of shares of the common voting stock of
Cliffs ($.01 par value per share) which is equal to the quotient obtained (and
expressed in number of shares) by dividing $23,500,000 by the Five-Day Average
for the five (5) days immediately preceding (but not including) the Closing
Date ("Stock Portion"), less the Closing Adjustment, if any and (iii) by check
or wire transfer, the amount of value added tax required by law on the amount
of the Purchase Price, less the Closing Adjustment, if any, for payment by
Seller to the appropriate Trinidadian Governmental Body.
Notwithstanding the foregoing, at the Closing Purchaser shall
deliver to Seller a facsimile of the stock certificate from the stock transfer
agent of Purchaser evidencing the Stock Portion of the Purchase Price (the
"Stock Certificate") and Purchaser shall cause the Stock Certificate to be
delivered to Seller by the stock transfer agent of Purchaser in a commercially
reasonable time and manner.
1.05 CLOSING ADJUSTMENT. The Closing Adjustment, if any, will be
determined as follows (collectively, "Closing Adjustment"):
(A) Rig 1 Adjustment. If, prior to Closing, Seller has
not obtained the Rig 1 Increased Rate set forth in Section 1.16(A), the Stock
Portion of the Purchase Price shall be reduced at Closing by an amount of stock
equal in value to the difference between (i) the sum of EIGHTEEN THOUSAND NINE
HUNDRED FIFTY-NINE DOLLARS ($18, 959) per day being paid by Amoco for Rig 1
under the Current Contract ("Current Amoco Rate") during the Rig 1 Increased
Rate Period (as defined in Section 1.16(A)) and (ii) the Rig 1 Increased Rate
for Rig 1 during the Rig 1 Increased Rate Period.
(B) Rig 2 Adjustment. If, prior to Closing, Seller has
not obtained the Rig 2 Increased Rate set forth in Section 1.16(B), the Stock
Portion of the Purchase Price shall, in addition to any reduction set forth in
(A) above, be reduced by an amount of stock equal in value to the difference
between (i) the sum of FIVE THOUSAND SEVEN HUNDRED TWENTY-FIVE DOLLARS ($5,725)
per day being paid by Trinmar for Rig 2 under the Current Contract ("Current
Trinmar Rate") during the Rig 2 Increased Rate Period (as defined
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<PAGE> 18
in Section 1.16(B)) and (ii) the Rig 2 Increased Rate for Rig 2 during the Rig
2 Increased Rate Period.
(C) Post Closing Adjustments. If (i) at Closing, the
Stock Portion payable by Purchaser to Seller is reduced as required by the
provisions of either or both of (A) or (B) above and (ii) at anytime subsequent
to the Closing, but during the term of the current Amoco contract for Rig 1 or
the current Trinmar contract for Rig 2, as appropriate ("Current Contract(s)"),
either or both of Amoco and Trinmar increase the day rate for Rig 1 payable to
Purchaser during the Rig 1 Increased Rate Period or the day rate for Rig 2
during the Rig 2 Increased Rate Period, to a rate and on terms reasonably
acceptable to Purchaser, in its sole discretion ("Post Closing Increased
Rate"), Purchaser shall pay to Seller additional cash ("Additional Cash") as
follows:
(1) With respect to Rig 1, Additional Cash in an
amount equal to the difference between the
Current Amoco Rate and the Post Closing
Increased Rate for Rig 1, multiplied by the
number of days which is the lesser of (a) the
number of days in the Rig 1 Increased Rate
Period or (b) the number of days from the
date on which the Post Closing Increased Rate
becomes effective until January 15, 1999.
(2) With respect to Rig 2, Additional Cash in an
amount equal to the difference between the
Current Trinmar Rate and the Post Closing
Increased Rate for Rig 2, multiplied by the
number of days which is the lesser of (a) the
number of days in the Rig 2 Increased Rate
Period or (b) the number of days from the day
on which the Post Closing Increased Rate
becomes effective until February 8, 1999.
provided, however, that for the purposes of (1) and (2) above, the total amount
of any Additional Cash paid by Purchaser to Seller shall be adjusted to permit
Purchaser to recover, on an amortized basis over the Agreed Amortization
Period, Purchaser's good faith estimate of its losses and additional costs of
and for (a) any reduced standby rates payable by Amoco or Trinmar,
respectively, during any refurbishment work, plus (b) Purchaser's costs of
upgrading Rig 1 and Rig 2; and provided, further, that Purchaser shall never be
required to pay to Seller Additional Cash of an amount which exceeds a value
(stated in Dollars) equal to the amount of the Closing Adjustment which was
deducted from the Stock Portion of the Purchase Price at Closing.
(D) Good Faith Estimate. For the purposes of this
Section 1.05, Purchaser's "good faith estimate" shall be based on an appraisal
carried out prior to Closing (unless otherwise agreed between the Parties) by
DeHart, Hopkins & Rodriguez, of Houston, Texas, of all work required to be
performed on Rig 1 and Rig 2, respectively, and shall be conclusive, absent
manifest error.
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<PAGE> 19
(E) Post Closing Expenses for Classification of Rig 2.
Seller and Owners agree to reimburse Purchaser for all reasonable and necessary
expenses incurred or to be incurred by Purchaser to obtain an appropriate
classification of Rig 2 by the American Bureau of Shipping ("ABS"), including
but not limited to, expenses related to satisfaction of ABS survey
recommendations and fees and expenses of ABS and any such reimbursement shall
be made by Seller and Owners within thirty (30) days after submission by
Purchaser of vouchers covering expenses for which Purchaser seeks
reimbursement.
(F) Cooperation. Seller, Owners and Purchaser shall
cooperate with each other and utilize their internal resources in a manner
designed to minimize the fees and expenses of both Parties and their
accountants with regard to the calculation of all Closing Adjustments.
1.06 LIMITED ASSUMPTION OF LIABILITIES.
(A) Assumption. The sole liabilities assumed by
Purchaser hereunder are:
(1) the rights and obligations of Seller to
perform;
(a) the Scheduled Contracts specifically
set forth in Appendix 1.02(A)(8) to
the Seller's Disclosure Letter, as
same may be amended from time to
time, provided same are not in
default as of the Closing Date; and
(b) the Sub-tenancy.
(B) EXCLUDED LIABILITIES. EXCEPT AS OTHERWISE PROVIDED
IN SECTION 1.06(A), PURCHASER DOES NOT ASSUME OR AGREE TO PAY, PERFORM OR
DISCHARGE, AND SHALL NOT BE RESPONSIBLE FOR, ANY OTHER LIABILITIES OR
OBLIGATIONS OF SELLER OR OWNERS, WHETHER ACCRUED, ABSOLUTE, CONTINGENT OR
OTHERWISE, INCLUDING WITHOUT LIMITATION LIABILITIES OR OBLIGATIONS BASED ON,
ARISING OUT OF, OR IN CONNECTION WITH:
(1) any defects in Services rendered by Seller or
any express or implied warranty relating to such Services or any damage to
property, death or personal injury ("Strict Liability") arising out of any
Service rendered by Seller in respect of the Business prior to the Closing
Date;
(2) defective performance of any Scheduled
Contract by Seller or any express or implied warranty with respect to such
performance or Seller's defaults under any Scheduled Lease prior to the Closing
Date;
(3) any federal, state, local or foreign income,
sales, real or personal property, transfer, valued added (except for value
added taxes resulting from the sale of the Assets contemplated hereby which
shall be paid by Purchaser), or other taxes, assessments, fees,
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<PAGE> 20
levies, imposts, duties, stamp duties, transfer taxes, deductions or other
charges of any nature whatsoever (including, without limitation, interest and
penalties) imposed by any law, rule or regulation (collectively, "Taxes") which
are attributable or relating to the Assets or the Business of Seller for any
periods ending on or before the Closing Date, or which may be applicable
because of Seller's sale of the Rigs, Equipment, Business or any of the Assets
to Purchaser (collectively, "Tax Obligations");
(4) any claims by any of Seller's directors,
officers, employees or shareholders relating to this Agreement or its
performance or consummation, or any claims by any of them relating to or
arising out of
(a) their employment (including, without
limitation, any modification or
termination thereof) by Seller;
(b) any employment contract; or
(c) any pension or other benefit
liabilities of Seller.
(5) any claims or conditions arising under or
relating to Environmental Laws or similar legal requirements attributable or
relating to the Assets (including, without limitation, the operation thereof)
or the Business of Seller; or
(6) any unlicensed or other unauthorized use by
Seller of any patented or unpatented invention, trade secret, copyright,
trademark or other industrial property right.
(C) Third Party Disputes. The assumption and agreement
by Purchaser to pay, perform and discharge, as the case may be, the Assumed
Obligations shall not prohibit Purchaser from contesting with a third party in
good faith the amount, validity or enforceability of any of the Assumed
Obligations.
(D) 1997 Property Taxes. Seller and Purchaser shall each
pay its respective pro rata portion of all 1997 property or similar Taxes under
any Rig, other property or lease included in the Assets. Except as provided in
Section 1.06(A) hereof, Purchaser shall have no other liability for Taxes
payable by Seller (including income Taxes) relating to the operations or
Business of Seller or the Transactions contemplated hereunder.
1.07. INSTRUMENTS OF TRANSFER; CLOSING DELIVERIES; FURTHER
ASSURANCES. In order to consummate the Transactions contemplated hereby,
simultaneously with the execution of this Agreement, the following executed
documents should be delivered and other events listed below occur, as
applicable ("Closing Deliveries")
(A) Seller's Disclosure Letter;
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<PAGE> 21
(B) A General Conveyance, Transfer, Bill of Sale and
Assignment and Assumption Agreement, in the form attached as Exhibit 1.07(B)
hereto ("General Conveyance, Transfer and Assignment"), covering all of the
Assets;
(C) With respect to Rig 2, the following:
(1) executed and notarized Bill of Sale (in
triplicate) suitable for recordation in Trinidad, or such other jurisdiction as
Purchaser may reasonably request prior to Closing, warranting title to Rig 2
and transferring title to Purchaser free and clear of all Liens, debts, and
encumbrances as of the Closing Date;
(2) the most recent confirmation of Rig 2's class
evidencing condition of class as of such last effective date (ABS), any Request
For Classification Survey and Agreements, survey reports for classification of
the Rig and status of satisfaction of recommendations of the surveyor;
(3) a copy of the most recent Hull Certificate as
of such last effective date; and
(4) a copy of the most recent Load Line
Certificate as of such last effective date.
(D) With respect to all of the Rigs, the following:
(1) a Protocol of Delivery and Acceptance,
stating the date, time and place of delivery and acceptance of each of the
Rigs;
(2) a Commercial Invoice for each Rig, stamped
"PAID";
(3) the most recent Rig Inspection Certificate;
(4) the most recent Crane Inspection Certificate;
(5) a copy of each Rig's radio license; and
(6) any other certificates or any other authority
in Seller's possession relevant to Rigs of these types and instruction for
operation in waters where such Rigs have been operating during the last three
(3) years.
(E) (1) a lease from Seller of sufficient office space
acceptable to Purchaser in Seller's office building in San Fernando, Trinidad
to operate the Business for a period of four (4) years commencing on the
Closing Date, free of rent to Purchaser but Purchaser to pay its own direct
expenses plus an agreed allocated portion of utility and other maintenance
costs for such
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<PAGE> 22
space; and (2) a sub-tenancy from Seller of all, or a portion acceptable to
Purchaser, of the Shore Base Facility, at a rent and on terms identical to
Seller's obligations under its tenancy with the landlord thereof (individually
or collectively, the "San Fernando Premises"), with each lease and sub-tenancy
consented to by the respective landlords, if necessary, ("Sub-tenancy" or
"Sub-tenancies");
(F) The opinion of Seller's counsel, dated the Closing
Date, in the form of Exhibit 1.07(F);
(G) All Scheduled Contracts;
(H) Seller and Purchaser shall each deliver to the other
a certificate of its respective Boards of Directors of each such Party
authorizing this Transaction;
(I) The executed Amoco and Trinmar consents referenced in
Section 1.09(E) below;
(J) In addition, each Party shall deliver to the other
all documents, instruments and certificates required to be delivered by such
Party pursuant to the terms of this Agreement;
(K) A Registration Rights Agreement duly executed by each
of Seller, Owners and Cliffs, in a form which complies with United States
securities laws, covering the shares of Cliffs stock issued to Seller, or
Owners, as the Stock Portion of the Purchase Price; and
(L) Simultaneously with the execution of this Agreement,
and at all times thereafter as may be necessary, Seller shall execute and
deliver to Purchaser
(1) such other instruments of transfer as shall
be reasonably necessary or appropriate to vest in Purchaser good and marketable
title to the Rigs and other Assets free and clear of all Liens, other than
Permitted Encumbrances, and to comply with the purposes and intent of this
Agreement; and
(2) such other instruments as shall be reasonably
necessary or appropriate to evidence the assignment by Seller and assumption by
Purchaser of the Scheduled Contracts and certain other liabilities to the
extent provided for in Section 1.06(A).
1.08 VALUE ASSIGNED TO THE ASSETS. Simultaneously with the
execution of this Agreement, Purchaser and Seller shall agree on the proportion
of the consideration to be allocated to each of the Rigs and other Assets
purchased pursuant to this Agreement as shall have been proposed by Purchaser
and reasonably approved by Seller, as set forth in Exhibit 1.08 to this
Agreement, and Purchaser and Seller agree that they shall not thereafter take
any position or action inconsistent with such allocation in the filing of any
federal income Tax returns.
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<PAGE> 23
1.09 CONDITIONS PRECEDENT TO CLOSING. Seller's and Purchaser's
obligation to deliver the Assets and Purchase Price, respectively, and Close
this Transaction on or before December 31, 1997, (the "Closing Date") is
subject to the satisfaction of the following conditions:
(A) Performance of Representations and Warranties. Each
of Seller and Purchaser shall have performed and complied with all terms of
this Agreement required to be performed or complied with by it on or before the
Closing, and all of the representations and warranties made by each of Seller
and Purchaser under this Agreement shall be true and correct in all material
respects on and as of the Closing Date;
(B) No Suit or Action. No suit, action or proceeding by
or before any governmental authority shall have been instituted or threatened
(and not subsequently dismissed, settled, or otherwise terminated) which might
restrain, prohibit or invalidate the Transaction contemplated by this Agreement
other than an action or proceeding instituted or threatened by one of the
Parties hereto or any of their Affiliates against the other;
(C) Closing Deliveries. Each Party shall have delivered
to the other, and otherwise complied with, all of the Closing Deliveries
required of it;
(D) Board Approval. The Board of Directors of each of
Seller and Purchaser shall have approved of the execution of this Agreement and
all other documents and Transactions contemplated hereby;
(E) Operator Consents. Seller shall have received an
executed consent (a) from Amoco agreeing to the assignment to Purchaser of the
two drilling contracts for Rig 1 and Rig 3 and (b) from Trinmar agreeing to the
assignment to Purchaser of the drilling contract for Rig 2; and
(F) Disclosure Letter. Purchaser shall have received,
and be satisfied with all of the disclosures and matters set forth in Seller's
Disclosure Letter, which has been duly executed by Seller and Owners.
1.10 TERMINATION.
(A) This Agreement, may, by written notice given at or
prior to Closing in the manner herein provided, be terminated or abandoned:
(1) by either (a) Seller or (b) Purchaser, in the
event that the Closing shall not have occurred on or before February 1, 1998;
(2) by Purchaser, if (a) a material default or
breach shall be made by any Seller with respect to the due and timely
performance of any of its covenants and agreements
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<PAGE> 24
contained herein, or with respect to the correctness of, or due compliance
with, any of its representations and warranties contained in Section 2.01
hereof or in the Seller's Disclosure Letter, and such default cannot be cured
and has not been waived by Purchaser, (b) the occurrence of an event which has,
or could with the lapse of time cause, a Material Adverse Effect on the
Business, Rigs or Assets; (c) Purchaser is not reasonably satisfied with any of
the disclosures or matters set forth in Seller's Disclosure Letter; or (d) a
loss event described in Sections 1.13(B) and (C) below occurs.
(3) by Seller, if a material default or breach
shall be made by Purchaser with respect to the due and timely performance of
any of its covenants and agreements contained herein, or with respect to the
correctness of, or due complaint with any of its representations and warranties
contained in Section 2.02 hereof, and such default cannot be cured and has not
been waived by Seller.
(B) In the event this Agreement is terminated pursuant to
Section 1.10(A), all further obligations of the Parties hereunder shall
terminate, except that the obligations set forth in Sections 4.03, 4.07 and
4.08 shall survive; provided, however, that if this Agreement is so terminated
by one Party because one or more of the conditions to such Party's obligations
under this Agreement is not satisfied, it is expressly agreed and understood
that the terminating Party's right to pursue all legal remedies for breach of
contract and damages shall also survive such termination unimpaired. In the
event of a conflict, the provisions in this Section 1.10(B) shall prevail over
any other provision to the contrary contained elsewhere in this Agreement.
1.11 CLOSING.
The Closing shall occur on the Closing Date at the offices of
Seller in San Fernando, Trinidad with transfer of title to and possession of
each Rig taking place on board such Rig, as certified by Seller's and
Purchaser's representatives on the executed Protocol of Delivery and
Acceptance, or at such other time and place as the Parties may agree in
writing.
1.12 CONDITION OF THE RIGS; SPARES; FEES. On delivery at the
Closing, the Rigs and their equipment will be delivered to Purchaser in the
same repair and condition existing as of the Inspection Date, fair wear and
tear excepted ("Delivery Condition"). Purchaser may, at its sole cost, risk,
and expense, from time to time further inspect the Rigs at their present
location to determine their condition. Except for warranty as to title and
Delivery Condition, SELLER DISCLAIMS AS TO THE RIGS ANY EXPRESS OR IMPLIED
WARRANTIES, WHETHER AS TO SEAWORTHINESS, MERCHANTABILITY OR OTHERWISE, THE RIGS
AND THEIR EQUIPMENT AND SPARES BEING SOLD "AS IS" AND "WHERE IS." Seller shall
deliver and transfer to Purchaser all bunkers and lubricating and hydraulic
oils on board the Rigs at the Closing Date. Any notarial and/or consular
taxes, other charges or expenses connected with the purchase and registration
under Purchaser's flag of Rig 2 shall be for Purchaser's account. Any notarial
and/or consular taxes, other charges, or expenses connected with registration
of Rig 2, the Bill of Sale and with the closing of Seller's registry for Rig 2
shall be for Purchaser's account.
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<PAGE> 25
1.13 RISK OF LOSS; RIG LOSS.
(A) Risk of Loss. The Assets shall be at Seller's sole
risk of loss and expense until delivery to and acceptance by the Purchaser at
Closing, at which time such risk of loss shall pass to Purchaser.
(B) Loss of a Rig or Equipment. Prior to delivery to and
acceptance by Purchaser at Closing, should (1) any Rig become a total or
constructive total loss, or (2) any Rig or Equipment suffer loss (whether
stolen, missing or otherwise) or damage and such loss, damage or missing
Equipment should amount to less than a total or constructive total loss but the
value of the loss, damaged or missing portions should exceed $1,000,000 (as
appraised by an independent ABS inspector chosen by Purchaser), Seller shall
have the option of either (a) terminating this Agreement, unless the loss is to
Rig 16, and proceeding in the manner set forth in subsection (C) below, or (b)
proceeding with the Closing and following the procedures set forth in
subsection (D) below.
(C) Termination Election. If Purchaser elects to
terminate this contract under the loss provisions in (B) above, Purchaser shall
so notify Seller in writing at or prior to Closing.
(D) Election to Close. If Purchaser elects the option to
close the Transaction despite a loss event set forth in (B) or (C) above, the
Closing shall take place on the Closing Date and either (1) the Purchase Price
shall be reduced by the value allocated to such Rig and its Equipment as set
forth in Appendix 1.13(D) to this Agreement, in which event all insurance
proceeds when collected shall belong to Seller, or (2) the Purchase Price shall
not be reduced and Purchaser shall be entitled to collect and retain all
insurance proceeds for such loss to the Rig. If Purchaser elects this option,
Seller and Purchaser shall, on or before Closing, execute an agreement
("Insurance Loss Proceeds Agreement") setting forth the procedures for
collecting such proceeds and with such other terms as are mutually agreeable to
the Parties.
(E) Insurance. Until the Closing, Seller agrees to keep
the Rigs, their Equipment and all other Assets insured for their full insurable
value for such risks and in such amounts as set forth in Appendix 2.01(E) to
Seller's Disclosure Letter. Purchaser shall, to the fullest extent possible,
be named as an additional insured under all such insurance policies required to
be maintained by Seller. Purchaser and Seller agree that Purchaser has an
insurable interest in the Rigs and Assets to the extent of its costs and
expenses in connection with this Agreement (including, but not limited to, its
inspection costs and reasonable attorneys' and accountant's fees plus all costs
of Purchaser in preparation for taking delivery of the Rigs and Assets.
(F) Rig 16. If Rig 16 or any of its Equipment suffers a
loss event set forth in (B) above, the Closing shall take place and the
Purchase Price shall be reduced by the value allocated to Rig 16 in Appendix
1.13(D) attached hereto, with Purchaser having no option to terminate the
Agreement.
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<PAGE> 26
1.14 PRE-CLOSING INSPECTION. Immediately prior to the Closing,
Seller's and Purchaser's representatives may, at Purchaser's option, meet on
board the respective Rigs and at each San Fernando Premises in order to conduct
a joint inspection of the Rigs, Equipment and Assets ("Pre-Closing
Inspection"). Seller and Purchaser shall each bear their own costs and
expenses of the Pre-Closing Inspection.
1.15 OTHER LOSS OR DAMAGE. If the Pre-Closing Inspection reveals
that any Rig or Equipment is damaged or any parts thereof are missing, which
loss or damage does not amount to a total or constructive total loss of such
Rig or Equipment, but the Rig at Closing is not in the Delivery Condition and
costs of repair or replacement does not exceed $1,000,000 in the aggregate, the
Closing shall take place and Purchaser at its option may either reduce the
Purchase Price by the amount of the loss, in which event all insurance proceeds
recovered by Seller or Purchaser as a result of such loss shall belong to
Seller, or elect to pay the full Purchase Price at Closing and retain any
insurance proceeds.
1.16 PRE-CLOSING SELLER OBLIGATIONS. Prior to Closing, Seller
shall have obtained the following with respect to the Rigs:
(A) With respect to Rig 1, Seller shall have executed a
new or amended contract with Amoco which, among other things, increases the day
rate for Rig 1, for the period commencing no later than June 1, 1998 and ending
on the termination date of the Current Contract, January 15, 1999 (the "Rig 1
Increased Rate Period"), to an amount equal to at least the sum of (i) $25,000
per day plus (ii) an amount per day which is sufficient to amortize over a
period, equal to the lesser of (a) thirty-six (36) months or (b) the number of
months, or any part thereof, during the Rig 1 Increased Rate Period (the lesser
of (a) or (b) herein called the "Agreed Amortization Period"), of the sum of
the following ("Rig 1 Increased Rate"):
(1) 100% of the costs of upgrading and
refurbishing Rig 1; plus
(2) an amount per day equal to $25,000 less the
actual day rate, if any, to be received by
the Purchaser during any period of downtime
to Rig 1 while such upgrades and
refurbishments to Rig 1 are being carried
out.
Purchaser, at its own cost and expense, shall carry out all
upgrades and refurbishments to Rig 1 required by Amoco in order to obtain such
Rig 1 Increased Rate.
(B) With respect to Rig 2, Seller shall have (i) executed
with Trinmar a new or amended contract which, among other things, increases the
day rate for Rig 2 to $9,725 per day ("Rig 2 Increased Rate") commencing on
January 1, 1998 and ending on termination of the Current Contract, February 8,
1999, ("Rig 2 Increased Rate Period") and (ii), at Seller's own cost and
expense, completed all upgrades and refurbishments to Rig 2 necessary to obtain
the increased day rate from Trinmar.
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<PAGE> 27
ARTICLE II
REPRESENTATIONS AND WARRANTIES; RESTRICTIVE COVENANTS
2.01 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller, Brash and
Pollonais, each jointly and severally represent and warrant to Purchaser that
the following are true and correct on and as of the Effective Date and will, as
of the Closing Date, be true and correct in all respects:
(A) Organization and Good Standing of Seller. Seller is
a private company duly organized, validly existing and in good standing under
the laws of the Republic of Trinidad and Tobago and is qualified to transact
business and is in good standing as a foreign company in the jurisdictions
(which are listed in Appendix 2.01(A) to Seller's Disclosure Letter) where it
is required to qualify in order to conduct its business as presently conducted.
Seller has the power and authority to own, lease or operate all properties and
assets now owned, leased or operated by it and to carry on its businesses as
now conducted. Seller has heretofore delivered to Purchaser complete and
correct copies of its Memorandum and Articles of Association, as amended and in
effect on the date hereof.
(B) Consents, Authorizations and Binding Effect.
(1) No Consents Required. Seller may execute,
deliver and perform this Agreement (including, without limitation, execution,
delivery and performance of the Operative Documents to which it is a party)
without the necessity of Seller obtaining any consent, approval, authorization
or waiver or giving any notice or otherwise, except for such consents,
approvals, authorizations, waivers and notices:
(a) which have been obtained and are
unconditional and are in full force
and effect and such notices which
have been given; or
(b) which are described on Appendix
2.01(B) to Seller's Disclosure
Letter.
(2) Corporate Power. Seller has the corporate
power to enter into this Agreement and to carry out its respective obligations
hereunder. This Agreement has been duly authorized, executed and delivered by
Seller and constitutes the legal, valid and binding obligation of Seller,
enforceable against it in accordance with its terms, except as may be limited
by bankruptcy, reorganization, fraudulent conveyance, insolvency and similar
laws of general application relating to or affecting the enforcement of rights
of creditors.
(3) Execution. The execution, delivery and
performance of this Agreement by Seller does not and will not:
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<PAGE> 28
(a) constitute a violation of its
Memorandum and Articles of
Association, as same may have been
amended;
(b) result in any Lien against the
Assets;
(c) constitute a violation of any
statute, judgment, Order, decree or
regulation or rule of any
Governmental Body applicable or
relating to Seller or the Assets or
the Business of Seller; or
(d) conflict with, or constitute a
breach or default under, or give
rise to any right of termination,
cancellation or acceleration under,
any term or provision of any
contract, agreement, lease,
mortgage, deed of trust, commitment,
license, franchise, Permit,
authorization or any other
instrument or obligation to which
Seller is a party or by which their
respective assets are bound, or an
event which with notice, lapse of
time, or both, would result in any
such conflict, breach, default or
right, except as provided in
Appendix 1.02(A)(6) to Seller's
Disclosure Letter.
(4) Authorization. Without limiting the
foregoing, the execution, delivery and performance of the Operative Documents,
and consummation of the Transactions contemplated thereby, have been duly
authorized and approved by the Board of Directors and Shareholders of Seller
without dissent.
(C) Liabilities. Seller has no liabilities affecting the
Business other than those disclosed on Appendix 2.01(C) to Seller's Disclosure
Letter, which liabilities are specifically not assumed by Purchaser.
(D) Title and Condition of Assets.
(1) Title. Seller has, and will at Closing have,
good and marketable title to the real property leasehold and tangible and
intangible personal property owned by it that comprise the Rigs and other
Assets, free and clear of Liens, other than:
(a) Permitted Encumbrances; or
(b) Liens which will be released or
discharged at or prior to the
Effective Date.
(2) Improvements. No improvement or structure on
any real property leased by Seller encroaches on any adjacent property. No
improvement or structure on any real
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<PAGE> 29
property leased by Seller has been damaged by any casualty or act of God, or
been subject to any condemnation proceedings.
(3) Asset Condition.
(a) At Delivery. The Rigs and tangible
Assets are, and will at Closing be:
(i) in the Delivery Condition,
subject to ordinary wear and
tear, and have been
maintained in accordance with
standard industry practice;
(ii) capable of being used in the
Business as presently being
conducted without present
need for repair or
replacement except in the
ordinary course of business;
and
(iii) in conformance in all respects
with all applicable legal
requirements.
(b) As Is/Where Is. EXCEPT FOR THE
SPECIFIC WARRANTY OF TITLE, THE
WARRANTY AS TO DELIVERY CONDITION
GIVEN HEREIN AND THE WARRANTIES SET
FORTH IN (a)(ii) AND (iii) ABOVE,
AND SUBJECT TO THE EXCLUDED
LIABILITIES SET FORTH IN SECTION
1.06(B) ABOVE, THE RIGS, EQUIPMENT
AND OTHER ASSETS SOLD HEREBY ARE
SOLD BY SELLER AS IS/WHERE IS AT
THEIR PRESENT LOCATION AND SELLER
DISCLAIMS ANY EXPRESS OR IMPLIED
WARRANTIES (UNLESS OTHERWISE STATED
HEREIN), WHETHER AS TO
SEAWORTHINESS, MERCHANTABILITY OR
OTHERWISE.
(c) Leased Assets. All real and
tangible personal property held by
Seller under lease or as a tenant is
held under a valid and binding lease
or rental agreement that is in full
force and effect, except that the
Shore Base Facility is rented on a
monthly basis and has no current
written lease or rental agreement.
Seller is not in default, and no
notice of alleged default has been
received by Seller, under any such
lease or monthly tenancy and no
landlord is in default or alleged to
be in default thereunder. None of
the rights of Seller under any
tenancy will be impaired by the
consummation of the Transactions
contemplated by this Agreement,
assuming that the consent of the
landlord to the assignment of each
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<PAGE> 30
tenancy described on Appendix 2.01(B)
to Seller's Disclosure Letter is
obtained.
(d) Assets Being Sold. The Assets
constitute all Rigs, Equipment,
material Assets and properties,
real, personal, tangible and
intangible, that are necessary for
the continued conduct of the
Business as presently being
conducted.
(E) Insurance. Appendix 2.01(E) to Seller's Disclosure
Letter contains a list of all policies of insurance maintained as of the date
of this Agreement by Seller in respect of the Business and Assets of Seller,
including, without limitation, insurance providing benefits for employees
working in the Business in effect as of the Effective Date. The insurance
policies set forth on Appendix 2.01(E) to Seller's Disclosure Letter provide
adequate coverage against the foreseeable risks involved in the Business and
Operation of the Assets. Seller has not received notice from any insurance
carrier of the intention of such carrier to discontinue any insurance coverage
afforded to Seller in connection with the Business or Assets.
(F) Litigation and Compliance With Laws, Etc. There are
no claims, actions, suits or proceedings, whether in equity or at law, or
governmental or administrative investigations pending or, to the knowledge of
any Seller, threatened against Seller affecting the Business, the Rigs or any
Asset except as described on Appendix 2.01(F) to Seller's Disclosure Letter, or
as may arise with respect to any of the matters described thereon. Except as
described on Appendix 2.01(F) to Seller's Disclosure Letter, as of the
Effective Date,
(1) Seller has conducted for the past five years
and does conduct its Business and operations in compliance with, and is not in
default or violation in any respect under, any law, regulation, writ,
injunction, decree or other Order applicable to Seller or its Assets,
including, without limitation, all safety and health, antitrust, consumer
protection, labor, equal opportunity or discrimination laws, rules and
regulations;
(2) there are no judgments outstanding and
unsatisfied against Seller, Owners or the Assets; and
(3) there is no basis for any claim against or
liability of Seller on account of any Service warranties or defective work
performed on any of the Rigs or with respect to the provisions of drilling
services generally (other than minor claims arising in the usual and ordinary
course of business which may be satisfied at nominal cost to Seller).
(G) Taxes. Seller has duly filed when due, including any
extensions, all Tax reports and returns in connection with and in respect of
Seller's Business, the Rigs, Assets and Affected Employees, and has timely paid
and discharged all Tax Obligations shown thereon. Seller has made available to
Purchaser, to the extent requested by Purchaser, all Tax reports and returns of
Seller for all periods ending prior to the date hereof. There are no Tax Liens
upon,
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<PAGE> 31
pending against or, to the knowledge of any Seller, threatened against any Rig
or other Asset. Consummation of the Transactions herein contemplated will not
result in the imposition or creation of any Tax Obligations on any Rig or other
Asset.
(H) Intangible Assets. Appendix 2.01(H) to Seller's
Disclosure Letter sets forth
(1) all patents, patent applications, trademarks,
trademark registrations, applications for trademark registrations, trade names
and copyrights which Seller owns or in which Seller has any proprietary
interest, or which are used in any way in, or are necessary for the conduct of
the Business; and
(2) all license agreements with respect to any of
the foregoing as to which Seller is licensor or licensee.
There are no pending or, to the knowledge of Seller,
threatened infringement claims against Seller, Owners or by any Person with
respect to any of the items listed on Appendix 2.01(H) to Seller's Disclosure
Letter, nor has any such item been declared invalid or been limited by any
court or agreement. The Intangible Assets will afford Purchaser at all times
after the Effective Date the rights to use all technology, proprietary
information, know-how or patented ideas, designs, inventions, trademarks,
copyrights, tradenames and servicemarks owned by Seller or others necessary for
the conduct of the Business as presently being conducted. The use of the
Intangible Assets will not and, the conduct of the Business as presently
conducted does not, infringe on the rights of any other Person.
(I) Instruments in Full Force and Effect; Possession
under Leases. The Scheduled Contracts, and other commitments, agreements and
obligations (including, without limitation, licenses, royalties, assignments
and similar agreements with respect to the Intangible Assets) constituting a
part of the Assets ("Instruments") are valid, binding and in full force and
effect, have not been amended or supplemented in any manner or respect except
as disclosed on Appendix 2.01(I) to Seller's Disclosure Letter, and upon
assignment and assumption, with applicable consents if necessary, will be
enforceable by Purchaser in accordance with their respective terms. There are
no defaults by Seller thereunder, and Seller knows of no defaults thereunder by
any other party thereto, and no event has occurred that with the lapse of time
or action or inaction by any party thereto would result in a violation thereof
or a default thereunder. None of the rights under the Instruments will be
impaired by the consummation of the Transactions contemplated by this
Agreement, and all such rights will enure to and be enforceable by Purchaser
after the Effective Date without the authorization, consent, approval, permit
or licenses of, or filing with, any other Person. Seller enjoys peaceful and
undisturbed possession of the Shore Base Facility and the San Fernando
Premises.
(J) Employee Plans and Agreements. As of the Closing,
all pension plans, profit sharing plans, retirement, bonus, life, medical
health and insurance plans, or other similar
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plans ("Plans") with respect to Affected Employees shall have been terminated.
With respect to any Affected Employee, neither Seller, Owners, nor any
Affiliate of Seller or Owners is currently under review or investigation by the
Republic of Trinidad and Tobago Board of Inland Revenue, Department of Labor or
any other Governmental Body, and all such Plans have been maintained in
compliance in all material respects with all applicable provisions of all
applicable statutes, rules or regulations.
(K) Labor and Employee Relations.
(1) No Collective Bargaining Agreement. Except
as listed in Appendix 2.01(K) to Seller's Disclosure Letter, there exists no
collective bargaining agreement or other labor union contract applicable to any
Affected Employee or any other employee of Seller engaged in the Business and
no such agreement or contract has been requested by any employee or group of
employees of Seller, nor has there been any discussion with respect thereto by
management of Seller with any employee of Seller. Seller has not received any
written notification of any unfair labor practice charges or complaints pending
before any agency having jurisdiction thereof, nor are there any current union
representation claims involving any of the Affected Employees or other
employees of Seller engaged in the Business. Further, Seller is not aware of
any such threatened charges or claims.
(2) No Unions. Except as set forth in Appendix
2.01(K) to Seller's Disclosure Letter, Seller is not aware of any union
organizing activities or proceedings involving, or any pending petitions for
recognition of, a labor union or association as the exclusive bargaining agent
for, or where the purpose is to organize, any group or groups of Affected
Employees of Seller. There is not currently pending, with regard to any of its
facilities, any proceeding before the Trinidad National Labor Relations Board
wherein any labor organization is seeking representation of any employees of
Seller involved in the Business. Except as set forth in Appendix 2.01(K) to
Seller's Disclosure Letter, Seller is not aware of any strikes, work stoppages,
work slowdowns or lockouts, nor of any threats thereof, by or with respect to
any of the Employees of Seller involved in the Business.
(3) No Pending Grievances. Except as set forth
in Appendix 2.01(K) to Seller's Disclosure Letter, there are no pending
grievances filed by Affected Employees of Seller within any collective
bargaining unit or by representatives of Affected Employees within any
collective bargaining unit. Further, there are no arbitration decisions,
settlement agreements, injunctions, consent decrees or conciliation agreements
which affect the operation of the Business other than those specifically listed
in Appendix 2.01(K) to Seller's Disclosure Letter.
(4) No Litigation. Except as set forth in
Appendix 2.01(K) to Seller's Disclosure Letter, there exists, with respect to
the Affected Employees:
(a) no charge of discrimination or
lawsuit involving any alleged
violation of any fair employment
law, wage payment law,
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occupational safety and health law;
(b) no threatened or pending litigation
arising out of any employment
relationship, or other
employment-related law, whether
federal, state or local; and
(c) no threatened or pending litigation
arising out of any employment
relationship, presently threatened
or pending, by any applicant,
employee or former employee of
Seller or any representative of any
such Person or Persons. No charge
or claim involving any of the
facilities or employees of Seller is
pending before any administrative
agency, local, state or federal, and
no lawsuit involving any of such
facilities or employees is pending
with respect to equal employment
opportunity, age discrimination,
occupational safety, or any other
form of alleged employment practice
or unfair labor practice.
(5) Affected Employees. Seller and Owners
acknowledge that the Affected Employees listed on Appendix 4.15(B) may be
employed after Closing by Purchaser.
(6) Responsibility for Grievances. Seller and
Owners shall each be solely responsible for all grievances, arbitrations,
claims, demands, or charges of any nature whatsoever including, but not limited
to, any such grievances, arbitrations, claims, demands, or charges whether now
known or not yet made by any Affected Employee or other employees, bargaining
agents, or governmental agencies, which result from or arise out of any event
occurring prior to the Closing Date; AND SELLER AND EACH OWNER JOINTLY AND
SEVERALLY AGREE TO HOLD HARMLESS AND INDEMNIFY PURCHASER FOR ALL SUCH CLAIMS,
IF ANY, ASSERTED AGAINST PURCHASER, ITS OFFICERS, DIRECTORS, EMPLOYEES,
SUCCESSORS OR ASSIGNS.
(L) Absence of Certain Changes, Etc. Except as disclosed
on Appendix 2.01(L) to Seller's Disclosure Letter, since the Inspection Date,
there has been, and will at Closing be, no Material Adverse Effect to the
Business, Rigs, Equipment or Assets of Seller.
(M) Material Contracts, Etc. Seller has heretofore
delivered, or made available to Purchaser or its counsel, complete copies of
all Scheduled Contracts, agreements and instruments listed on Appendix
1.02(A)(8) to Seller's Disclosure Letter. There are no existing defaults by
Seller, or to the knowledge of any Seller, or other parties, under any of the
contracts, leases, agreements and instruments listed on Appendix 2.01(N) to
Seller's Disclosure Letter.
(N) Non-Competition Agreements. Except as set forth in
Appendix 2.01(N) to Seller's Disclosure Letter, Seller is not a party to any
agreement, contract or covenant limiting the freedom of Seller, or any
purchaser of the Assets from Seller, from competing in any line of
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business, or with any Person in any geographic area.
(O) Licenses and Permits.
(1) Seller possesses all of the Permits that are
material in connection with the ownership and conduct of the Business, as
listed in Appendix 1.02(A)(6) to Seller's Disclosure Letter, copies of which
have been delivered to Purchaser. Such Permits constitute all the Permits
necessary for Seller to conduct the Business as now being conducted and to own,
operate, maintain and use the Rigs and other Assets in the manner in which they
are now being operated, maintained and used. Each of such Permits and Seller's
rights with respect thereto is valid and subsisting, in full force and effect,
and enforceable by Seller.
(2) Seller is in compliance, in all material
respects, with the terms of such Permits and none of such Permits have been, or
to the knowledge of Seller, are threatened to be, revoked, canceled, suspended
or modified.
(3) Seller shall use its best efforts in
assisting the Purchaser to obtain the consents of all third parties and
Governmental Bodies necessary for the grant of all Permits necessary to carry
on the Business.
(P) Environmental Matters. Without in any manner
limiting any other representations and warranties set forth in this Agreement,
except as set forth in Appendix 2.01(P) to Seller's Disclosure Letter
(1) No Violations of Law. Neither Seller, nor
any real property or facility presently leased, used, maintained or operated by
Seller in connection with the Rigs or the Business ("Seller Site"), nor any of
the other Assets is in violation of, or has violated, or has been, or is in
non-compliance with, any Environmental Laws in connection with the ownership,
use, maintenance or operation of, or conduct of business related to, Seller,
any Seller Site or any of the other Assets of Seller; and
(2) General. Without in any manner limiting the
generality of (1) above, with respect to the Business
(a) except in accordance with
Environmental Laws (including,
without limitation, the obtaining of
necessary Permits), no Materials of
Environmental Concern (as defined
below) have been used, generated,
manufactured, stored or treated, or
disposed of, landfilled or in any
other way Released (and no Release
is threatened), on, under or about
any Seller Site or transported to or
from any Seller Site, and to the
knowledge of any Seller, no
Materials of Environmental Concern
have been generated, manufactured,
stored or
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treated or disposed of, landfilled or
in any other way Released (and no
Release is threatened), on, under,
about or from any property adjacent
to any Seller Site;
(b) Seller is not now, and it will not
be in the future, as a result of the
operation or condition of its
Business or Assets prior to or on
the Effective Date, subject to any
(i) contingent liability in
connection with any Release
or threatened Release of any
Material of Environmental
Concern into the environment
whether on or off a Seller
Site; or
(ii) reclamation or remediation
requirements under
Environmental Laws, or any
reporting requirements
related thereto;
(c) The Assets being sold hereby include
all environmental and pollution
control equipment necessary for
compliance with all Environmental
Laws (including, without limitation,
all applicable Permits) and
operation of Seller's Business as it
is presently conducted;
(d) no Materials of Environmental
Concern have been incorporated into
any of the Assets;
(e) there are no underground storage
tanks, pits, sumps or impondments
(as defined under Environmental
Laws) located under any Seller Site;
(f) Seller has not received any notices
of any Release or threatened Release
of Materials of Environmental
Concern, or of any violation of,
noncompliance with, or remedial
obligation under, Environmental Laws
relating to the ownership, use,
maintenance, operation of, or
conduct of business related to, any
Seller Site, the rigs or Assets of
Seller, nor is there any basis for
any of the foregoing;
(g) there are no writs, injunctions,
decrees, Orders or judgments
outstanding, or lawsuits, claims,
proceedings or investigations
pending, or, to the knowledge of
Seller, threatened, relating to the
ownership, lease, use, maintenance,
operation of, or conduct of business
related
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<PAGE> 36
to, any Seller Site, the Rigs or
Assets of Seller, nor is there any
basis for any of the foregoing; and
(i) there are no obligations,
undertakings or liabilities arising
out of, or relating to,
Environmental Laws which Seller has
agreed to, assumed or retained by
contract or otherwise.
As used in this Agreement,
(x) "Materials of Environmental Concern"
shall mean any solid or hazardous waste, hazardous substance, pollutant,
contaminant, oil, petroleum product, commercial product or other substance
which is listed, regulated or designated as toxic or hazardous (or words of
similar meaning and regulatory effect), or with respect to which remedial
obligations may be imposed under any Environmental Laws or exposure to which
may pose a health or safety hazard, and
(y) "Environmental Laws" means any
applicable federal, state, or local laws, rules, or regulations, common law or
strict liability provisions, and any judicial or administrative interpretations
thereof, including any judicial or administrative Orders or judgments, relating
to health, safety, industrial hygiene, pollution or environmental matters.
(Q) Excluded Assets. None of the Excluded Assets will be
needed in the continuing operation of the Business or operation of the Rigs
following the Closing Date.
(R) Pricing. Attached hereto as Appendix 2.01(R) of the
Disclosure Letter is a complete and accurate list of Seller's standard drilling
day rates under all Drilling Contracts involved in the Business and any
applicable discounts by operator name.
(S) Competing Lines of Business. Except as set forth in
Appendix 2.01(S) to Seller's Disclosure Letter, no Affiliate of Seller owns,
directly or indirectly, any interest in (excepting not more than a 5% holding
for investment purposes in securities of publicly held and traded companies),
or is an officer, director, employer or consultant of, or otherwise receives
remuneration from, any Person which is, or is engaged in business as, a
competitor, lessor, lessee, customer or supplier of Seller. Except as set
forth in Appendix 2.01(S), Seller does not have, and no officer or director or
shareholder of Seller, or any Affiliate of Seller has, nor during the period
beginning January 1, 1996 through, to and including the date hereof, had any
interest in any property, real or personal, tangible or intangible, used in or
pertaining to the Business. None of the shareholders of Seller have any claims
or rights against Seller which might affect the Assets or Rigs, except as set
forth in Appendix 2.01(S) to Seller's Disclosure Letter.
(T) Disclosure.
(1) Information Provided. Seller and Owners have
fully provided the Purchaser, or its representatives, with all the information
that the Purchaser has requested for
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<PAGE> 37
deciding whether to consummate the purchase of the Business pursuant to the
terms and conditions of this Agreement.
(2) No Untrue Statements. No representation or
warranty of Seller or either of the Owners contained in this Agreement or
statement in the Seller's Disclosure Letter contains any untrue statement. No
representation or warranty of Seller or either of the Owners contained in this
Agreement or statement in the Seller's Disclosure Letter omits to state a
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
(3) No Material Adverse Effects. There is no
fact known to Seller or Owners which has specific application to any Seller or
the Business (other than general economic or industry conditions) and which
could have a Material Adverse Effect which has not been set forth in this
Agreement or the Seller's Disclosure Letter.
(4) Seller's Disclosure Letter. The disclosures
in the Seller's Disclosure Letter, and those in any supplement thereto, shall
relate only to the representations and warranties in the section of this
Agreement to which they expressly relate and to no other representation or
warranty in this Agreement.
(5) Conflicts. In the event of any inconsistency
between the statements in the body of this Agreement and those in the Seller's
Disclosure Letter (other than an exception expressly set forth as such in the
Seller's Disclosure Letter in relation to a specifically identified
representation or warranty), those in this Agreement shall control.
(U) Investment Representations.
(1) Investment. Seller and each Owner represents
that it and he, as appropriate, are acquiring the Stock Portion for its or his
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
United States Securities and Exchange Commission under the United States
Securities Act covering the Stock Portion, or (ii) pursuant to an applicable
exemption under the United States Securities Act. In acquiring the Stock
Portion none of Seller or either Owner is offering or selling, or will offer or
sell, for Cliffs in connection with any distribution of the Stock Portion, and
no such Seller or Owner 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.
(2) Review and Advice. Seller and each Owner
acknowledges that it or his 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 connection with a public sale of Cliffs
shares which are included in the Stock Portion. Seller and each Owner further
represents that it and he has had an opportunity to ask questions of and
receive answers from Cliffs regarding Cliffs and its
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<PAGE> 38
business, assets, results of operations and financial condition and the terms
and conditions of the issuance of the Stock Portion.
(3) Economic Risk. Seller and each Owner
acknowledges that it and he can bear the economic risk of its and his
investment in the Stock Portion, and has such knowledge and experience in
financial and business matters that each is capable of evaluating the merits
and risks of an investment in the Stock Portion.
(4) Unregistered Securities. Seller and each
Owner understands that the Stock Portion, when issued, will not have been
registered pursuant to the United States Securities Act, that the Stock Portion
will be characterized as "restricted securities" under U.S. federal securities
laws, and that, under such laws and applicable regulations, the Stock Portion
cannot be sold or otherwise disposed of without registration under the United
States Securities Act or an exemption therefrom. Seller and each Owner further
understands that, following consummation of the transactions contemplated by
this Agreement, it or he may be an "affiliate" of Cliffs for purposes of Rule
144 promulgated under the United States Securities Act. In this regard, Seller
and each Owner represents that each has consulted with United States legal
counsel and understands the resale limitations imposed thereby and by the
United States Securities Act. Stop transfer instructions may be issued to the
transfer agent for the Cliffs common stock in connection with Stock Portion
owned by Seller, either Owner or their Affiliates.
(5) Stock Certificate Legend. It is agreed and
understood by Seller and each Owner that the certificate(s) representing the
Stock Portion 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
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<PAGE> 39
DISPOSE OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN AN
ASSET PURCHASE AGREEMENT DATED DECEMBER ___, 1997
BETWEEN THE CORPORATION, WELL SERVICES (MARINE)
LIMITED, CHARLES A. BRASH AND PHILLIP A. POLLONAIS, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE CORPORATION.
It is agreed and understood by Purchaser that the first legend will be removed
upon the registration of the shares represented by such certificate under the
United States Securities Act or upon delivery to Purchaser of a written opinion
of counsel, which opinion and counsel are reasonably satisfactory to Purchaser,
to the effect that such legend is not required.
2.02 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Seller and Owners that the following are true and
correct on and as of the Effective Date:
(A) Purchaser is a company duly organized, validly
existing and in good standing under the laws of the Republic of Trinidad and
Tobago and is qualified to transact business and is in good standing as a
foreign company in the jurisdictions where it is required to qualify in order
to conduct its business as presently conducted. Purchaser has the power and
authority to own, lease or operate the Rigs and Assets and to carry on the
Business after Closing.
(B) Purchaser may execute, deliver and perform this
Agreement without the necessity of Purchaser obtaining any consent, approval,
authorization or waiver or giving any notice or otherwise, except for
(1) those consents, approvals, authorizations and
waivers which have been obtained and are unconditional and in full force and
effect; and
(2) notices that have been given.
(C) The execution, delivery and performance of this
Agreement do not and will not
(1) constitute a violation of the Memorandum and
Articles of Association of Purchaser; or
(2) constitute a violation of any statute,
judgment, Order, decree or
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<PAGE> 40
regulation or rule of any court, governmental authority or arbitrator
applicable or relating to Purchaser.
(D) This Agreement has been duly authorized, executed and
delivered by Purchaser. This Agreement constitutes the legal, valid and
binding obligation of Purchaser, enforceable in accordance with its terms,
except as may be limited by bankruptcy, reorganization, insolvency and similar
laws of general application relating to, or affecting the enforcement of,
rights of creditors and subject to general principles of equity.
2.03 RESTRICTIVE COVENANTS.
(A) Reasonableness. The Parties to this Agreement
stipulate and agree that the restraints on competition and the covenants agreed
to within this Section 2.03 are reasonable in time, geographical territory and
scope of activities affected, and that such restraints and covenants are
reasonably necessary to protect the Assets, Business and Rigs being sold to
Purchaser.
(B) Covenants. Except as provided below, each of Brash
and Pollonais agrees that, for a period of four (4) years from the Effective
Date, neither Brash nor Pollonais shall, anywhere within the territorial waters
of Trinidad and Tobago (including its Exclusive Economic Zone) ("Territory"),
without the prior written consent of the Purchaser, individually or by
association with others, directly or indirectly, through any form of ownership,
or as a director, officer, manager, partner, joint venturer, agent, employee,
consultant or otherwise engage in any business which is competitive with the
offshore oil and gas drilling and workover business conducted by the Purchaser
in the Territory, and agrees not to solicit or induce any employee of the
Purchaser to terminate his or her employment with Purchaser.
(C) Remedies, The restrictive covenants contained in
this Section 2.03 are independent of any other provision in this Agreement.
Brash and Pollonais agree that the Purchaser's remedies at law for any breach
or threat of breach by either Brash or Pollonais of the provisions of this
Section 2.03 will be inadequate and that Purchaser shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this Section
2.03 and to enforce specifically the terms and provisions of this Section 2.03
in addition to any other remedy to which it may be entitled at law or equity.
Should any provision of this Section 2.3 be adjudged to any extent invalid by
any competent tribunal, such provision will be deemed modified to the extent
necessary to make it enforceable.
(D) Consideration. Brash and Pollonais each agree that
the restrictive covenants contained in this Section 2.03 are a condition
precedent to Purchaser entering into this Agreement and purchasing the Assets
and Business from Seller and paying the Purchase Price therefor.
(E) Exclusions. Notwithstanding the foregoing, nothing
contained in this Agreement is intended to restrict Brash and Pollonais from
carrying on and operating other
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<PAGE> 41
businesses which perform oil and gas drilling and workover services on land,
from providing other products or services which are similar to those provided
by Purchaser, Cliffs or its Affiliates, or from owning and operating interests
in oil and gas concession farmouts and leases, provided they do not own any
interest in, or operate, offshore drilling or workover equipment, or provide
any similar products or services, in the Territory.
2.04 CONSULTING AGREEMENT. Brash agrees that for a period of
twenty-four (24) months after the Effective Date he shall act as a consultant
to the Purchaser. In connection therewith, Brash shall perform such duties as
the Purchaser may reasonably request and shall use his best efforts to promote
the interests of the Purchaser and the Business. In this regard, the Purchaser
agrees that it will not make unreasonable demands on Brash's time and
acknowledges that any such duties will always be subject to Brash's
availability. Brash agrees that he shall not receive any additional
compensation for his consulting duties, and acknowledges that his consulting
services are given in partial consideration of Purchaser's agreement to
purchase the Assets and payment of the Purchase Price; provided, however,
Purchaser agrees to reimburse Brash for all reasonable amounts for hotel,
travel, entertainment and other expenses properly incurred or to be incurred by
Brash, with prior approval of any of the officers of Purchaser, in connection
with Brash's consulting services and any such reimbursement shall be made by
the Purchaser within thirty (30) days after submission to the Purchaser of
vouchers covering expenses for which Brash seeks reimbursement.
ARTICLE III
INDEMNIFICATION
3.01 INDEMNITY.
(A) SUBJECT TO SECTION 3.01(D) HEREOF, SELLER, BRASH AND
POLLONAIS EACH JOINTLY AND SEVERALLY AGREE TO INDEMNIFY AND HOLD PURCHASER AND
PURCHASER'S OFFICERS, DIRECTORS, SHAREHOLDERS, AFFILIATES, EMPLOYEES, AGENTS
AND EMPLOYEE PLAN FIDUCIARIES ("PURCHASER INDEMNITEES") HARMLESS FROM ANY AND
ALL DAMAGES, LOSSES WHICH SHALL INCLUDE ANY DIMINUTION IN VALUE, SHORTAGES,
LIABILITIES (JOINT OR SEVERAL), PAYMENTS, OBLIGATIONS, PENALTIES, CLAIMS,
LITIGATION, DEMANDS, DEFENSES, JUDGMENTS, SUITS, PROCEEDINGS, COSTS,
DISBURSEMENTS OR EXPENSES (INCLUDING, WITHOUT LIMITATION, FEES, DISBURSEMENTS
AND EXPENSES OF ATTORNEYS, ACCOUNTANTS AND OTHER PROFESSIONAL ADVISORS AND OF
EXPERT WITNESSES AND COSTS OF INVESTIGATION AND PREPARATION) OF ANY KIND OR
NATURE WHATSOEVER (COLLECTIVELY "DAMAGES"), DIRECTLY OR INDIRECTLY RESULTING
FROM, RELATING TO, OR ARISING OUT OF
(1) ANY BREACH OF OR INACCURACY IN ANY
REPRESENTATION OR WARRANTY OF SELLER OR EITHER OF THE OWNERS CONTAINED IN
SECTION 2.01 OR IN ANY OPERATIVE DOCUMENT;
(2) ANY BREACH OR NON-PERFORMANCE, PARTIAL OR
TOTAL, BY SELLER OR EITHER OF THE OWNERS OF ANY COVENANT OR AGREEMENT OF SELLER
OR OWNERS (OR ANY AFFILIATE OR
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SUBSIDIARY THEREOF) CONTAINED IN THIS AGREEMENT OR IN ANY OPERATIVE DOCUMENT;
(3) ANY ACTUAL OR THREATENED VIOLATION OF OR
NON-COMPLIANCE WITH, OR REMEDIAL OBLIGATION ARISING UNDER, ANY ENVIRONMENTAL
LAWS ARISING FROM ANY EVENT, CONDITION, CIRCUMSTANCE, ACTIVITY, PRACTICE,
INCIDENT, ACTION OR PLAN EXISTING OR OCCURRING PRIOR TO THE CLOSING DATE
RELATING IN ANY WAY TO THE RIGS, ASSETS OR THE BUSINESS OF SELLER (INCLUDING,
WITHOUT LIMITATION, THE OWNERSHIP, OPERATION OR USE OF THE RIGS, ASSETS AND THE
CONDUCT OF THE BUSINESS OF SELLER PRIOR TO THE CLOSING DATE; THE PRESENCE OF
ANY UNDERGROUND STORAGE TANKS OR ANY MATERIALS OF ENVIRONMENTAL CONCERN ON, IN,
UNDER OR AFFECTING ALL OR ANY PORTION OF SELLER'S PROPERTIES OR ANY SURROUNDING
AREAS, AND ANY RELEASE OR THREATENED RELEASE WITH RESPECT TO SUCH UNDERGROUND
STORAGE TANKS OR MATERIALS OF ENVIRONMENTAL CONCERN; AND THE STORAGE, DISPOSAL
OR TREATMENT, OR TRANSPORTATION FOR STORAGE, DISPOSAL OR TREATMENT, OF
MATERIALS OF ENVIRONMENTAL CONCERN;
(4) ANY EXCLUDED LIABILITY OR OUT OF THE
OWNERSHIP, MANAGEMENT OR USE OF THE RIGS, EQUIPMENT AND OTHER ASSETS PRIOR TO
THE CLOSING DATE; THE CONDUCT OF THE BUSINESS PRIOR TO THE CLOSING DATE
(INCLUDING, BUT NOT LIMITED TO, CLAIMS FOR INJURY TO, OR DEATH OF, ANY PERSONS,
OR DAMAGE, LOSS OR DESTRUCTION OF OR TO ANY PROPERTY, REAL OR PERSONAL, UNDER
ANY THEORY OF TORT, CONTRACT OR STRICT LIABILITY); ALL CONTRACTS, AGREEMENTS,
OBLIGATIONS, COMMITMENTS AND LIABILITIES, TAXES, STAMP DUTIES, FEES OR COSTS OF
SELLER OF EVERY KIND AND CHARACTER RELATING IN ANY WAY TO THE RIGS, ASSETS OR
THE BUSINESS OF SELLER (AND THEIR TRANSFER TO PURCHASER) OTHER THAN THE ASSUMED
OBLIGATIONS; THE TRANSFER OF THE RIGS AND ASSETS CONTEMPLATED HEREBY, AND ALL
PENSION, RETIREMENT, BONUSES, SEVERANCE PAY, SALARIES AND ALL OTHER
COMPENSATION AND BENEFITS OF WHATSOEVER NATURE ATTRIBUTABLE TO SERVICE OR TO OR
EMPLOYMENT BY SELLER OF ANY PERSON PRIOR TO THE CLOSING DATE;
(5) ANY LABOR ORGANIZATION CLAIMING IT HAD ANY
RIGHT TO REPRESENT ANY EMPLOYEES OF SELLER WHO ARE EMPLOYED BY PURCHASER
SUBSEQUENT TO THE CLOSING DATE, WHERE SUCH CLAIMS FOR REPRESENTATION ARISE OUT
OF CIRCUMSTANCES EXISTING PRIOR TO THE EFFECTIVE DATE; AND
(6) ANY LOSSES OR COSTS OF DEFENDING AGAINST ANY
CLAIMS WHICH MAY BE MADE AGAINST PURCHASER BY ANY PERSON CLAIMING VIOLATIONS OF
ANY LOCAL, STATE, OR FEDERAL LAWS RELATING TO THE EMPLOYMENT RELATIONSHIP,
INCLUDING, BUT NOT LIMITED TO, WAGES, HOURS, CONCERTED ACTIVITY,
NONDISCRIMINATION, OCCUPATIONAL HEALTH AND SAFETY AND THE PAYMENT AND
WITHHOLDING OF TAXES, WHERE SUCH CLAIMS ARISE OUT OF CIRCUMSTANCES OCCURRING AT
OR PRIOR TO THE CLOSING DATE.
(B) PURCHASER SHALL INDEMNIFY AND HOLD SELLER AND OWNERS
AND SELLER'S AND OWNERS' OFFICERS, DIRECTORS AND SHAREHOLDERS ("SELLER
INDEMNITEES") HARMLESS FROM, ANY AND ALL DAMAGES RESULTING FROM OR ARISING OUT
OF:
(1) ANY BREACH OF ANY REPRESENTATION OR WARRANTY
OF PURCHASER
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<PAGE> 43
CONTAINED IN SECTION 2.02;
(2) THE NON-PERFORMANCE, PARTIAL OR TOTAL, OF ANY
COVENANT OR AGREEMENT OF PURCHASER (OR ANY AFFILIATE THEREOF) CONTAINED IN THIS
AGREEMENT, ANY OPERATIVE DOCUMENT OR ANY INSTRUMENT OR AGREEMENT DELIVERED
PURSUANT TO THIS AGREEMENT; AND
(C) SELLER AND OWNERS SHALL RETAIN LIABILITY, AND SHALL
JOINTLY AND SEVERALLY INDEMNIFY PURCHASER, FOR THE PAYMENT OF ANY TAX
LIABILITIES WITH RESPECT TO THE RIGS, ASSETS AND THE CONDUCT OF THE BUSINESS
DURING ALL PERIODS ENDING AS OF (AND INCLUDING) OR PRIOR TO THE CLOSING DATE
AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OTHER THAN THE LIABILITIES
EXPRESSLY ASSUMED BY PURCHASER.
3.02 NOTICE, PARTICIPATION AND DURATION.
(A) If a claim by a third party is made against a Party
indemnified pursuant to this Article III ("Indemnitee"), and if such Indemnitee
intends to seek indemnity with respect thereto under this Article III, the
Indemnitee shall promptly, and in any event within sixty (60) days after the
assertion of any claim or the discovery of any fact upon which Indemnitee
intends to base a claim for indemnification under this Agreement ("Claim"),
notify the Party or Parties from whom indemnification is sought ("Indemnitor")
of such Claim. In the event of any Claim, Indemnitor, at its option, may
assume (with legal counsel reasonably acceptable to the Indemnitee) the defense
of any Claim, demand, lawsuit or other proceeding in connection with the
indemnitee's Claim, and may assert any defense of Indemnitee or Indemnitor;
provided, however, that Indemnitee shall have the right at its own expense to
participate jointly with Indemnitor in the defense of any Claim, demand,
lawsuit or other proceeding in connection with the Indemnitee's Claim and
provided further that failure to give such notice shall not preclude Indemnitee
from making any Claim thereon if the failure or delay in giving such notice did
not prejudice Indemnitee. In the event that Indemnitor elects to undertake the
defense of any Claim hereunder, Indemnitee shall cooperate with Indemnitor to
the fullest extent possible in regard to all matters relating to the Claim
(including, without limitation, corrective actions required by applicable law,
assertion of defenses and the determination, mitigation, negotiation and
settlement of all amounts, costs, actions, penalties, damages and the like
related thereto) so as to permit Indemnitor's management of same with regards
to the amount of damages by the Indemnitor hereunder. Neither Purchaser,
Seller nor Owners shall be entitled to settle any Claim without the prior
written consent of the other, which consent shall not be unreasonably withheld.
(B) No claim for indemnification under this section may
be made after the third anniversary of the Effective Date, except claims for
indemnification in respect of breaches of the representations and warranties
contained in Section 2.01(G) hereof may be made so long as any claim may be
made in respect of such matters under any applicable statute of limitations;
provided, however, that the foregoing shall not affect any claim made in good
faith prior to the date of such expiration.
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<PAGE> 44
3.03 INDEMNIFICATION IF NEGLIGENCE OF INDEMNITEE. THE
INDEMNIFICATION PROVIDED IN THIS ARTICLE III SHALL BE APPLICABLE WHETHER OR NOT
NEGLIGENCE OF THE INDEMNITEE IS ALLEGED OR PROVEN.
3.04 REIMBURSEMENT. In the event that the Indemnitor shall
undertake, conduct or control the defense or settlement of any Claim and it is
later determined that such Claim was not a Claim for which the Indemnitor is
required to indemnify the Indemnitee under this Article III, the Indemnitee
shall reimburse the Indemnitor for all its costs and expenses with respect to
such settlement or defense, including reasonable attorneys' fees and
disbursements.
3.05 OFFSET. Any Purchaser Indemnitee shall have the right to
offset any amounts for which it or any other Purchaser Indemnitee is entitled
to indemnification under this Article III against any amounts payable by any
Purchaser Indemnitee pursuant to this Agreement or any Operative Document or
otherwise.
3.06 NO THIRD PARTY BENEFICIARIES. The foregoing indemnification
is given solely for the purpose of protecting the Parties to this Agreement and
shall not be deemed extended to, or interpreted in a manner to confer any
benefit, right or cause of action upon, any other Person.
ARTICLE IV
MISCELLANEOUS
4.01 FURTHER ACTIONS. From time to time, as and when requested by
Purchaser, Seller and Owners shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as may be reasonably necessary to
transfer, assign and deliver to Purchaser or its permitted assigns the Business
(or to evidence the foregoing) and to consummate and to effect the other
Transactions expressly required to be performed by Seller and Owners hereunder.
4.02 NO BROKER. Seller and Purchaser represent and warrant to the
other that they have no obligation or liability to any broker or finder by
reason of the Transactions which are the subject of this Agreement. Each of
Seller, Owners and Purchaser agree to indemnify the other against, and to hold
the others harmless from, at all times after the date hereof any and all
liabilities and expenses (including, without limitation, legal fees) resulting
from, related to or arising out of any claim by any other Person for brokerage
commissions or finder's fees, or rights to similar compensation, on account of
services purportedly rendered on behalf of Seller or Purchaser, as the case may
be, in connection with this Agreement or the Transactions contemplated hereby.
4.03 EXPENSES. Except as otherwise specifically provided herein,
Seller, Owners and Purchaser shall each bear their own legal fees, accounting
fees and other costs and expenses with
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<PAGE> 45
respect to the negotiation, execution and the delivery of this Agreement and
the consummation of the Transactions hereunder.
4.04 ENTIRE AGREEMENT. This Agreement, the Exhibits hereto and the
Seller's Disclosure Letter contain, and are intended by the Parties as a final
expression of, the entire agreement between Seller, Owners and Purchaser with
respect to the Transactions contemplated by this Agreement and supersedes all
prior oral or written agreements, arrangements or understandings with respect
thereto.
4.05 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
4.06 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and shall be delivered
either personally or by telegraph, telex, telecopy or similar facsimile means,
by registered or certified mail (postage prepaid and return receipt requested),
or by express courier or delivery service, addressed as follows:
IF TO SELLER:
WELL SERVICES (MARINE) LTD.
Otaheite Industrial Park
South Oropouche, P.O. Box 152 San Fernando
Trinidad, W.I.
Attn: Charles Brash or Kenneth Sammy
Telephone No.: 1 809 677-7475 or 7531
Telecopier No.: 1 809 677-7003
WITH COPIES TO:
Seller's Counsel
Hobsons, Attorneys-at-Law and Notaries Public
Hobsons Court, 13-17 Keate Street
San Fernando
Trinidad and Tobago, WI
Attn: Krishna Narinesingh CMT
Telephone No.: 1 868 652 3801
Telecopier No.: 1 868 652 1282
IF TO OWNERS:
Charles A. Brash
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<PAGE> 46
Otaheite Industrial Park
South Oropouche, Trinidad, W.I.
Telephone No.: 1 868 677 7531, 7532
Telecopier No.: 1 868 677 7003
Phillip A. Pollonais
Otaheite Industrial Park
South Oropouche, Trinidad, W.I.
Telephone No.: 1 868 677 7531, 7532
Telecopier No.: 1 868 677 7003
IF TO PURCHASER:
CLIFFS DRILLING TRINIDAD OFFSHORE LIMITED
1200 Smith Street, Suite 300
Houston, Texas 77002
Attn: James P. Mitchen or Douglas E. Swanson
Telephone No.: (713) 651-9426
Telecopier No.: (713) 951-0649
WITH COPIES TO:
GRIGGS & HARRISON, P.C.
1301 McKinney, Suite 3200
Houston, Texas 77010-3033
Attn: W. Garney Griggs
Telephone No.: (713) 651-0600
Telecopier No.: (713) 651-1944
or at such other address and number as either Party shall have previously
designated by written notice given to the other Party in the manner hereinabove
set forth. Notices shall be deemed given when received, if sent by telegram,
telex, telecopy or similar facsimile means (confirmation of such receipt by
confirmed facsimile transmission being deemed receipt of communications sent by
telex, telecopy or other facsimile transmission); and when delivered and
receipted for (or upon the date of attempted delivery where delivery is
refused), if hand-delivered, sent by express courier or delivery service, or
sent by certified or registered mail.
4.07 GOVERNING LAW.
(A) Arbitration Provisions. Section 4.08 shall be
governed by the procedural rules of the American Arbitration Association and,
to the extent applicable, the United States
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<PAGE> 47
Federal Arbitration Act, Title 9, United States Code.
(B) Securities Law Provisions. Sections 2.01(U) and 4.23
shall be governed, construed and interpreted by the securities laws of the
United States of America, and to the extent applicable, the laws of the State
of Texas, excluding conflicts of law principles.
(C) Other Provisions. Except as set forth in subsections
(A) and (B) above, this Agreement shall be governed and interpreted by and
construed in accordance with the laws of the Republic of Trinidad and Tobago
(other than the choice of law principles thereof, which would refer the
resolution of any issue to the law of a jurisdiction other than Trinidad and
Tobago).
4.08 ARBITRATION AND DISPUTE RESOLUTION.
(A) Rules. All disputes arising in connection with this
Agreement or the purchase, sale and lease transactions contemplated hereby
(whether any such dispute arises in contract, tort, Strict Liability or
otherwise) shall be finally settled by binding arbitration under the general
Commercial Arbitration Rules of the American Arbitration Association ("AAA"),
as same is supplemented and modified by its International Arbitration Rules and
Procedures, by three arbitrators appointed in accordance with subsection (B)
below; provided, however, that Purchaser shall always have the right to seek
the intervention of the courts of Trinidad and Tobago and any other applicable
jurisdiction, either at law or in equity, in order to protect and enforce its
rights and benefits and, seek all necessary remedies, under the provisions of
Section 2.03 to this Agreement.
(B) Powers and Selection.
(1) The Party that submits a dispute to the AAA
under this Agreement shall name in its submission one arbitrator. The Party
against whom the request for arbitration is filed must select an arbitrator and
notify the other Party and the AAA of its selection within ten (10) days after
receipt of written notice from the AAA of the other Party's demand for
arbitration. If any Party fails to notify the AAA of its selection, within ten
(10) days after written notice by the AAA to do so, the AAA is empowered to
select an arbitrator for such Party. The two arbitrators selected by the
Parties shall mutually select a third neutral arbitrator to chair the arbitral
panel and notify the AAA of their selection within fifteen (15) days after the
appointment of the two party-appointed arbitrators. If the arbitrators
selected by the Parties are unable to agree on a third arbitrator within such
fifteen (15) days time period, then the AAA shall appoint the third arbitrator.
(2) The arbitrators shall have the power to
gather such materials, documents, information, testimony and evidence as they
deem relevant to the dispute and the Parties shall provide such materials,
documents, information, testimony and evidence requested by the arbitrators,
except to the extent that it is proprietary, subject to third-party
confidentiality restrictions or subject to an attorney-client or other legal
privilege. Any
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<PAGE> 48
challenge to a claim of privilege or the arbitrability of any issue shall be
resolved by the arbitrators.
(C) Venue. Arbitration conducted pursuant to this
Agreement shall be held in Houston, Texas. Judgment on any award resulting
therefrom may be entered in and enforced by any federal or state court having
jurisdiction over any of the Parties (or the assets of any of the Parties)
against whom such award is rendered, and the Parties hereby waive any claim of
immunity to such enforcement. Any awards hereunder shall be deemed to be
non-domestic and commercial affecting foreign commerce and may also be enforced
in accordance with the provisions of the New York Convention on the Enforcement
of Foreign Arbitral Awards (1958), as adopted and codified by the United States
of America.
(D) Award. The arbitrators shall commence and conclude
the arbitration and render their award within ninety (90) days of either
Party's demand for arbitration. The award rendered by the arbitrators shall be
the sole and exclusive remedy of the Parties regarding any claims,
counterclaims, issues or accounting arising under this Agreement or the
Transactions contemplated hereby (whether sounding in contract, tort or
otherwise). The arbitrators may make any award of money damages or provide
specific performance or injunctive relief, including awarding interest and
attorneys' fees. Any award shall be final and binding on the Parties and
non-appealable, and the arbitrators shall give written reasons for their award.
(E) Service. Service of any and all notices of
arbitration hereunder may be made by either Party on the other in the manner
and to the address set forth in Section 4.06 of this Agreement and service
thus made shall be taken and held to be valid personal service upon such Party
by any Party to this Agreement on whose behalf such service is made.
(F) Costs. All administrative costs of the American
Arbitration Association together with all fees and expenses of the arbitrators
shall be borne equally by the Parties and all costs, fees and expenses incident
to enforcing any award shall be charged to and borne by the Party resisting the
award.
4.09 ASSIGNABILITY. This Agreement shall not be assignable
otherwise than by operation of law by any Party without the prior written
consent of the other Parties, and any purported assignment by any Party without
the prior written consent of the other Parties shall be void.
4.10 WAIVERS AND AMENDMENTS. Any waiver of any term or condition
of this Agreement, or any amendment or supplementation of this Agreement, shall
be effective only if in writing. A waiver of any breach or failure to enforce
any of the terms or conditions of this Agreement shall not in any way affect,
limit or waive a Party's rights hereunder at any time to enforce strict
compliance thereafter with every term or condition of this Agreement.
4.11 THIRD PARTY RIGHTS. Notwithstanding any other provision of
this Agreement, this
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<PAGE> 49
Agreement shall not create benefits on behalf of any Person who is not a party
to this Agreement (including, without limitation, any broker or finder,
notwithstanding the provisions of Section 4.02 hereof), and this Agreement
shall be effective only as between the Parties hereto, their successors and
permitted assigns; provided, however, that Purchaser Indemnitees and Seller
Indemnitees are intended third party beneficiaries hereof to the extent
provided in Sections 3.01 and 3.06.
4.12 ILLEGALITIES. In the event that any provision contained in
this Agreement shall be determined to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and the remaining provisions of this
Agreement shall not, at the election of the Party for whose benefit the
provisions exists, be in any way impaired.
4.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one Agreement.
4.14 SURVIVAL; EXCLUSIVELY OF REMEDIES. The representations and
warranties, covenants and agreements of the Parties hereto shall survive the
Closing of the Transaction contemplated by this Agreement, and the
indemnification provided by Section 3.01 shall not be the exclusive remedy
available to the Parties hereto.
4.15 EMPLOYEES.
(A) SELLER AND OWNERS WILL CAUSE THE EMPLOYMENT OF ALL
THE OFFICERS AND EMPLOYEES ("EMPLOYEES") PERFORMING SERVICES RELATING TO THE
BUSINESS TO BE TERMINATED PRIOR TO THE CLOSING DATE. SELLER AND OWNERS SHALL
BE JOINTLY AND SEVERALLY RESPONSIBLE FOR, AND JOINTLY AND SEVERALLY INDEMNIFY
AND HOLD THE PURCHASER INDEMNITEES HARMLESS FROM, ALL DAMAGES RESULTING FROM,
RELATING TO, OR ARISING OUT OF SUCH TERMINATION OF EMPLOYMENT, AND EMPLOYEES'
EMPLOYMENT CONTRACTS, COLLECTIVE BARGAINING AGREEMENTS AND PENSION AND OTHER
EMPLOYEE PENSION, HEALTH AND INSURANCE PLANS AND AGREEMENTS, INCLUDING
ADMINISTRATIVE AND OTHER COSTS OF PLAN TERMINATION. THE INDEMNITY PROVIDED IN
THIS SECTION SHALL BE IN ADDITION TO THE INDEMNITY PROVIDED IN SECTION 3.01.
(B) Seller will permit Purchaser to offer employment to
some or all of the Employees prior to or on the Closing Date. Purchaser may
offer employment as of the Closing Date to the employees listed on Exhibit
4.15(B) ("Affected Employees"). Purchaser shall have full and absolute
discretion in determining the terms, conditions and benefits relating to such
employment, subject to any Collective Bargaining Agreement listed in Appendix
2.01(K) to Seller's Disclosure Letter.
(C) Nothing contained in this Agreement shall obligate
Purchaser to continue the employment of or to rehire any Employee or Affected
Employee. Nothing in this section is
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<PAGE> 50
intended to create any claim or right on the part of any Employee of Seller or
any Affected Employee, and no such Employee or Affected Employee shall be
entitled to assert any claim or right hereunder.
(D) Seller and Owners shall be jointly and severally
responsible for causing each of the Affected Employees to be paid at the same
time each such Affected Employee receives his or her last payroll check from
Seller or any Affiliate of Seller or Owners, a cash amount equal to such
employees accrued vacation pay for the calendar year 1997, and any severance
payments required under the laws of the Republic of Trinidad and Tobago. For
periods subsequent to December 31, 1997, Affected Employees shall be subject to
the vacation policies of Purchaser, but shall be credited, for purposes of
vacation, with the seniority attained during such employee's employment by
Seller or any Affiliate of Seller or Owners.
(E) Purchaser shall provide Affected Employees with such
group health plan rights and benefits as may be required by applicable law and
as otherwise agreed by Purchaser.
(F) Prior to the Closing Date, Seller and Owners shall be
jointly and severally responsible for causing all Employee Plans to be
terminated. To the extent, if any, that Purchaser offers coverage under any of
its employee benefit plans to Affected Employees, Purchaser, Seller and Owners
shall cooperate to integrate such employees into the Purchaser's employee
benefits plans, with respect to those employees who elect to participate
therein. Any Affected Employee who becomes an employee of the Purchaser on or
after the Closing Date, shall, to the extent permitted by applicable law, be
treated as a new hire and subject to the terms and conditions for coverage as
set out under such Plans as Purchaser may, in its sole option, implement in
carrying on the Business and no other, unless specifically required otherwise
under local or other applicable law.
4.16 ACCESS TO RECORDS.
(A) Following the Effective Date, Seller shall give to
Purchaser free and unrestricted access to (and the right to make copies at the
expense of Seller) the Records and to the extent that such are being purchased
by Purchaser hereunder and relate to the Rigs or Business, operations, income,
expenses and Assets of Seller existing on, accruing or arising prior to or
occurring prior to Effective Date, but any access pursuant to this section
shall be conducted in such manner as not to interfere unreasonably with the
operations of the Business following the Effective Date.
(B) Following the Effective Date, Seller shall give
Purchaser and its representatives free and unrestricted access to the Rigs,
Equipment, Assets, properties, offices and sites (including the Seller's Site)
of Seller where the Business is or was within the last two (2) years being
carried on, and Purchaser's representatives may conduct such reviews, and
inspections of such Rigs, Assets, and properties as it may deem necessary,
provided that it does not interfere unreasonably with the Business of Seller
prior to the Closing Date.
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<PAGE> 51
4.17 COST OF LITIGATION. If any legal action or other proceeding
is brought for the enforcement of this Agreement or because of an alleged
dispute, breach, default or misrepresentation in connection with this Agreement
or the Transactions contemplated hereby, the successful or prevailing Party or
Parties shall be entitled to recover reasonable attorneys' fees and other costs
incurred in connection with such action or proceeding, in addition to any other
relief to which it or they may be entitled.
4.18 HART-SCOTT-RODINO. The Parties hereto acknowledge that they
and their respective legal counsel have reviewed all pertinent laws, rules and
regulations under the United States Hart-Scott-Rodino Pre-Merger Notification
Act (HSR) and are of the reasonable opinion that no HSR pre-merger notification
filing is required with the U.S., Justice Department or any other U.S.
Governmental Body.
4.19 CONFIDENTIALITY. Seller and Purchaser agree to use reasonable
business efforts to maintain the confidentiality of this Agreement. The
Parties hereto agree not to record this Agreement in any public records.
4.20 SUCCESSORS AND ASSIGNS. This Agreement and Transaction and
other documents contemplated hereby shall bind and inure to the benefit of each
Party's respective successors, heirs and assigns (subject to the restrictions
in Section 4.09).
4.21 CONSEQUENTIAL DAMAGES DISALLOWED. In no event shall either
Party be responsible or held liable under this Agreement or otherwise for
prospective profits lost or special, exemplary, indirect, incidental or
consequential damages incurred or suffered by the other Party for any reason
whatsoever.
4.22 OWNERS' OBLIGATIONS. The Owners jointly and severally
covenant and agree that they will cause all of Seller's obligations, agreements
and indemnities to be timely and correctly performed and honored in the manner
set forth herein, and, in addition, Owners will comply with all other direct
obligations, indemnities and agreements on their part to be performed under
this Agreement.
4.23 REGISTRATION RIGHTS. The shares of Cliffs common stock issued
to Seller or Owners, by Purchaser as the Stock Portion of the Purchase Price
shall be unregistered securities pursuant to the securities laws of the United
States and shall be subject to such holding and manner of sale restrictions as
provided by such laws, rules and regulations. Purchaser shall cause Cliffs to
register such securities within sixty (60) days from and after Closing, and
such registration shall be effective for not longer than one (1) year from and
after Closing and shall also grant to Seller and Owners, as appropriate,
"piggyback" registration rights for one (1) year subject to reasonable
restrictions thereto as required by the securities laws of the United States or
the managing underwriters of Purchaser. Seller or Owners, as appropriate,
shall pay underwriting commissions and discounts, registration fees payable to
the Securities and Exchange Commission and the New York Stock Exchange and fees
and expenses of Seller's counsel, if any, and
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<PAGE> 52
Purchaser shall bear all other costs of registration.
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<PAGE> 53
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
PURCHASER:
CLIFFS DRILLING TRINIDAD OFFSHORE LIMITED
By: /s/ JIM R. WISE
---------------------------------------
Name: Jim R. Wise
Title: Director
OWNERS:
/s/ CHARLES A. BRASH
-------------------------------------------
Charles A. Brash
/s/ PHILLIP A. POLLONAIS
-------------------------------------------
Phillip A. Pollonais
SELLER:
WELL SERVICES (MARINE) LTD.
By: /s/ CHARLES A. BRASH
---------------------------------------
Name: Charles A. Brash
Title: Chairman
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<PAGE> 54
EXHIBITS
<TABLE>
<S> <C>
1.02(A)(1) Description of Rigs and all Equipment
1.07(B) General Conveyance, Transfer and Assignment
1.07(F) Opinion of Counsel to Seller
1.08 Purchase Price Allocation
4.15(B) Affected Employees
</TABLE>
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<PAGE> 55
APPENDICES TO SELLER'S DISCLOSURE LETTER
<TABLE>
<S> <C>
Appendix 1.01 Permitted Encumbrances
Appendix 1.02(A)(4) Vehicles
Appendix 1.02(A)(5) Equipment
Appendix 1.02(A)(6) Permits
Appendix 1.02(A)(7) Intangible Assets
Appendix 1.02(A)(8) Scheduled Contracts
Appendix 1.02(B) Excluded Assets
Appendix 1.13(D) Purchase Price Allocation
Appendix 2.01(A) Foreign Jurisdictions
Appendix 2.01(B) Consents
Appendix 2.01(C) Liabilities
Appendix 2.01(E) Insurance
Appendix 2.01(F) Litigation/Compliance with Laws
Appendix 2.01(H) Intangible Assets
Appendix 2.01(I) Instruments
Appendix 2.01(K) Labor and Employee Relations
Appendix 2.01(L) Changes in Business
Appendix 2.01(N) Non-Competition Agreements
Appendix 2.01(P) Environmental Matters
Appendix 2.01(R) Pricing
Appendix 2.01(S) Competing Lines of Business
Appendix 4.15(B) Affected Employees
</TABLE>
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<PAGE> 1
EXHIBIT 4.9
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is dated as of December 29, 1997
(this "Agreement"), by and among CLIFFS DRILLING COMPANY, a Delaware
corporation (the "Company"), and WELL SERVICES (MARINE) LTD., a Trinidad and
Tobago, W.I. private limited company, CHARLES A. BRASH of San Fernando,
Trinidad, W.I., and PHILLIP A. POLLONAIS, of San Fernando, Trinidad, W.I.
(referred to individually as a "Stockholder" and collectively as the
"Stockholders").
W I T N E S S E T H:
WHEREAS, Cliffs Drilling Trinidad Offshore Limited, a Trinidad and
Tobago, W.I. private limited company and indirect wholly owned subsidiary of
the Company ("Purchaser") and the Stockholders are parties to the Asset
Purchase Agreement (as hereinafter defined), pursuant to which Purchaser will
acquire the Assets (as defined in the Asset Purchase Agreement), and in
consideration thereof, will issue to the Stockholders such number of shares of
the Common Stock (as hereinafter defined) of the Company which is equal to the
quotient obtained (and expressed in number of shares) by dividing $23,500,000
by the Five-Day Average for the five (5) days immediately preceding (but not
including) the Closing Date, LESS the Closing Adjustment (as defined in the
Asset Purchase Agreement), if any; and
WHEREAS, Purchaser has agreed to cause the Company to provide to the
Stockholders the limited registration rights set forth herein.
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:
1. DEFINITIONS.
As used in this Agreement, the following capitalized terms
have the meanings specified as follows:
(a) The term "Asset Purchase Agreement" means that certain Asset
Purchase Agreement dated as of December 29, 1997 by and among the Company and
the Stockholders.
(b) The term "Commission" means the Securities and Exchange
Commission.
(c) The term "Common Stock" means the common stock, par value
$0.01 per share, of the Company.
(d) The term "Company" has the meaning specified in the preamble
to this Agreement.
(e) The term "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission issued under
such Act, as they each may, from time to time, be in effect.
(f) The term "Person" means an individual, partnership,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
(g) The term "Piggy-back Registration" shall have the meaning
given it in Section 3
<PAGE> 2
hereof.
(h) The term "Qualified Transferee" means any shareholder of a
Stockholder to whom the Registrable Securities and the rights hereunder have
been transferred in liquidation and/or dissolution of such Stockholder, if and
only if such transferee shall have executed and delivered to the Company, prior
to the transfer, a written agreement pursuant to which such transferee (i)
makes the representations set forth in Section 2.01(U) of the Asset Purchase
Agreement, and (ii) agrees to be bound by the restrictions set forth in Section
2.01(U) of the Asset Purchase Agreement and the obligations imposed on the
Stockholders by this Agreement.
(i) The terms "register," "registered" and "registration" refer to
a registration of securities effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act (as defined
below), and the declaration or ordering of effectiveness of such registration
statement or document.
(j) The term "Registrable Securities" means (i) the shares of
Common Stock received by the Stockholders pursuant to the Asset Purchase
Agreement, and (ii) any other shares of Common Stock issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of,
such shares of Common Stock; provided, however, that such shares of Common
Stock shall cease to be Registrable Securities when (i) such shares have been
effectively registered under the Securities Act and disposed of in accordance
with a registration statement, (ii) such shares are sold pursuant to Rule 144
(or any similar provision then in force) under the Securities Act, or (iii)
such shares are otherwise transferred by a Stockholder to a Person other than a
Qualified Transferee.
(k) The term "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission issued under such Act,
as they each may, from time to time, be in effect.
(l) The term "Stockholders" means the persons defined as such in
the preamble to this Agreement to whom registration rights are hereby granted,
and any Qualified Transferee to whom the rights granted under this Agreement
are assigned in accordance with Section 11 hereof.
2. SECURITIES SUBJECT TO THIS AGREEMENT.
The securities entitled to the benefits of this Agreement are
the Registrable Securities.
3. REGISTRATION RIGHTS
(a) Piggy-back Registration.
(i) For a period of one (1) year from the date after the
closing of the transactions contemplated by the Asset Purchase Agreement, if
the Company proposes to file a registration statement under the Securities Act
with respect to an offering by the Company for its own account or for the
account of any other Person of any class of equity security, including any
security convertible into or exchangeable for any equity security (other than a
registration statement on Forms S-4 or S-8 (or their successor forms) or filed
in connection with an exchange offer or an offering of securities solely to the
Company's existing stockholders, and other than as
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set forth in Section 3(a)(ii) below, then the Company shall in each case give
written notice of such proposed filing to the Stockholders of Registrable
Securities at least twenty days before the anticipated filing date, and such
notice shall offer such Stockholders the opportunity to register such number of
Registrable Securities as each such Stockholder may request (a "Piggy-back
Registration"). The Company shall use reasonable efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
Stockholders of Registrable Securities requested to be included in the
registration for such offering to include such securities in such offering on
the same terms and conditions as any similar securities of the Company included
therein. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering delivers an opinion to the Stockholders of
Registrable Securities that the total amount of securities which they and any
other Persons (other than the Company) intend to include in such offering is
sufficiently large to materially and adversely affect the success of such
offering, then the amount of Registrable Securities to be offered for the
accounts of Stockholders of Registrable Securities shall be reduced in inverse
order of the priority of registration rights held by holders of securities
requesting inclusion therein to the extent necessary, in the opinion of such
managing underwriter, to reduce the total amount of securities to be included
in such offering to the amount recommended by such managing underwriter;
provided, that the reduction imposed upon Stockholders of Registrable
Securities shall not be greater, on a percentage basis with respect to the
Registrable Securities requested to be included, than the reduction imposed
upon other Persons whose Piggy-back registration rights are pari passu with
those granted hereby with respect to the amount of securities requested for
inclusion in such registration.
(ii) Notwithstanding anything to the contrary contained in
this Agreement, the Company shall not be required to include Registrable
Securities in any registration statement if the proposed registration is (i) a
registration of a stock option or other employee incentive compensation or
employee benefit plan or of securities issued or issuable pursuant to any such
plan, or a registration statement relating to warrants, options or shares of
capital stock granted or to be granted or sold primarily to employees,
directors or officers of the Company, (ii) a registration of securities issued
or issuable pursuant to a stockholder reinvestment plan or other similar plan,
(iii) a registration of securities issued in exchange for any securities or any
assets of, or in connection with a merger or consolidation with, an
unaffiliated company, (iv) a registration of securities pursuant to a "rights"
or other similar plan designed to protect the Company's stockholders from a
coercive or other attempt to cause a change in control of the Company, (v) a
registration of securities filed pursuant to Rule 145 under the Securities Act
or any successor rule, or (vi) a registration of preferred stock or securities
issued in connection with any debt or preferred stock financing of the Company.
(iii) The Company may withdraw any registration statement
and abandon any proposed offering initiated by the Company without the consent
of any Stockholder of Registrable Securities, notwithstanding the request of
any such Stockholder to participate therein in accordance with this provision,
if the Company determines in its sole discretion that such action is in the
best interests of the Company and its stockholders (for this purpose, the
interest of the Stockholders shall not be considered).
(b) Shelf Registration.
The Company shall file a "shelf" registration statement on any
appropriate form pursuant to Rule 415 (or any similar rule that may be adopted
by the Commission) under the Securities Act, as promptly as practicable and in
no event later than sixty (60) calendar days after
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the closing of the transactions contemplated by the Asset Purchase Agreement.
The Company agrees to use its best efforts to cause such shelf registration
statement to become effective as promptly as practicable after the filing
thereof and thereafter to keep it continuously effective, for a period of one
(1) year from the date after the closing of the transactions contemplated by
the Asset Purchase Agreement. Notwithstanding anything herein to the contrary,
the period during which the Company is obligated to maintain the effectiveness
of a registration statement hereunder will terminate when all the Registrable
Securities covered by the registration statement have been sold.
4. REGISTRATION PROCEDURES.
In connection with the Company's Piggy-back or shelf
registration obligations pursuant to Section 3 hereof, the Company shall as
expeditiously as reasonably practicable:
(a) Prepare and file with the Commission a registration statement
on an appropriate form under the Securities Act and use its best efforts to
cause such registration statement to become effective; provided, that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to the Stockholders and the underwriters, if
any, as soon as practicable, copies of all such documents proposed to be filed,
which documents will be subject to the review of the Stockholders and the
underwriters, and the Company will not file any registration statement or
amendment thereto, or any prospectus or any supplement thereto, to which the
underwriters, if any, or the holders of a majority of the Registrable
Securities shall reasonably object in light of the requirements of the
Securities Act and any other applicable laws and regulations.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to a registration statement as may be necessary to
keep such registration statement effective for the applicable period; cause the
related prospectus to be filed pursuant to Rule 424(b) under the Securities
Act; cause such prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424(b) under
the Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during the applicable period in accordance with the intended methods
of disposition set forth in such registration statement or supplement to such
prospectus.
(c) Notify the Stockholders and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such advice in writing,
(i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the Commission for amendments or supplements to a registration
statement or related prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceeding for that purpose,
(iv) if at my time the representations and warranties of the Company
contemplated by Section 4(l) cease to be true and correct, (v) of the receipt
by the Company of any notification with respect to the suspension or
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceeding for such purpose, (vi) of the happening of
any event which requires the making of any changes in a registration statement
or related prospectus so that such documents will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements
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therein not misleading, and (vii) of the Company's reasonable determination
that a post-effective amendment to a registration statement would be
appropriate or that there exist circumstances not yet disclosed to the public
which make further sales under such registration statement inadvisable pending
such disclosures and post-effective amendment.
(d) Exercise its best efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration statement, or the lifting
of any suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction, at the earliest possible moment.
(e) If requested by the managing underwriters or the holders of a
majority of the Registrable Securities in connection with an underwritten
offering, promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority of the Registrable Securities agree should be included therein
relating to such sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of shares of
Registrable Securities being sold to such underwriters and the purchase price
being paid therefor by such underwriters and with respect to any other terms of
the underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any registration statement if
requested by the holders of a majority of the Registrable Securities or any
underwriter of such Registrable Securities.
(f) Furnish to the Stockholders and each managing underwriter, if
any, without charge, at least one signed copy of the registration statement,
any post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference).
(g) Deliver without charge to the Stockholders and the
underwriters, if any, as many copies of the prospectus or prospectuses
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; and the Company consents to the use of
such prospectus or any amendment or supplement thereto by the Stockholders and
the underwriters, if any, in connection with the offer and sale of the
Registrable Securities covered by such prospectus or any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Securities,
register or qualify or cooperate with the Stockholders, the underwriters, if
any, and respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as the Stockholders or an
underwriter reasonably requests in writing; keep each such registration or
qualification effective during the period such registration statement is
required to be kept effective and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable registration statement; provided, however,
that the Company will not be required in connection therewith or as a condition
thereto to qualify generally to do business or subject itself to general
service of process in any such jurisdiction where it is not then so subject.
(i) Cooperate with the Stockholders and the managing underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in
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such denominations and registered in such names as the managing underwriters
may request at least two business days prior to any sale of Registrable
Securities to the underwriters.
(j) Use its best efforts to cause the Registrable Securities
covered by the applicable registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
if any, to consummate the disposition of such Registrable Securities.
(k) Upon the occurrence of any event contemplated by Section 4(c)
(ii) - (vii) above, prepare a supplement or post-effective amendment to the
applicable registration statement or related prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchaser of the Registrable Securities being
sold thereunder, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading.
(l) Enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is entered into and
whether or not the Registrable Securities to be covered by such registration
are to be offered in an underwritten offering: (i) make such representations
and warranties to the Stockholders with respect to the registration statement,
prospectus and documents incorporated by reference, if any, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Company and updates thereof with respect to the registration
statement and the prospectus in the form, scope and substance which are
customarily delivered in underwritten offerings; (iii) in the case of an
underwritten offering, enter into an underwriting agreement in form, scope and
substance as is customary in underwritten offerings and obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the managing
underwriters and not reasonably objected to by the holders of a majority of the
Registrable Securities) addressed to the Stockholders and the underwriters, if
any, covering the matters customarily covered in opinions delivered in
underwritten offerings and such other matters as may be reasonably requested by
the holders of a majority of the Registrable Securities and such underwriters;
(iv) obtain "cold comfort" letters and updates thereof from the Company's
independent certified public accountants addressed to the Stockholders and the
underwriters, if any, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters by accountants in
connection with underwritten offerings; (v) if any underwriting agreement is
entered into, set forth in full in such underwriting agreement the
indemnification provisions and procedures customarily included in underwriting
agreements in underwritten offerings; and (vi) deliver such documents and
certificates as may be requested by the managing underwriters, if any, and the
holders of a majority of the Registrable Securities to evidence compliance with
clause (k) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
(m) Make available for inspection by a representative of the
Stockholders, any underwriter participating in any disposition pursuant to such
registration, and any attorney or accountant retained by the Stockholders or
such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in connection with
such registration; provided
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that any records, information or documents that are designated by the Company
in writing as confidential shall be kept confidential by such Persons unless
disclosure of such records, information or documents is required by applicable
law or court or administrative order.
(n) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make generally available to its
security holders earnings statements satisfying the provisions of Section 11(a)
of the Securities Act and Rule 158 promulgated thereunder.
5. CONTENTS OF REGISTRATION STATEMENT.
In connection with any registration of Registrable Securities,
the Company may require each Stockholder to furnish to the Company such
information regarding itself and the distribution of such securities as the
Company may from time to time reasonably request in writing. If the Company,
in the exercise of its reasonable judgment, objects to any information relating
to the Company requested by the Stockholders or the underwriters, if any, to be
included in any registration statement or prospectus or any amendments or
supplements thereto, the Company shall not be obligated to include such
objectionable information, and the Stockholders may withdraw the Registrable
Securities from such registration, in which event the shelf registration
statement or amendment thereto shall be filed as soon as agreement with respect
to any proposed change shall be reached among the Company, the holders of a
majority of the Registrable Securities, and the managing underwriter, if any.
6. STAND-OFF AGREEMENT.
Each Stockholder agrees by acquisition of Registrable
Securities that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(c)(ii)-(vii) hereof, such
Stockholder will forthwith discontinue disposition of Registrable Securities
covered by such registration statement or prospectus until the Stockholder's
receipt of copies of the supplemented or amended prospectus contemplated by
Section 4(k) hereof, or until it is advised in writing by the Company that the
use of the applicable prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in such
prospectus, and, if so directed by the Company, each such Stockholder will
deliver to the Company all copies, other than permanent file copies then in
such Stockholder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the time period regarding maintaining the
effectiveness of such registration statement set forth in Section 3 shall be
extended by the number of days during the time period from and including the
date of the giving of such notice pursuant to Section 4(c) hereof to and
including the date when the Stockholders shall have (i) received the copies of
the supplemented or amended prospectus contemplated by Section 4(k) hereof, or
(ii) been advised in writing by the Company that use of the prospectus may be
resumed.
7. EXPENSES OF REGISTRATION.
In connection with a registration, filing or qualification
pursuant to Section 3 hereof, Stockholders shall pay all underwriting
commissions and discounts attributable to sales of Registrable Securities,
registration fees payable to the Commission and the New York Stock Exchange,
and fees and expenses of Stockholder's counsel. All other expenses of a
registration, filing or qualification pursuant to Section 3 hereof, including,
without limitation, printers' and accounting fees, and the fees and
disbursements of counsel for the Company, shall be borne and
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paid by the Company.
8. UNDERWRITTEN REGISTRATIONS.
If any of the Registrable Securities covered by any
registration under Section 3 are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering may be selected by the Stockholders; provided, that
such investment bankers and managers must be reasonably satisfactory to the
Company.
9. INDEMNIFICATION.
In the event any Registrable Securities are included in a
registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Stockholder, the officers and directors of such Stockholder,
each underwriter of Registrable Securities and each other Person, if any, who
controls such Stockholder or such underwriter within the meaning of Section 15
of the Securities Act, against any losses, claims, damages, liabilities or
expenses, joint or several, to which any such Person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement under which such Registrable
Securities were registered under the Securities Act pursuant hereto, or any
post-effective amendment thereof, or any omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, if
used prior to the effective date of the registration statement and not
corrected in the final prospectus, or contained in the final prospectus (as
amended or supplemented, if the Company shall have filed with the Commission
any amendment thereof or supplement thereto), or any omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will reimburse any
such Person for any legal or other expenses reasonably incurred by such Person
in connection with investigating or defending any such loss, claim, damage,
liability or expense; provided, however, that the indemnity agreement contained
in this Section 9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld); and provided further that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon any such untrue statement or omission or alleged
untrue statement or omission which has been made in said registration
statement, preliminary prospectus, prospectus or amendment or supplement or
omitted therefrom in reliance upon and in conformity with information furnished
in writing to the Company by the Stockholders or such underwriter specifically
for use in the preparation thereof.
(b) To the extent permitted by law, each Stockholder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
each underwriter and each Person who controls any underwriter within the
meaning of Section 15 of the Securities Act, against any losses, claims,
damages, liabilities or expenses, joint or several, to which the Company or any
such Person, may become subject under the Securities
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Act or otherwise, and will reimburse the Company or any such Person for any
legal or other expenses reasonably incurred by the Company or such Person in
connection with investigating or defending any such loss, claim, damage,
liability or expense, but only insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission of a material fact referred to in clause (i) or (ii) of Section 9(a)
hereof, in each case to the extent (and only to the extent) that such untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with information furnished in writing by or on
behalf of such Stockholder specifically for use in connection with such
registration; provided, however, that the indemnity agreement contained in this
Section 9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if such settlement is effected without the
consent of such Stockholder, which consent shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 9,
notify the indemnifying party in writing of the commencement thereof; provided,
however, that the failure to so notify the indemnifying party shall not relieve
the indemnifying party from any liability hereunder except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
The indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding.
(d) If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party and the indemnified parties, the relative fault of the
indemnifying party and indemnified parties in connection with the actions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 9(c) hereof, any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 9(d) were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in the
immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
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fraudulent misrepresentation.
10. REPORTS UNDER EXCHANGE ACT.
With a view to making available to the Stockholders the
benefits of Rule 144 under the Securities Act and any other rule or regulation
of the Commission that may at any time permit the Stockholders to sell
securities of the Company to the public without registration, the Company
agrees, for so long as any Stockholder holds shares of Common Stock acquired by
it pursuant to the Asset Purchase Agreement, to:
(a) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act, and the rules and regulations adopted by the Commission
thereunder; and
(b) furnish to the Stockholders forthwith upon request (i) a
written statement by the Company as to whether it has complied with the
reporting requirements of Rule 144, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents filed by
the Company pursuant to the Exchange Act, and (iii) such other information as
may be reasonably requested in availing the Stockholders of any rule or
regulation of the Commission which permits the sale of any securities without
registration.
11. ASSIGNMENT OF REGISTRATION RIGHTS.
The right to cause the Company to register Registrable
Securities pursuant to this Agreement may not be transferred or assigned, in
whole or in part, by any Stockholder without the prior written consent of the
Company, except to a Qualified Transferee of such Stockholder. Any such
transferring Stockholder shall notify the Company in writing at least five
business days prior to effecting any such transfer or assignment, specifying
the name and address of the Qualified Transferee(s) and identifying the
securities with respect to which such rights are being assigned.
12. MISCELLANEOUS.
(a) Successors and Assigns; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective permitted successors and assigns. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
and their respective permitted successors and assigns any rights or remedies
under or by reason of this Agreement, except as expressly provided in this
Agreement.
(b) Governing Law. This Agreement, and the rights and obligations
of the parties hereunder, shall be interpreted, governed by, and construed and
enforced in accordance with, the substantive laws of the State of Texas,
without giving effect to the principles of conflicts of law thereof.
(c) Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by
all, the parties hereto.
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(d) Titles and Subtitles. The titles and subtitles used in this
Agreement are inserted for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be delivered by (i)
personal delivery, (ii) expedited delivery service or express courier, (iii)
certified or registered mail, postage prepaid, or (iv) confirmed facsimile
transmission. Any such notice shall be deemed given upon its receipt at the
following address (or such other address as may be specified by such party upon
written notice to the others in accordance with this Section 12(e)):
IF TO THE COMPANY:
CLIFFS DRILLING COMPANY
1200 Smith Street, Suite 300
Houston, Texas 77002
Attention: Douglas E. Swanson or Edward A. Guthrie
Telephone: (713) 651-9426
Telefax: (713) 951-0649
WITH COPIES TO:
Mr. W. Garney Griggs
Griggs & Harrison, P.C.
1301 McKinney, Suite 3200
Houston, Texas 77010-3033
Telephone: (713) 651-0600
Telefax: (713) 651-1944
IF TO THE STOCKHOLDERS:
WELL SERVICES (MARINE) LTD.
Otaheite Industrial Park
South Oropouche, P.O. Box 152 San Fernando
Trinidad, W.I.
Attn: Charles Brash or Kenneth Sammy
Telephone No.: 1 809 677-7475 or 7531
Telecopier No.: 1 809 677-7003
CHARLES A. BRASH AND/OR PHILLIP A. POLLONAIS
Otaheite Industrial Park
South Oropouche, P.O. Box 152 San Fernando
Trinidad, W.I.
Telephone No.: 1 809 677-7475 or 7531
Telecopier No.: 1 809 677-7003
WITH COPIES TO:
Hobsons, Attorneys-at-Law and Notaries Public
Hobsons Court, 13-17 Keate Street
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San Fernando
Trinidad and Tobago, WI
Attn: Krishna Narinesingh CMT
Telephone No.: 1 868 652 3801
Telecopier No.: 1 868 652 1282
(f) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
(which may be generally or in a particular instance and either retroactively or
prospectively) may not be given, unless the Company has obtained the written
consent of the holders of a majority of the Registrable Securities; provided,
however, that in the event any such amendment, modification, supplement, waiver
or consent shall materially and adversely affect the rights of a single
Stockholder or a similarly situated group of Stockholders (as opposed to the
Stockholders generally), such amendment, modification, supplement, waiver or
consent shall not be effective as against such Stockholder or group of
Stockholders unless approved by such Stockholder or group of Stockholders.
(g) Severability. If any provision or any portion of any provision
of this Agreement or the application of such provision or any portion thereof
to any Person or circumstance shall be held invalid or unenforceable, the
remaining portion of such provision, as it applies to other Persons or
circumstances and the remaining provisions, shall not be affected or impaired
thereby.
(h) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter herein contained. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Company with
respect to the securities received by the Stockholders pursuant to the
Acquisition. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
CLIFFS DRILLING COMPANY:
By: /s/ JIM R. WISE
--------------------------------------
Printed Name: Jim R. Wise
Title: Director
STOCKHOLDERS:
WELL SERVICES (MARINE) LTD.:
(In Members Voluntary Liquidation)
By:/s/ GEORGE ANTHONY DIEFFENTHALLER
---------------------------------------
Printed Name: George Anthony Dieffenthaller
12
<PAGE> 13
Title: Liquidator
By:/s/ CHARLES A. BRASH
---------------------------------------
CHARLES A. BRASH
By:/s/ PHILLIP A. POLLONAIS
---------------------------------------
PHILLIP A. POLLONAIS
13
