<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-13289
PRIDE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 76-0069030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5847 SAN FELIPE, SUITE 3300
HOUSTON, TEXAS 77057
(Address of principal executive offices) (Zip Code)
(713) 789-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [_]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practical date.
Outstanding as of May 10, 2000
Common Stock, no par value 65,173,546
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PRIDE INTERNATIONAL, INC.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of March 31, 2000
and December 31, 1999 2
Consolidated Statement of Operations for the three
months ended March 31, 2000 and 1999 3
Consolidated Statement of Cash Flows for the three
months ended March 31, 2000 and 1999 4
Notes to Unaudited Consolidated Financial Statements 5
Report of Independent Accountants 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 15
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRIDE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................................... $ 150,192 $ 111,627
Short-term investments....................................... 72,931 42,877
Trade receivables, net....................................... 126,086 129,311
Parts and supplies........................................... 38,880 36,295
Other current assets......................................... 64,355 77,380
---------- ----------
Total current assets........................................ 452,444 397,490
---------- ----------
PROPERTY AND EQUIPMENT, net................................... 1,919,179 1,893,680
---------- ----------
OTHER ASSETS
Investments in affiliates.................................... 52,012 51,012
Other assets, net............................................ 47,943 46,495
---------- ----------
Total other assets.......................................... 99,955 97,507
---------- ----------
$2,471,578 $2,388,677
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................................. $ 90,871 $ 106,391
Accrued expenses............................................. 102,105 96,593
Short-term borrowings........................................ 8,237 402
Current portion of long-term debt............................ 53,920 53,097
Current portion of long-term lease obligations............... 8,314 8,336
---------- ----------
Total current liabilities................................... 263,447 264,819
---------- ----------
OTHER LONG-TERM LIABILITIES................................... 59,273 51,163
LONG-TERM DEBT, net of current portion........................ 907,014 898,237
LONG-TERM LEASE OBLIGATIONS, net of current portion........... 33,682 34,176
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES............... 219,403 216,473
DEFERRED INCOME TAXES......................................... 43,647 48,064
MINORITY INTEREST............................................. 53,925 50,476
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, no par value; 100,000,000 shares authorized;
65,061,636 and 60,470,552 shares issued and 65,007,416
and 60,416,332 shares outstanding, respectively............. 1 1
Paid-in capital.............................................. 710,235 637,424
Treasury stock, at cost...................................... (191) (191)
Retained earnings............................................ 181,142 188,035
---------- ----------
Total shareholders' equity.................................. 891,187 825,269
---------- ----------
$2,471,578 $2,388,677
========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
2
<PAGE>
PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
2000 1999
-------- ----------
<S> <C> <C>
REVENUE................................................... $170,083 $153,819
OPERATING COSTS........................................... 114,505 114,112
RESTRUCTURING CHARGES..................................... - 12,817
-------- --------
Gross margin............................................. 55,578 26,890
DEPRECIATION AND AMORTIZATION............................. 27,948 23,392
SELLING, GENERAL AND ADMINISTRATIVE....................... 16,309 21,893
RESTRUCTURING CHARGES..................................... - 25,700
-------- --------
EARNINGS (LOSS) FROM OPERATIONS........................... 11,321 (44,095)
-------- --------
OTHER INCOME (EXPENSE)
Other income (expense), net.............................. (1,403) 563
Interest income.......................................... 2,147 1,244
Interest expense......................................... (19,005) (12,559)
-------- --------
Total other income (expense), net....................... (18,261) (10,752)
-------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES & MINORITY INTEREST... (6,940) (54,847)
INCOME TAX PROVISION (BENEFIT)............................ (3,107) (15,377)
MINORITY INTEREST......................................... 3,060 (13)
-------- --------
NET EARNINGS (LOSS)....................................... $ (6,893) $(39,457)
======== ========
NET EARNINGS (LOSS) PER SHARE:
Basic................................................... $(.11) $(.78)
Diluted................................................. $(.11) $(.78)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic................................................... 60,500 50,403
Diluted................................................. 60,500 50,403
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
3
<PAGE>
PRIDE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss)...................................................... $ (6,893) $(39,457)
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities -
Depreciation and amortization......................................... 27,948 23,392
Discount amortization on zero coupon convertible subordinated
debentures.......................................................... 2,930 2,796
Gain on sale of assets................................................ (1,183) (206)
Deferred tax provision (benefit)...................................... (4,417) (13,320)
Minority interest..................................................... 3,060 (13)
Changes in assets and liabilities, net of effects of acquisitions -
Trade receivables................................................... 3,225 26,024
Parts and supplies.................................................. (2,585) 137
Other current assets................................................ 13,025 4,967
Other assets........................................................ (1,531) 4,966
Accounts payable.................................................... (30,307) (53,576)
Accrued expenses.................................................... 5,901 25,193
Other liabilities................................................... 8,110 1,293
-------- --------
Net cash used in (provided by) operating activities.............. 17,283 (17,804)
-------- --------
INVESTING ACTIVITIES
Purchases of property and equipment...................................... (39,266) (55,747)
Proceeds from sales of property and equipment............................ 1,872 97,395
Investments in affiliates................................................ (1,000) (1,278)
Purchases of short-term investments...................................... (30,054) -
-------- --------
Net cash provided by (used in) investing activities.............. (68,448) 40,370
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of common stock................................... 72,000 -
Proceeds from exercise of stock options.................................. 811 261
Proceeds from debt borrowings............................................ 22,581 48,047
Reduction of debt........................................................ (5,662) (16,268)
Proceeds from minority interest owners................................... - 82
-------- --------
Net cash provided by financing activities........................ 89,730 32,122
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS.................................. 38,565 54,688
CASH AND CASH EQUIVALENTS, beginning of period............................. 111,627 86,540
-------- --------
CASH AND CASH EQUIVALENTS, end of period................................... $150,192 $141,228
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Capital expenditures in accounts payable................................. $ 14,787 $ 16,617
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
4
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. General
The unaudited consolidated financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and note disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, pursuant to such rules and
regulations. These unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
of Pride International, Inc. (the "Company") included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999. Certain
reclassifications have been made to prior year amounts to conform with the
current year presentation.
In the opinion of management, the unaudited consolidated financial
information included herein reflects all adjustments, consisting only of normal
recurring adjustments, which are necessary for a fair presentation of the
Company's financial position, results of operations and cash flows for the
interim periods presented. The results of operations for the interim periods
presented herein are not necessarily indicative of the results to be expected
for a full year or any other interim period.
2. Debt
Long-Term Debt
Long-term debt as of March 31, 2000 and December 31, 1999 consisted of the
following:
March 31, December 31,
2000 1999
-------- ------------
(in thousands)
9 3/8% Senior Notes due 2007................. $325,000 $325,000
10% Senior Notes due 2009.................... 200,000 200,000
Drillship loans.............................. 370,646 356,491
Limited-recourse collateralized term loans... 25,502 26,699
Senior convertible note payable.............. 21,250 21,250
Collateralized term loans.................... 16,488 18,771
Other notes payable.......................... 2,048 3,123
-------- --------
960,934 951,334
Current portion of long-term debt............ 53,920 53,097
-------- --------
Long-term debt, net of current portion....... $907,014 $898,237
======== ========
In connection with the construction of two new ultra-deepwater drillships,
the Pride Africa and the Pride Angola, the Company and the two joint venture
companies in which the Company has a 51% interest entered into financing
arrangements with a group of banks that provided $400 million of the drillships'
total cost of $470 million. The loans with respect to the Pride Africa are non-
recourse to the joint venture participants, and the loans with respect to the
Pride Angola will become non-recourse upon commencement of operations of the
drillship, which is expected to occur in May 2000. As of March 31, 2000, $176.0
million was outstanding under the non-recourse loans for the Pride Africa and
$194.6 million was outstanding under the loans for the Pride Angola.
5
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
3. Restructuring Charges
During the first quarter of 1999, the Company implemented a restructuring
plan to address the dramatic decline in drilling and workover activity that had
occurred since the third quarter of 1998. The restructuring consisted of
regional base consolidations, downsizing of administrative staffs and other
reductions in personnel and resulted in a pretax charge of $38.5 million for
current and future cash expenditures. Charges included the estimated costs of
involuntary employee termination benefits, including severance, wage
continuation, medical and other benefits, facility closures and other costs in
connection with the restructuring plan. The Company identified approximately
$34.7 million of such costs attributable to involuntary employee termination
benefits relating to 767 operational employees and 88 management and
administrative employees (all but two of which had been terminated as of March
31, 2000), $900,000 attributable to facility closures and $1.1 million of other
costs in connection with the restructuring. As of March 31, 2000, the Company
had paid $33.8 million of such costs, had accrued liabilities for $2.9 million
of such costs and had reversed during the fourth quarter of 1999 $1.8 million of
the estimated expenses charged in the first quarter of 1999.
4. Income Taxes
The Company's consolidated effective income tax rate for the three months
ended March 31, 2000 was approximately 31.1%, as compared to approximately 28.0%
for the corresponding period in 1999. The increase in the effective tax rate
for the three months ended March 31, 2000 resulted from net losses being subject
to taxation in higher effective tax rate jurisdictions.
5. Net Earnings Per Share
Basic net earnings per share has been computed based on the weighted
average number of shares of common stock outstanding during the applicable
period. As a result of net losses for the three months ended March 31, 2000 and
March 31, 1999, potential common stock equivalents of 7,327,834 and 13,226,840,
respectively, have been excluded from the calculation of diluted earnings (loss)
per share because their effect is antidilutive for those periods.
6. Acquisition and Sale of Common Equity
In April 2000, the Company's wholly owned subsidiary, Twin Oaks Financial
Ltd. ("Twin Oaks"), acquired all the outstanding capital stock of Servicios
Especiales San Antonio S.A. ("San Antonio") from Perez Companc S.A. The purchase
price was $61 million, consisting of $35 million in cash and a $26 million
promissory note of Twin Oaks guaranteed by San Antonio and payable in monthly
installments equal to the lesser of (1) 25% of the revenues of San Antonio for
the relevant month from services provided by it to Perez Companc and its
affiliates or (2) $722,222. Interest on the outstanding balance of the note is
payable quarterly at LIBOR plus 2.75%. Perez Companc is also entitled to four
"earn-out" payments of up to $3.0 million each at the end of each of the first
four anniversary dates of the closing if San Antonio's revenues from services
provided to Perez Companc and its affiliates exceed $40 million during the 12
calendar months ending immediately prior to the relevant anniversary date. In
addition to the consideration for San Antonio's capital stock, Twin Oaks
provided $17 million in cash at closing for the repayment of a portion of San
Antonio's outstanding debt. To finance the acquisition and to improve the
Company's overall liquidity, the Company capitalized Twin Oaks with 4.5 million
shares of the Company's common stock, and Twin Oaks, in turn, sold those shares
to a fund managed by First Reserve Corporation for $72 million cash. As a result
of this transaction, First Reserve funds currently own a total of 10.2 million
shares of the Company's common stock, or approximately 15.7% of the total shares
outstanding.
6
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7. Commitments and Contingencies
The Company is routinely involved in litigation incidental to its business,
which at times involves claims for significant monetary amounts, some of which
would not be covered by insurance. In the opinion of management, none of the
Company's existing litigation should have a material adverse effect on the
Company's financial position, results of operations or cash flows.
8. Other Events
The Company has a 26.4% equity interest in a joint venture company
organized to construct, own and operate four dynamically positioned, Amethyst-
class semisubmersible drillings rigs. Two of the rigs, the Pride Brazil and the
Pride Carlos Walter, have been constructed in South Korea and are now undergoing
equipment commissioning and testing. These two rigs are expected to be delivered
by the shipyard mid-year 2000, subject to satisfactory completion of testing and
resolution of outstanding construction contract matters. The other two rigs, the
Amethyst 4 and Amethyst 5, are under construction in the U.S.; however, in early
January 2000, the shipyard notified the joint venture that construction of the
rigs was being suspended because of alleged delays in receiving detailed
engineering work and the joint venture's previous rejection of the shipyard's
requests for extensions of the construction contract delivery dates. In March
2000, following a preliminary hearing, the Commercial Court in London ruled that
the rights and obligations of the parties to the construction contracts remain
in full force and effect and that the shipyard remains obligated to construct
and complete the Amethyst 4 and Amethyst 5. Recently, work was resumed on a
limited scale by the shipyard. The joint venture and the shipyard are currently
engaged in negotiations with a view toward reaching an agreement on an
acceptable basis for the full-scale resumption by the shipyard of construction
of those rigs. No prediction can be made as to whether the Amethyst 4 and the
Amethyst 5 will be completed or, if completed, when they will be delivered. If
the joint venture is unable to complete construction of the rigs, the Company's
ability to realize its equity investment in the joint venture could be impaired.
The joint venture was formed to build, own and operate its four rigs under
charter and service contracts with Petroleo Brasilerio S.A. ("Petrobras") having
initial terms of six to eight years. Petrobras has threatened to cancel those
contracts for late delivery of the rigs, and the joint venture has obtained a
preliminary injunction in a Brazilian court against that cancellation. Based on
Petrobras' announced deepwater drilling program and related rig requirements,
the Company believes that Petrobras likely will employ all of the joint
venture's rigs upon completion; however, there can be no assurance that any of
the four rigs will be chartered to Petrobras or to any other customer.
If Petrobras were to successfully cancel the charters for the rigs, such
cancellation would constitute an event of default under the joint venture
company's financing arrangements that are providing substantially all of the
financing for construction of the rigs. The Company has provided the lenders
financing construction of the Pride Brazil and Pride Carlos Walter with certain
commitments and guarantees, the principal one being a guarantee for repayment of
up to $32.4 million of loans aggregating up to $340 million. In November 1999,
the joint venture issued $53 million of senior secured notes, which are
partially secured by a Company guarantee of up to $30 million. The $32.4
million Company guarantee of borrowings under the credit facilities is separate
from, and in addition to, the Company's guarantee of up to $30 million of the
venture's senior secured notes. The Company's other commitments and guarantees
to the lenders under the credit facilities for the Pride Brazil and Pride Carlos
Walter include (a) a guarantee of the cost overruns of up to an aggregate of $6
million; (b) a guarantee of the cost of the two rigs in excess of related refund
guarantees supporting their construction contracts and (c) guarantees relating
to the performance of its subsidiaries and affiliates under their management
agreements relating to the rigs.
7
<PAGE>
PRIDE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
If Petrobras accepts delivery of the joint venture's rigs under the
existing charters, it will be entitled to impose late delivery penalties which,
in the case of the Pride Brazil and Pride Carlos Walter, could be as much as
$17.2 million based on the dates those rigs are currently expected to commence
operations under their respective Petrobras charters. In connection with the
credit facilities for the Amethyst 4 and Amethyst 5, the Company has guaranteed
payment of up to $20.5 million of late delivery penalties that are accruing and
may be payable under the charters relating to those two rigs. If the Amethyst 4
and Amethyst 5 are completed and delivered to Petrobras under their existing
charters, the maximum late delivery penalties Petrobras would be entitled to
impose for those rigs would be $56.6 million. The Company has no direct or
indirect obligation to pay more than $20.5 million of late delivery penalties
for any of the Amethyst rigs but may be called upon to advance its share if the
venture does not have or is unable to obtain funds to pay those penalties or if
Petrobras refuses to allow such penalties to be paid or charged against charter
payments over the terms of the charters (as it has done in the past with
offshore drilling rigs it has chartered from other firms).
9. Segment Information
The following table sets forth selected consolidated financial information
of the Company by operating segment for the periods indicated (operating costs
include restructuring costs):
Three Months Ended March 31,
--------------------------------
2000 1999
-------------- --------------
(in millions, except percentages)
Revenue:
United States offshore............. $ 22.0 12.9% $ 28.4 18.5%
International offshore............. 74.4 43.8 58.2 37.8
International land................. 73.7 43.3 67.2 43.7
------ ----- ------ -----
Total revenue..................... $170.1 100.0% $153.8 100.0%
------ ----- ------ -----
Operating Costs:
United States offshore............. $ 17.6 15.4% $ 22.4 17.7%
International offshore............. 40.1 35.0 41.5 32.7
International land................. 56.8 49.6 63.0 49.6
------ ----- ------ -----
Total operating costs............. $114.5 100.0% $126.9 100.0%
------ ----- ------ -----
Gross Margin:
United States offshore............. $ 4.4 7.9% $ 6.0 22.3%
International offshore............. 34.3 61.7 16.7 62.1
International land................. 16.9 30.4 4.2 15.6
------ ----- ------ -----
Total gross margin................ $ 55.6 100.0% $ 26.9 100.0%
====== ===== ====== =====
8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Pride International, Inc.:
We have reviewed the accompanying consolidated balance sheet of Pride
International, Inc. as of March 31, 2000, and the related consolidated statement
of operations for each of the three-month periods ended March 31, 2000 and 1999,
and the related consolidated statement of cash flows for the three-month periods
ended March 31, 2000 and 1999. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated interim financial statements for
them to be in conformity with generally accepted accounting principles.
We have previously audited in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet as of
December 31, 1999, and the related consolidated statements of operations,
changes in shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated March 30, 2000, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet as of
December 31, 1999 is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
PricewaterhouseCoopers LLP
Houston, Texas
May 12, 2000
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
You should read the following discussion and analysis in conjunction with
our unaudited consolidated financial statements as of March 31, 2000 and for the
three-month period ended March 31, 2000 and 1999 included elsewhere herein, and
with our Annual Report on Form 10-K for the year ended December 31, 1999. The
following information contains forward-looking statements. Please read "Forward-
Looking Statements" for a discussion of limitations inherent in such statements.
General
Pride is a leading international provider of contract drilling and related
services, operating both offshore and on land. Currently, we operate a global
fleet of 291 rigs, including two ultra-deepwater drillships, three
semisubmersible rigs, 18 jackup rigs, six tender-assisted rigs, three barge
rigs, 21 offshore platform rigs and 238 land-based drilling and workover rigs.
We operate in more than 20 countries and marine provinces. The significant
diversity of our rig fleet and areas of operations enables us to provide a broad
range of services and to take advantage of market upturns while reducing our
exposure to sharp downturns in any particular market sector or geographic
region.
Most recently, we have focused on increasing the size of our fleet capable
of drilling in deeper waters. We have a 51% ownership interest in joint ventures
that own and operate two ultra-deepwater drillships, the Pride Africa and the
Pride Angola, and we have a 26.4% interest in a joint venture engaged in the
construction of four fourth-generation Amethyst-class semisubmersible rigs.
Outlook
With market conditions improving as a result of the increases in oil
and gas prices since mid-1999, management anticipates continued increases in
utilization and dayrates through the remainder of 2000. If commodity prices
remain near their current levels, we expect that our financial results will
improve throughout the year. However, due to the volatility of oil and gas
prices, which affect the demand for our drilling services, we cannot predict
with any certainty whether these improving conditions will continue to affect
our financial results positively or whether commodity prices, and demand for our
services will decline substantially.
The depressed industry conditions over the latter part of 1998 and in
1999 led us to reduce our workforce significantly. In the first quarter of
1999, we recorded charges of $28.9 million, net of income taxes, for current and
future cash expenditures related to a company-wide restructuring plan
implemented to address the dramatic decline in drilling and workover activity.
We expect the restructuring to result in annual cost savings in excess of $25
million.
10
<PAGE>
Results of Operations
We have presented in the following table selected consolidated financial
information by operating segment for the periods indicated. Operating costs for
the three month period ended March 31, 1999 include restructuring charges.
Three Months Ended March 31,
--------------------------------
2000 1999
-------------- --------------
(in millions, except percentages)
Revenue:
United States offshore............. $ 22.0 12.9% $ 28.4 18.5%
International offshore............. 74.4 43.8 58.2 37.8
International land................. 73.7 43.3 67.2 43.7
------ ----- ------ -----
Total revenue..................... $170.1 100.0% $153.8 100.0%
------ ----- ------ -----
Operating Costs:
United States offshore............. $ 17.6 15.4% $ 22.4 17.7%
International offshore............. 40.1 35.0 41.5 32.7
International land................. 56.8 49.6 63.0 49.6
------ ----- ------ -----
Total operating costs.............. $114.5 100.0% $126.9 100.0%
------ ----- ------ -----
Gross Margin:
United States offshore............. $ 4.4 7.9% $ 6.0 22.3%
International offshore............. 34.3 61.7 16.7 62.1
International land................. 16.9 30.4 4.2 15.6
------ ----- ------ -----
Total gross margin................ $ 55.6 100.0% $ 26.9 100.0%
====== ===== ====== =====
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31,
1999.
Revenue. Revenue for the three months ended March 31, 2000 increased
$16.3 million, or 10.6%, as compared to the corresponding period in 1999. Of
this increase, $6.5 million resulted from moderately increased utilization of
our international land-based rigs, primarily in Argentina, Colombia and
Venezuela. Revenue from our international offshore operations increased by
$16.2 million due to higher utilization for our international offshore rigs and
business interruption insurance receipts relating to the Pride Africa.
Conversely, revenue from our United States offshore operations decreased $6.4
million due to lower dayrates and utilization of our Gulf of Mexico jackup and
platform rigs.
Operating Costs. Operating costs for the three months ended March 31, 2000
decreased $12.4 million, or 9.8%, as compared to the corresponding period in
1999. Operating costs attributable to our international land-based and
international offshore operations decreased $6.2 million and $1.4 million,
respectively, attributable to the restructuring charges incurred in the first
quarter 1999 partially offset by higher utilization and dayrates. Furthermore,
the United States offshore operations expense decreased $4.8 million due to
decreased utilization.
Depreciation and Amortization. Depreciation and amortization for the three
months ended March 31, 2000 increased $4.6 million, or 19.5%, as compared to the
corresponding period in 1999, due to the expansion of our deepwater fleet.
Selling, General and Administrative. Selling, general and administrative
expenses for the three months ended March 31, 2000 decreased $31.3 million, or
65.7%, as compared to the corresponding period in 1999, as a result of $25.7
million of restructuring charges relating to the base consolidations and down-
sizing of administrative staff undertaken in the first quarter of 1999 and the
resulting savings in overhead costs.
11
<PAGE>
Other Income (Expense). Other expense for the three months ended March 31,
2000 increased $7.5 million, or 70.1%, as compared to the corresponding period
in 1999. Of this increase, $6.4 million related to increased interest expense
due to increased borrowings to fund drillship construction and other expansion
projects as well as to enhance liquidity. Interest income increased by $0.9
million due to an increase in cash available for investment. Other income
(expense) declined by $2.0 million, primarily due to losses recognized on our
foreign currency exchange contracts.
Income Tax Provision. Our consolidated effective income tax rate for the
three months ended March 31, 2000 was approximately 31.1%, as compared to
approximately 28.0% for the corresponding period in 1999. The increase in the
effective income tax rate for the three months ended March 31, 2000 resulted
from the net losses in the current period being in higher effective tax rate
jurisdictions.
Liquidity and Capital Resources
We had working capital of $189.0 million and $132.7 million as of March 31,
2000 and December 31, 1999, respectively. Our current ratio, the ratio of
current assets to current liabilities, was 1.7 as of March 31, 2000 and 1.5 as
of December 31, 1999. The increases in the amount of working capital and the
current ratio were attributable to the net increase in cash and cash equivalents
from our capital transactions in 2000, described below.
During the three months ended March 31, 2000, our capital expenditures
consisted primarily of approximately $3.8 million related to the construction of
the Pride Africa and the Pride Angola, approximately $6.3 million for the
acquisition of a 3,000 horsepower land rig, approximately $3.4 million
attributable to certain other construction and refurbishment projects begun in
1998 and 1999 as well as approximately $5.1 million of other enhancement and
sustaining capital expenditures. We expect to spend approximately $30 to 35
million during the remainder of 2000 for enhancements and sustaining capital
expenditures.
At December 31, 1999 we had a senior revolving bank credit facility under
which up to $50 million (including $30 million for letters of credit) was
available. The credit facility was terminated in March 2000. We currently have
senior bank credit facilities with foreign banks that provide aggregate
availability of up to $76.8 million. The credit facilities terminate between
March 2001 and December 2004. Borrowings under each of the credit facilities
bear interest at variable rates based on LIBOR plus a spread ranging from 0.35%
to 1.25%. As of March 31, 2000, there were no advances outstanding under these
credit facilities.
We have a senior secured credit facility with a U.S. bank under which up to
$25 million of letters of credit may be issued. Outstanding letters of credit
issued under this credit facility are secured by our cash and cash equivalents
maintained at such bank. The letter of credit facility expires in March 2003.
As of March 31, 2000, there were $12.6 million of letters of credit issued under
this credit facility.
In connection with the construction of the Pride Africa and the Pride
Angola, we and the two joint venture companies in which we have a 51% interest
entered into financing arrangements with a group of banks that provided $400
million of the drillships' total construction cost of $470 million. The loans
with respect to the Pride Africa became non-recourse to the joint venture
participants in June 1999, and the loans with respect to the Pride Angola will
become non-recourse upon the acceptance of the rig by the customer, which is
expected to occur in May 2000. As of March 31, 2000, $176.0 million was
outstanding under the non-recourse loan for the Pride Africa and $194.6 million
was outstanding under the construction period loans for the Pride Angola.
Pride has a 26.4% equity interest in a joint venture company organized to
construct, own and operate four dynamically positioned, Amethyst-class
semisubmersible drilling rigs. Two of the rigs, the Pride Brazil and the Pride
Carlos Walter, have been constructed in South Korea and are now undergoing
equipment commissioning and testing. These
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two rigs are expected to be delivered by the shipyard mid-year 2000, subject to
satisfactory completion of testing and resolution of outstanding construction
contract matters.
The other two rigs, the Amethyst 4 and Amethyst 5, are under construction
in the U.S.; however, in early January 2000, the shipyard notified the joint
venture that construction of the rigs was being suspended because of alleged
delays in receiving detailed engineering work and the joint venture's previous
rejection of the shipyard's requests for extensions of the construction contract
delivery dates. In March 2000, following a preliminary hearing, the Commercial
Court in London ruled that the rights and obligations of the parties to the
construction contracts remain in full force and effect and that the shipyard
remains obligated to construct and complete the Amethyst 4 and Amethyst 5.
Recently, work was resumed on a limited scale by the shipyard. The joint venture
and the shipyard are currently engaged in negotiations with a view toward
reaching an agreement on an acceptable basis for the full-scale resumption by
the shipyard of construction of those rigs. No prediction can be made as to
whether the Amethyst 4 and the Amethyst 5 will be completed or, if completed,
when they will be delivered. If the joint venture is unable to complete
construction of the rigs, our ability to realize our equity investment in the
joint venture could be impaired. The joint venture was formed to build, own and
operate its four rigs under charter and service contracts with Petrobras having
initial terms of six to eight years. Petrobras has threatened to cancel those
contracts for late delivery of the rigs, and the joint venture has obtained a
preliminary injunction in a Brazilian court against that cancellation. Based on
Petrobras' announced deepwater drilling program and related rig requirements, we
believe that Petrobras likely will employ all of the joint venture's rigs upon
completion; however, there can be no assurance that any of the four rigs will be
chartered to Petrobras or to any other customer.
If Petrobras were to successfully cancel the charters for the rigs, such
cancellation would constitute an event of default under the joint venture
company's financing arrangements that are providing substantially all of the
financing for construction of the rigs. Pride has provided the lenders
financing construction of the Pride Brazil and Pride Carlos Walter with certain
commitments and guarantees, the principal one being a guarantee for repayment of
up to $32.4 million of loans aggregating up to $340 million. In November 1999,
the joint venture issued $53 million of senior secured notes, which are
partially secured by a Pride guarantee of up to $30 million. The $32.4 million
Pride guarantee of borrowings under the credit facilities is separate from, and
in addition to, Pride's guarantee of up to $30 million of the venture's senior
secured notes. Pride's other commitments and guarantees to the lenders under
the credit facilities for the Pride Brazil and Pride Carlos Walter include (a) a
guarantee of the cost overruns of up to an aggregate of $6 million; (b) a
guarantee of the cost of the two rigs in excess of related refund guarantees
supporting their construction contracts and (c) guarantees relating to the
performance of our subsidiaries and affiliates under their management agreements
relating to the rigs.
If Petrobras accepts delivery of the joint venture's rigs under the
existing charters, it will be entitled to impose late delivery penalties which,
in the case of the Pride Brazil and Pride Carlos Walter, could be as much as
$17.2 million based on the dates those rigs are currently expected to commence
operations under their respective Petrobras charters. In connection with the
credit facilities for the Amethyst 4 and Amethyst 5, Pride has guaranteed
payment of up to $20.5 million of late delivery penalties that are accruing and
may be payable under the charters relating to those two rigs. If the Amethyst 4
and Amethyst 5 are completed and delivered to Petrobras under their existing
charters, the maximum late delivery penalties Petrobras would be entitled to
impose for those rigs would be $56.6 million. Pride has no direct or indirect
obligation to pay more than $20.5 million of late delivery penalties for any of
the Amethyst rigs but may be called upon to advance its share if the venture
does not have or is unable to obtain funds to pay those penalties or if
Petrobras refuses to allow such penalties to be paid or charged against charter
payments over the terms of the charters, as it has done in the past with
offshore drilling rigs it has chartered from other firms.
In April 2000, our wholly owned subsidiary, Twin Oaks Financial
Ltd., acquired all the outstanding capital stock of Servicios Especiales San
Antonio S.A. from Perez Companc S.A. The purchase price was $61 million,
consisting of $35 million in cash and a $26 million promissory note of Twin Oaks
guaranteed by San Antonio and payable in monthly installments equal to the
lesser of (1) 25% of the revenues of San Antonio for the relevant month from
services provided by it to Perez Companc and its affiliates or (2) $722,222.
Interest on the outstanding balance of the note is payable quarterly at LIBOR
plus 2.75%. Perez Companc is also entitled to four "earn-out" payments of up to
$3.0 million each at the end of each of the first four anniversary dates of the
closing if San Antonio's revenues from services provided to Perez Companc and
its affiliates exceed $40 million during the 12 calendar months ending
immediately prior to the relevant anniversary date. In addition to the
consideration for San Antonio's capital stock, Twin Oaks provided $17 million in
cash at closing for the repayment of
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a portion of San Antonio's outstanding debt. To finance the acquisition and to
improve our overall liquidity, we capitalized Twin Oaks with 4.5 million shares
of our common stock, and Twin Oaks, in turn, sold those shares to a fund managed
by First Reserve for $72 million cash. As a result of this transaction, First
Reserve funds currently own a total of 10.2 million shares of our common stock,
or approximately 15.7% of our total shares outstanding.
At March 31, 2000, we had approximately $1.2 billion of debt and capital
lease obligations. We do not expect that our level of total indebtedness will
have a material adverse impact on our financial position, results of operations
or liquidity in future periods.
Management believes that the cash and cash equivalents on hand, together
with the cash generated from our operations, the remaining net proceeds from the
March 2000 First Reserve transaction and borrowings under our credit facilities,
will be adequate to fund normal ongoing capital expenditures, working capital
and debt service requirements for the foreseeable future.
From time to time, we may review possible expansion and acquisition
opportunities. The timing, size or success of any acquisition effort and the
associated potential capital commitments are unpredictable. From time to time,
we have one or more bids outstanding for contracts that could require
significant capital expenditures and mobilization costs. We expect to fund
acquisitions and project opportunities primarily through a combination of
working capital, cash flow from operations and full or limited recourse debt or
equity financing.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. All statements, other than statements
of historical facts, included in this Quarterly Report on Form 10-Q that address
activities, events or developments that we expect, project, believe or
anticipate will or may occur in the future are forward-looking statements. These
include such matters as:
. future capital expenditures and investments in the construction, acquisition
and refurbishment of rigs (including the amount and nature thereof and the
timing of completion thereof)
. repayment of debt
. expansion and other development trends in the contract drilling industry
. business strategies
. expansion and growth of operations
. utilization rates and contract rates for rigs and
. future operating results and financial condition
We have based these statements on assumptions and analyses made by our
management in light of its experience and its perception of historical trends,
current conditions, expected future developments and other factors it believes
are appropriate in the circumstances. These statements are subject to a number
of assumptions, risks and uncertainties, including:
. general economic and business conditions
. prices of oil and gas and industry expectations about future prices
. foreign exchange controls and currency fluctuations
. the business opportunities (or lack thereof) that may be presented to and
pursued by us and
. changes in laws or regulations
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Most of these factors are beyond our control. We caution you that forward
looking-statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected in these
statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks arising from the use of financial
instruments in the ordinary course of business. These risks arise primarily as
a result of potential changes in the fair market value of financial instruments
that would result from adverse fluctuation in interest rates and foreign
currency exchange rates as discussed below. We entered into these instruments
other than for trading purposes.
Interest Rate Risk. We are exposed to interest rate risk through our
convertible and fixed rate long-term debt. The fair market value of fixed rate
debt will increase as prevailing interest rates decrease. The fair value of our
long-term debt is estimated based on quoted market prices where applicable, or
based on the present value of expected cash flows relating to the debt
discounted at rates currently available to us for long-term borrowings with
similar terms and maturities. The estimated fair value of our long-term debt as
of March 31, 2000 was approximately $1.13 billion, which is less that its
carrying value of $1.16 billion. A hypothetical 10% decrease in interest rates
would increase the fair market value of our long-term debt by approximately $48
million.
We enter into interest rate swap and cap agreements to manage our exposure
to interest rate risk. As of March 31, 2000, we held interest rate swap
agreements covering $418 million, fixing our interest payments on related debt
at 7.30%. The weighted average interest rate incurred on the related debt in
the first quarter of 2000 excluding the swap agreements was 6.91%. As of March
31, 2000, we held interest rate cap agreements covering $11 million, capping our
interest rate at 7.00%. The interest incurred on related capital lease
obligations in the first quarter of 2000 was 7.77%. The fair market value of our
interest rate swap and cap agreements is determined based upon discounted
expected future cash flows using the market interest rate at the balance sheet
date. The estimated fair value of our interest rate swap and cap agreements
as of March 31, 2000 was a gain of approximately $3.2 million. A hypothetical
10% decrease in interest rates would decrease the fair market value of our
interest rate swap and cap agreements by approximately $8.5 million. The
change in the cash flows from the interest rate swap and cap agreements would
be offset by a corresponding change in interest expense on the related debt.
Foreign Currency Exchange Rate Risk. We operate in a number of
international areas and are involved in transactions denominated in currencies
other than U.S. dollars, which expose us to foreign exchange rate risk. We
utilize forward exchange contracts, local currency borrowings and the payment
structure of customer contracts to selectively mitigate our exposure to exchange
rate fluctuations in connection with monetary assets, liabilities and cash flows
denominated in certain foreign currencies. A hypothetical 10% increase in the
U.S. dollar relative to the value of all foreign currencies as of March 31, 2000
would result in an approximate $4.8 million decrease in the fair value of our
forward exchange contracts. We do not hold or issue forward exchange contracts
or other derivative financial instruments for speculative purposes.
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The information set forth under the caption "Liquidity and Capital Resources"
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Item 2 of this Quarterly Report on Form 10-Q regarding the
issuance on March 31, 2000 of 4,500,000 shares of our common stock to a fund
managed by First Reserve Corporation for $72,000,000 in cash is incorporated by
reference in response to this item. In our opinion, this issuance is exempt
from registration under the Securities Act of 1933 by virtue of Section 4(2)
thereof in that such transaction did not involve any public offering.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits*
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.1 -- Securities Purchase Agreement, dated as of March 31, 2000, among
Pride International, Inc. (the "Company"), Twin Oaks Financial
Ltd. and First Reserve Fund VIII, L.P.
10.2 -- First Amended and Restated Shareholders Agreement, dated as of
March 31, 2000, among the Company, First Reserve Fund VIII, L.P.
and First Reserve Fund VII, L.P.
15.1 -- Awareness Letter of PricewaterhouseCoopers LLP
27 -- Financial Data Schedule
______________
* During the three months ended March 31, 2000 the Company entered into debt
instruments under which the total amount of securities authorized does not
exceed 10% of the total assets of the Company and its subsidiaries on a
consolidated basis. Pursuant to paragraph 4(v) of Item 601(b) of
Regulation S-K, the Company agrees to furnish a copy of such instruments to
the Securities and Exchange Commission upon request.
(b) Reports on Form 8-K
The Company has filed no reports on Form 8-K during the three months ended
March 31, 2000.
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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, THEREUNTO DULY AUTHORIZED.
PRIDE INTERNATIONAL, INC.
By: /s/ EARL W. MCNIEL
---------------------------------------
(Earl W. McNiel)
Vice President and Chief
Financial Officer
Date: May 15, 2000
17
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Exhibit 10.1
EXECUTION VERSION
================================================================================
SECURITIES PURCHASE AGREEMENT
DATED AS OF MARCH 31, 2000
BY AND AMONG
PRIDE INTERNATIONAL, INC.,
FIRST RESERVE FUND VIII, L.P.
AND
TWIN OAKS FINANCIAL LTD.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS.................................................... 1
"Affiliate".................................................... 1
"Agreement".................................................... 1
"Annual Report"................................................ 1
"Average Market Price"......................................... 1
"Beneficial Owner"............................................. 1
"Business Combination Date".................................... 2
"Call Notice".................................................. 2
"Call Right"................................................... 2
"Closing"...................................................... 2
"Closing Date"................................................. 2
"Commission"................................................... 2
"Common Stock"................................................. 3
"Company"...................................................... 3
"Company Indemnified Party".................................... 3
"Continuing Directors"......................................... 3
"Contracts".................................................... 3
"Costs"........................................................ 3
"Dispute"...................................................... 3
"Environmental Claims"......................................... 3
"Environmental Laws"........................................... 3
"Exchange Act"................................................. 3
"First Reserve Group".......................................... 3
"GAAP"......................................................... 3
"Group"........................................................ 3
"Governmental Authority"....................................... 3
"Incorporated Documents"....................................... 3
"Indemnified Party"............................................ 3
"Indemnifying Party"........................................... 3
"Intermediary"................................................. 3
"Liens"........................................................ 4
"Loss" and "Losses"............................................ 4
"Material Adverse Change"...................................... 4
"Material Adverse Effect"...................................... 4
"Materials of Environmental Concern"........................... 4
"Own Company Securities"....................................... 4
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"Permits"...................................................... 4
"Person"....................................................... 4
"Prospectus"................................................... 4
"Purchase Price"............................................... 4
"Purchaser".................................................... 4
"Purchaser Indemnified Party".................................. 4
"Put Date"..................................................... 5
"Put Notice"................................................... 5
"Put Payment".................................................. 5
"Put Right".................................................... 5
"Registration Statement"....................................... 5
"SEC Reports".................................................. 5
"Securities Act"............................................... 5
"Sellers"...................................................... 5
"Shareholder Approval Date".................................... 5
"Shareholders Agreement"....................................... 5
"Shares"....................................................... 5
"Subsidiary"................................................... 5
"Trading Date"................................................. 5
"Transactions"................................................. 5
"Twin"......................................................... 6
Section 1.2 OTHER DEFINITIONS.............................................. 6
Section 1.3 CONSTRUCTION................................................... 6
ARTICLE II
ISSUANCE AND PURCHASE OF COMMON STOCK
Section 2.1 ISSUANCE AND PURCHASE OF COMMON STOCK.......................... 6
Section 2.2 THE CLOSING.................................................... 6
Section 2.3 PUT RIGHTS..................................................... 7
Section 2.4 CALL RIGHTS.................................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 ORGANIZATION................................................... 8
Section 3.2 CAPITALIZATION................................................. 8
Section 3.3 POWER AND AUTHORITY; ENFORCEABILITY............................ 9
Section 3.4 CONSENTS AND APPROVALS......................................... 9
Section 3.5 COMMISSION REPORTS............................................. 10
Section 3.7 LITIGATION..................................................... 11
Section 3.8 INTELLECTUAL PROPERTY.......................................... 12
Section 3.9 PERMITS........................................................ 12
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Section 3.10 NO ADVERSE CHANGE; ABSENCE OF LIABILITIES...................... 12
Section 3.11 TAX RETURNS.................................................... 12
Section 3.12 PROPERTIES AND CONTRACTS....................................... 12
Section 3.13 ENVIRONMENTAL MATTERS.......................................... 13
Section 3.14 LABOR MATTERS.................................................. 13
Section 3.15 INSURANCE...................................................... 13
Section 3.16 NO INVESTMENT COMPANY.......................................... 14
Section 3.17 REGISTRATION RIGHTS; PUT RIGHTS................................ 14
Section 3.18 NO INTEGRATION................................................. 14
Section 3.19 NO REGISTRATION................................................ 14
Section 3.20 BROKER'S OR FINDER'S COMMISSIONS............................... 14
Section 3.21 USE OF PROCEEDS; MARGIN REGULATIONS............................ 14
Section 3.22 NO ILLEGAL OR IMPROPER TRANSACTIONS............................ 14
Section 3.23 COMPLETENESS OF INFORMATION; ABSENCE OF MISSTATEMENTS
AND OMISSIONS.................................................. 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.1 AUTHORITY...................................................... 16
Section 4.2 CONSENTS AND APPROVAL; NO VIOLATION............................ 16
Section 4.3 SECURITIES LAWS................................................ 16
Section 4.4 BROKER'S OR FINDER'S COMMISSIONS............................... 17
ARTICLE V
COVENANTS
Section 5.1 USE OF PROCEEDS................................................ 17
Section 5.2 CORPORATE EXISTENCE............................................ 17
Section 5.3 COMPLIANCE WITH LAWS........................................... 17
Section 5.4 MAINTENANCE OF PROPERTIES AND PERMITS.......................... 17
Section 5.5 ACCESS TO INFORMATION.......................................... 18
Section 5.6 SEC FILINGS.................................................... 18
Section 5.7 APPROPRIATE ACTION; CONSENTS; FILINGS.......................... 18
Section 5.8 CONDUCT OF BUSINESS PENDING CLOSING............................ 19
Section 5.9 ............................................................... 19
Section 5.10 RECOMMENDATION TO SHAREHOLDERS................................. 20
Section 5.11 NO SENIOR PUT RIGHTS........................................... 20
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ARTICLE VI
PURCHASER'S CONDITIONS
Section 6.1 REPRESENTATIONS AND COVENANTS.................................. 20
Section 6.2 SHAREHOLDERS AGREEMENT......................................... 20
Section 6.3 COMPANY CAUSED MATERIAL ADVERSE CHANGE......................... 20
Section 6.4 REQUIRED CONSENTS, APPROVALS AND FILINGS....................... 21
Section 6.5 NEW YORK STOCK EXCHANGE APPROVAL............................... 21
Section 6.6 PAYMENTS....................................................... 21
Section 6.7 OPINIONS OF COUNSEL............................................ 21
Section 6.8 ADDITIONAL DOCUMENTS........................................... 21
ARTICLE VII
COMPANY'S CONDITIONS
Section 7.1 REPRESENTATIONS AND COVENANTS.................................. 21
Section 7.2 SHAREHOLDERS AGREEMENT......................................... 21
Section 7.3 REQUIRED CONSENTS AND APPROVALS................................ 21
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION.................................................... 22
Section 8.2 SURVIVAL; FAILURE TO CLOSE..................................... 22
ARTICLE IX
OTHER PROVISIONS
Section 9.1 BROKERAGE FEES AND COMMISSIONS................................. 22
Section 9.2 PUBLIC ANNOUNCEMENTS........................................... 22
ARTICLE X
INDEMNIFICATION
Section 10.1 INDEMNIFICATION BY THE COMPANY................................. 23
Section 10.2 INDEMNIFICATION BY THE PURCHASER............................... 23
Section 10.3 INDEMNIFICATION PROCEDURES..................................... 23
Section 10.4 TERMINATION.................................................... 24
ARTICLE XI
MISCELLANEOUS
Section 11.1 DISPUTE RESOLUTION............................................. 24
Section 11.2 ENTIRE AGREEMENT............................................... 27
Section 11.3 NOTICES........................................................ 27
Section 11.4 GOVERNING LAW.................................................. 28
Section 11.5 SEVERABILITY................................................... 28
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Section 11.6 EXPENSES....................................................... 29
Section 11.7 DESCRIPTIVE HEADINGS........................................... 29
Section 11.8 COUNTERPARTS................................................... 29
Section 11.9 ASSIGNMENT..................................................... 29
Section 11.10 AMENDMENTS; WAIVERS............................................ 29
EXHIBIT A
FIRST AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
EXHIBIT B
FORM OF OPINION OF BAKER BOTTS L.L.P.
EXHIBIT C
FORM OF OPINION OF SHER GARNER CAHILL
RICHTER KLEIN MCALISTER & HILBERT, L.L.P.
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement ("Agreement") is made and entered into
as of the 31st of March, 2000, by and among Pride International, Inc., a
Louisiana corporation ( the "Company"), Twin Oaks Financial Ltd., a British
Virgin Islands corporation and a wholly-owned subsidiary of the Company ("Twin";
and together with the Company, the "Sellers"), and First Reserve Fund VIII,
L.P., a Delaware limited partnership (the "Purchaser").
WHEREAS, subject to the terms and conditions of this Agreement, the Company
is desirous of receiving additional investment, and the Purchaser is desirous of
making an additional investment in the Company;
NOW, THEREFORE, the Company and the Purchaser agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the following
terms have the meanings indicated:
"Affiliate" and the terms contained in the definition thereof which are
themselves defined terms shall have the respective meanings given to such terms
in Rule 405 under the Securities Act.
"Agreement" has the meaning ascribed to such term in the first paragraph
hereof.
"Annual Report" means the Annual Report on Form 10-K for the Year Ended
December 31, 1998 of the Company, or, from and after the date of its filing, the
Annual Report on Form 10-K for the Year Ended December 31, 1999.
"Average Market Price" means, for a given security, the average Market
Price for such security for the twenty Trading Day period ending on and
including the Trading Day prior to the date of determination.
"Beneficial Owner" is defined in Rules 13d-3 and 13d-5 of the Exchange Act,
but without taking into account any contractual restrictions or limitations on
voting or other rights.
"Business Combination" means (i) any consolidation, merger, share exchange
or similar business combination transaction involving the Company or Twin with
any Person, (ii) any Change of Control Stock Event, (iii) the sale, assignment,
conveyance, transfer, lease or other disposition by the Company or Twin of all
or substantially all of its assets or (iv) the Company shall cease to own and
control, of record and beneficially, 100% of each class of outstanding stock of
Twin. For purposes of this definition, "Change of Control Stock Event" means
any issuance by the Company
<PAGE>
or Twin, in a single transaction or series of related transactions, of their
respective shares of common stock or Common Stock Equivalents in connection with
the acquisition of assets (including cash) or securities by the Company or a
Subsidiary of the Company (including by way of a merger of a Subsidiary of the
Company with or into a Person) or any purchase (whether on the open market, by
consent or otherwise) of shares of common stock of the Company or a Subsidiary,
except where (i) the shareholders of the Company or Twin immediately prior to
such issuance or purchase own (in substantially the same proportion relative to
each other as such shareholders owned the common stock or voting stock of the
Company or Twin, as the case may be, immediately prior to such consummation) (x)
more than 50% of the voting stock of the Company or Twin, as the case may be,
immediately after such issuance, and (y) more than 50% of the outstanding common
stock of the Company or Twin, as the case may be, immediately after such
issuance or purchase, (ii) the members of the Board of Directors (the "Board")
of the Company or Twin, as the case may be, immediately after entering into the
agreement relating to such issuance or purchase (or if no such agreement is
entered into, then immediately after such issuance or purchase) consist of a
majority of Continuing Directors and (iii) no Person or Group of Persons
immediately after such issuance or purchase is the Beneficial Owner of 35% or
more of the total outstanding voting stock (calculated based on the total number
of outstanding voting stock prior to the date of such issuance or purchase) of
the Company or Twin, as the case may be, or common stock. In calculating the
percentage of the voting stock of the Company or Twin owned by the shareholders
of the Company or Twin, as the case may be, immediately prior to an issuance or
purchase of common stock or Common Stock Equivalents in which there is more than
one class or series of voting stock, the percentage of the voting stock shall be
calculated based on the number of votes eligible to be cast in the election of
the directors of the Company or Twin, generally. In calculating the percentages
of voting stock and common stock owned by a shareholder for purposes of this
definition, such calculation shall be calculated on a basis assuming the
exercise or conversion in full of all Common Stock Equivalents and on a basis
disregarding all Common Stock Equivalents, and the percentage which results in
the lower percentage owned by such shareholder shall apply in the application of
clause (i) above.
"Business Combination Date" means the earlier of (i) the date the Company
or Twin announces that it has agreed to a transaction that, upon consummation
thereof, would result in a Business Combination or (ii) the date a Business
Combination of the Company or Twin occurs.
"Call Notice" has the meaning ascribed to such term in Section 2.4.
"Call Right" has the meaning ascribed to such term in Section 2.4.
"Closing" has the meaning ascribed to such term in Section 2.2.
"Closing Date" has the meaning ascribed to such term in Section 2.2.
"Commission" has the meaning ascribed to such term in Section 3.5.
"Common Stock" means the common stock, no par value, of the Company.
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"Company" has the meaning ascribed to such term in the first paragraph
hereof.
"Company Indemnified Party" has the meaning ascribed to such term in
Section 10.2.
"Continuing Directors" means (a) the directors of the Company on the
Closing Date and (b) each other director if (a) in each case, such other
director's nomination for election to the board of director's of the Company is
recommended by at least two-thirds of the then Continuing Directors.
"Contracts" means any indenture, mortgage, deed of trust, loan agreement,
note, lease, license, franchise agreement, permit, certificate, contract or
other agreement or instrument to which the Company, Twin or any of their
respective Subsidiaries is a party or to which their respective properties or
assets are subject.
"Costs" has the meaning ascribed to such term in Section 11.6.
"Dispute" has the meaning ascribed to such term in Section 11.1.
"Environmental Claims" has the meaning ascribed to such term in
Section 3.13.
"Environmental Laws" has the meaning ascribed to such term in Section 3.13.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Reserve Group" shall have the meaning set forth in the Shareholders
Agreement.
"GAAP" has the meaning ascribed to such term in Section 3.6.
"Group" means a group as contemplated by Section 13(d)(3) of the Exchange
Act.
"Governmental Authority" means the United States, any foreign country,
province, state, county, city or other political subdivision, government
corporation, agency or instrumentality of any thereof.
"Incorporated Documents" means all exhibits, appendices and annexes
included with or incorporated by reference in any of the SEC Reports.
"Indemnified Party" has the meaning ascribed to such term in Section 10.3.
"Indemnifying Party" has the meaning ascribed to such term in Section 10.3.
"Intermediary" has the meaning ascribed to such term in Section 9.1.
"Liens" has the meaning ascribed to such term in Section 3.2.
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"Loss" and "Losses" have the meaning ascribed to such terms in
Section 10.1.
"Material Adverse Change" has the meaning ascribed to such term in
Section 3.10.
"Material Adverse Effect" means any event or condition which, individually
or in the aggregate, could reasonably be expected to have a material adverse
effect on the general affairs, management, business, condition (financial or
otherwise), prospects or results of operations of the Company and the
Subsidiaries, taken as a whole.
"Materials of Environmental Concern" has the meaning ascribed to such term
in Section 3.13.
"Own Company Securities" means from and after the first date upon which the
aggregate amount invested by the Purchaser in the Common Stock and/or the
preferred stock of the Company and any other securities that are convertible
into or exchangeable for Common Stock of the Company equals or exceeds $50
million (regardless of whether, as a result of share repurchases, dividends or
otherwise, the Purchaser's investment in the Company subsequently becomes less
than $50 million); provided, however, the Purchaser shall not be deemed to "Own
Company Securities" after the date (after such date on which the First Reserve
Group is first deemed to Own Company Securities) that its aggregate direct or
indirect beneficial ownership of capital stock of the Company constitutes or
would be convertible into or exchangeable for less than 5% of the then
outstanding shares of Common Stock.
"Permits" means any licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and all declarations and filings with,
all federal, state, local and other Governmental Authorities, all self-
regulatory organizations and all courts and other tribunals presently required
or necessary to own or lease, as the case may be, and to operate the properties
of the Company, Twin and the Subsidiaries and to carry on the business of the
Company, Twin and the Subsidiaries as now or proposed to be conducted as set
forth in the SEC Reports.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Prospectus" means the prospectus contained in the Registration Statement
in the form filed with the Commission pursuant to Rule 424 under the Securities
Act.
"Purchase Price" has the meaning ascribed to such term in Section 2.1.
"Purchaser" has the meaning ascribed to such terms in the first paragraph
hereof.
"Purchaser Indemnified Party" has the meaning ascribed to such term in
Section 10.1.
"Put Date" means the date the Purchaser exercises its Put Right.
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"Put Notice" has the meaning ascribed to such term in Section 2.3.
"Put Payment" has the meaning ascribed to such term in Section 2.3.
"Put Right" has the meaning ascribed to such term in Section 2.3.
"Registration Statement" means the Company's Registration Statement on Form
S-3 (file No. 333-44925), filed by the Company under the Securities Act in the
form declared effective by the Commission on March 23, 1998.
"SEC Reports" means the Registration Statement, the Annual Report, the
Company's Quarterly Report on Form 10-Q for the Quarter ended September 30,
1999, the definitive Proxy Statement dated April 27, 1999 for the Annual Meeting
of Stockholders to be held on May 25, 1999 and each other document, report or
filing made by the Company, Twin and any of its Subsidiaries since March 23,
1998 to and including the Closing Date with the Commission, including, in each
instance, all Incorporated Documents.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" has the meaning ascribed to such term in the first paragraph.
"Shareholder Approval Date" means the date the shareholders of the Company
adopt the resolution approving the issuance of the Common Stock to the Purchaser
as set forth herein.
"Shareholders Agreement" means the First Amended and Restated Shareholders
Agreement in the form attached hereto as Exhibit A, as the same may be further
amended or restated from time to time.
"Shares" has the meaning ascribed to such term in Section 2.1.
"Subsidiary" means, when used with reference to an entity, any
corporation, a majority of the outstanding voting securities of which are owned
directly or indirectly by such entity. Such term shall also refer to any other
partnership, limited partnership, limited liability company, joint venture,
trust, or other business entity in which such entity has a material interest.
"Trading Date" means a day on which the principal market with respect to
the security in question is regularly scheduled to be open for trading, or if
there is not such principal market, then a day on which the New York Stock
Exchange is regularly scheduled to be open for trading.
"Transactions" means the issuance and sale of the Shares to the Purchaser,
the other transactions contemplated by this Agreement and the Shareholders
Agreement.
"Twin" has the meaning ascribed to such term in the first paragraph.
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Section 1.2 OTHER DEFINITIONS. Other terms defined in this Agreement
have the meanings so given them.
Section 1.3 CONSTRUCTION. Whenever the context requires, the gender of
all words used in this Agreement includes the masculine, feminine, and neuter,
and the singular shall include the plural, and vice versa. Except as specified
otherwise, all references to Articles and Sections refer to articles and
sections of this Agreement, and all references to exhibits are to Exhibits
attached to this Agreement, each of which is made a part of this Agreement for
all purposes. The word "including" shall mean "including, without limitation"
unless the context otherwise requires.
ARTICLE II
ISSUANCE AND PURCHASE OF COMMON STOCK
Section 2.1 ISSUANCE AND PURCHASE OF COMMON STOCK. (a) Subject to the
terms and conditions of this Agreement, the Company agrees to (i) issue and sell
to the Purchaser (or to another member of the First Reserve Group designated by
the Purchaser), in such proportion as the Purchaser shall designate prior to the
Closing Date, and the Purchaser (or such other member of the First Reserve
Group) agrees to subscribe for and purchase from the Company, Four Million Five
Hundred Thousand (4,500,000) shares of Common Stock of the Company at a purchase
price of $16.00 per share (the number of shares of Common Stock so delivered
being referred to herein as the "Shares").
(b) The aggregate purchase price for the Shares (the "Purchase Price")
shall be payable at the Closing by delivery by the Purchaser to the Company of
immediately available funds in the amount of $72,000,000.
(c) Prior to the Shareholder Approval Date, (i) the holder of the
Shares shall not be permitted to vote the Shares on any matter for which
shareholder approval is sought, and (ii) the Purchaser shall not, and shall
cause each other member of the First Reserve Group that it controls not to,
directly or indirectly, sell, transfer beneficial ownership of, pledge,
hypothecate or otherwise dispose of any Shares; provided however, prior to and
after the Shareholder Approval Date, subject to applicable law and the
Shareholder Agreement, the Shares shall have all the rights as any Common Stock
of the Company, except as set forth in this Section 2.1(c).
Section 2.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the issuance and purchase of the Shares shall take place at a closing
(the "Closing") to be held at the offices of Vinson & Elkins L.L.P., 1001 Fannin
Street, 23rd Floor, Houston, Texas, at 10:00 a.m. (Central time) on the day
following the satisfaction of the conditions to purchase, but not later than
March 31, 2000, or such other date as may be agreed by the parties. The date on
which the Closing occurs is referred to herein as the "Closing Date." On the
Closing Date, the Company will deliver, or cause to be delivered, certificates
representing the validly issued, fully paid and nonassessable Shares upon
receipt of the Purchase Price therefor by wire transfer of immediately available
funds to an account designated by the Company, or by such other method as is
mutually agreed to by the Purchaser and the Company. Certificates evidencing
the Shares shall bear appropriate restrictive legends deemed necessary by the
Company to comply with applicable securities laws.
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Section 2.3 PUT RIGHTS. At any time, and from time to time, prior to
the Shareholder Approval Date but in no event prior to the earlier of (a) the
first anniversary of the Issue Date and (b) a Business Combination Date, the
Purchaser may elect to sell to Twin by notifying Twin in writing (the "Put
Notice"), and upon such election Twin will be required to purchase from the
Purchaser all (but not less than all) of the Shares (the "Put Right") for a cash
price per Share equal to the Average Market Price of the Common Stock,
calculated with the date of determination being the day immediately following
the tenth Trading Day after the Purchaser delivers the Put Notice to Twin. Twin
shall make any such redemption payment (the "Put Payment") by wire transfer to
an account specified by the Purchaser on the thirtieth day following receipt of
the Put Notice. The Purchaser's Put Rights shall terminate on the Shareholder
Approval Date.
Section 2.4 CALL RIGHTS. (a) If the Board of the Company submits and
recommends to the shareholders of the Company adoption of resolutions approving
the issuance and purchase of the Common Stock by the Purchaser as specified
herein and the shareholders affirmatively fail to adopt such resolutions, then,
at any time during the 30 day period beginning on the 190th day after the
Closing Date, Twin may elect to purchase from the Purchaser by notifying the
Purchaser in writing (the "Call Notice"), and upon such election the Purchaser
will be required to sell to Twin (the "Call Right") all (but not less than all)
of the Shares for a cash price per share equal to the greater of (i) the Average
Market Price of the Common Stock, calculated with the date of determination
being the day immediately following the tenth Trading Day after Twin delivers
the Call Notice to the Purchaser, and (ii) $16 (as adjusted for stock splits,
stock dividends and recapitalization); provided that, the full cumulative
dividends shall have been paid or declared and set apart for payment upon all
Shares for all past dividend periods. Twin shall make any such redemption
payment by wire transfer to an account specified by Purchaser on the first
Business Day following the expiration of the 30th day after the Purchaser
receives the Call Notice; provided, that if subsequent to receiving such payment
Purchaser shall become entitled to additional consideration pursuant to the
proviso to the first sentence of this Section 2.4, then the Company shall
promptly (but in any event within five business days) make payment of such
additional consideration to Purchaser. The Company's Call Right under this
Section 2.4 shall terminate on the Shareholder Approval Date.
(b) If Twin exercises its Call Right pursuant to Section 2.4(a), the
Purchaser or any other member of the First Reserve Group may purchase common
stock of the Company in the open market, any equity offering of the Company, or
otherwise up to the same number of shares purchased pursuant to the execution of
the Call Right.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and Twin jointly and severally represent and warrant to the
Purchaser as follows:
Section 3.1 ORGANIZATION. Each of the Company and the Subsidiaries is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate or other power and
authority to own its properties and conduct its business as now conducted and as
described in the Annual Report; each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing in all other jurisdictions
where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect.
Section 3.2 CAPITALIZATION. (a) As of the Closing Date, the Company
will have the authorized, issued and outstanding capitalization set forth in the
SEC Reports (other than any changes due to the exercise of outstanding stock
options or to the conversion of convertible indebtedness). Except as disclosed
in the SEC Reports, there are no outstanding (i) securities or obligations of
the Company convertible into or exchangeable for any capital stock of the
Company, (ii) warrants, rights or options to subscribe for or purchase from the
Company any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the Company to issue any
shares of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options; all offers and sales of
the Company's capital stock by the Company prior to the date hereof were at all
relevant times duly registered under the Securities Act or exempt from the
registration requirements of the Securities Act and were duly registered or the
subject of an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws; the capital stock of the Company,
including the Common Stock, conforms in all material respects to all statements
relating thereto in the Prospectus and the Registration Statement. All of the
outstanding shares of capital stock of the Company and each of the Subsidiaries
have been, and as of the Closing Date will be, duly authorized and validly
issued, are fully paid and nonassessable and were not and will not be issued in
violation of any preemptive or similar rights and are owned directly or
indirectly by the Company, subject to such minimum minority ownership interests
in the non-U.S. Subsidiaries as may be required under applicable law; except as
set forth in the Prospectus and the SEC Reports and except for liens granted in
favor of the lenders under the Company's credit facility and lenders to the
Subsidiaries, all of the outstanding shares of capital stock of the Subsidiaries
will be free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability ("Liens") (other than those imposed by the
Securities Act and the securities or "Blue Sky" laws of certain jurisdictions).
There are no outstanding subscriptions, rights, warrants, options, calls,
convertible or exchangeable securities, commitments of sale, or Liens related to
or entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interests in, any Subsidiary.
(b) Upon receipt by the Company of the Purchase Price, the Shares
shall be duly authorized, validly issued, fully paid and non-assessable. At the
Closing, the Shares shall have been duly authorized for issuance by all
requisite corporate and other action and shall have been approved and on the
Shareholder Approval Date, listed for trading on the New York Stock Exchange.
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(c) All of the outstanding capital stock of Twin is owned beneficially
and of record by the Company. Twin is a Subsidiary of the Company.
Section 3.3 POWER AND AUTHORITY; ENFORCEABILITY. (a) The Company has
all requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to engage in and perform the Transactions.
This Agreement and the Transactions have been duly and validly authorized by the
Company and, when executed and delivered in accordance with its terms (assuming
the due authorization, execution and delivery by the Purchaser), this Agreement
will have been duly executed and delivered and will constitute a valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is considered in
a proceeding in equity or at law).
(b) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Shareholders Agreement.
The Shareholders Agreement has been duly and validly authorized by the Company
and, when executed and delivered by the Company (assuming due authorization,
execution and delivery by the Purchaser), will have been duly executed and
delivered and will constitute a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that (i) the enforcement thereof may be subject to (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (B) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and (ii) any rights to indemnity
or contribution thereunder may be limited by federal and state securities laws
and public policy considerations.
Section 3.4 CONSENTS AND APPROVALS. (a) The execution and delivery of
this Agreement, the Shareholders Agreement, the issuance and sale of the Shares,
the performance of this Agreement, the Shareholders Agreement, and the
consummation of the transactions contemplated hereby and thereby will not
require any consent, approval, authorization or other order of any court, or
other Governmental Authority (except for such consents as have been obtained and
except as such may be required under the securities or Blue Sky laws of the
various states) and will not conflict with, result in a breach of or violate any
of the terms or provisions of, or constitute a default or cause an acceleration
of any obligation under, (i) the charter or bylaws of the Company or any
Subsidiary, (ii) any bond, note, debenture or other evidence of indebtedness or
any indenture, mortgage, deed of trust or other contract, lease or other
instrument to which the Company or any Subsidiary is a party or by which any of
them is bound, or to which any of the property or assets of the Company or any
Subsidiary is subject, which could reasonably be expected to have a Material
Adverse Effect, (iii) any Permit or statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to the
Company, the Subsidiaries or any of their respective properties or assets, or
(iv) subject to the accuracy of Purchaser's representations and warranties
herein, violate or conflict with any applicable foreign, Federal, state or local
law, rule, administrative regulation or
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ordinance or administrative or court decree applicable to the Company or any
Subsidiary or any of their respective properties.
(b) Neither the Company nor any Subsidiary is in violation of or in
default under (i) its charter or bylaws or (ii) any bond, debenture, note or any
other evidence of indebtedness or any indenture, mortgage, deed of trust or
other contract, lease or other instrument to which it is a party or by which it
is bound, or to which any of its property or assets is subject, which could
reasonably be expected to have a Material Adverse Effect. No contract or other
document of a character required to be described in the SEC Reports or to be
filed as an exhibit to the SEC Reports is not so described or filed as required.
(c) The Board of Directors of the Company has taken all action
required to be taken by it in order to exempt this Agreement and the
Transactions from, and this Agreement and the Transactions are exempt from, the
requirements of any "moratorium," "control share," "fair price," "affiliate
transaction," "business combination" or other antitakeover laws and regulations
of any state, including, without limitation, the State of Louisiana, and as a
result, any requirements of such antitakeover laws and regulations are
inapplicable to this Agreement and the Transactions.
Section 3.5 COMMISSION REPORTS. The Company has made all filings
required to be made by it with the Securities and Exchange Commission (the
"Commission") pursuant to Sections 12, 13, 14 and 15 of the Exchange Act. All
of such filings, and all filings made by the Company with the Commission
pursuant to such sections, rules and regulations although not required to be
made, complied in all material respects, as to both form and content, with all
applicable requirements of the Securities Act or the Exchange Act and the rules
and regulations thereunder, as applicable, and, at the time of filing, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The Prospectus, the
SEC Reports and the Incorporated Documents heretofore filed were filed in a
timely manner and, when they were filed (or, if any amendment with respect to
any such document was filed, when such amendment was filed), conformed in all
material respects, as to both form and content, to the requirements of the
Securities Act or Exchange Act, as applicable; and any further SEC Reports and
Incorporated Documents filed prior to the Closing will, when so filed, be filed
in a timely manner and conform in all material respects, as to both form and
content, to the requirements of the Exchange Act.
Section 3.6 FINANCIAL STATEMENTS. (a) PricewaterhouseCoopers LLP, the
firm of accountants that has certified the applicable consolidated financial
statements and supporting schedules of the Company filed with the Commission as
part of or incorporated by reference in the SEC Reports, are independent public
accountants with respect to the Company and the Subsidiaries, as required by the
Securities Act and the Exchange Act. Ernst & Young Audit, Price Waterhouse and
Pistrelli, Diaz & Associados are independent public accountants with respect to
certain Subsidiaries of the Company. The consolidated financial statements,
together with related schedules and notes, set forth or incorporated by
reference in the SEC Reports comply as to form in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable. Such
financial statements fairly present the consolidated financial position of the
Company and the
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Subsidiaries at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated, and have
been prepared in accordance with generally accepted accounting principles
("GAAP"), except as otherwise expressly stated therein, as consistently applied
throughout such periods. The other financial and statistical information and
data included or incorporated by reference in the SEC Reports, historical and
pro forma, are, in all material respects, accurate and prepared on a basis
consistent with such financial statements and the books and records of the
Company. Each of the Company and its Subsidiaries keeps books and records that
fairly reflect its assets and maintains internal accounting controls which
provide reasonable assurance that (i) transactions are executed in accordance
with management's authorization, (ii) transactions are recorded as necessary to
permit preparation of the Company's consolidated financial statements in
accordance with generally accepted accounting principles and to maintain
accountability for the assets of the Company, (iii) access to the assets of the
Company and each of its Subsidiaries is permitted only in accordance with
management's authorization, and (iv) the recorded accountability for assets of
the Company and each of its Subsidiaries is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
material differences.
(b) As of the Closing Date after giving effect to the transaction set
forth herein, Twin's net worth will not be less than $100 million. Twin keeps
books and records that fairly reflect its assets and maintains internal
accounting controls which provide reasonable assurance that (1) transactions are
executed in accordance with management's authorization, (2) transactions are
recorded as necessary to permit preparation of Twin's unconsolidated financial
statements in accordance with generally accepted accounting principles and to
maintain accountability for the assets of Twin, (3) access to the assets of Twin
is permitted only in accordance with management's authorization, and (4) the
recorded accountability for assets of Twin is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
material differences.
Section 3.7 LITIGATION. Except as disclosed in the SEC Reports, there
is no action, suit or proceeding before or by any court or governmental agency
or body pending against the Company or any of its Subsidiaries that is required
to be disclosed in the SEC Reports, or which could reasonably be expected to
have a Material Adverse Effect, or materially and adversely affect the
performance of the Company's obligations pursuant to this Agreement and, to the
best of the Company's knowledge, no such proceedings are contemplated or
threatened. No action has been taken with respect to the Company or any
Subsidiary, and no statute, rule or regulation or order has been enacted,
adopted or issued by any governmental agency and no injunction, restraining
order or other order of any court of competent jurisdiction has been issued with
respect to the Company or any Subsidiary that prevents the issuance of the
Shares, no action, suit or proceeding before any court or arbitrator or any
Governmental Body, agency or official (domestic or foreign), is pending against
or, to the knowledge of the Company, threatened against, the Company or any
Subsidiary that, if adversely determined, could reasonably be expected to (a)
interfere with or adversely affect the issuance of the Shares or (b) in any
manner invalidate this Agreement.
Section 3.8 INTELLECTUAL PROPERTY. The Company and the Subsidiaries own
or possess the right to use all patents, trademarks, trademark registrations,
service marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the
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Annual Report as being owned by them or any of them or necessary for the conduct
of their respective businesses, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the right of the Company and
the Subsidiaries with respect to the foregoing.
Section 3.9 PERMITS. The Company and each of its Subsidiaries has such
Permits including, without limitation, under any Environmental Laws, issued by
Governmental Authorities as are, in all material respects, necessary to own,
lease and operate their respective properties and to conduct their respective
businesses; the Company and each of its Subsidiaries has fulfilled and performed
all of its material obligations with respect to such Permits and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results or would result in any other material
impairment of the rights of the holder of any such Permit; and, except as
described in the Annual Report, such Permits contain no restrictions that are
materially burdensome to the Company and its Subsidiaries considered as a whole.
Section 3.10 NO ADVERSE CHANGE; ABSENCE OF LIABILITIES. Except as
disclosed in the SEC Reports, subsequent to the respective dates as of which
information is given in the Annual Report, (a) neither the Company nor any
Subsidiary has incurred any liabilities or obligations, direct or contingent,
that are material to the Company and the Subsidiaries, taken as a whole, nor
entered into any transaction not in the ordinary course of business that is
material to the Company and the Subsidiaries, taken as a whole, and is required
to be disclosed on a balance sheet in accordance with GAAP, either when
considered alone or together with all other such transactions, (b) there has
been no decision or judgment in the nature of litigation adverse to the Company
or any Subsidiary that could reasonably be expected to have a Material Adverse
Effect, and (c) there has been no material adverse change in the financial
condition or in the results of operations, business affairs or business
prospects of the Company and the Subsidiaries, taken as a whole (any of the
above, a "Material Adverse Change").
Section 3.11 TAX RETURNS. All material tax returns required to be filed
by the Company and the Subsidiaries in every jurisdiction have been filed, other
than those filings being contested in good faith, and, except as disclosed in
the Annual Report, all taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due or claimed to be due from such
entities have been paid.
Section 3.12 PROPERTIES AND CONTRACTS. Except as otherwise set forth in
the Annual Report or such as would not have a Material Adverse Effect, the
Company and each Subsidiary has good and marketable title, free and clear of all
Liens (except Liens for taxes not yet due and payable), to all property and
assets described in the Annual Report as being owned by it. All leases to which
the Company or any Subsidiary is a party are valid and binding and no default
has occurred or is continuing thereunder, which might result in a Material
Adverse Effect, and the Company and each Subsidiary enjoy peaceful and
undisturbed possession under all such leases to which any of them is a party as
lessee with such exceptions as do not materially interfere with the use made by
the Company or such Subsidiary.
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Section 3.13 ENVIRONMENTAL MATTERS. Except as would not, individually or
in the aggregate, have a Material Adverse Effect (a) neither the Company nor any
Subsidiary is in violation of any foreign, Federal, state or local laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of toxic or hazardous substances, materials or wastes, or petroleum and
petroleum products ("Materials of Environmental Concern"), or otherwise relating
to the storage, disposal, transport or handling of Materials of Environmental
Concern (collectively, "Environmental Laws"), which violation includes, but is
not limited to, noncompliance with any permits or other governmental
authorizations; (b) neither the Company nor any Subsidiary has received any
communication (written or oral), whether from a governmental authority or
otherwise, alleging any such violation or noncompliance, and there are no
circumstances, either past, present or that are reasonably foreseeable, that may
lead to such violation in the future; (c) there is no pending or threatened
claim, action, investigation or notice (written or oral) by any person or entity
alleging potential liability for investigatory, cleanup, or governmental
responses costs, or natural resources or property damages, or personal injuries,
attorney's fees or penalties relating to (i) the presence, or release into the
environment, of any Materials of Environmental Concern at any location owned or
operated by the Company or any Subsidiary, now or in the past, or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law (collectively, "Environmental Claims"); and (d) there are no
past or present actions, activities, circumstances, conditions, events or
incidents, that could form the basis of any Environmental Claim against the
Company or any Subsidiary or against any person or entity whose liability for
any Environmental Claim the Company or any Subsidiary has retained or assumed
either contractually or by operation of law.
Section 3.14 LABOR MATTERS. Except as would not have a Material Adverse
Effect, (a) neither the Company nor any Subsidiary is in material violation of
any Federal, state or local law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable wage or hour laws nor any
provisions of the Employee Retirement Income Security Act of 1974, as amended,
or the rules and regulations promulgated thereunder, (b) there is no unfair
labor practice complaint pending against the Company or any Subsidiary or, to
the best knowledge of the Company, threatened against any of them, before the
National Labor Relations Board or any state or local labor relations board, and
(c) there is no labor dispute in which the Company or any Subsidiary is involved
nor, to the best knowledge of the Company, is any labor dispute imminent, other
than routine disciplinary and grievance matters.
Section 3.15 INSURANCE. The Company and its Subsidiaries maintain what
they believe to be reasonably adequate insurance coverage for those risks that
the Company believes to be customarily insured against by companies in the same
business.
Section 3.16 NO INVESTMENT COMPANY. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
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Section 3.17 REGISTRATION RIGHTS; PUT RIGHTS. Except for the
Shareholders Agreement and the Registration Rights Agreements between the
Company and (i) Paul A. Bragg, (ii) Ackermans & van Haaran Group and Soletanche
Group, and (iii) DWC Amethyst N.V., a true, correct and complete copy of each of
which has been furnished to the Purchaser, no holder of any security of the
Company has any right to require registration of shares of the Common Stock or
any other security of the Company. Except as provided herein, Twin has not
granted any Person the right to sell or put to Twin any capital stock of the
Company or its Affiliates.
Section 3.18 NO INTEGRATION. Neither the Company nor any of the
Subsidiaries nor any of their respective Affiliates (as defined in Rule 501(b)
of Regulation D under the Securities Act) has directly, or through any agent,
(a) sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of any "security" (as defined in the Securities Act) which is or could
be integrated with the sale of the Shares in a manner that would require the
registration under the Securities Act of the Shares or (b) engaged in any form
of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the offering of the
Shares or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
Section 3.19 NO REGISTRATION. It is not necessary in connection with the
offer, sale and delivery of the Shares to the Purchaser in the manner
contemplated by this Agreement to register any of the Shares under the
Securities Act or to register or qualify such offer, sale and delivery under any
applicable state "blue sky" or securities laws, based on available non-public
offering exemptions which are based, in part, on the representations of the
Purchaser in Section 4.3.
Section 3.20 BROKER'S OR FINDER'S COMMISSIONS. No broker's or finder's
fees or commissions will be payable by the Company or any of its Subsidiaries in
connection with the issuance and sale of the Shares or the Transactions.
Section 3.21 USE OF PROCEEDS; MARGIN REGULATIONS. All proceeds from the
issuance of Shares will be used by the Company only in accordance with the
provisions of Section 5.1. No part of the proceeds from the issuance of Shares
will be used by the Company to purchase or carry any "margin stock" (within the
meaning of the regulations referred to in the following sentence) or to extend
credit to others for the purpose of purchasing or carrying any "margin stock."
Neither the purchase of the Shares nor the use of the proceeds thereof will
violate or be inconsistent with the provisions of regulations of the Board of
Governors of the Federal Reserve System regulating the use of margin credit.
Section 3.22 NO ILLEGAL OR IMPROPER TRANSACTIONS. Neither the Company
nor any Subsidiary has, nor has any director, officer or employee of the Company
or any Subsidiary, directly or indirectly, used funds or other assets of the
Company or any Subsidiary, or made any promise or undertaking in such regard,
for (a) illegal contributions, gifts, entertainment or other expenses relating
to political activity; (b) illegal payments to or for the benefit of
governmental officials or employees, whether domestic or foreign, (c) illegal
payments to or for the benefit of any person, firm, corporation or other entity,
or any director, officer, employee, agent or representative thereof;
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(d) gifts, entertainment or other expenses that jeopardize the normal business
relations between the Company or any Subsidiary and any of its customers; (e)
the establishment or maintenance of a secret or unrecorded fund; or (f)
participated in or co-operated with an international boycott as defined in
Section 999 of the Internal Revenue Code of 1986; and there have been no
knowingly false or fictitious entries made in the books or records of the
Company or any Subsidiary.
Section 3.23 COMPLETENESS OF INFORMATION; ABSENCE OF MISSTATEMENTS AND
OMISSIONS. (a) The copies of written materials that the Company has delivered
to or made available to the Purchaser constitute true, complete and correct
copies of the originals thereof. The Company is not aware of any fact, matter or
circumstance that has not been disclosed to the Purchaser that does or may
render any such written materials untrue, inaccurate, or misleading in any
material respect (other than information contained in any such written materials
that updates or supplants portions of such written materials that were prepared
as of an earlier date).
(b) Neither the Prospectus as of the date thereof, the SEC Reports,
the Incorporated Documents nor any amendment or supplement thereto as of the
date thereof contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. No representation or warranty made by the Company contained in this
Agreement and no statement contained in any certificate, list, exhibit or other
instrument specified in this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
Section 3.24 SOLVENCY. After giving effect to the grant of the Put Right
and assuming the payment of the Put Amount thereof, (a) the fair value of the
assets of Twin, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of Twin will be greater than the amount that will be required to
pay the probable liability in respect of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) Twin will be able to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) Twin will not have unreasonably
small capital with which to conduct the businesses in which it is engaged as
such businesses are now conducted and are proposed to be conducted.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Sellers as follows:
Section 4.1 AUTHORITY. The Purchaser has all requisite partnership
power and authority to execute and deliver this Agreement and the Shareholders
Agreement and to consummate the Transactions to be performed by the Purchaser.
The execution and delivery of this Agreement and the Shareholders Agreement and
the consummation of the Transactions to be performed by the
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Purchaser have been duly and validly authorized by all necessary action on the
part of the General Partner of the Purchaser, and no other partnership or
similar proceedings are necessary to authorize the execution and delivery of
this Agreement and the Shareholders Agreement by the Purchaser or to consummate
the Transactions to be performed by the Purchaser. This Agreement and the
Shareholders Agreement have been duly and validly executed and delivered by the
Purchaser and, assuming this Agreement and the Shareholders Agreement constitute
valid and binding obligations of the Company, each of this Agreement and the
Shareholders Agreement constitutes a valid and binding agreement of the
Purchaser, enforceable against it in accordance with its terms, except that the
enforcement thereof may be subject to (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (b) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is considered in
a proceeding in equity or at law).
Section 4.2 CONSENTS AND APPROVAL; NO VIOLATION. Neither the execution
and delivery of this Agreement and the Shareholders Agreement by the Purchaser,
the consummation of the Transactions to be performed by the Purchaser, nor
compliance by the Purchaser, with any of the provisions hereof will (a) conflict
with or result in any breach of any provisions of the Agreement of Limited
Partnership of the Purchaser, (b) require any material consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except for consents, approvals, authorizations, permits, filings or
notifications which have been obtained or made, (c) result in a default (with or
without due notice or lapse of time or both) or give rise to any right of
termination, cancellation or acceleration under any of the terms, conditions or
provisions of any material indentures or loan or credit agreements and
guaranties of any such obligations to which the Purchaser is a party or by which
the Purchaser or any of its assets may be bound, except for such defaults (or
rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained, or (d) violate any material order, writ,
injunction, decree, statute, rule or regulation applicable to such Purchaser or
any of its assets.
Section 4.3 SECURITIES LAWS. The Purchaser has such knowledge and
experience in financial and business matters as enables it to evaluate the
merits and risks of an investment in the Shares. The Purchaser is an
"accredited investor" as such term is defined in Rule 501 under the Securities
Act. The Purchaser is acquiring the Shares for its own account and not with the
view to resale or redistribution thereof in violation of the Securities Act;
provided however, that the Purchaser shall at all times retain full power and
authority over the transfer of its properties and assets. The Purchaser
acknowledges that it may not transfer the Shares except pursuant to an effective
registration statement under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act, and that a legend to such
effect shall be included on the certificate representing the Shares.
Section 4.4 BROKER'S OR FINDER'S COMMISSIONS. No broker's or finder's
fees or commissions will be payable by the Purchaser in connection with the
issuance and sale of the Shares or the Transactions.
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ARTICLE V
COVENANTS
Section 5.1 USE OF PROCEEDS. The entire amount of the cash proceeds
from the issuance of the Shares shall be (i) contributed to Twin to fund Twin's
acquisition of all the shares of Servicios Especiales San Antonio S.A. from
Perez Companc S.A. and Perez Companc International as contemplated by the letter
of intent dated March 1, 2000 between the Company and such parties, and (ii)
used by the Company for general corporate purposes.
Section 5.2 CORPORATE EXISTENCE. For so long as the Purchaser or any of
the First Reserve Group Own Company Securities, the Company and Twin will do or
cause to be done all things necessary to preserve and keep in full force and
effect the corporate existence, rights (charter and statutory) and franchises of
the Company and each of the Subsidiaries; provided, however, that the Company or
Twin shall not be required to preserve any such right or franchise if the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company, Twin and their Subsidiaries as a
whole and that the loss thereof is not disadvantageous in any material respect
to the Purchaser.
Section 5.3 COMPLIANCE WITH LAWS. For so long as the Purchaser or any
of the First Reserve Group Own Company Securities, the Company and Twin shall
and shall cause each of their Subsidiaries to comply with all applicable
federal, state and local laws, rules and regulations, including, without
limitation, Environmental Laws, except where failure to comply will not have a
Material Adverse Effect.
Section 5.4 MAINTENANCE OF PROPERTIES AND PERMITS. For so long as the
Purchaser or any of the First Reserve Group Own Company Securities, the Company
and Twin will (a) cause all properties (except as to properties not operated by
the Company, Twin or a Subsidiary, as to which the Company and Twin shall use
their reasonable best efforts) owned by the Company, Twin or any of their
Subsidiaries or used or held for use in the conduct of its respective business
or the business of any Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, and (b) keep in full force and effect or obtain valid
Permits and fulfill and perform all obligations with respect to such Permits as
are necessary or advisable to the operation of the business of the Company, Twin
and the Subsidiaries, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent the Company or Twin from discontinuing the maintenance of
any of such properties or Permits if such discontinuance is not disadvantageous
in any material respect to the Purchaser and would not have a Material Adverse
Effect.
Section 5.5 ACCESS TO INFORMATION. Between the date hereof and the
Closing Date, the Company and Twin will afford to the Purchaser and its
authorized representatives full access to the plant, offices, warehouses, or
other facilities and properties and to the books and records of the Company,
Twin and its Subsidiaries, will permit the Purchaser and its representatives to
make such
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reasonable inspections as they may require and will cause its officers and those
of their Subsidiaries to furnish the Purchaser and its representatives with such
financial and operating data, environmental assessment and other information
with respect to the business, assets and properties of the Company, Twin and
their Subsidiaries, as applicable, as the Purchaser and its representatives may
from time to time request. No inspection or examination by the Purchaser or its
representatives will constitute a waiver of any claim against the Company or
Twin for misrepresentation or breach of this Agreement. The Purchaser shall hold
strictly confidential all information obtained as a result of such access;
provided, that the Purchaser shall not be obligated to hold confidential
information which (a) was or becomes generally available to the public other
than as a result of a disclosure by the Purchaser or its representatives, (b)
was or becomes available to the Purchaser from a source other than the Company,
Twin or their representatives, provided that such source is not bound by a
confidentiality agreement with the Company, Twin or their Subsidiaries or
otherwise prohibited from transmitting the information to the Purchaser, or (c)
is required to be disclosed in order to comply with any applicable law, order,
regulation or ruling or the rules of any national securities exchange.
Section 5.6 SEC FILINGS. For so long as the Purchaser or any of the
First Reserve Group Own Company Securities, the Company covenants and agrees
that it will (a) maintain on a current basis the filing of all reports required
to be filed by the Company pursuant to the Exchange Act and the rules and
regulations thereunder and promptly deliver to the Purchaser copies of all such
reports; (b) use its reasonable best efforts to achieve and maintain
qualification for the use of Form S-3 (or any successor form) under the
Securities Act; and (c) cooperate with the Purchaser whenever the Purchaser
wishes to dispose of any securities of the Company owned by it or any of the
First Reserve Group under Rule 144 and/or Rule 144A under the Securities Act, to
the full extent feasible in order to consummate such disposition.
Section 5.7 APPROPRIATE ACTION; CONSENTS; FILINGS. The Company, Twin
and the Purchaser shall each use its reasonable best efforts promptly (a) to
take, or cause to be taken, all appropriate action and do, or cause to be done,
all things necessary, proper or advisable under applicable law or otherwise to
consummate and make effective the Transactions as contemplated by this Agreement
and the Shareholder Agreement in an expeditious manner, (b) to obtain from any
Governmental Authority any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained by the Company, Twin or the
Purchaser, respectively, in connection with the authorization, execution,
delivery and performance of this Agreement, the consummation of the Transactions
contemplated hereby, and the Shareholder Agreement, (c) to make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement, the Transactions, and the Shareholder Agreement and any other
transactions contemplated hereby or thereby required under any applicable Law;
provided that the Company, Twin and the Purchaser shall cooperate with each
other in connection with the making of all such filings. The Company and Twin
shall furnish all information reasonably requested by the Purchaser for any
application or other filing to be made pursuant to any applicable law in
connection with the transactions contemplated by this Agreement, and the
Shareholder Agreement.
Section 5.8 CONDUCT OF BUSINESS PENDING CLOSING. During the period from
the date of this Agreement and continuing until the Closing Date, the Company
agrees that:
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(a) Except as provided in this Agreement and for borrowings under
existing credit facilities, the Company shall, and shall cause each Subsidiary
to, (i) carry on its business in the usual, regular and ordinary course in a
manner consistent with its past practices and in compliance with all applicable
laws, rules and regulations and (ii) preserve its business organization,
maintain its rights and franchises, keep available the services of its officers
and key employees and preserve the goodwill and its relationships with
customers, suppliers and others having business dealings with them. The Company
shall preserve, and shall cause each Subsidiary to preserve, in full force and
effect all material leases, operating agreements, Permits, licenses, Contracts
and other material agreements which relate to the business, properties or assets
of the Company or such Subsidiary (other than those expiring by their terms) and
perform all material obligations of the Company or such Subsidiary in or under
any of such leases, agreements and Contracts relating to such assets.
(b) The Company shall not, and shall not permit any Subsidiary to, (i)
declare or pay any dividend on or make any other distribution in respect of any
of its capital stock, (ii) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of, its capital stock, (iii) purchase,
redeem or otherwise acquire any shares of its capital stock, or (iv) take any
preliminary action with respect to the foregoing.
(c) The Company shall not, and shall not permit any Subsidiary to, (i)
issue, deliver, sell or authorize the issuance, delivery or sale of any shares
of its capital stock of any class or any securities convertible into or
exchangeable for, or rights, warrants or options to acquire, any such shares or
convertible or exchangeable securities (other than options to acquire Common
Stock under existing employee benefit plans of the Company), or (ii) enter into
any agreement or understanding or take any preliminary action with respect to
the foregoing.
(d) The Company shall not, and shall not permit any Subsidiary to, (i)
amend its Articles of Incorporation or Bylaws, or similar organizational
documents, or (ii) enter into any agreement or incur any obligation, the terms
of which would be violated by the consummation of the transactions contemplated
by this Agreement.
Section 5.9 NO IMPAIRMENT. The Company and Twin each will not , by
amendment of its respective Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, dividend, debt incurrence or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company and the Twin, but will at all
times in good faith assist in the carrying out of all the provisions herein and
in taking of all such action as may be necessary or appropriate in order to
protect the Put Right of the Purchaser against impairment.
Section 5.10 RECOMMENDATION TO SHAREHOLDERS. In connection with the 1999
annual meeting of the shareholders of the Company occurring after the date
hereof, the Board of Directors of the Company covenants to (i) submit for the
approval of the shareholders of the Company resolutions approving the issuance
and purchase of the Shares on the terms set forth herein; provided that the
Company shall provide the Purchaser with a copy of such resolutions and related
proxy
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materials for the Purchaser's review and comment at least 5 Business Days
prior to submitting such resolutions to the shareholders; (ii) recommend that
the shareholders of the Company vote in favor of such resolutions and (iii) use
all reasonable endeavors to obtain the aforementioned approval.
Section 5.11 NO SENIOR PUT RIGHTS. After the date hereof, the Company
shall not grant, and the Company shall not permit any Subsidiary to grant, to
any Person owning, directly or indirectly, any capital stock of the Company or
any of its Subsidiaries, any put, redemption or similar rights that will require
Twin to purchase from such Person any capital stock of the Company or any
options or warrants exercisable into such capital stock (i) in preference to
Purchaser's Put Right set forth in Section 2.3 or (ii) exercisable before the
30th day after the first anniversary of the date hereof. The Company shall
notify the Purchaser upon any grant of any put right after the date hereof.
ARTICLE VI
PURCHASER'S CONDITIONS
The obligations of the Purchaser to effect the closing of the Shares on the
Closing Date are subject to the satisfaction of the following conditions any one
or more of which may be waived in writing by the Purchaser.
Section 6.1 REPRESENTATIONS AND COVENANTS. The representations and
warranties contained in Article III hereof, to the extent qualified by
materiality shall be true and correct in all respects and to the extent not so
qualified, shall be true and correct in all material respects, in each case on
and as of the Closing Date as if made, and shall be deemed to have been remade,
on and as of the Closing Date. The Company shall have complied with all of its
obligations contained herein the performance of which is required on or prior to
the Closing Date. The Purchaser shall have received a certificate to the
foregoing effect executed by an executive officer of the Company.
Section 6.2 SHAREHOLDERS AGREEMENT. The Shareholders Agreement in the
form of Exhibit A shall have been duly adopted by all requisite corporate
action, executed and delivered by the Company and be in full force and effect.
Section 6.3 COMPANY CAUSED MATERIAL ADVERSE CHANGE. Since December 31,
1999, there shall have occurred no event, act, or condition caused by or arising
from an act or omission of the Company or any Subsidiary which has resulted in,
or could reasonably be expected to result in, a Material Adverse Change.
Section 6.4 REQUIRED CONSENTS, APPROVALS AND FILINGS. All consents,
approvals and waivers necessary to the consummation of the purchase and sale of
the Shares and the Transactions or as otherwise requested by the Purchaser
(other than the approval of the shareholders of the Company described in Section
5.9) shall have been obtained.
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Section 6.5 NEW YORK STOCK EXCHANGE APPROVAL. All applications and
related exhibits and other materials necessary for the approval of the listing
and trading on the New York Stock Exchange of the Shares shall have been filed
with and approved by the New York Stock Exchange.
Section 6.6 PAYMENTS. The Company shall have paid to or on behalf of
the Purchaser all amounts payable pursuant to Section 11.6.
Section 6.7 OPINIONS OF COUNSEL. The Purchaser shall have received (i)
an opinion of Baker Botts L.L.P. at the Closing, in the form attached hereto as
Exhibit B, and (ii) an opinion of Sher Garner Cahill Richter Klein McAlister &
Hilbert, L.L.C. at the Closing, in the form attached hereto as Exhibit C.
Section 6.8 ADDITIONAL DOCUMENTS. The Purchaser shall have received
such other certificates, instruments and documents from the Company and each
Subsidiary as it may reasonably request pursuant to this Agreement.
ARTICLE VII
COMPANY'S CONDITIONS
The obligations of the Company to issue and sell the Shares subject to the
satisfaction of the following conditions any one or more of which may be waived
by the Company:
Section 7.1 REPRESENTATIONS AND COVENANTS. The representations and
warranties contained in Article IV hereof, to the extent qualified by
materiality shall be true and correct in all respects and to the extent not so
qualified, shall be true and correct in all material respects, in each case on
and as of the Closing Date as if made, and shall be deemed to be remade, on and
as of the Closing Date. The Purchaser shall have complied with all of its
obligations contained herein performance of which is required on or prior to the
Closing Date. The Company shall have received a certificate to the foregoing
effect executed by an officer of the General Partner of the Purchaser.
Section 7.2 SHAREHOLDERS AGREEMENT. The Shareholders Agreement in the
form of Exhibit A shall have been duly adopted by all requisite corporate
action, executed and delivered by the Purchaser and be in full force and effect.
Section 7.3 REQUIRED CONSENTS AND APPROVALS. All consents, approvals
and waivers necessary to the consummation of the purchase and sale of the Shares
and the Transactions (other than the approval of the shareholders of the
Company described in Section 5.10) shall have been obtained.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION. The transactions contemplated hereby may be
abandoned at any time prior to the Closing, as follows:
(a) by the mutual written consent of the Company, Twin and the
Purchaser;
(b) by the Company and Twin, on one hand, or the Purchaser, on the
other hand, if there shall have been a breach by the other party of any of the
covenants contained herein or if any representation or warranty made by any
other party is untrue in any material respect, in either case in a manner not
capable of being cured on or before March 31, 2000.
Section 8.2 SURVIVAL; FAILURE TO CLOSE. All representations,
warranties, indemnities, and covenants contained herein or made in writing by
any party in connection herewith will survive the execution and delivery of this
Agreement and any investigation made at any time by or on behalf of Purchaser,
except that any claim for a breach of a representation or warranty must be
brought within the period set forth in Section 10.4. Notwithstanding anything
herein to the contrary, in the event the funding by Purchaser of its investment
has not occurred on or before March 31, 2000, because one or more conditions set
forth in Article VI or Article VII has not been satisfied, either party may
terminate its obligations under this Agreement by written notice to the other;
provided, however, that the provisions of this Section 8.2 and Section 11.6
shall survive any such termination; provided further, however that no party may
terminate this Agreement if such funding has failed to occur because such party
(or any Affiliate thereof) willfully or negligently fails to perform or observe
its material agreements and covenants hereunder.
ARTICLE IX
OTHER PROVISIONS
Section 9.1 BROKERAGE FEES AND COMMISSIONS. Each party agrees to pay,
and to indemnify and hold harmless the other party from and against liability
for, any compensation to any finder, broker, agent, financial advisor, or other
intermediary (collectively, an "Intermediary") retained by such party, or any
other Intermediary in connection with the transactions contemplated by this
Agreement, and the fees and expenses of defending against such liability or
alleged liability.
Section 9.2 PUBLIC ANNOUNCEMENTS. The Company and the Purchaser (a)
will consult with each other before issuing any press release or otherwise
making any public statements with respect to the existence of this Agreement or
the Transactions and (b) shall not issue any press release or make any public
statement prior to such consultation, except in the case of clause (b) as may be
required by law or by obligations pursuant to any listing agreements between the
Company and The New York Stock Exchange.
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ARTICLE X
INDEMNIFICATION
Section 10.1 INDEMNIFICATION BY THE COMPANY. The Company shall in
addition to any such rights which any Purchaser Indemnified Party (as defined
herein) may have pursuant to statute, the Company's Articles of Incorporation or
other organizational or constituent documents of the Company, or otherwise,
indemnify and hold harmless the Purchaser (including its subsidiaries,
Affiliates, designees and persons serving as officers, directors, partners,
employees, representatives and agents, each a "Purchaser Indemnified Party")
from and against any and all losses, claims, damages, taxes, fines, penalties,
costs, expenses and liabilities, joint or several, including any investigation,
legal and other expenses incurred in connection with the investigation, defense,
settlement or appeal of, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted ("Losses" or "Loss"), to which they, or any
of them, may suffer or incur which arise or result from the breach of any
representation, warranty, covenant or agreement of the Company under this
Agreement (except as limited by Section 10.4) or in any certificate, schedule or
exhibit delivered pursuant hereto, or by reason of any claim, action or
proceeding arising out of or resulting from a breach of such representations,
warranties covenants or agreements.
Section 10.2 INDEMNIFICATION BY THE PURCHASER. The Purchaser shall in
addition to any such rights which any Company Indemnified Party (as defined
herein) may have pursuant to statute, or otherwise, indemnify and hold harmless
the Company (including its subsidiaries, Affiliates, designees and persons
serving as officers, directors, partners, employees, representatives and agents,
each a "Company Indemnified Party") from and against any and all Losses, to
which they, or any of them, may suffer or incur which arise or result from the
breach of any representation, warranty, covenant or agreement of the Purchaser
under this Agreement or in any certificate, schedule or exhibit delivered
pursuant hereto, or by reason of any claim, action or proceeding arising out of
or resulting from a breach of such representations, warranties covenants or
agreements.
Section 10.3 INDEMNIFICATION PROCEDURES. Any Purchaser Indemnified Party
or Company Indemnified Party that proposes to assert the right to be indemnified
under this Article X (for purposes of this Section 10.3 such initiating
Purchaser Indemnified Party or Company Indemnified Party shall be referred to as
the "Indemnified Party") shall, promptly after receipt of notice of commencement
of any claim or action against such Indemnified Party or upon the discovery by
such Indemnified Party of the Loss suffered by it, in either case in respect of
which a claim is to be made against the other party hereto (the "Indemnifying
Party") under Section 10.1 or Section 10.2, as the case may be, notify the
Indemnifying Party of the commencement of such action or the occurrence of such
Loss, enclosing a copy of all papers served or a brief description of the facts
resulting in such Loss, but the omission so to notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability that the
Indemnifying Party may have to any Indemnified Party under the foregoing
provisions of this Article X unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the Indemnifying
Party. The Indemnified Party shall have the right to retain its own counsel in
any such action and all reasonable fees, disbursements and other charges
incurred in the investigation, defense and/or settlement of such action shall be
advanced and reimbursed by the Indemnifying Party promptly as they are incurred;
provided, however, that the
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Indemnified Party shall agree to repay any expenses so advanced hereunder if it
is ultimately determined by a court of competent jurisdiction that the
Indemnified Party to whom such expenses are advanced is not entitled to be
indemnified as a matter of law. So long as the Indemnified Party has reasonably
concluded that no conflict of interest exists and that the Indemnifying Party is
financially capable of fulfilling its obligations under this Article X, the
Indemnifying Party may assume the defense of any action hereunder with counsel
reasonably satisfactory to the Indemnified Party; provided, however, that the
Indemnifying Party shall not settle any action or claim for which
indemnification is sought under this Article X without the prior written consent
of the Indemnified Party. In the event that the Indemnifying Party does not
assume defense of any action, it shall nonetheless have the right to participate
in (but not control) such action. The Indemnifying Party shall not be liable for
any settlement of any action or claims effected without its written consent;
provided that if such consent is withheld and such action or claims are
subsequently settled or prosecuted for a greater amount, such Indemnifying Party
shall be liable for the full amount of such losses, damages, liabilities and
expenses (including without limitation any interest and penalties related
thereto) without regard to any limitations on indemnification set forth in this
Article X.
Section 10.4 TERMINATION. The Company's and Twin's representations set
forth in Sections 3.8, 3.9, 3.11, 3.12, 3.14, 3.15, 3.16, and 3.21 shall
terminate at the Closing Date, and no claim for indemnification for any Loss for
any breach thereof may be brought after the Closing Date. The Company's
obligation to indemnify the Purchaser, and the Purchaser's obligation to
indemnify the Company, in each case as set forth in this Section 10 shall
terminate as to any Loss asserted after the close of business in Houston, Texas
on the first anniversary of the Closing Date, other than any Loss suffered as a
result of the breach of any representation of the Company contained in Sections
3.2, 3.3 and 3.23, which may be asserted indefinitely, or as a result of the
agreement set forth in Section 11.6, which may be asserted indefinitely.
ARTICLE XI
MISCELLANEOUS
Section 11.1 DISPUTE RESOLUTION. (a) Agreement to Arbitrate. If
Purchaser and the Company are unable to resolve any controversy, dispute, claim
or other matter in question arising out of, or relating to, this Agreement, the
Shareholders Agreement, any provision hereof or thereof, the alleged breach
hereof or thereof, or in any way relating to the subject matter of this
Agreement, the Transactions or the relationship between the parties created by
this Agreement, including questions concerning the scope and applicability of
this Section 11.1, whether sounding in contract, tort or otherwise, at law or in
equity, under State or federal law, whether provided by statute or common law,
for damages or any other relief (any such controversy, dispute, claim or other
matter in question, a "Dispute"), on or before the 30th day following the
receipt by the Company or Purchaser of written notice of such Dispute from the
other party(ies), which notice describes in reasonable detail the nature of the
dispute and the facts and circumstances relating thereto, the Company or
Purchaser may, by delivery of written notice to the other party(ies), require
that a senior officer of the Company and of the General Partner of the Purchaser
meet at a mutually agreeable time and place in an attempt to resolve such
Dispute. Such meeting shall take place on or before the 15th day following the
date of the notice requiring such meeting, and if the Dispute has not been
resolved
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within 15 days following such meeting, the Company or Purchaser may cause such
Dispute to be resolved by binding arbitration in Houston, Texas, by submitting
such Dispute for arbitration within 30 days following the expiration of such 15-
day period. This agreement to arbitrate shall be specifically enforceable
against the parties.
(b) The Arbitration Shall be Governed by and Conducted Pursuant to the
Federal Arbitration Act: It is the intention of the parties that the
arbitration shall be governed by and conducted pursuant to the Federal
Arbitration Act, as such Act is modified by this Section 11.1. If it is
determined the Federal Arbitration Act is not applicable to this Agreement
(e.g., this Agreement does not evidence a transaction involving interstate
commerce), this agreement to arbitrate shall nevertheless be enforceable
pursuant to applicable state law. While the arbitrators may refer to Commercial
Arbitration Rules of the American Arbitration Association for guidance with
respect to procedural matters, the arbitration proceeding shall not be
administered by the American Arbitration Association but instead shall be self-
administered by the parties until the arbitrators are selected and then the
proceeding shall be administered by the arbitrators.
(c) Authority of the Arbitrators: The validity, construction, and
interpretation of this agreement to arbitrate, and all procedural aspects of the
arbitration conducted pursuant to this agreement to arbitrate, including but not
limited to, the determination of the issues that are subject to arbitration
(i.e., arbitrability), the scope of the arbitrable issues, allegations of "fraud
in the inducement" to enter into this Agreement or this arbitration provision,
allegations of waiver, laches, delay or other defenses to arbitrability, and the
rules governing the conduct of the arbitration (including the time for filing an
answer, the time for the filing of counterclaims, the times for amending the
pleadings, the specificity of the pleadings, the extent and scope of discovery,
the issuance of subpoenas, the times for the designation of experts, whether the
arbitration is to be stayed pending resolution of related litigation involving
third parties not bound by this arbitration agreement, the receipt of evidence,
and the like), shall be decided by the arbitrators.
(d) Choice of Law: The rules of arbitration of the Federal
Arbitration Act, as modified by this Agreement, shall govern procedural aspects
of the arbitration; to the extent the Federal Arbitration Act as modified by
this Agreement does not address a procedural issue, the arbitrators may refer
for guidance to the Commercial Arbitration Rules then in effect with the
American Arbitration Association. The arbitrators may refer for guidance to the
Federal Rules of Civil Procedure, the Federal Rules of Civil Evidence, and the
federal law with respect to the discovery process, applicable legal privileges,
and admissible evidence. In deciding the substance of the parties' Dispute, the
arbitrators shall refer to the substantive laws of the State of New York for
guidance (excluding New York conflict-of-law rules or principles that might call
for the application of the law of another jurisdiction). IT IS EXPRESSLY AGREED
THAT NOTWITHSTANDING ANY OTHER PROVISION IN THIS SECTION 11.1 TO THE CONTRARY,
THE ARBITRATORS SHALL HAVE ABSOLUTELY NO AUTHORITY TO AWARD CONSEQUENTIAL
DAMAGES (SUCH AS LOSS OF PROFIT), TREBLE, EXEMPLARY OR PUNITIVE DAMAGES OF ANY
TYPE UNDER ANY CIRCUMSTANCES REGARDLESS OF WHETHER SUCH DAMAGES MAY BE AVAILABLE
UNDER NEW YORK LAW, THE LAW OF ANY OTHER STATE, OR FEDERAL LAW, OR UNDER THE
FEDERAL
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ARBITRATION ACT, OR UNDER THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. The arbitrators shall have the authority to assess the
costs and expenses of the arbitration proceeding (including the arbitrators'
fees and expenses) against either or both parties. However, each party shall
bear its own attorneys fees and the arbitrators shall have no authority to award
attorneys fees.
(e) Selection of Arbitrators. When a Dispute has been submitted for
arbitration, within 30 days of such submission, the Company will choose an
arbitrator and Purchaser will choose an arbitrator. The two arbitrators shall
select a third arbitrator, failing agreement on which within ninety days of the
original notice, Purchaser and the Company (or either of them) shall apply to
any United States District Judge for the Southern District of Texas, who shall
appoint the third arbitrator. While the third arbitrator shall be neutral, the
two party-appointed arbitrators are not required to be neutral and it shall not
be grounds for removal of either of the two party-appointed arbitrators or for
vacating the arbitrators' award that either of such arbitrators has past or
present minimal relationships with the party that appointed such arbitrator.
Evident partiality on the part of an arbitrator exists only where the
circumstances are such that a reasonable person would have to conclude there in
fact existed actual bias and a mere appearance or impression of bias will not
constitute evident partiality or otherwise disqualify an arbitrator. Minimal or
trivial past or present relationships between the neutral arbitrator and the
party selecting such arbitrator or any of the other arbitrators, or the failure
to disclose such minimal or trivial past or present relationships, will not by
themselves constitute evident partiality or otherwise disqualify any arbitrator.
Upon selection of the third arbitrator, each of the three arbitrators shall
agree in writing to abide faithfully by the terms of this agreement to
arbitrate. The three arbitrators shall make all of their decisions by majority
vote. If one of the party-appointed arbitrators refuses to participate in the
proceedings or refuses to vote, the decision of the other two arbitrators shall
be binding. If an arbitrator dies or becomes physically incapacitated and is
unable to fulfill his or her duties as an arbitrator, the arbitration proceeding
shall continue with a substitute arbitrator selected as follows: if the
incapacitated arbitrator is a party-appointed arbitrator, the party shall
promptly select a new arbitrator, and if the incapacitated arbitrator is the
neutral arbitrator, the two-party appointed arbitrators shall select a
substitute neutral arbitrator, failing agreement on which Purchaser and the
Company (or either of them) shall apply to any United States District Judge for
the Southern District of Texas, who shall appoint the substitute neutral
arbitrator.
(f) Final Hearing and Arbitrators' Award: The final hearing shall be
conducted within 120 days of the selection of the third arbitrator. The final
hearing shall not exceed ten working days, with each party to be granted one-
half of the allocated time to present its case to the arbitrators. There shall
be a transcript of the hearing before the arbitrators. The arbitrators shall
render their ultimate decision within twenty days of the completion of the final
hearing completely resolving all of the disputes between the parties that are
the subject of the arbitration proceeding. The arbitrators' ultimate decision
after final hearing shall be in writing, but shall be as brief as possible, and
the arbitrators shall assign their reasons for their ultimate decision. In the
case the arbitrators award any monetary damages in favor of either party, the
arbitrators shall certify in their award that they have not included any treble,
exemplary or punitive damages.
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(g) Finality of the Arbitrators' Award: The arbitrators' award shall,
as between the parties to this Agreement and those in privity with them, be
final and entitled to all of the protections and benefits of a final judgment,
e.g., res judicata (claim preclusion) and collateral estoppel (issue
preclusion), as to all Disputes, including compulsory counterclaims, that were
or could have been presented to the arbitrators. The arbitrators' award shall
not be reviewable by or appealable to any court, except to the extent permitted
by the Federal Arbitration Act.
(h) Use of the Courts to Assist in the Enforcement of the Arbitrators'
Decisions and the Arbitrators' Award: It is the intent of the parties that the
arbitration proceeding shall be conducted expeditiously, without initial
recourse to the courts and without interlocutory appeals of the arbitrators'
decisions to the courts. However, if a party refuses to honor its obligations
under this agreement to arbitrate, the other party may obtain appropriate relief
compelling arbitration in any court having jurisdiction over the parties; the
order compelling arbitration shall require that the arbitration proceedings take
place in Houston, Texas, as specified above. The parties may apply to any court
for orders requiring witnesses to obey subpoenas issued by the arbitrators.
Moreover, any and all of the arbitrators' orders and decisions may be enforced
if necessary by any court. The arbitrators' award may be confirmed in, and
judgment upon the award entered by, any federal or State court having
jurisdiction over the parties.
(i) Confidentiality: To the fullest extent permitted by law, this
arbitration proceeding and the arbitrators award shall be maintained in
confidence by the parties. However, a violation of this covenant shall not
affect the enforceability of this arbitration agreement or of the arbitrators'
award.
(j) The Parties' Obligations under this Arbitration Provision are
Enforceable Even if the Agreement has Terminated or is Breached; Severability:
A party's breach of this Agreement shall not affect this agreement to arbitrate.
Moreover, the parties' obligations under this arbitration provision are
enforceable even after this Agreement has terminated. The invalidity or
unenforceability of any provision of this arbitration agreement shall not affect
the validity or enforceability of the parties' obligation to submit their
disputes to binding arbitration or the other provisions of this agreement to
arbitrate.
Section 11.2 ENTIRE AGREEMENT. This Agreement and the Shareholders
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
Section 11.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by facsimile, with confirmation of receipt,
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows:
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If to the Company or Twin:
Pride International, Inc.
5847 San Felipe, Suite 3300
Houston, Texas 77057
Fax: 713-789-1430
Attn: Mr. Paul A. Bragg
President and Chief Executive Officer
With a copy to:
Baker Botts L.L.P.
910 Louisiana
Houston, Texas 77002
Fax: 713-229-1522
Attn: L. P. Thomas, Esq.
If to the Purchaser:
First Reserve Fund VIII, L.P.
c/o First Reserve Corp.
1801 California Street
Denver, Colorado 80202
Fax: 303-382-1275
Attn: Thomas Denison, Esq.
With a copy to:
Vinson & Elkins L.L.P.
1001 Fannin Street, 23rd Floor
Houston, Texas 77002-6760
Fax: 713-615-5605
Attn: Bruce C. Herzog, Esq.
Section 11.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws in the State of New York applicable to
agreements made and wholly performed in the State of New York.
Section 11.5 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement unless the consummation of the Transactions contemplated
hereby is materially and adversely affected thereby.
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<PAGE>
Section 11.6 EXPENSES. Except as otherwise provided herein or in the
Shareholders Agreement, each party shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with transactions contemplated
hereby, including fees and expenses of its representatives, provided, however,
that the Company shall pay all filing fees associated with all filings,
applications, notifications or requests for consent, approval or permission that
may be required by statute regulation or judicial decrees in connection with the
Transactions and shall also pay all of the Purchaser' legal fees, professional
fees and other transaction costs (collectively, the "Costs") incurred in
connection with the evaluation, preparation and negotiation of the Transactions
contemplated hereby.
Section 11.7 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of and shall not be utilized in interpreting this Agreement.
Section 11.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.
Section 11.9 ASSIGNMENT. Except as provided in this Section 11.9,
neither of the Purchaser nor the Company may assign its rights or obligations
hereunder; provided, however, that (i) the Purchaser may assign its rights to
acquire the Shares to another member of the First Reserve Group, provided that
such assignment shall not relieve the Purchaser of its obligations hereunder;
and (ii) the Company may assign its obligations to deliver the Shares and its
rights to receive the Purchase Price therefor to a wholly owned subsidiary of
the Company, provided that such assignment shall not relieve the Company of its
obligations hereunder, and provided further that the Company shall deliver to
the Purchaser such opinions of counsel with respect to such assignment as the
Purchaser may reasonably request.
Section 11.10 AMENDMENTS; WAIVERS. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Company or
Purchaser therefrom, shall in any event be effective unless the same shall be in
writing and signed by each Purchaser and the Company in the case of amendments,
and each Purchaser or the Company, as the case may be, in the case of waivers.
29
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first set above.
PRIDE INTERNATIONAL, INC.
By: /s/ Paul A. Bragg
------------------------------------------
Name: Paul A. Bragg
Title: President
TWIN OAKS FINANCIAL LTD.
By: /s/ Paul A. Bragg
------------------------------------------
Name: Paul A. Bragg
Title: President
FIRST RESERVE FUND VIII, L.P.
By: First Reserve Fund GP VIII, L.P.
its General Partner
By: First Reserve Corporation
its General Partner
By: /s/ Thomas R. Denison
-------------------------------------
Name: Thomas R. Denison
Title: Managing Director
30
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EXHIBIT A
FIRST AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
31
<PAGE>
EXHIBIT B
FORM OF OPINION OF BAKER BOTTS L.L.P.
1. The Agreement and the Shareholders Agreement are valid and binding
agreements of the Company enforceable in accordance with their respective terms;
and
2. This opinion will be subject to customary exceptions, qualifications
and assumptions.
32
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EXHIBIT C
FORM OF OPINION OF SHER GARNER CAHILL
RICHTER KLEIN MCALISTER & HILBERT, L.L.P.
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Louisiana and has all requisite
corporate power and authority to carry on its business as now being conducted;
2. The Company has the requisite corporate power to effect the
Transactions as contemplated by the Agreement;
3. The execution and delivery of the Agreement and the Shareholders
Agreement did not, and the consummation of the Transactions will not, violate
any provisions of the Company's Articles of Incorporation or Bylaws, each as
amended to date;
4. The Agreement and the Shareholders Agreement have been duly and
validly authorized, executed and delivered by the Company;
5. The Shares to be delivered by the Company in connection with the
Agreement are duly authorized and reserved for issuance and, when issued in
accordance with the terms and conditions of the Agreement, will be validly
issued, fully paid and nonassessable; and
7. These opinions will be subject to customary exceptions, qualifications
and assumptions.
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Exhibit 10.2
EXECUTION VERSION
- --------------------------------------------------------------------------------
FIRST AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
AMONG
PRIDE INTERNATIONAL, INC.
FIRST RESERVE FUND VII, L.P.
AND
FIRST RESERVE FUND VIII, L.P.
MARCH 31, 2000
- --------------------------------------------------------------------------------
<PAGE>
FIRST AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
This First Amended and Restated Shareholders Agreement (this "Agreement")
is entered into as of the 31st day of March, 2000 by and among Pride
International, Inc., a Louisiana corporation (the "Company"), First Reserve Fund
VII, L.P., a Delaware limited partnership ("First Reserve VII"), and First
Reserve Fund VIII, L.P., a Delaware limited partnership ("First Reserve
VIII")(collectively, "First Reserve").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Securities Purchase Agreement entered
into by and between First Reserve VII and the Company dated as of May 5, 1999,
as amended (as so amended, the "Purchase Agreement"), First Reserve VII received
upon consummation of the transactions contemplated by the Purchase Agreement,
shares of Common Stock, no par value, of the Company;
WHEREAS, pursuant to that certain Securities Purchase Agreement entered
into by and among First Reserve VIII, the Company and Twin Oaks Financial Ltd.
dated as of March 31, 2000 (the "Second Purchase Agreement"), First Reserve VIII
received upon consummation of the transactions contemplated thereby additional
shares of Common Stock (the shares of Common Stock acquired pursuant to the
Purchase Agreement together with the shares of Common Stock acquired pursuant to
the Second Purchase Agreement are collectively referred to herein as the "Common
Stock"); and
WHEREAS, the parties hereto desire to reflect herein the agreements
relating to representation of First Reserve on the Board of the Company
described in Section 5.7 of the Purchase Agreement and to set forth certain
additional agreements among them relating to the First Reserve Group's (as
defined below) acquisition and ownership of Company Securities.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 Defined Terms. The following capitalized terms when used in
this Agreement shall have the following meanings:
"Affiliate" shall have the respective meanings assigned thereto in Rule 405
as presently promulgated under the Securities Act.
"Amethyst Agreement" means the Put and Exchange Agreement dated September
14, 1999 between the Company and First Reserve.
<PAGE>
"beneficial ownership" and "group" shall have the respective meanings
assigned thereto in Rules 13d-3 and 13d-5 as presently promulgated under the
Exchange Act.
"Board" means the Board of Directors of the Company.
"Common Stock" has the meaning assigned in the Recitals to this Agreement.
"Company Securities" means, collectively, the Common Stock and any class or
series of the Company's preferred stock, and any other securities, warrants or
options or rights of any nature (whether or not issued by the Company) that are
convertible into, exchangeable for, or exercisable for the purchase of, or
otherwise give the holder thereof any rights in respect of Common Stock, or any
class or series of Company preferred stock that is entitled to vote generally
for the election of directors or otherwise.
"Director" means any member of the Board.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Reserve Group" means, collectively, First Reserve and its
Affiliates; provided, however, that a Person shall not be deemed a member of the
First Reserve Group if the only reason that such Person would be deemed an
Affiliate of First Reserve is because it is (a) a limited partner of First
Reserve, (b) an operating company in which First Reserve (and/or any other fund
or funds similar to First Reserve that is controlled by, controlling or under
common control with First Reserve) has an investment, but in which First Reserve
and such other funds do not, in the aggregate (i) have at least a majority of
the voting power (defined in a manner consistent with the definition of Voting
Power set forth herein with respect to the Company) of the securities of such
operating company, or (ii) the contractual right to designate at least a
majority of the members of the board of directors (or similar governing body) of
such operating company, or (c) an Affiliate of an operating company described in
clause (b) who is not otherwise an Affiliate of the First Reserve Group.
"Own Company Securities" means from and after the first date upon which the
aggregate amount invested by the First Reserve Group in the Company equals or
exceeds $50 million (regardless of whether, as a result of share repurchases,
dividends or otherwise, the First Reserve Group's investment in the Company
subsequently becomes less than $50 million); provided, however, the First
Reserve Group shall not be deemed to "Own Company Securities" after the date
(after such date on which the First Reserve Group is first deemed to Own Company
Securities) that its aggregate direct or indirect beneficial ownership of
capital stock of the Company constitutes or would be convertible into or
exchangeable for less than 5% of the then outstanding shares of Common Stock.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or other entity of whatever nature.
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"Purchase Agreement" shall have the meaning assigned in the Recitals to
this Agreement.
"Purchase Agreements" means, when the plural is used, the Purchase
Agreement and the Second Purchase Agreement, collectively.
"Registration Rights Agreement" means the provisions of Article 5 hereof,
as amended, modified or supplemented from time to time.
"Second Purchase Agreement" shall have the meaning assigned in the Recitals
to this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Termination Date"means April 1, 2006.
"Voting Power" means, at, any measurement date, the total number of votes
that could have been cast in an election of directors of the Company had a
meeting of the stockholders of the Company been duly held based upon a record
date as of the measurement date if all Company Securities then outstanding and
entitled to vote at such meeting were present and voted to the fullest extent
possible at such meeting.
Section 1.2 Other Definitions. Definitions applicable to the
Registration Rights Agreement provisions of this Agreement are found in
Article 5 hereof.
Section 1.3 Construction. Whenever the context requires, the gender of
all words used in this Agreement includes the masculine, feminine, and neuter,
and the singular shall include the plural, and vice versa. Except as specified
otherwise, all references to Articles and Sections refer to articles and
sections of this Agreement, and all references to exhibits are to Exhibits
attached to this Agreement, each of which is made a part of this Agreement for
all purposes. The word "including" shall mean "including, without limitation"
unless the context otherwise requires.
ARTICLE 2
BOARD OF DIRECTORS; VOTING
Section 2.1 Election of Directors. (a) For so long as First Reserve or
any of the First Reserve Group collectively Own Company Securities, First
Reserve shall have the right (i) to nominate one person for election to the
Board; provided, however, that the person nominated shall be a managing director
or other higher official of First Reserve Corporation or otherwise be reasonably
acceptable to the Company, and (ii) (A) to receive all notices, reports and
other communications sent to Directors at the same time they are transmitted to
Directors, and to receive reasonable notice of and to have one representative
attend any meeting of the Company's Board,
3
<PAGE>
(B) to consult with and advise members of senior management of the Company, and
(C) upon reasonable notice, to have access to the books and records of the
Company. If at any time more than one member of the First Reserve Group shall be
the owner of Company Securities, First Reserve shall have the right set forth in
subparagraph (i) of this Section 2.1(a) and may delegate (with notice to the
Company) any of the rights set forth in subparagraph (ii) of this Section 2.1(a)
to the extent deemed advisable by First Reserve in order to comply with laws and
regulations applicable to the First Reserve Group and the members thereof. First
Reserve hereby designates William E. Macaulay as its initial nominee for
election to the Company's Board.
(b) The Company agrees with First Reserve that the Company will take all
steps necessary to increase the authorized number of members of the Board by one
and to have the person initially designated by First Reserve appointed to the
Company's Board of Directors on the Closing Date (as such term is defined in the
Purchase Agreement). At each subsequent election of directors at which the term
of the nominee of First Reserve as a director of the Company expires, the
Company will nominate the designee of First Reserve for election to the
Company's Board for the succeeding term for which Directors are elected, will
recommend his or her election to the Company's stockholders and otherwise will
use its reasonable best efforts to cause the Company's stockholders to elect the
designee of First Reserve to the Company's Board. The Company shall use its
reasonable best efforts to solicit from its stockholders proxies voted in favor
of such nominee, and shall vote all management proxies in favor of such nominee,
except for such proxies that specifically indicate to the contrary. The rights
set forth in this Section 2.1(a) shall survive until the termination of this
Agreement as provided in Section 6.1 hereof.
(c) In the event that any Director designated pursuant to Section 2.1(a)
for any reason ceases to serve as a member of the Board during his term of
office, First Reserve shall be entitled to designate a successor Director to
fill the vacancy created thereby on the terms and subject to the conditions of
this Section 2.1. If and to the extent that the remaining members of the Board
are entitled to fill vacancies on the Board, upon the occurrence of any vacancy,
the Board will promptly take any actions necessary to fill such vacancies in
accordance with the foregoing provision in order to cause the election of the
nominee of First Reserve.
Section 2.2 No Inconsistent Company Actions. The Company hereby agrees
not to take any action inconsistent with the provisions of Section 2.1.
ARTICLE 3
ACQUISITION AND SALE OF COMPANY SECURITIES
Section 3.1. Company Securities. First Reserve covenants and agrees with
the Company that, without the consent of the Company, except for the Company
Securities acquired pursuant to the Purchase Agreements or any similar agreement
to which the Company and First Reserve (or its Affiliates or designees) are
parties, any Company Securities acquired with the consent of the Company and any
Company Securities issued pursuant to a stock split, stock dividend or
recapitalization with respect to such Company Securities, no member of the First
Reserve Group
4
<PAGE>
shall, directly or indirectly, acquire any Company Securities, if the effect of
such acquisition, agreement or other action would be to increase the aggregate
beneficial ownership of Company Securities by the First Reserve Group by an
amount equal to 3% or more of either the Voting Power or the number of
outstanding shares of any class or series of Company Securities.
Section 3.2 Distribution of Company Securities. First Reserve covenants
that it shall not, and that it shall cause each other member of the First
Reserve Group that it controls not to, directly or indirectly, sell, transfer
beneficial ownership of, pledge, hypothecate or otherwise dispose of any Company
Securities, except by conversion, exchange or exercise of such Company
Securities pursuant to their terms in a manner not otherwise in violation of
Section 3.1 or pursuant to:
(a) a bona fide pledge of or the granting of a security interest or
any other lien or encumbrance in such Company Securities to a lender that is not
a member of the First Reserve Group to secure a bona fide loan for money
borrowed made to one or more members of the First Reserve Group, the foreclosure
of such pledge or security interest or any other lien or encumbrance that may be
placed involuntarily upon any Company Securities, or the subsequent sale or
other disposition of such Company Securities by such lender or its agent;
(b) a transfer, assignment, sale or disposition of such Company
Securities to another member of the First Reserve Group that has signed this
Agreement;
(c) a distribution of Company Securities to any partner of First
Reserve; provided that any distributee that is a member of the First Reserve
Group has signed this Agreement; and provided, further that any arrangements
coordinated or initiated by or on behalf of First Reserve to assist its limited
partners in the sale of Company Securities distributed to them must comply with
the provisions of this Section 3.2;
(d) sales in public offerings registered under the Securities Act;
(e) sales effected in compliance with the provisions of Rule 144 under
the Securities Act;
(f) other privately negotiated sales of Company Securities;
(g) upon consummation of or otherwise in connection with a business
combination or similar transaction involving the Company that is approved by the
Board;
(h) sales in a tender offer open to all holders of Company Securities;
or
(i) put rights and call rights granted in the Second Purchase
Agreement.
Notwithstanding anything to the contrary in this Section 3.2, in effecting any
sale, transfer of any beneficial interest in or other disposition of Company
Securities pursuant to Sections 3.2 (c), (d) and
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(f), above, the members of the First Reserve Group selling, transferring or
disposing such Company Securities shall, unless the Company consents otherwise,
use their reasonable best efforts to refrain from knowingly selling,
transferring or disposing of such number of Company Securities as represent
either the right to acquire or ownership of 5% or more of the Voting Power to
any one Person or group of Persons (other than Twin Oaks, Inc.).
Section 3.3. Proxy Solicitations. First Reserve agrees that as a
stockholder, the First Reserve Group shall vote or cause to be voted all Company
Securities of which any member of the First Reserve Group is the beneficial
owner with respect to each matter submitted to the Company's stockholders
providing for, involving, expected to facilitate or that could reasonably be
expected to result in a business combination or other change in control of the
Company that has not been approved by the Board (including without limitation
the election or removal of one or more Company directors or one or more nominees
for director proposed by the Board), either (a) in the manner recommended by the
Board, or (b) proportionately with all other holders of Company Securities
voting with respect to such matter (provided, that the First Reserve Group shall
at all times retain the power to vote for the election of the nominee of First
Reserve to the Company's Board). First Reserve hereby agrees that it and each
member of the First Reserve Group that it controls shall not take any action, or
solicit proxies in any fashion, inconsistent with the provisions of this
Section 3.3.
Section 3.4. Groups. First Reserve covenants that it shall not, and that
no other member of the First Reserve Group that it controls shall, join a
partnership, limited partnership, syndicate or other group, or otherwise act in
concert with any other Person, for the purpose of acquiring, holding, voting or
disposing of any Company Securities, other than the First Reserve Group itself.
Section 3.5. Limitation on Covenants. Notwithstanding any provision to
the contrary in this Agreement, during any period that any person designated by
First Reserve to serve as a Director in accordance with the provisions of
Section 2.1(a) is not serving as a Director as a result of the failure of the
Company or the Board to comply with the terms of this Agreement, or if any such
designee is not elected by the stockholders (and Section 2.1(a) and Section 2.2
are complied with), then the covenants set forth in this Article 3 shall cease
to be effective during such period; provided, however, that if a person
designated by First Reserve ceases to be a Director by reason of death or
resignation, then the provisions of this Section 3.5 shall not apply if the
Board appoints First Reserve's designated replacement to fill any such vacancy
within 15 business days after the Company receives notice of such designation.
The provisions of this Section 3.5 shall be in addition to any other remedies
that First Reserve may have in connection with a breach of the provisions of
Article 2 hereof.
ARTICLE 4
LEGEND AND STOP TRANSFER ORDER
Section 4.1 Legend and Stop Transfer Order. To assist in effectuating
the provisions of this Agreement, First Reserve hereby consents: (a) to the
placement, on certificates issued with
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respect to the shares of Common Stock issued to it pursuant to the Purchase
Agreements or otherwise promptly after any Company Securities become subject to
the provisions of this Agreement, of the following legend on all certificates
representing ownership of Company Securities owned of record by any member of
the First Reserve Group or by any Person where a member of the First Reserve
Group is the beneficial owner thereof, until such shares are sold, transferred
or disposed in a manner permitted hereby to a Person who is not then a member of
the First Reserve Group:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF
AN AGREEMENT AMONG, INTER ALIA, PRIDE INTERNATIONAL, INC. AND FIRST RESERVE
FUND VIII, L.P., AND MAY NOT BE VOTED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE THEREWITH.
COPIES OF THE AGREEMENT ARE ON FILE AT THE OFFICE OF THE CORPORATE
SECRETARY OF PRIDE INTERNATIONAL, INC.
; and (b) to the entry of stop transfer orders with the transfer agent or agents
of Company Securities against the transfer of Company Securities except in
compliance with the requirements of this Agreement, or if the Company acts as
its own transfer agent with respect to any Company Securities, to the refusal by
the Company to transfer any such securities except in compliance with the
requirements of this Agreement. The Company agrees to remove promptly all
legends and stop transfer orders with respect to the transfer of Company
Securities being made to a Person who is not then a member of the First Reserve
Group in compliance with the provisions of this Agreement.
ARTICLE 5
REGISTRATION RIGHTS AGREEMENT
Section 5.1. Defined Terms. The following capitalized terms when used in
this Registration Rights Agreement shall have the following meanings:
"Amethyst Registrable Securities" means the shares of Common Stock that (i)
are Registrable Securities and (ii) are received by a member of the First
Reserve Group upon exchange of the Exchangeable Stock pursuant to Section 5.10
or 5.11 of the Purchase Agreement or would be received by a member of the First
Reserve Group upon exercise of its right to exchange the Exchangeable Stock
pursuant to Section 5.10 of the Purchase Agreement.
"Demand Registration" means a demand registration as defined in Section
5.2(a) hereof.
"Existing Holders" means the holders of registerable securities in
accordance with the terms of the Existing Registration Rights Agreements.
"Existing Registration Rights Agreements" means that certain (i)
Registration Rights Agreement, dated as of September 1, 1993, by and among the
Company and Paul A. Bragg, (ii)
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Registration Rights Agreement, dated as of March 10, 1997, by and among the
Company and Ackermans & van Haaran Group and Soletanche Group, and (ii)
Registration Rights Agreement, dated as of October 1, 1998, by and among the
Company and DWC Amethyst N.V.
"Holders" means the holders of the Registrable Securities in accordance
with the terms of this Registration Rights Agreement.
"Indemnified Party" has the meaning set forth in Section 5.3(c).
"Indemnifying Party" has the meaning set forth in Section 5.3(c).
"Piggyback Registration" means a piggyback registration as defined in
Section 5.2(b) hereof.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to the
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
"Registrable Securities" means (a) all shares of Common Stock issued to
First Reserve pursuant to the Purchase Agreements including all shares of Common
Stock which may be issued upon exchange of the Exchangeable Stock or otherwise
pursuant to the Amethyst Agreement and (b) any other securities issued by the
Company after the date hereof with respect to such shares of Common Stock by
means of exchange, reclassification, dividend, distribution, split up,
combination, subdivision, recapitalization, merger, spin-off, reorganization or
otherwise; provided, however, that as to any Registrable Securities, such
securities shall cease to constitute Registrable Securities for the purposes of
this Registration Rights Agreement if and when: (i) a Registration Statement
with respect to the sale of such securities shall have been declared effective
by the SEC and such securities shall have been sold pursuant thereto; (ii) such
securities shall have been sold in compliance with of all applicable resale
provisions of Rule 144 under the Securities Act; (iii) such securities may be
sold by the Holder thereof in reliance upon Rule 144(k) (or any successor rule)
promulgated under the Securities Act, or (iv) such securities cease to be issued
and outstanding for any reason.
"Registration Statement" means any registration statement filed by the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Registration Rights Agreement, including the Prospectus included
therein, amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"SEC" means the Securities and Exchange Commission, or any successor agency
thereto.
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"Securities Act" means the Securities Act of 1933, as amended.
Section 5.2. Registration Rights
(a) Demand Registration. (i) At any time after June 21, 2000, First
Reserve may at any time and from time to time make a written request for
registration under the Securities Act in a firm commitment underwritten public
offering of Registrable Securities owned by them having a good faith estimated
public offering price of at least $20 million (a "Demand Registration");
provided that the Company shall not be obligated to effect more than three
Demand Registrations in any 12-month period or more than an aggregate of three
Demand Registrations pursuant to this Section 5.2(a). Such request will specify
the number of shares of Registrable Securities proposed to be sold. Within five
days of such request, the Company shall give written notice of such request to
all other Holders of Registrable Securities and shall include in the
registration in respect of which notice has been given all Registrable
Securities with respect to which the Company has received written requests from
Holders for inclusion therein within ten days after the Company's notice
regarding such registration has been given as provided herein. If Registrable
Securities of other Holders are included in such registration, the Holder or
Holders requesting such Demand Registration may reduce the number of shares of
Registrable Securities initially specified to be included in such registration
in its or their sole discretion; provided, that Registrable Securities having a
good faith estimated public offering price of at least $20 million are included
in such registration. A registration will not count as a Demand Registration
until the Registration Statement filed pursuant to such registration has been
declared effective by the SEC and remains effective for the period specified in
Section 5.2(d)(i).
(ii) The Holder or Holders requesting the Demand Registration shall
select the managing underwriters (including the book running lead managing
underwriters) and any additional investment bankers and managers to be used in
connection with the offering (unless a member of the First Reserve Group is
included among the Holders selling pursuant to such registration, in which case
First Reserve shall select such underwriters, investment bankers and managers);
provided that the lead managing underwriter must be reasonably satisfactory to
the Company.
(iii) Neither the Company nor any of its security holders (other than
the Holders of Registrable Securities in such capacity) shall be entitled to
include any of the Company's securities in a Registration Statement initiated as
a Demand Registration under this Section 5.2(a) without the consent of First
Reserve.
(iv) In addition to the Demand Registration rights enumerated above,
with respect to the Amethyst Registrable Securities at any time after (X) July
1, 2002 or (Y) such earlier date which is 60 days prior to the date on which the
Exchangeable Stock shall have been exchanged for Common Stock pursuant to
Section 5.10 or 5.11 of the Purchase Agreement, First Reserve may make a request
in writing that the Company file a registration statement under the Securities
Act to register under the Securities Act all Amethyst Registrable Securities
(whether or not such Amethyst
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Registrable Securities are then issued and outstanding) for resale on a delayed
or continuous basis for a period of one year in an amount equal to the lesser of
(A) all such Amethyst Registrable Securities, or (B) the number of Amethyst
Registrable Securities that could be sold pursuant to the provisions of Rule 144
by an affiliate of the Company (assuming such Amethyst Registrable Securities
were not restricted securities within the meaning of Rule 144) during such one-
year period. Such a request (and the related registration) shall be in addition
to the Demand Registrations provided for in Section 5.2(a)(i) of this Agreement.
(b) Piggyback Registration. If the Company proposes to file a
registration statement under the Securities Act with respect to an offering of
Common Stock (i) for the Company's own account (other than a registration
statement on Form S-4 or S-8 (or any substitute form that may be adopted by the
SEC for transactions traditionally registered on Form S-4 or S-8)) or (ii) for
the account of any of its holders of Common Stock, including without limitation,
the Existing Holders (other than pursuant to a Demand Registration under Section
5.2(a)), then the Company shall give written notice of such proposed filing to
First Reserve as soon as practicable (but in no event later than the earlier to
occur of (i) the tenth day following receipt by the Company of notice of
exercise of other demand registration rights and (ii) 15 days before the filing
date), and such notice shall offer First Reserve the opportunity to register
such number of shares of Registrable Securities as First Reserve may request
within 10 days after receipt by First Reserve of the Company's notice on the
same terms and conditions as the Company's or such holder's Common Stock (a
"Piggyback Registration"). First Reserve will be permitted to withdraw all or
any part of its Registrable Securities from a Piggyback Registration at any time
prior to the date the Registration Statement filed pursuant to such Piggyback
Registration becomes effective with the SEC.
(c) Reduction of Offering. Notwithstanding anything contained herein,
if the Piggyback Registration is an underwritten offering and the lead managing
underwriter of such offering delivers a written opinion to the Company that the
size of the offering that the Company, First Reserve, the Existing Holders and
any other Persons whose securities are proposed to be included in such offering
is such that the offering or the offering price would be materially and
adversely affected, the Company will include in such Piggyback Registration in
the following order of priority (i) first, all of the securities proposed to be
registered by the Company (if the offering is for the account of the Company),
or, if the offering is for the account of the Existing Holders (or any of them),
all of the securities proposed to be registered by such Existing Holders, (ii)
second, all of the Registrable Securities requested by First Reserve, and (iii)
thereafter, the securities proposed to be registered by any other Persons.
(d) Filings; Information. Whenever First Reserve requests that any
Registrable Securities be registered pursuant to Section 5.2(a) hereof, the
Company will use its reasonable best efforts to effect the registration of such
Registrable Securities and to permit the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, as promptly as is
practicable, and in connection with any such request:
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(i) the Company will as expeditiously as possible, but in no event
later than 30 days after receipt of a request to file a registration statement
with respect to such Registrable Securities, prepare and file with the SEC a
Registration Statement on any form for which the Company then qualifies and
which counsel for the Company shall deem appropriate and available for the sale
of the Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof and which is reasonably satisfactory to
First Reserve, and use its reasonable best efforts to cause such Registration
Statement to become and remain effective for a period of not less than 90 days
(or such shorter period which will terminate when all Registrable Securities
covered by such Registration Statement have been sold); provided that if at the
time the Company receives a request to file a Registration Statement with
respect to Registrable Securities or thereafter, the Company is engaged in
confidential negotiations or other confidential business activities, disclosure
of which would be required in such Registration Statement or a related
prospectus or supplement thereto (but would not be required if such Registration
Statement were not filed) and the board of directors of the Company determines
in good faith that such disclosure would be materially detrimental to the
Company and its stockholders, the Company shall have a period of not more than
120 days (less the number of days during the previous 12 months that the use of
a Prospectus was suspended pursuant to Section 5.2(d)(vi) and/or this Section
5.2(d)(i)) within which to file such registration statement measured from the
date of the Company's receipt of First Reserve's request for registration in
accordance with Section 5.2(a) hereof or to file any supplement required by
Section 5.2(d)(vi). The filing of a registration statement may only be deferred
once for any potential transaction or event or related transactions or events
that could arise as a result of negotiations or other activities and any
registration statement whose filing has been deferred as a result shall be filed
forthwith if the negotiations or other activities are disclosed or terminated.
In order to defer the filing of a registration statement pursuant to this
Section 5.2(d)(i), the Company shall promptly, upon determining to seek such
deferral, deliver to First Reserve a certificate signed by the President or
Chief Financial Officer of the Company stating that the Company is deferring
such filing pursuant to this Section 5.2(d)(i).
(ii) the Company will prepare and file with the SEC such amendments
and supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective for the period set forth in Section 5.2(d)(i) and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement.
(iii) the Company will, if requested, prior to filing a
Registration Statement or any amendment or supplement thereto, furnish to First
Reserve and each applicable managing underwriter, if any, copies thereof, and
thereafter furnish to First Reserve and each such underwriter, if any, such
number of copies of such Registration Statement, amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein) and the Prospectus included in such Registration Statement
(including each preliminary Prospectus) as First Reserve or each such
underwriter may reasonably request in order to facilitate the sale of the
Registrable Securities.
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(iv) After the filing of the Registration Statement, the Company
will promptly notify First Reserve of any stop order issued or, to the Company's
knowledge, threatened to be issued by the SEC and take all reasonable actions
required to prevent the entry of such stop order or to remove it as soon as
possible if entered.
(v) the Company will use its reasonable best efforts to qualify
the Registrable Securities for offer and sale under such other securities or
blue sky laws of such jurisdictions in the United States as First Reserve
reasonably requests; provided that the Company will not be required to (A)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph 5.2(d)(v), (B)
subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.
(vi) the Company will as promptly as is practicable notify First
Reserve, at any time when a Prospectus is required by law to be delivered in
connection with sales by an underwriter or dealer, of the occurrence of any
event requiring the preparation of a supplement or amendment to such Prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading and promptly make available to First
Reserve and to the underwriters any such supplement or amendment. First Reserve
agrees that, upon receipt of any notice from the Company of the occurrence of
any event of the kind described in the preceding sentence, First Reserve will
forthwith discontinue the offer and sale of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities until receipt by
First Reserve and the underwriters of the copies of such supplemented or amended
Prospectus and, if so directed by the Company, First Reserve will deliver to the
Company all copies, other than permanent file copies, then in First Reserve's
possession of the most recent Prospectus covering such Registrable Securities at
the time of receipt of such notice. In the event the Company shall give such
notice, the Company shall extend the period during which such Registration
Statement shall be maintained effective as provided in Section 5.2(d)(i) by the
number of days during the period from and including the date of the giving of
such notice to the date when the Company shall make available to First Reserve
such supplemented or amended Prospectus.
(vii) the Company will enter into customary agreements
(including an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the sale
of such Registrable Securities.
(viii) the Company will furnish to First Reserve and to each
underwriter a signed counterpart, addressed to such underwriter, of an opinion
or opinions of counsel to the Company and a comfort letter or comfort letters
from the Company's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the managing underwriter reasonably requests.
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(ix) the Company will make generally available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of 12 months, beginning within three months after the effective date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations
of the SEC thereunder.
(x) the Company will use its reasonable best efforts to cause all
such Registrable Securities to be listed on each securities exchange or market
on which the Common Stock is then listed.
The Company may require First Reserve to furnish promptly in writing to the
Company such information regarding First Reserve, the plan of distribution of
the Registrable Securities and other information as the Company may from time to
time reasonably request or as may be legally required in connection with such
registration.
(e) Registration Expenses. In connection with any Demand Registration
or any Piggyback Registration, the Company shall pay the following expenses
incurred in connection with such registration: (i) filing fees with the SEC;
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities); (iii) printing expenses; (iv)
fees and expenses incurred in connection with the listing of the Registrable
Securities; (v) fees and expenses of counsel and independent certified public
accountants for the Company and (vi) the reasonable fees and expenses of any
additional experts retained by the Company in connection with such registration.
In connection with the preparation and filing of a Registration Statement
pursuant to Section 5.2(a), the Company will also pay the reasonable fees and
expenses of a single legal counsel chosen by First Reserve. First Reserve shall
pay any underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities and any other expenses of First Reserve.
(f) Participation in Underwritten Registrations. No Person may
participate in any underwritten registered offering contemplated hereunder
unless such Person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and this
Registration Rights Agreement.
(g) Holdback Agreements. First Reserve agrees not to effect any
public sale (including a sale pursuant to Rule 144 of the Securities Act) of any
Registrable Securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the 14 days prior to, and during the
120-day period beginning on, the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which First Reserve
participates, other than the Registrable Securities to be sold pursuant to such
registration statement.
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Section 5.3. Indemnification
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless First Reserve, its general partner, the general partner of the
general partner, and the officers and directors of such general partner, and
each Person, if any, who controls First Reserve within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses arising
out or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or prospectus relating to the
Registrable Securities or any preliminary Prospectus, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities and expenses are
caused by any untrue statement or omission or alleged untrue statement or
omission based upon information relating to First Reserve or the plan of
distribution furnished in writing to the Company by or on behalf of First
Reserve expressly for use therein; provided, that the foregoing indemnity with
respect to any preliminary Prospectus shall not inure to the benefit of First
Reserve if a copy of the most current Prospectus at the time of the delivery of
the Registrable Securities was not provided to the purchaser, the Company had
previously furnished First Reserve with a sufficient number of copies of the
current Prospectus and such current Prospectus would have cured the defect
giving rise to such loss, claim, damage or liability. The Company also agrees
to indemnify any underwriters of the Registrable Securities, their officers and
directors and each Person who controls such underwriters on substantially the
same basis as that of the indemnification of First Reserve provided in this
Section 5.3(a).
(b) Indemnification by First Reserve. First Reserve agrees to
indemnify and hold harmless the Company, its officers and directors, and each
Person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to First Reserve, but only with
reference to information relating to First Reserve or the plan of distribution
furnished in writing by or on behalf of First Reserve expressly for use in any
Registration Statement or Prospectus, or any amendment or supplement thereto, or
any preliminary Prospectus. First Reserve also agrees to indemnify and hold
harmless any underwriters of the Registrable Securities, their officers and
directors and each person who controls such underwriters on substantially the
same basis as that of the indemnification of the Company provided in this
Section 5.3(b).
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to Section 5.3(a) or
Section 5.3(b), such Person (the "Indemnified Party") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party shall have the right to assume the defense of
such proceeding and retain counsel reasonably satisfactory to such Indemnified
Party to represent such Indemnified Party and any others the Indemnifying Party
may designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
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and expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the Indemnified Party
and the Indemnifying Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) at any time for all such Indemnified Parties,
and that all such fees and expenses shall be reimbursed as they are incurred.
In the case of any such separate firm for the Indemnified Parties, such firm
shall be designated in writing by the Indemnified Parties. The Indemnifying
Party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Indemnifying Party shall indemnify and hold
harmless such Indemnified Parties from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment.
(d) Contribution. If the indemnification provided for in this
Registration Rights Agreement is unavailable to an Indemnified Party in respect
of any losses, claims, damages, liabilities or expenses referred to herein, then
each such 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 fault of the Company and
First Reserve and the underwriters in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities. The
relative fault of the Company and, First Reserve and the underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and First Reserve agree that it would not be just and
equitable if contribution pursuant to this Section 5.3(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
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 fraudulent misrepresentation.
Section 5.4. Rule 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as First Reserve may reasonably
request to the extent required from time to time to enable First Reserve to sell
Registrable Securities without registration under the Securities Act within the
limitation of
15
<PAGE>
the exemptions provided by Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC. Upon the request of First Reserve, the Company will deliver
to First Reserve a written statement as to whether it has complied with such
reporting requirements.
Section 5.5. Miscellaneous.
(a) Notices. Any notice or other communication required or permitted
under this Registration Rights Agreement shall be in writing or by telex,
telephone or facsimile transmission with subsequent written confirmation, and
may be personally served or sent by United States mail and shall be deemed to
have been given upon receipt by the party notified. For purposes hereof, the
addresses of the parties hereto (until notice of a change thereof is delivered
as provided in this Section 5.5) shall be as set forth opposite each party's
name on the signature page hereof.
(b) Termination. This Registration Rights Agreement will terminate
upon the earlier of (i) the date upon which the Company and First Reserve
mutually agree in writing to terminate this Registration Rights Agreement and
(ii) the first date on which there ceases to be any Registrable Securities.
(c) Transfer of Registration Rights. The rights of Holders hereunder
may be assigned by Holders to a transferee or assignee of any Registrable
Securities provided that the Company is given written notice at the time of or
within a reasonable time after said transfer, stating the name and address of
such transferee or assignee and identifying the securities with respect to which
such registration rights are being assigned; and provided further that the
registration rights granted by the Company in Section 5.2 may only be
transferred to, and the definition of "Holders" shall only include, transferees
who meet either of the following criteria: such transferee is (i) a holder of
100,000 or more shares of the Registrable Securities before giving effect to the
transfer, (ii) a member of the First Reserve Group, or (iii) a bank, trust
company or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form. To the extent the
rights under Section 5.2(a) of this Agreement are assigned to multiple Holders,
all rights hereunder that may be exercised by the First Reserve Group may only
be exercised by one or more Holders holding 50% or more of the Registrable
Securities in the aggregate.
(d) Waivers and Amendments; Noncontractual Remedies; Preservation of
Remedies. This Registration Rights Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the Company and the Holders of a majority of the
Registrable Securities or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising a right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude a further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights
16
<PAGE>
or remedies that any party may otherwise have at law or in equity. The rights
and remedies of any party based upon, arising out of or otherwise in respect of
any breach of any provision of this Registration Rights Agreement shall in no
way be limited by the fact that the act, omission, occurrence or other state of
facts upon which any claim of any such breach is based may also be the subject
matter of any other provision of this Registration Rights Agreement (or of any
other agreement between the parties) as to which there is no breach.
(e) Severability. If any provision of this Registration Rights
Agreement or the applicability of any such provision to a person or
circumstances shall be determined by any court of competent jurisdiction to be
invalid or unenforceable to any extent, the remainder of this Registration
Rights Agreement or the application of such provision to Persons or
circumstances other than those for which it is so determined to be invalid and
unenforceable, shall not be affected thereby, and each provision of this
Registration Rights Agreement shall be valid and shall be enforced to the
fullest extent permitted by law. To the extent permitted by applicable law each
party hereto hereby waives any provision or provisions of law which would
otherwise render any provision of this Registration Rights Agreement invalid,
illegal or unenforceable in any respect.
(f) Successors and Assigns. Subject to Section 5.5(c), this
Registration Rights Agreement shall be binding upon and inure to the benefit of
and be enforceable by the successors and assigns of the parties hereto.
(g) Other Registration Rights Agreements. Without the prior written
consent of First Reserve, the Company will neither enter into any new
registration rights agreements that conflict with the terms of this Registration
Rights Agreement nor permit the exercise of any other registration rights in a
manner that conflicts with the terms of the registration rights granted
hereunder.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Termination. Except as provided in Section 5.5(b) as to the
Registration Rights Agreement (which shall be governed by such Section 5.5(b))
and this Section 6.1, the respective covenants and agreements of First Reserve
and the Company contained in this Agreement will continue in full force and
effect until the earliest to occur of either of the following: (i) the
Termination Date, or (ii) the sale or other disposition in accordance with this
Agreement by the First Reserve Group of Company Securities if after and giving
effect to such sale or other disposition, the First Reserve Group beneficially
owns in the aggregate Company Securities representing less than 5% of the Voting
Power (including all exchangeable and convertible Company Securities on an "as-
if" exchanged or converted basis). Upon any termination of this Agreement
pursuant to this Section 6.1 all of the obligations of the Company and First
Reserve hereunder (other than the Registration Rights Agreement) shall
terminate.
17
<PAGE>
Section 6.2 Notices. Any notice or other communication required or
permitted hereunder shall be in writing or by telex, telephone or facsimile
transmission with subsequent written confirmation, and may be personally served
or sent by United States mail and shall be deemed to have been given upon
receipt by the party notified. For purposes hereof, the addresses of the parties
hereto (until notice of a change thereof is delivered as provided in this
Section 6.2) shall be as set forth opposite each party's name on the signature
page hereof.
Section 6.3 Waivers and Amendments; Noncontractual Remedies;
Preservation of Remedies. Other than with respect to the provisions of the
Registration Rights Agreement, which shall be governed by Section 5.5(d), this
Agreement may be amended, superseded, canceled, renewed or extended, and the
terms hereof may be waived, only by a written instrument signed by the Company
and the holders of a majority of the Company Securities held by the First
Reserve Group or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising a right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude a further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity. The rights
and remedies of any party based upon, arising out of or otherwise in respect of
any breach of any provision of this Agreement (other than the Registration
Rights Agreement, which shall be governed by Section 5.5(d)) shall in no way be
limited by the fact that the act, omission, occurrence or other state of facts
upon which any claim of any such breach is based may also be the subject matter
of any other provision of this Agreement (or of any other agreement between the
parties) as to which there is no breach.
Section 6.4 Severability. If any provision of this Agreement or the
applicability of any such provision to a person or circumstances shall be
determined by any court of competent jurisdiction to be invalid or unenforceable
to any extent, the remainder of this Agreement or the application of such
provision to persons or circumstances other than those for which it is so
determined to be invalid and unenforceable, shall not be affected thereby, and
each provision of this Agreement shall be valid and shall be enforced to the
fullest extent permitted by law. To the extent permitted by applicable law each
party hereto hereby waives any provision or provisions of law which would
otherwise render any provision of this Agreement invalid, illegal or
unenforceable in any respect.
Section 6.5 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts and when so executed shall constitute one
Agreement, notwithstanding that all parties are not signatories to the same
counterpart.
Section 6.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state, without giving
effect to the conflict of laws principles of such state.
18
<PAGE>
Section 6.7 Successors and Assigns. Subject to the transfer
restrictions contained in this Agreement, this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the successors and assigns of
the parties hereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
19
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Address: PRIDE INTERNATIONAL, INC.
5847 San Felipe Road, Suite 3300 By: /s/ Paul A. Bragg
Houston, Texas 77057 ----------------------------------
Attn: Mr. Paul A. Bragg Paul A. Bragg
Fax: 713-789-1430 President and Chief Executive
Officer
Address: FIRST RESERVE FUND VIII, L.P.
600 Travis, Suite 6000
Houston, Texas 77002
Attn: Ben A. Guill By: First Reserve GP VIII, L.P., its
Fax: 713-224-0771 General Partner
By: First Reserve Corporation, its
General Partner
By: /s/ Thomas R. Denison
--------------------------------
Thomas R. Denison
Managing Director
Address: FIRST RESERVE FUND VII, L.P.
600 Travis, Suite 6000
Houston, Texas 77002
Attn: Ben A. Guill By: First Reserve GP VII, L.P., its
Fax: 713-224-0771 General Partner
By: First Reserve Corporation, its
General Partner
By: /s/ Thomas R. Denison
--------------------------------
Thomas R. Denison
Managing Director
<PAGE>
EXHIBIT 15.1
AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Pride International, Inc.
Quarterly Report on Form 10-Q
We are aware that our report dated May 12, 2000 on our review of interim
financial information of Pride International, Inc. (the "Company") as of March
31, 2000 and for each of the three-month periods ended March 31, 2000 and 1999
and included in the Company's quarterly report on Form 10-Q is incorporated by
reference in its Registration Statements on Form S-8 (Registration Nos. 333-
06823, 333-06825, 333-27661, 333-35089, 333-35093, 333-87259 and 333-87263) and
on Form S-3 (Registration No. 333-44925). Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statements prepared or certified by us within the meanings of
Sections 7 and 11 of that Act.
Very truly yours,
PricewaterhouseCoopers LLP
Houston, Texas
May 12, 2000
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<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 150,192 111,627
<SECURITIES> 72,931 42,877
<RECEIVABLES> 129,007 133,098
<ALLOWANCES> 2,921 3,787
<INVENTORY> 38,880 36,295
<CURRENT-ASSETS> 452,444 397,490
<PP&E> 2,192,374 2,139,749
<DEPRECIATION> 273,195 246,069
<TOTAL-ASSETS> 2,471,578 2,388,677
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<BONDS> 219,403 216,473
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0 0
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<TOTAL-REVENUES> 170,083 153,819
<CGS> 114,505 126,929
<TOTAL-COSTS> 158,762 197,914
<OTHER-EXPENSES> 2,316 (1,820)
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<INTEREST-EXPENSE> 19,005 12,559
<INCOME-PRETAX> (10,000) (54,834)
<INCOME-TAX> (3,107) (15,377)
<INCOME-CONTINUING> (6,893) (39,457)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
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<NET-INCOME> (6,893) (39,457)
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