UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): MARCH 22, 1995
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PRIDE PETROLEUM SERVICES, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 0-16961 76-0069030
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1500 CITY WEST BLVD., SUITE 400
HOUSTON, TEXAS 77042
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (713) 789-1400
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 22, 1995, Pride Petroleum Services, Inc. (the "Company") acquired
all of the outstanding capital stock of X-Pert Enterprises, Inc. ("X-Pert") from
Raymond H. Eaves and Billy B. Cooper for consideration of approximately
$10,000,000 which was negotiated at arms length. The sellers had no material
relationship with the buyers.
X-Pert operates 35 well servicing rigs in New Mexico and also provides
lease maintenance services to oilfield operators. X-Pert generated revenues of
approximately $12,638,000 and earnings from continuing operations before income
taxes of approximately $1,798,000, ($1,129,000 after taxes), for its fiscal year
ended March 31, 1994. Results of operations have continued at approximately the
same levels during X-Pert's fiscal 1995 year.
The purchase price for the X-Pert acquisition consisted of $3,000,000
cash, a note payable to the selling shareholders in the amount of approximately
$6,000,000, and 200,000 shares of the Company's common stock. The cash portion
of the purchase price was funded from the Company's working capital. X-Pert had
working capital and other monetary assets in excess of liabilities of
approximately $3,000,000 at the date of acquisition.
The Stock Purchase Agreement dated March 22, 1995, by and among the
selling shareholders and the Company is included as an exhibit hereto. The
foregoing discussion is qualified in its entirety by reference to such exhibit.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Provision of financial statements for X-Pert required by this item within
15 days is impracticable. The required financial statements will be filed by an
amendment on Form 8 as soon as practicable, but not later than 60 days after
this report is required to be filed.
(B) PRO FORMA FINANCIAL INFORMATION.
Provision of pro forma financial information for Pride Petroleum Services,
Inc. required by this item within 15 days is impracticable. The required
financial statements will be filed by an amendment on Form 8 as soon as
practicable, but not later than 60 days after this report is required to be
filed.
(C) EXHIBITS.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION
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2 Stock Purchase Agreement, dated March 22, 1995, by and among Raymond
H. Eaves and Billy B. Cooper and Pride Petroleum Services, Inc.
3
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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.
PRIDE PETROLEUM SERVICES, INC.
By: PAUL A. BRAGG
Paul A. Bragg
Vice President, Treasurer and
Chief Financial Officer
Date: April 6, 1995
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is made as of the 22nd day of March, 1995
among RAYMOND H. EAVES and BILLY B. COOPER (hereinafter collectively referred to
as the "SELLERS" and individually as a "SELLER") and PRIDE PETROLEUM SERVICES,
INC., ("PURCHASER").
WHEREAS, SELLERS own, or as of the Closing will own, all of the issued and
outstanding stock (the "X-Pert STOCK") of X-PERT ENTERPRISES, INC. ("X-Pert")
which is the owner of all the issued and outstanding stock of X-PERT WELL
SERVICE, INC. and B&M SERVICE CO., INC. (collectively the "Companies",
individually the "Company"), and PURCHASER desires to acquire the X-Pert STOCK
from SELLERS; and
WHEREAS, SELLERS AND PURCHASER desire to set forth herein the terms and
conditions of their agreement and understanding;
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
ARTICLE I
1.1 DEFINITIONS - For purposes of the Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the terms defined
in this Section 1.1 have the meanings herein assigned to them.
(a) "Agreement" means this Stock Purchase Agreement.
(b) "Financial Statements" shall have the meaning as defined in Sections
3.1(y).
(c) "Effective Closing Date" means Midnight, on January 31, 1995.
(d) "ERISA" shall have the same meaning as defined in Section 3.1(r).
(e) "Closing" means the closing of the transaction contemplated by the
Agreement scheduled for 10 a.m. local time at PURCHASER'S offices in
Houston, Texas, on March 22, 1995 or at such other time or place as
the parties may mutually agree in writing.
(f) "Code" means the Internal Revenue Code of 1986 as amended.
(g) "Corporate Documents" mean the Articles of Incorporation and Bylaws of
X-Pert and the Companies.
(h) "Party" means any signatory party to this Agreement.
(i) "Purchase Price" shall have the same meaning as defined in Section
2.2.
(j) "X-Pert STOCK" shall have the same meaning as defined in the preamble.
(k) "X-Pert Accounting Procedures" shall have the same meaning as defined
in Section 2.2. (l) "X-Pert Yard" shall have the meaning as defined in
Section 4.1(f).
(m) "Note" shall have the same meaning as defined in Section 2.2(d).
(n) "Mortgage" shall have the same meaning as defined in Section 2.2(e).
(o) "Security Agreement" shall have the same meaning as defined in Section
2.2(e).
(p) "Financing Statement" shall have the same meaning as defined in
Section 2.2(e).
(q) "Pride STOCK" shall have the same meaning as defined in Section
2.2(c).
(r) "Excluded Property" shall have the same meaning as defined in Section
3.1(s).
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ARTICLE II
SALE AND PURCHASE OF STOCK OF COMPANIES
2.1 SALE OF STOCK - Subject to the terms and conditions of the Agreement,
SELLERS shall sell, assign, transfer and convey the X-Pert STOCK to PURCHASER at
Closing. SELLERS shall deliver to PURCHASER, at the Closing, (i) certificates
representing all the shares of X-Pert STOCK, duly endorsed in proper form for
transfer and dated as of the Closing, (ii) letters of resignation of all
officers and directors of X-Pert and the Companies, and (iii) all other
certificates, opinions and documents required to be delivered to PURCHASER by
SELLERS at Closing pursuant to this Agreement.
2.2 PURCHASE PRICE - The purchase price for the X-Pert STOCK (the
"Purchase Price") shall be an amount equal to NINE MILLION NINE HUNDRED SIXTY
FOUR THOUSAND FOUR HUNDRED EIGHTY ONE DOLLARS AND NINETY FOUR CENTS
($9,964,481.94). The Purchase Price consists of SEVEN MILLION DOLLARS
($7,000,000.00) plus the value of the Net Realizable Assets of X-Pert and the
Companies as shown on their Financial Statements as of the Effective Closing
Date less the amounts of (i) the transactions described in Section 4.1(a) to
exercise the option on Harry Eaves' stock ($409,596) and to purchase the stock
of Messrs. Rhoads and Rogers ($55,380); less an adjustment to reconcile the
exercise of Harry Eaves' stock options ($29,388); (iii) less an adjustment to
reflect the tax adjusted difference between the market value and the book value
as shown on X-Pert's Financial Statements as of the Effective Closing Date of
the Merrill Lynch WCMA accounts numbered 68B-07347 (owned by X-Pert Well
Service) and 68B-07346 (owned by B&M Service Company) and Vanguard Securities
Fund accounts numbered 9882723784 (owned by X-Pert Well Service) and
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9882723836 (owned by B&M Service Company) ($46,253.08); and (iv) less an
adjustment for SELLERS expenses in negotiating this agreement ($57,578.90). "Net
Realizable Assets" shall mean all of the assets of X-Pert and the Companies less
net property and equipment less all liabilities. On the consolidated Financial
Statements of X-Pert and the Companies, dated January 31, 1995, attached hereto
as part of Exhibit "L", the Net Realizable Assets of $3,562,677.92 equals total
assets of $8,333,960.66 less net property and equipment of $2,493,879.44 less
total liabilities of $2,277,403.30. Net Realizable Assets will be calculated
utilizing the basis of accounting as historically and consistently applied by
X-Pert for at least the last five (5) fiscal years ("X-Pert Accounting
Procedures"). The Purchase Price is adjusted and payable as hereinafter set
forth.
(a) Cash of $2,925,000 shall be payable at Closing ($2,692,462.50 to
SELLER Eaves and $232,537.50 to SELLER Cooper).
(b) Cash of $75,000 shall be payable at Closing for the noncompetition
agreements identified in Article VIII.
(c) PURCHASER shall issue, at Closing, to SELLERS, or their designee,
200,000 shares of PURCHASER'S common stock (the "Pride STOCK"), which
shall be pro-rated between SELLERS based upon the amount of X-Pert
Stock held by each SELLER, as of Closing, (184,100 shares of the Pride
STOCK to SELLER Eaves and 15,900 shares of the Pride STOCK to SELLER
Cooper) subject to a Registration Rights Agreement (attached as
Exhibit "O") that will require the prompt filing of a shelf
registration for such shares at PURCHASER'S cost. The Certificates
representing all of the Pride STOCK shall be delivered to SELLERS
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at Closing. PURCHASER agrees to use its best efforts to complete the
shelf registration as soon as possible. Upon delivery to SELLERS, the
Certificates representing the Pride STOCK shall be sold, assigned,
transferred and conveyed by PURCHASER to SELLERS duly endorsed and
shall be freely transferable by SELLERS, subject only to the transfer
restriction imposed pursuant to the Registration Rights Agreement.
(d) PURCHASER shall deliver to SELLERS a note ("Note"), at Closing, in an
amount equal to the balance of the Purchase Price after crediting the
amounts of the $3,000,000 cash downpayment and the value of the Pride
STOCK at $1,000,000. The amount of the Note is $5,964,481.94 (attached
hereto as Exhibit "P"). The Note shall be for a term of five (5) years
and shall bear interest at the fixed rate of 8.5% per annum as stated
in the Note. The Note shall be payable in twenty (20) consecutive
equal, quarterly, installments of principal plus interest then accrued
on the unpaid balance as stated in the Note.
(e) The payment of the Note by PURCHASER to SELLERS shall be secured by
valid and enforceable first liens in favor of SELLERS against all of
the property and equipment of X-Pert and the Companies existing as of
the Closing pursuant to the Real Estate Mortgage ("Mortgage"),
Security Agreement ("Security Agreement") and Financing Statement
(attached hereto as Exhibits Q, R and S respectively) fully executed
by PURCHASER, and delivered to SELLERS at Closing. Except for liens
perfected prior to Closing, as specifically listed on Exhibit "V"
attached hereto, SELLERS shall retain a valid and enforceable first
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lien on all of X-Pert's property and equipment acquired after the
Closing Date, but excluding all receivables. PURCHASER shall pay all
recording fees and closing costs (excluding Attorney's fees of
SELLER).
(f) In the event that the shelf registration is not declared effective as
required by this Agreement within 180 days from the date of Closing,
SELLERS shall have the right, but not the obligation, in the exercise
of SELLERS' discretion and upon the redelivery to PURCHASER of the
Pride STOCK, to require PURCHASER to pay to SELLERS ONE MILLION
DOLLARS ($1,000,000) cash, due and payable no later than 5:00 p.m.
Central Time on the 30th day from the receipt by PURCHASER of SELLERS'
written notice of SELLERS' election to receive cash in lieu of Pride
STOCK. Such notice may be given at any time after the expiration of
180 days after the Closing provided the shelf registration has not
become effective. In the event SELLERS elect not to require PURCHASER
to pay the ONE MILLION DOLLARS ($1,000,000) cash in lieu of the Pride
STOCK after the 180 day period, PURCHASER shall complete the shelf
registration as soon as possible thereafter.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLERS - As of the Effective
Closing Date and the Closing, SELLERS represent and warrant to PURCHASER and
agree with PURCHASER that:
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(a) ORGANIZATION AND STANDING - X-Pert and the Companies have each been
duly organized and are validly existing in good standing under the
laws of the State of New Mexico and are all qualified as foreign
corporations and are in good standing under the laws of every other
jurisdiction in which they own or lease property or conduct business
so as to require such qualification and all such companies have the
requisite corporate power and authority and all licenses, permits and
authorizations necessary to own and operate their properties and to
carry on their businesses as now conducted except where the lack of
such qualifications, licenses, permits and authorizations would not
have a material adverse effect on the business, financial condition,
operations, or results of operations of X-Pert and the Companies.
(b) AUTHORITY - SELLERS have the power and authority to enter into and
perform their obligations under this Agreement. The execution,
delivery and performance of this Agreement have been duly authorized
by all requisite action, and this Agreement has been duly executed and
delivered by SELLERS.
(c) VALIDITY OF AGREEMENT - The Agreement is a legal, valid and binding
obligation of each SELLER and is enforceable against each SELLER in
accordance with the terms of the Agreement, except as enforcement may
be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights in general.
(d) NO VIOLATION - The execution and delivery of the Agreement and the
performance by SELLERS of the terms of the Agreement do not conflict
with or result in a
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material violation or material breach of any agreement, instrument,
order, writ, judgment or decree to which any SELLER, X-Pert or any
Company is a party or is bound.
(e) APPROVALS - SELLERS shall have obtained all consents necessary for the
performance of the Agreement. All material authorizations, approvals
or other actions by or filing(s) with any governmental agency required
in connection with the execution, delivery and performance by SELLERS
of this Agreement shall have been obtained.
(f) X-PERT STOCK - All of X-Pert and each Company's authorized and issued
capital stock is set out on Exhibit "A". The stock of X-Pert and each
Company has been duly authorized and validly issued and is fully paid
and nonassessable and constitutes all of the issued and outstanding
stock of each of those corporations.
(g) X-PERT STOCK OWNERSHIP - SELLERS own, or as of Closing will own, all
the X-Pert STOCK and have good and marketable title to such X-Pert
STOCK and shall deliver it free and clear of any lien, charge, claim
or encumbrance at Closing. X-Pert owns all the stock of the Companies.
The transfer of the X-Pert STOCK shall not constitute a material
violation of any state or federal law. The stock ownership of each
Company is set out on Exhibit "B". Each SELLER has or as of Closing
will have full record and beneficial ownership of the X-Pert STOCK; at
the Closing each SELLER will have such ownership free of any liens,
claims, charges, exceptions or encumbrances, and upon delivery to
Buyer of the certificates for the X-Pert STOCK and payment therefore
at the Closing as
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provided herein, PURCHASER will have full record and beneficial
ownership of the X-Pert STOCK and X-Pert will have full record and
beneficial ownership of the stock of each Company free of any liens,
claims, charges, exceptions or encumbrances except those created by
this Agreement and those that may result from acts of PURCHASER. No
person has any preemptive or similar rights in respect of the
issuance of any shares of the capital stock of X-Pert or any
Company. Other than set out on Exhibit "A", there is no other type
of stock authorized or issued by X-Pert or any Company.
(h) OTHER STOCK OWNERSHIP; INVESTMENTS - Other than those listed on
Exhibit "B", neither X-Pert nor any of the Companies, directly or
indirectly, own any stock in any subsidiary corporation nor in any
other corporation, partnership, venture, entity or business
enterprises. Exhibit "B" sets forth all equity and other ownership
interests of X-Pert and the Companies in all bonds, notes and other
securities, all of which are free and clear of any liens, claims,
charges and encumbrances except as disclosed in Exhibit "B."
(i) CORPORATE DOCUMENTS - The Corporate Documents, attached as Exhibit
"C", constitute true, correct and complete copies of the Corporate
Documents of X-Pert and the Companies and reflect all amendments
thereto.
(j) OPTIONS AND WARRANTS - Except as set forth in Article 4.1 of this
Agreement, there are no outstanding options, warrants, convertible
securities, proxies, voting trust agreements or other rights of any
kind to acquire any of the X-Pert STOCK, nor
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are there any outstanding rights or privileges, preemptive or
contractual, to acquire any equity interest in X-Pert or any
Company.
(k) LITIGATION AND CLAIMS - Except as set forth on Exhibit "D", there are
no actions, suits, claims, orders, investigations or proceedings
pending or threatened against X-Pert, or any Company, or any joint
venture or any other business arrangement in which X-Pert or any
Company owns an interest before any court, or arbitration body or
before any governmental department, agency or instrumentality. Neither
X-Pert nor any of the Companies or any of the SELLERS are in default
with respect to any judgment, order, writ, injunction, decree or award
applicable to it from any court, any governmental instrumentality or
arbitrator having jurisdiction over X-Pert or any Company. To the
extent the litigation and claims identified on Exhibit "D" have not
been disclosed in writing and accrued on X- Pert's Financial
Statements, SELLERS shall indemnify PURCHASER as set forth in Section
6.1(b) of this Agreement.
(l) COMPLIANCE WITH LAWS - In the conduct of their respective businesses,
X-Pert, the Companies and the SELLERS, to the best of SELLERS'
knowledge and belief, are in material compliance with all applicable
federal, state and local laws, statutes, ordinances and regulations.
(m) DISCLOSURES - The representations and warranties by SELLERS in the
Agreement and the statements contained in the documents (including the
Exhibits), certificates and other writings furnished to PURCHASER,
when considered as a whole, to the best of SELLERS' knowledge and
belief, do not and will not
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contain any untrue statement of a material fact and do not and will
not omit to state any material fact necessary to make the statements
herein and therein not misleading. SELLERS warrant and represent, to
the best of SELLERS' knowledge and belief, that the Exhibits
attached hereto are true, correct and complete in all material
respects.
(n) TAXES - (i) X-Pert and each Company has filed all tax returns required
to be filed by it under the laws of the United States, the state of
its incorporation and each state in which it conducts business. All
taxes shown by such returns to be due and payable have been paid or
accrued on the Financial Statements. Except to the extent accruals
therefor are reflected on the Financial Statements or, in the case of
disputed assessments, as identified in Exhibit "D," and except with
respect to local sales taxes incurred in the ordinary course of each
Company's business for which no accruals are provided, after due
review and inquiry, neither X-Pert nor any Company has any tax
liabilities due or to become due for any taxable period, or portion
thereof, occurring prior to the Effective Closing Date; (ii) except as
provided on Exhibit "I" no federal income tax returns of X-Pert nor
any Company have any outstanding audits by the Internal Revenue
Service; (iii) there are no agreements which have been made for the
extension of time for the assessment of any federal income tax against
X-Pert or any Company; (iv) neither X-Pert nor any Company is in
default in the payment of any taxes due and payable; and, (v) any
disputed assessments for a taxable period, or portion
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thereof, occurring prior to the Effective Closing Date which X-Pert
is ultimately required to pay will be paid by SELLERS as an
adjustment to the Purchase Price.
(o) CONTRACTS - Except as set forth on Exhibit "E", neither X-Pert nor any
Company is a party to or the subject of any material written or oral
contract. Neither X-Pert nor any Company is in default under any
contract listed on Exhibit "E" and each such agreement is in full
force and effect and is a legal, valid and a binding obligation of the
parties thereto except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights in general.
(p) EMPLOYEES - Exhibit "F" contains a list of all employees of X-Pert and
the Companies. X-Pert and the Companies are not a party to any
employment contract(s), leased employee agreements, brokerage
commission contract(s), consulting contract(s) or any other type of
employment arrangement(s) other than those designated on Exhibit "F".
As provided in Article IV, all agreements between X-Pert and the
Companies and Mr. Harry R. Eaves shall be terminated prior to Closing.
To the best of SELLERS' knowledge and belief after a thorough review
of all the personnel files, X-Pert and each Company is in material
compliance with all laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal
opportunity and the payment of social security and other taxes. The
Financial Statements shall reflect an accrual for no less than fifty
percent (50%) of the value of all vested and nonvested vacation for
all hourly employees of X-Pert and the Companies.
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(q) BOOKS AND RECORDS - The books and records of X-Pert and each Company
have been maintained in accordance with X-Pert's Accounting Procedures
consistently applied, and (i) all balances recorded for accounts
receivable represent valid and enforceable claims and are not recorded
in excess of their collectible amounts, (ii) all liabilities of X-Pert
and each Company for goods and services received by X-Pert and each
Company respectively or otherwise accruable under X-Pert's Accounting
Procedures have been recorded on the records of the Company, and (iii)
SELLERS have furnished PURCHASER with copies of balance sheets for
each Company for the last five (5) fiscal years (attached to this
Agreement as part of Exhibit "L"). The foregoing balance sheets
including in all cases the schedules thereto (if any) have been based
on the information contained in X-Pert's books and records and are
accurate in all respects as of their respective dates. Except as
identified herein, or as otherwise disclosed, X-Pert and the Companies
have no material liabilities (whether accrued, absolute, contingent,
or unliquidated). For purposes hereof "material liabilities" is
defined as any liability in excess of $25,000.00.
(r) BENEFIT PLAN(S) - To the best of SELLERS' knowledge and belief, after
due review and inquiry by SELLERS and by SELLERS' counsel (identified
in Section 5.1(j)) X-Pert and each Company currently have no employee
benefit plans to which the Employee Retirement Income Security Act of
1974 ("ERISA") applies. In about October, 1991, X-Pert terminated its
profit sharing plan and, with regard to that profit sharing plan, it
(i) was operated in all respects in accordance with
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all applicable requirements of federal law, including Employee
Retirement Income Security Act of 1974 ("ERISA") and the Code, (ii)
did not engage in any prohibited transactions (as such term is
defined in Section 406 of ERISA), and (iii) met the minimum funding
standards of Section 412 of the Code, if applicable and (iv) no
Reportable Event (within the meaning of Section 4043 of ERISA)
occurred with respect to such plan.
(s) PROPERTY - Except as set forth on Exhibit "G", X-Pert and each Company
has good and marketable fee title, free and clear of all liens and
encumbrances, to all of the real property and good indefeasible title,
free and clear of all liens and encumbrances to all of its tangible or
intangible personal property. All property is listed on the attached
Exhibit "G". Exhibit "G" lists, among other things, all real and
personal property owned or leased by each Company. None of the rigs,
vehicles or equipment owned by X-Pert and the Companies have been
operated in any county except as set forth in Exhibit "G" and, except
as indicated on Exhibit "G", all are in good operating condition less
ordinary wear and tear with no need of substantial repairs and conform
to all applicable laws governing their use. All commercial vehicles
and rigs requiring Department of Transportation and/or State
Inspection Certificates have certificates that are current within the
last twelve (12) months. Attached as Exhibit "U" is a listing of all
of SELLERS' personal property ("Excluded Property") located at
X-Pert's Yard.
(t) ABSENCE OF CHANGE - Except as set forth on Exhibit "H" and in Articles
2.2 and 4.1 of this Agreement and since January 31, 1995, neither
X-Pert nor any
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Company has (i) incurred any material obligation or liability
(absolute, accrued, or contingent), except in the ordinary course of
business, (ii) discharged or satisfied any lien or encumbrance, or
paid or satisfied any obligation or liability (absolute, accrued, or
contingent) other than (a) liabilities shown or reflected on the
January 31, 1995 balance sheet, or (b) liabilities incurred since the
date of the January 31, 1995 balance sheet in the ordinary course of
business, (iii) increased or established any accrual for taxes or any
other liability on its books or otherwise provided therefore, except
as may have been required due to income or operations of the Companies
since the date of the January 31, 1995 balance sheet, (iv) mortgaged,
pledged or subjected to any lien, charge or other encumbrance any of
its assets, tangible or intangible, (v) sold or transferred any of its
assets or cancelled any debts or claims or waived any rights, except
in the ordinary course of business, (vi) disposed of or permitted to
lapse any patents or trademarks or any patent or trademark
applications material to the operation of its business, (vii) granted
any general or uniform increase in the rates of pay of employees or
any substantial increase in salary payable or to become payable by it
to any officer, employee, consultant, or agent or by means of any
bonus or pension plan, contract or other commitment increased the
compensation of any officer, employee, consultant or agent, (viii)
authorized any capital expenditures for additions or repairs to
property or equipment in excess of $10,000 for any item, (ix) made any
declaration, setting aside or payment to its shareholders of any
dividend or other distribution in respect of its capital stock, or
otherwise, or
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redeemed or purchased any of its capital stock, or agreed to take any
such action, (x) entered into any transaction other than in the
ordinary course of business, (xi) borrowed any funds, except in the
ordinary course of business, (xii) issued any stocks, bonds or other
corporate securities or evidences of indebtedness, other than
expressly noted in the Exhibits, or (xiii) experienced damage,
destruction or loss not covered by insurance affecting any of its
properties, assets or business, or experienced any other change in its
financial condition, assets, liabilities or business, other than
changes in the ordinary course of business, which changes have not, in
the aggregate, adversely affected the business operation, properties
or financial condition of X-Pert or any Company. For purposes hereof
"adversely affected" is defined as any change which, in the aggregate,
exceeds $25,000.00.
(u) CERTAIN INFORMATION - Exhibit "I" is a true and complete list setting
forth (i) the name of each director and officer of X-Pert and each
Company and the offices held by each, (ii) the name of each person
entitled to receive from X-Pert any Company bonuses, contingent
compensation payments or deferred compensation payments and the terms
thereof, (iii) the name of each bank in which X-Pert and each Company
has an account or safe deposit box, the identifying numbers or symbols
thereof, and the name of each person authorized to draw thereon or to
have access thereto, (iv) the name of each person holding tax or other
powers of attorney from X-Pert or any Company, and a summary statement
of the terms thereof all of which will be terminated as of the
Closing, (v) the taxpayer
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identifying number for X-Pert and each Company and a listing of all
memberships owned or paid for by X-Pert and each Company.
(v) INSURANCE - Each Company is self-insured or has in force valid
policies of insurance on its rigs, buildings, equipment, vehicles,
inventory, operations and for workmen's compensation with coverages
and in amounts as are customarily carried by corporations engaged in
similar business. All said policies and claims against said policies
known to SELLERS, after due inquiry, are listed and described in
Exhibits "J" and "D" hereto. Any premiums, claims, adjustments or
audits by an insurance company or the State of New Mexico, relating to
any period prior to the Effective Closing Date, which produces an
additional premium or cost, and which are not reserved for, accrued on
the Financial Statements or disclosed to PURCHASER, shall be paid by
SELLERS. All medical claims by X-Pert employees under any X-Pert
medical plan, any workers' compensation claim or any third party claim
that arises out of events occurring prior to the Effective Closing
Date, and which are not reserved for or accrued on the Financial
Statements, shall paid by SELLERS. Any overaccrued amount and/or any
refunded or unused reserves for any such insurance claims, including,
but not limited to, reserves held by Provident Life and Accident
Insurance Company pursuant to policy number W-058 for the account of
X-Pert ("the Provident Policy") and amounts maintained by X-Pert in an
off-balance sheet account the funds of which are dedicated to
satisfaction of X-Pert's obligations under the Provident Policy, shall
be paid to SELLERS by PURCHASER within thirty (30)
-17-
days of Pride's, X-Pert's or the Companies' receipt of such refunded
or unused reserve and/or adjustment on their books of any such
overaccrual as additional consideration under this Stock Purchase
Agreement and shall constitute an adjustment to the Purchase Price.
Any underaccrued amount for any such insurance claim shall promptly
be paid by SELLERS to PURCHASER within thirty days of the receipt of
Pride's invoice and shall constitute an adjustment to the Purchase
Price.
(w) NO BREACH OF AGREEMENTS; REQUIRED CONSENTS, ETC. - Neither X-Pert, nor
any of the Companies or any SELLER is a party to, subject to or bound
by any agreement or any judgment, order, writ, injunction or decree of
any court or governmental body which prevents the carrying out of this
Agreement. The consummation of the transactions provided for herein
will not conflict with or result in a material breach of any condition
or provision of, or constitute a default, or give rise to any right of
termination, acceleration, cancellation or forfeiture under, any
indenture, agreement or other instrument or constitute a violation of
any statute, governmental rule or ordinance to which X-Pert or any
Company or any SELLER is a party or by which any Company or any SELLER
may be bound, or to which any of its properties or operations are
subject.
(x) COMPLIANCE WITH LAW - To the best of SELLERS' knowledge and belief,
the properties utilized in the operation of X-Pert and the Companies
do not violate or conflict with any restrictive covenant, or any
federal, state or local zoning or pollution ordinance, administrative
regulation or provision of law which
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substantially or materially interferes with or prevents the
continued conduct of X-Pert and the Companies' business in the same
manner as heretofore conducted or the continued use of the
properties owned or leased by the Companies for the purposes for
which they are now being used.
(y) FINANCIAL STATEMENTS - Complete copies of all financial statements for
X-Pert and the Companies for each of the five (5) previous fiscal
years are attached as part of Exhibit "L". Also, the consolidated
balance sheet and income statement of X-Pert and the Companies as of
the Effective Closing Date is herein referred to as the "Financial
Statements" and is included or will be included as part of Exhibit "L"
prior to Closing. All such financial statements have been prepared in
accordance with X-Pert's Accounting Procedures consistently applied
throughout the periods indicated and from period to period (including
the periods covered by the financial statements referenced herein) and
present fairly the financial condition of X-Pert and Companies and the
results of operations of each Company and any changes in its
shareholders' equity and changes in its financial position for the
respective periods specified therein in accordance with X-Pert's
Accounting Procedures.
3.2 SELLERS' AGENT - Each SELLER and PURCHASER will appoint and maintain
for a period of five (5) years from the Effective Closing Date an agent for
service of process in the States of New Mexico and Texas with respect to any
matters or disputes arising under this Agreement. Thereafter, each party shall
notify the other parties promptly as to any change of
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such names or addresses. Each such agent shall be an appropriate responsible
corporation or individual resident in New Mexico and Texas.
(aa) ENVIRONMENTAL MATTERS - To the best of SELLERS' knowledge or belief,
after due inquiry, X-Pert and each Company (i) is and has in the past
been in compliance with all Environmental Laws and all permits,
requests and notifications relating to health, safety or the
environment of X-Pert and each Company or any of their respective
properties, assets, operations and businesses, (ii) has obtained and
adhered to and currently possesses all necessary permits and other
approvals necessary to store, dispose of and otherwise handle any
applicable Hazardous Materials and to operate its properties, assets
and businesses, (iii) has reported, to the extent required by all
federal, state and local statutes, laws, ordinances, regulations,
rules, permits, judgments, orders and decrees, all past and present
sites owned and/or operated by X-Pert or any Company where any
Hazardous Material has been released, created, stored or disposed of,
and (iv) has not used, stored, or Released any Hazardous Material in
excess of amounts allowed by Environmental Law. To the best of
SELLERS' knowledge or belief, after due inquiry, there is (v) no
location on any property currently or previously owned or operated by
X-Pert or either Company where Hazardous Materials have entered into
the soil or groundwater of such property, (vi) no on-site or off-site
location to which X-Pert or either Company has Released or transported
Hazardous Materials or arranged for the transportation or disposal of
Hazardous Materials, which is or is likely to be the subject of any
federal, state, local or
-20-
foreign enforcement action or any investigation which could lead to
any claims against any such entity for any clean-up cost, remedial
work, damage to natural resources, common law or legal liability,
including, but not limited to, claims under CERCLA, and (vii) there
are no underground storage facilities for petroleum products on any
of the real property identified on Exhibit "G" or on any property
currently or previously owned or operated by X-Pert or either
Company that have not been removed in accordance with all
Environmental Laws, copies of all such documentation of which has
been provided to PURCHASER. For the purposes of this Section (i)
"Environmental Laws" means any and all local, state and federal
laws, statutes, ordinances, rules, regulations, orders, decrees,
judicial or arbitral decisions, or determinations of any
governmental or judicial authority pertaining to health, safety or
the environment in effect now in any and all jurisdictions in which
X-Pert or either Company is doing or at any time has done business
or where any of their property is located, including, without
limitation, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended,
the Occupational Safety and Health Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Safe Drinking Water
Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendment and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, each as amended and revised,
comparable state and local laws and other
-21-
environmental conservation and environmental protection laws, (ii)
"Hazardous Material" means any pollutant, contaminant, solid waste,
asbestos, petroleum product, oil, any toxic or hazardous substance,
material or waste, any flammable, explosive or radioactive material,
any chemical which causes cancer or teratogenic effects, and any
other material or substance not mentioned above which is defined,
listed, regulated or otherwise subject to any Environmental Law, and
(iii) "Release" means 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),
except for any minor leakage or spillage that occurs or has occurred
in the course of operation of either Company's business, which minor
leakage or spillage would not impose any liability whatsoever on
such Company.
(bb) TRANSACTIONS INVOLVING ANY SELLER AND ANY COMPANY - Except as set out
on Exhibit "K", or as otherwise identified or required in this Stock
Purchase Agreement, the Note, Mortgage, the Security Agreement or the
Financing Statement there are no agreement(s) between any SELLER and
X-Pert or either of the Companies.
3.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER - As of the Effective
Closing Date, PURCHASER represents and warrants to SELLERS as follows:
(a) ORGANIZATION AND STANDING - PURCHASER has been duly organized and is
validly existing in good standing under the laws of the State of
Louisiana.
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(b) AUTHORITY - PURCHASER has the corporate power and authority to enter
into and perform its obligations under this Agreement, Note, Mortgage
and Security Agreement. The execution, delivery and performance of
this Agreement have been duly authorized by all corporate action of
PURCHASER, and this Agreement and the Note, Mortgage and Security
Agreement have been duly executed and delivered by PURCHASER.
(c) VALIDITY - This Agreement, Note, Mortgage and Security Agreement are
each legal, valid and binding obligations of PURCHASER and are
enforceable against it in accordance with their terms, except as
enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights in general.
(d) NO VIOLATION - The execution and delivery of the Agreement, Note,
Mortgage and Security Agreement and the performance by PURCHASER of
their terms thereof do not conflict with or result in a material
violation of the Articles of Incorporation or Bylaws of PURCHASER or
of any agreement, instrument, order, writ, judgment or decree to which
PURCHASER is a party or bound.
(e) CONSENTS - All consents necessary to the performance of this
Agreement, Note, Mortgage and Security Agreement by PURCHASER shall be
obtained prior to Closing. All approvals, authorizations or other
action by, or filing with, any governmental authorities required in
connection with the execution, delivery and performance by PURCHASER
of the Agreement, Note, Mortgage and Security Agreement have been
obtained.
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(f) DISCLOSURES - The representations and warranties by PURCHASER in the
Agreement, Note, Mortgage and Security Agreement and the statements
contained in the documents (including Exhibits), certificates and
other writings furnished to SELLERS pursuant to the Agreement, when
considered as a whole, to the best of PURCHASER'S knowledge and
belief, do not and will not contain any untrue statements of a
material fact and do not and will not onto omit to state any material
fact necessary to make the statements herein and therein not
misleading. PURCHASER warrants and represents, to the best of
PURCHASER'S knowledge and belief, that the Exhibits furnished by
PURCHASER attached hereto are true, correct and complete in all
material respects.
(g) PRIDE STOCK - The Pride STOCK upon delivery to SELLERS shall be duly
authorized, validly issued, fully paid and non-assessable. The
transfer of the Pride STOCK to SELLERS shall not constitute a material
violation of any state or federal law. Upon delivery to SELLERS of the
certificates for the Pride STOCK as provided herein, SELLERS will have
full record and beneficial ownership of the Pride STOCK free of any
liens, claims, charges, exceptions or encumbrances except those that
may result from acts of SELLERS.
(h) X-PERT STOCK - PURCHASER intends to hold the X-Pert STOCK for
investment and will not engage or participate in any activity that
would constitute a distribution of the shares for purposes of the
Securities Act of 1933.
(i) SHAREHOLDERS' INFORMATION. Attached as Exhibit "T" are true and
complete copies of PURCHASER'S most recent report on Form 10-K as
filed with the Securities
-24-
and Exchange Commission (the "SEC"), most recent Annual Report and
Proxy Statement distributed to PURCHASER's shareholders, each report
on Form 10-Q or Form 8-K filed with the SEC subsequent to said Form
10-K, each quarterly or other report or statement distributed to
PURCHASER'S shareholders subsequent to said Annual Report or Proxy
Statement, and all amendments (if any) to the foregoing reports or
statements.
(j) OPTIONS AND WARRANTY - Other than those listed in Exhibit "T" or
previously filed with the SEC, there are no outstanding, warrants,
convertible securities, proxies, or voting trust agreements.
(k) LITIGATION AND CLAIMS - Except as set forth in Exhibit "T" and except
for claims covered by Pride's insurance, there are no material
actions, suits, claims, orders, investigations or proceedings pending
or to the best of PURCHASER'S knowledge threatened against PURCHASER
or any joint venture or in any other business arrangement in which
PURCHASER owns an interest before any court, or arbitration body or
before any governmental department, agency or instrumentality.
PURCHASER is not in default with respect to any judgment, order, writ,
injunction, decree or award applicable to it from any court, any
governmental instrumentality or arbitrator having jurisdiction over
PURCHASER.
(l) COMPLIANCE WITH LAWS - In the conduct of its business, PURCHASER, to
the best of PURCHASER's knowledge and belief, is in material
compliance with all federal, state and local laws, statutes,
ordinances and regulations.
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(m) NO BREACH OF AGREEMENTS; REQUIRED CONSENTS, ETC. - PURCHASER is not a
party to, subject to or bound by any material agreement or any
judgment, order, writ, injunction or decree of any court or
governmental body which prevents the carrying out of this Agreement,
the Note, the Mortgage and the Security Agreement. The consummation of
the transactions provided for herein and in the Note, Mortgage and
Security Agreement will not conflict with or result in a material
breach of any condition or provision of, or constitute a default, or
give rise to any right of termination, acceleration, cancellation or
forfeiture under, any indenture, agreement or other instrument or
constitute a material violation of any statute, governmental rule or
ordinance to which PURCHASER is a party or by which PURCHASER may be
bound, or to which any of its properties or operations are subject.
ARTICLE IV
COVENANTS OF THE PARTIES
4.1 COVENANTS OF SELLERS - SELLERS covenant with PURCHASER as follows:
(a) CONDUCT OF BUSINESS - Prior to Closing, X-Pert shall (1) pay in full
to Mr. Harry Eaves the balance due under that certain note between Mr.
Harry Eaves and X-Pert dated March 24, 1988 in the approximate amount
of $605,309.01 (as of January 31, 1995), (2) exercise its options to
purchase from Mr. Harry Eaves for approximately $409,596.00 all
remaining shares of Stock owned by Harry Eaves and, (3) purchase as
treasury shares all of the shares of X-Pert STOCK owned by Dusty
Rhodes (115 shares) and Doug Rogers (15 shares) for approximately
-26-
$55,380. Otherwise, from the date hereof, through the Closing, unless
otherwise required by this Agreement, X-Pert and each Company will
not, without the written consent of PURCHASER (i) issue any stock,
bonds, notes, options, warrants or other corporate securities, (ii)
amend their Corporate Documents, (iii) incur any obligations or
liabilities except for (1) obligations disclosed herein, or (2)
obligations incurred in the ordinary course of business, (iv)
mortgage, pledge or subject to lien any assets or properties, tangible
or intangible, (v) sell or transfer any stock, bonds, notes, or
intangible assets, (vi) pay any material obligation other than current
liabilities incurred in the ordinary course of business, consistent
with past practice, (vii) sell, transfer or lease any of their
material assets, property or rights or cancel, waive or compromise any
debts, claims or rights, (viii) waive any rights or amend or terminate
any contract, lease agreement or license which in the aggregate are
material to each Company, (ix) enter into any transaction not in the
ordinary course of business and consistent with past practices, (x)
enter into an agreement to do any of the acts prohibited by this
Section 4.1 (a) (i-ix), and (xi) make, solicit, initiate or encourage
submission, directly or indirectly, of proposals or offers from any
persons or corporations (including any of its officers) for the sale
or recapitalization, merger consolidation or the acquisition, or
purchase of the stock or all or substantially all of the assets of, or
equity interest in X-Pert or any Company, or similar transaction or
business combination involving X-Pert or any Company. SELLERS shall
direct their financial and other advisors and representatives to
-27-
comply with each of the covenants contained in this Section 4.1.
SELLERS, will not, directly or indirectly, participate in any
negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with
or assist in an effort or attempt by any other person to do or seek
any of the items referred to in this Section 4.1.
(b) FINANCIAL STATEMENTS - SELLERS shall deliver to PURCHASER the
Financial Statements prior to Closing.
(c) ACCESS TO PROPERTIES AND INFORMATION - Prior to Closing, SELLERS shall
provide PURCHASER and its agents full access to X-Pert and each
Company's properties, personnel, representative and records in order
that PURCHASER shall have a full opportunity to make reasonable
investigations of the business and financial status of X-Pert and each
Company. After Closing and for so long as there is any outstanding
balance under the Note or obligation under this Stock Purchase
Agreement, PURCHASER shall provide SELLERS and their agents full
access to X-Pert and each Company's properties, personnel,
representatives and records in order that SELLERS shall have full
opportunity to make reasonable investigations of the business and
financial status of X-Pert and each Company. Upon written notice from
SELLERS, PURCHASER shall provide an accounting of any amounts due or
payable pursuant to this Stock Purchase Agreement or the Note.
(d) TAXES - SELLERS have caused X-Pert to file or will cause to be timely
filed or cause to timely extend and file all returns in respect to
taxes and other reports
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which were or will be required to be filed in respect to all taxes
for X-Pert and each Company for periods with due dates prior to
Closing and have caused X-Pert or will cause X-Pert to pay or accrue
on its financial statements all taxes due with respect to such
returns and all audits thereof and future assessments originated by
the taxing authorities thereon. PURCHASER shall permit SELLERS the
opportunity to fully participate in, protest, dispute and defend
against any post-Closing audit or assessment originated by any
taxing authority concerning unaccrued or unpaid taxes for periods
with due dates or tax liabilities prior to the Effective Closing
Date.
(e) DELIVERY OF CORPORATE RECORDS - Prior to the Closing, SELLERS will
provide PURCHASER with full access to all original corporate and
shareholder records of X-Pert and each Company. All such original
documents will be delivered to PURCHASER at Closing.
(f) QUIET TITLE ACTIONS - After the Closing, SELLERS, at their sole cost
and expense, will promptly and diligently initiate and prosecute a
quiet title action for the X-Pert yard located in Hobbs, New Mexico
and described on Exhibit "G" and Exhibit "A" to the Mortgage ("X-Pert
Yard"). Such quiet title action shall be completed within 180 days
following Closing unless Pride consents to an extension of such time
which consent shall not be unreasonably withheld so long as SELLERS
are diligently prosecuting the quiet title action.
(g) REMOVAL OF WASTE AND HAZARDOUS MATERIAL - Prior to Closing, SELLERS,
at their sole cost and expense, shall remove from the X-Pert Yard and
properly dispose,
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or shall make arrangements satisfactory to PURCHASER for such
removal and disposal after Closing, of all drums and buckets
described in Section VI A. of that Environmental Site Assessment
prepared for PURCHASER and dated February, 1995, a copy of which has
been delivered to SELLERS.
4.2 COVENANTS OF PURCHASER AND SELLERS - SELLERS covenant to PURCHASER and
PURCHASER covenants to SELLERS as follows:
(a) CONDITIONS PRECEDENT - Each Party will use its best effort to cause
the conditions precedent set forth in Article V applicable to such
party to be fulfilled and satisfied prior to Closing.
(b) FURTHER ASSURANCES - On and after the Closing, SELLERS and PURCHASER
will take all appropriate actions and execute any instruments or
conveyances of any kind which may be reasonably necessary or advisable
to carry out any of the provisions hereof.
(c) TAX AUDITS - SELLERS shall fully cooperate with PURCHASER in any tax
audit of X-Pert or any Company relating all or in part to any period
prior to Closing.
(d) X-PERT'S EMPLOYEE HEALTH PLAN - X-Pert and the Companies have an
employee health plan ("X-Pert Health Plan"). Effective as of Closing
all employees of X-Pert and the Companies will be placed under
PURCHASER'S health plan. The X-Pert Health Plan will be terminated for
future coverage as of the Closing but will continue to be administered
by Provident Life and Accident Insurance Company pursuant the
Provident Policy for the benefit of the pre-Closing X-Pert employees.
-30-
(e) INCOME, LIABILITIES AND CONTRACTUAL OBLIGATIONS SUBSEQUENT TO THE
EFFECTIVE CLOSING DATE. All income, liabilities and contractual
obligations incurred in the ordinary course of business, including
liability arising out of accidents involving or affecting employees,
of X-Pert and the Companies earned or incurred subsequent to the
Effective Closing Date shall accrue to the benefit and be the
responsibility of PURCHASER. It is the intent of the parties that
SELLERS shall have no responsibility or obligation with regard to any
liability incurred in the ordinary course of business of X-Pert or the
Companies incurred subsequent to the Effective closing Date. As of the
Effective Closing Date, Pride, X-Pert and the Companies shall continue
to be responsible to perform and pay according to their terms all
contracts of X-Pert and the Companies and SELLERS shall have no
liability as to any such contracts entered into in the ordinary course
of business after the Effective Closing Date and before Closing.
SELLERS shall have no liability whatsoever for any contracts entered
into by X-Pert and the Companies after Closing.
4.3 COVENANTS OF PURCHASER - PURCHASER covenants with SELLERS as
followers:
(a) X-Pert Well Service, Inc. has executed a promissory note in favor of
Norwest (formerly United New Mexico Bank) dated September 22, 1994
with a principal unpaid balance of approximately $266,660 ("Norwest
Note") as of March 1, 1995 which is secured by that certain Commercial
Security Agreement ("CSA") dated September 22, 1994 between X-Pert
Well Service, Inc. and Norwest. SELLERS
-31-
recognize that with regard to the collateral specified the CSA,
their Security Agreement, Financing Statement and Note are subject
to the Norwest Note and the CSA. PURCHASER agrees that X-Pert Well
Service, Inc. will pay the Norwest Note when due in accordance with
its terms and will not amend, extend, request or obtain any further
extensions of credit under the Norwest Note. X-Pert Well Service,
Inc. has executed a promissory note in favor of Texas National Bank
of Midland dated September 9, 1994 with a principal unpaid balance
of approximately $301,920 ("TNB Note") as of March 1, 1995 PURCHASER
agrees that X-Pert Well Service, Inc. will pay the TNB Note when due
in accordance with its terms and will not amend, extend, request or
obtain any further extensions of credit under the TNB Note.
(b) Unless and until PURCHASER pays the Purchase Price to SELLERS in full
as required by the terms of this Agreement and the Exhibits hereto,
PURCHASER shall own and maintain X-Pert as a wholly owned subsidiary
and shall not sell, assign, encumber, hypothecate, lease, transfer or
otherwise convey the property and equipment of X-Pert and the
Companies, except in the ordinary course of business, and PURCHASER
shall not merge, dissolve liquidate or otherwise terminate or
reorganize X-Pert and the Companies so as to impair SELLERS' liens
pursuant to the Mortgage and Security Agreement on the property and
equipment of X-Pert and the Companies.
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ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT OF PURCHASER - The obligations of PURCHASER to
consummate the transaction contemplated by this Agreement are subject, at the
sole discretion of PURCHASER, to the satisfaction of, or waiver in writing by
PURCHASER at or prior to Closing of the conditions set forth in subsections (a)
through (m) below. If any of the conditions set forth below are not satisfied or
waived at the Closing, PURCHASER shall have the right, at its sole discretion,
to terminate this Agreement without liability. If the PURCHASER completes the
Closing as set forth herein, PURCHASER shall be deemed to have waived any
conditions precedent not satisfied at Closing.
(a) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING - All representations
and warranties of SELLERS contained in this Agreement shall be true
and correct at and as of the Effective Closing Date and Closing as
if such representations and warranties were made at and as of the
Effective Closing Date and Closing and (i) PURCHASER shall have
received all documents and stock certificates required by this
Agreement to be received at or prior to Closing, and (ii) the
SELLERS have performed in all respects at or prior to Closing all of
the covenants and agreements required to be performed by them at or
prior to the Closing in accordance with this Agreement.
(b) X-PERT ACCOUNTING PROCEDURES - PURCHASER is convinced, in its sole
opinion, that after its due diligence review and inspection, there
are no unacceptable
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variances between Pride's accounting methods and principles and the
X-Pert Accounting Procedures.
(c) PERFORMANCE OF COVENANTS AND AGREEMENTS - Each of the SELLERS shall
have performed in all material respects all of the covenants and
agreements required to be performed by them in accordance with this
Agreement.
(d) LITIGATION - No action, suit, proceeding, investigation, inquiry or
request for information by any third person (including, but not
limited to, any Governmental Authority) shall have been instituted
or threatened against any of the parties hereto or any of their
respective affiliates that questions or reasonably could be expected
to lead to subsequent questioning of, the validity or legality of
this Agreement or the transactions contemplated hereby or thereby
which, if successful, (a) would materially and adversely affect the
right of the PURCHASER to consummate the transactions contemplated
by this Agreement or to continue to conduct the business and
operations of SELLERS' substantially as currently conducted, or (b)
might involve material liability on the part of the PURCHASER.
(e) FINANCIAL STATEMENTS - SELLERS shall have cooperated with PURCHASER
and assisted PURCHASER'S accounting firm in reviewing the Financial
Statements.
(f) ENVIRONMENTAL MATTERS - PURCHASER shall have been afforded a
reasonable opportunity to conduct, and PURCHASER shall conduct at
its sole expense, a comprehensive environmental survey of all of
X-Pert's real property (including the collection of soil samples by
coring and other similar measures), and as a
-34-
result thereof, PURCHASER shall not have discovered any event or
condition which, in its sole judgment, would subject PURCHASER to
unacceptable financial or environmental risks as the owner or
operator of such real property. PURCHASER has provided to SELLERS a
copy of the results of its comprehensive environmental survey to
SELLERS ("PURCHASER'S Environmental Survey"), which is attached
hereto as Exhibit "W".
(g) REAL PROPERTY - PURCHASER shall have received the original policies
of title insurance, if any exist, or abstracts which are current as
of Closing on all real property identified on Exhibit "G" and
satisfied itself of X-Pert's ownership of such real property.
Pursuant to Section 4.1(f) of this Agreement, SELLERS shall
prosecute a quiet title action after Closing with regard to certain
of X-Pert's real property.
(h) NONCOMPETITION AGREEMENTS - Messrs. Eaves and Cooper shall have
executed and delivered the noncompetition agreements contemplated by
Article VIII hereof.
(i) CONDITION OF PROPERTIES - PURCHASER shall have been satisfied as of
Closing that (A) all the personal properties are in good operating
condition, order and repair, subject to ordinary wear and tear and
have been maintained in accordance with standard industry practice
and all legal requirements, and (B) all of the real property and
facilities are in compliance with all legal requirements and are
free of all liens and encumbrances. Pursuant to Section 4.1(f) of
this Agreement, SELLERS shall prosecute a quiet title action after
Closing with regard to certain of X-Pert's real property.
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(j) OPINION OF COUNSEL - PURCHASER shall have received from SELLERS and
Eaves, Bardacke & Baugh, P.A., counsel for SELLERS, an opinion or
opinions dated the date of Closing, satisfactory to PURCHASER, to
the effect that (i) SELLERS are duly authorized to sell and convey
the X-Pert STOCK and perform their obligations under the Agreement,
(ii) to the best of counsel's knowledge, after due inquiry and
except as provided herein, no material suit, action or claim is
pending against X-Pert or any Company, (iii) to the best of
counsel's knowledge, after due inquiry, all consents, waivers,
authorizations and approvals of firms, entities or governments and
agencies required or necessary to the execution, delivery or
performance of this Agreement by each of the SELLERS have been
obtained by the Closing, the execution and delivery of this
Agreement by each of the SELLERS and performance of all the terms of
this Agreement by SELLERS will not materially violate any term or
provision of any charter, by-law, indenture, lien, mortgage,
contract, agreement, instrument, judgment or decree, order, statute,
rule or regulation applicable to SELLERS, X-Pert or the Companies or
be in conflict with or constitute a material default under any term
of the Agreement, and (iv) to the best of counsel's knowledge, after
due inquiry, SELLERS have not materially breached any of its
representations, warranties or covenants in the Agreement or in any
agreement or document to be delivered at the Closing.
(k) INJUNCTIONS - No suit, action or other proceeding at the Closing
shall be pending or threatened before any court or governmental
agency in which it is sought to
-36-
restrain or prohibit or to obtain material damages or other relief
in connection with the Agreement or the consummation of the
transactions contemplated hereby.
(l) CONSENTS - All consents, waivers, authorizations and approvals of
all parties required for or necessary to the execution, delivery or
performance by SELLERS of this Agreement shall have been obtained.
(m) BOARD APPROVAL - this Agreement and the transaction contemplated
herein shall have been approved by the Board of Directors of the
PURCHASER and the Board of Directors and shareholders of X-Pert.
5.2 CONDITIONS PRECEDENT OF SELLERS - The obligations of SELLERS to
consummate the transactions contemplated by the Agreement are subject, at the
sole discretion of SELLERS, to the satisfaction of or waiver in writing by
SELLERS at or prior to Closing of the conditions set forth in subsection (a)
through (h) below. If any of the conditions set forth below are not satisfied or
waived by the Closing, SELLERS shall have the right, at their sole discretion,
to terminate this Agreement without liability. If SELLERS complete the Closing
as set forth herein, SELLERS shall be deemed to have waived any conditions
precedent not satisfied at Closing.
(a) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING - All representations
and warranties of PURCHASER contained in the Agreement shall be true
at and as of the Closing as if such representations and warranties
were made at and as of Closing and SELLERS (i) shall have received
all documents and certificates required by this Agreement to be
received at or prior to Closing, and (ii) the PURCHASER has
performed in all respects at or prior to Closing all of the
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covenants and agreements required to be performed by it at or prior
to the Closing in accordance with this Agreement.
(b) COMPLIANCE WITH AGREEMENT - On and as of the Closing, PURCHASER
shall have performed and complied in all material respects with all
agreements and conditions required by the Agreement to be performed
and complied with by them at or prior to the Closing Date.
(c) CERTIFICATE OF COUNSEL - SELLERS shall have received from the Vice
President and General Counsel of PURCHASER a certificate dated the
date of Closing, satisfactory to SELLERS, to the effect that (i)
PURCHASER is a corporation duly organized and validly existing and
in good standing under the laws of the State of Louisiana and has
full power and all necessary authority to carry out its business as
it is now being conducted, (ii) this agreement has been duly and
validly executed and delivered by PURCHASER and constitutes the
valid and binding agreements of PURCHASER, (iii) to the best of
counsel's knowledge, after due inquiry, all consents, waivers,
authorizations and approvals of firms, entities or governments and
agencies required for or necessary to the execution, delivery or
performance of this Agreement by PURCHASER have been obtained, and
this Agreement of PURCHASER will not violate any term or provision
of any charter, by-law, indenture, lien, mortgage, contract,
agreement, instrument, judgment or decree, order, statute, rule or
regulation applicable to PURCHASER or be in conflict with or
constitute a default any term of the Agreement, (iv) to the best of
counsel's knowledge, PURCHASER has not breached any of its
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representations, warranties or covenants in the Agreement or in any
agreement or document to be delivered at the Closing, (v) PURCHASER
is duly authorized to sell and convey the Pride STOCK and perform
its obligations under the Agreement, (vi) to the best of counsel's
knowledge, after due inquiry, no material suit, action or claim is
pending against PURCHASER that would require disclosure under its
year end filings with the Securities and Exchange Commission for the
calendar year 1994.
(d) INJUNCTIONS - No suit, action, or other proceeding at the Closing
shall be pending or threatened before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain
material damages or other relief in connection with Agreement or the
consummation of the transaction contemplated hereby.
(e) CONSENTS - All consents, waivers, authorizations and approvals of
all parties required for or necessary to the execution, delivery or
performance by PURCHASER of this Agreement shall have been obtained.
(f) LITIGATION - No action, suit, proceeding, investigation, inquiry or
request for information by any third person (including, but not
limited to, any Governmental Authority) shall have been instituted
or threatened against any of the parties hereto or any of their
respective affiliates that questions or reasonably could be expected
to lead to subsequent questioning of, the validity or legality of
this Agreement or the transactions contemplated hereby or thereby
which, if successful, (a) would materially or adversely affect the
right of SELLERS to consummate the transactions contemplated by this
Agreement or to continue to
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conduct the business and operations of PURCHASER substantially as
currently conducted, or (b) might involve material liability on the
part of the SELLERS, X-Pert or the Companies.
(g) SHAREHOLDER INFORMATION - PURCHASER shall have cooperated with
SELLERS and assisted SELLERS' accounting firm in reviewing the
Shareholder Information furnished to SELLERS.
(h) BOARD APPROVAL - this Agreement and the transaction contemplated
herein shall have been approved by the Board of Directors of the
PURCHASER and the Board of Directors and shareholders of X-Pert.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY SELLERS - SELLERS jointly and severally agree to
defend and indemnify PURCHASER and hold it harmless against and in respect of
any loss or damage incurred by PURCHASER as a result of:
(a) The breach of any of SELLERS' representations, warranties, covenants
or agreements set forth in this Agreement;
(b) Any claims against or liabilities of X-Pert or any Company arising
out of events occurring prior to the Effective Closing Date to the
extent not provided for in the Financial Statements, covered by
insurance proceeds or by the reserves available in that certain
Norwest Bank of Lea County account numbered 1155002873 which is
identified as part of Exhibit "I" hereto;
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(c) Current assets on the Financial Statements which are determined in
good faith by PURCHASER to be unrealizable subsequent to the
Closing; and
(d) Any environmental claim that is made with respect to a condition
that occurs all or partially prior to Closing, which has not been
caused by PURCHASER, or that has been identified or disclosed in
PURCHASER'S Environmental Survey if, after review of PURCHASER'S
Environmental Survey, SELLERS elect to proceed with Closing. SELLERS
have caused X-Pert to have prepared and to deliver to PURCHASER a
Phase I Environmental Survey of X-Pert's Yard, a copy of which is
attached hereto as Exhibit "X" ("X-Pert's Environmental Survey").
Any claims by Pride for indemnification pursuant to this Subsection
(d) shall be waived, released and forever discharged if not made
within three (3) years after Closing regardless of whether any such
claim may arise, accrue or be discovered after such three (3) year
period. The terms and provisions of this Agreement generally, and of
this Subsection (d) specifically, are intended to allocate the
responsibilities, liabilities and obligations of the Parties hereto
and their respective successors, transferees and assigns with regard
to environmental matters and shall control any allocation of such
responsibilities, liabilities and obligations pursuant to any
Environmental Law including, without limitation, Section 107(e)(1)
of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.ss.9607(e)(1).
(e) If PURCHASER demands to be indemnified and held harmless by SELLERS,
SELLERS shall have the exclusive right at SELLERS' expense, in
SELLERS'
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sole discretion, and with PURCHASER'S cooperation, to defend against
any such claim or liability asserted against PURCHASER for which
PURCHASER has claimed indemnification from SELLERS.
(f) If PURCHASER determines in good faith that current assets on the
Financial Statements are unrealizable, SELLERS shall have the
exclusive right at SELLERS' expense, in SELLERS' sole discretion,
and with PURCHASER'S cooperation to take any action to realize any
asset PURCHASER deems to be unrealizable.
(g) PURCHASER shall provide timely written notice to SELLERS of any
demand for indemnification from SELLERS pursuant to this Section
6.1. PURCHASER shall permit SELLERS the opportunity to fully
participate in, protest, dispute and defend against any written
demand, claim, dispute, or controversy concerning events occurring
prior to the Effective Closing Date which might result in a demand
for indemnification by PURCHASER against SELLERS under this Section
6.1, and SELLERS shall have the exclusive right at SELLERS' expense,
in SELLERS' sole discretion, and with PURCHASER'S cooperation to
take any action to resolve any such demand, claim, dispute or
controversy.
(h) In case of any such notice, the SELLERS may participate at their
expense in the defense, or if they so elect within a reasonable time
after receipt of such notice, to assume the defense of any such
action; and if they so elect to assume the defense, such defense
will be conducted by counsel chosen by them.
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6.2 INDEMNIFICATION BY PURCHASER - PURCHASER agrees to indemnify SELLERS
and hold them harmless against any loss or damage incurred by SELLERS as a
result of:
(a) Any breach of PURCHASER'S representations, warranties, covenants or
agreements set forth in the Agreement.
(b) Any claims against or liabilities of SELLERS, X-Pert or any Company
arising out of the operation and business of X-Pert, the Companies
and/or Pride occurring after the Closing or occurring in the
ordinary course of business between the Effective Closing Date and
Closing.
(c) Any environmental claim that is made with respect to a condition
that occurs all or partially after Closing which has not been caused
by X-Pert or the Companies or, if occurring all or partially prior
to Closing, is not made within three (3) years after Closing.
(d) SELLERS shall provide timely written notice to PURCHASER of any
demand for indemnification from PURCHASER pursuant to this Section
6.2. In case of any such notice, the PURCHASER may participate at
its expense in the defense, or if it so elects within a reasonable
time after receipt of such notice, to assume the defense of any such
action; and if it so elects to assume the defense, such defense will
be conducted by counsel chosen by it.
ARTICLE VII
TAX MATTERS
7.1 SELLERS' TAX INDEMNITY
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(a) Except to the extent that accruals for such Taxes are reflected on
the Financial Statements or except with respect to local sales taxes
incurred in the ordinary course of business for which no accruals
are provided, SELLERS shall indemnify PURCHASER, X-Pert and each
Company and hold them harmless from and against liability for (i)
Taxes initiated by the taxing authority attributable to X-Pert and
each Company for tax periods ending on or before the Effective
Closing Date, (ii) taxes due and payable by X-Pert and each Company
on or before the Effective Closing Date including Taxes for which an
extension of time to pay past the Closing has been received, and
(iii) taxes attributable to other members of an affiliated group as
defined in Code Section 1504(a) or any analogous provision under
foreign, state or local law to which any Company belonged on or
before the Closing attributable to any tax period occurring on or
before the Effective Closing Date.
(b) Payment by SELLERS of any amounts due under this Section 7.1 shall
be made within thirty (30) calendar days following SELLERS' receipt
of written notice from PURCHASER that payment of such amounts to the
appropriate taxing authority is due ("Tax Claim Notice"). In the
case of a tax that is contested in good faith by PURCHASER or
SELLERS, payment of the tax to the appropriate taxing authority will
not be considered to be due earlier than when a final determination
to such effect is made by the appropriate taxing authority or a
court and all appeals are finally decided. If SELLERS fail to make a
payment required by this Section 7.1 within thirty (30) days
following the latter of (i)
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PURCHASER'S receipt of a Tax Claim Notice, as aforesaid, or (ii)
SELLERS' receipt of written notice from PURCHASER verifying their
payment of such tax liability described in such Tax Claim Notice,
such payment shall bear interest from the date of SELLERS' receipt
of such Tax Claim Notice, at a rate for delinquent payments under
the Code.
ARTICLE VIII
NONCOMPETITION AGREEMENT
8.1 NONCOMPETITION AGREEMENT OF RAYMOND H. EAVES - Raymond H. Eaves
("Eaves") understands and agrees that it is a material condition of this
Agreement that he, as the President and majority shareholder of X-Pert, agree
that he will not compete with PURCHASER in the same or similar business all as
set forth in a Noncompetition Agreement in the form attached as Exhibit "M".
Eaves agrees to execute and deliver to PURCHASER such Noncompetition Agreement
at Closing in the consideration of a $50,000.00 payment to Eaves at Closing.
8.2 NONCOMPETITION AGREEMENT OF BILLY B. COOPER - Billy B. Cooper
("Cooper") understands and agrees that it is a material condition of this
Agreement that he, as a Vice President and shareholder of SELLERS, agree that he
will not compete with PURCHASER in the same or similar business, all as set
forth in a Noncompetition Agreement in the form attached as Exhibit "N." Cooper
agrees to execute and deliver to PURCHASER such Noncompetition Agreement at
Closing in the consideration of a $25,000.00 payment to Cooper at Closing.
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ARTICLE IX
MISCELLANEOUS
9.1 NOTICES - All communications or notices required or permitted to be
given under the Agreement shall be in writing and any communication or notice
shall be deemed to have been duly made if actually delivered or if it is mailed
by registered or certified mail, postage prepaid, and addressed to:
<TABLE>
<CAPTION>
SELLERS:
<S> <C> <C>
RAYMOND H. EAVES TEXAS AGENT: NEW MEXICO AGENT:
Address: 1905 Crescent Pl. Don R. Kidd, Esq. John M. Eaves, Esq.
Midland, Texas 79705 Sims, Kidd, Hubbert & Wilson Eaves, Bardacke & Baugh
1205 Broadway 6400 Uptown NE, #110-W
Lubbock, Texas 79401 Albuquerque, NM 87110
and
BILLY B. COOPER TEXAS AGENT: NEW MEXICO AGENT:
Address: 5303 Brazos Don R. Kidd, Esq. John M. Eaves, Esq.
Midland, Texas 79707 Sims, Kidd, Hubbert & Wilson Eaves, Bardacke & Baugh
1205 Broadway 6400 Uptown NE, #110W
Lubbock, Texas 79401 Albuquerque, NM 87110
With a copy to:
John M. Eaves
Eaves, Bardacke & Baugh, P.A.
6400 Uptown Blvd., N.E.
Suite 110-W City Centre
Albuquerque, New Mexico 87110
Fax (505)883-4406
PURCHASER:
PRIDE PETROLEUM SERVICES,
INC. TEXAS AGENT: NEW MEXICO AGENT:
1500 Citywest Blvd. C.T. Corporation C.T. Corporation
Suite 400 811 Dallas Ave. 217 W. Manhattan Ave.
Houston, Texas 77042 Suite 1500 Santa Fe, New Mexico 87501
ATTN: President Houston, Texas 77002
</TABLE>
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Notice is effective upon delivery. A Party may, by written notice, so delivered
to the other parties, change the address to which communications or written
notices shall be made under the Agreement.
9.2 MODIFICATIONS - The Agreement, including this Section, and including
the Exhibits hereto shall not be modified except by an instrument in writing
signed by all of the Parties.
9.3 GOVERNING LAW - This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Mexico. Venue for any
action hereunder shall be in U.S. District Court, Midland County, Texas, or, if
jurisdiction is not available in the U.S. District Court, Midland County, Texas,
then in the Texas state district court in Midland County, Texas.
9.4 ASSIGNMENT - The Agreement shall not be assigned by any Party prior to
the Closing without the written consent of the other party.
9.5 COUNTERPARTS - The Agreements may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
9.6 SEVERANCE - If any provision of this Agreement shall be held to be
illegal or unenforceable as applied to any person or circumstance, the remainder
of this Agreement and the application of such provision to every other personal
circumstance shall remain unaffected.
9.7 ENTIRE AGREEMENT - The Agreement, Note, Mortgage and Security
Agreement, and the Exhibits attached thereto, contain the entire agreement
between the Parties hereto with respect to the transaction contemplated herein
and all prior and/or contemporaneous understandings and agreements shall merge
herein. There are no additional terms, whether
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consistent or inconsistent, oral or written, which are intended to be part of
the Parties' understanding except as contained in the other documents to be
executed at Closing.
9.8 EXPENSES - Except as provided in the Note, Mortgage and Security
Agreement, the Parties shall bear their respective legal fees, costs and
expenses in connection with the transactions contemplated herein.
9.9 WAIVER - Except as provided in Articles 5.1 and 5.2, no waiver by any
party, whether express or implied, of any right under the provisions of the
Agreement shall constitute a waiver of such Party's rights at any other time. No
failure by an Party hereto to take an action with respect to breach of the
Agreement or default by another Party shall constitute a waiver of the former
Party's right to enforce any other breach or default of the Agreement.
9.10 SURVIVAL - The representations and warranties contained in the
Agreement except those satisfied or waived at Closing (including any
representations and warranties relating to the same contained in any certified
delivery pursuant hereto) shall survive the Closing.
The Parties hereto have executed this Agreement as of the date first above
written.
"SELLERS" "PURCHASER"
Pride Petroleum Services, Inc.
RAYMOND H. EAVES By: DEXTER POLK
Sr. Vice President
BILLY B. COOPER
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SCHEDULE OF EXHIBITS
EXHIBIT
-------
X-Pert and Companies and their stock
ownership structure A
Stock Ownership/Investments B
Corporate Documents C
Litigation and Claims D
Contracts E
Employees F
Property G
Changes H
Certain Information I
Insurance J
Transactions with SELLERS K
X-Pert Financial Statements L
Eaves Noncompetition Agreement M
Cooper Noncompetition Agreement N
Registration Rights Agreements O
Note P
Mortgage Q
Security Agreement R
Financing Statement S
Pride 10K, 10Q's, 8K and Annual Report T
Excluded Property U
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EXHIBIT
-------
Liens Perfected Prior to Closing V
PURCHASER'S Environmental Survey W
X-Pert's Environmental Survey, Phase I X
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