As filed with the Securities and Exchange Commission on November 12, 1996.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Superior Energy Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1503 Engineers Road 75-2379388
(State or other jurisdiction P. O. Box 6220 (I.R.S. Employer
of incorporation or organization) New Orleans, LA 70174 Identification No.)
(504) 393-7774
(Address, including zip code, and telephone
number, including area code, of the registrant's
principal executive offices)
Terence E. Hall
Superior Energy Services, Inc.
Chairman of the Board,
Chief Executive Officer and President
1503 Engineers Road
P. O. Box 6220
New Orleans, Louisiana 70174
(504) 393-7774
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
William B. Masters, Esq.
Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
201 St. Charles Avenue
New Orleans, Louisiana 70170
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
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<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================
Proposed Amount of
Title of each class of maximum registration
securities to be registered(1) offering price(2) fee(3)
______________________________________________________________________________________________
<S> <C>
Common Stock, $0.001 par value per share(4) $100
==============================================================================================
(1)This Registration Statement relates solely to shares of Common Stock of Superior
Energy Services, Inc. previously registered under Registration Statement Nos. 33-
48460-FW and 33-94454 and issuable upon the exercise of Superior's Class A and Class
B Redeemable Common Stock Purchase Warrants issued in July 1992 and December 1995,
respectively.
(2)Estimated solely for purpose of calculating the registration fee. In no event will
the aggregate exercise price of the Common Stock issuable upon exercise of the Class
A and Class B Redeemable Common Stock Warrants exceed the amounts previously
registered under Registration Nos. 33-48460-FW and 33-94454.
(3)Pursuant to Rule 429 under the Securities Act of 1933, as amended, the Prospectus
included herein relates solely to shares of Common Stock previously registered under
Registration Statement Nos. 33-48460-FW and 33-94454. If any of such previously
registered securities are offered prior to the effective date of this Registration
Statement, the amount of such securities will not be included in any prospectus
hereunder. Filing fees in respect of the Class A and Class B Redeemable Common
Stock Purchase Warrants and an indeterminate number of shares of common stock were
previously paid by the registrant in connection with Registration Statement Nos. 33-
48460-FW and 33-94454.
(4)Such indeterminable number of shares of Common Stock as may be issuable from time to
time upon exercise of the Class A and Class B Redeemable Common Stock Purchase
Warrants.
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The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement will thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
included in this Registration Statement will also be used in connection with
the issuance of Common Stock registered pursuant to Registration
Statements Nos. 33-48460-FW and 33-94454 previously filed by Superior Energy
Services, Inc.
<PAGE>
Subject to Completion, dated November 12, 1996
PROSPECTUS
6,296,251 Shares
Superior Energy Services, Inc.
Common Stock
This Prospectus relates to 6,296,251 shares of common stock,
$0.001 par value per share (the "Common Stock"), of Superior
Energy Services, Inc. ("Superior" or the "Company"), which may be
offered from time to time by the Company exclusively to the
holders, and upon the exercise, of certain warrants previously
issued by the Company (the "Offering").
In July 1992, the Company issued 1,121,251 Class A
Redeemable Common Stock Purchase Warrants ("Class A Warrants") to
purchase Common Stock entitling the holder to purchase one share
of Common Stock for $6.00 until July 6, 1997. In December 1995,
the Company issued 5,175,000 Class B Redeemable Common Stock
Purchase Warrants ("Class B Warrants") entitling the holder to
purchase one share of Common Stock for $3.60 during the four-year
period commencing December 8, 1996. All of the shares of Common
Stock offered hereby are being offered by the Company exclusively
to the holders of the Class A Warrants and Class B Warrants.
The Common Stock is currently traded on the Nasdaq National
Market under the symbol "SESI." On November 8, 1996, the last
reported sales price of the Common Stock as reported by the
Nasdaq National Market was $3-3/8.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING
AN INVESTMENT IN THE COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OR THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
================================================================================================
Price to Underwriting Discounts Proceeds to Company(2)
Public and Commissions(1)
________________________________________________________________________________________________
<S> <C> <C> <C>
Per share, upon exercise of:
Class A Warrant $6.00 $ - $6.00
Class B Warrant $3.60 $ - $3.60
________________________________________________________________________________________________
Total $ 6,727,506 $ - $ 6,727,506
$18,630,000 $ - $18,630,000
=================================================================================================
(1) No commissions, bonuses, or other fees will be paid to any person in
connection with the offer and sale of the Common Stock.
(2) Before deducting expenses estimated at $30,000.
</TABLE>
November ___, 1996
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Common Stock being offered pursuant to this
Prospectus. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements
contained herein concerning the provisions of any documents are not
necessarily complete and, in each instance, reference is made to the copy
of such document filed or incorporated by reference as an exhibit to the
Registration Statement.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Commission. The Registration Statement, as well as such reports,
proxy statements and other information filed with the Commission by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, DC 20549, and at the regional offices of the
Commission at the following locations: New York Regional Office, 7 World
Trade Center, 13th Floor, New York, New York 10048 and Chicago Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621-2511.
Copies of such material may be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, DC 20549, at
prescribed rates. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission (http://www.sec.gov).
The Company's Common Stock is traded on the Nasdaq National Market.
Reports, proxy statements and other information may also be inspected at
the offices of the National Association of Securities Dealers, Inc. at 1735
K Street, N.W., Washington, D.C. 20006.
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed
information and the consolidated financial statements and other information
appearing elsewhere in this Prospectus.
THE COMPANY
Superior Energy Services, Inc. ("Superior" or the "Company"), through
its subsidiaries, provides specialized oil field services in the Gulf of
Mexico. The Company's services include plugging and abandoning oil and gas
wells and providing wireline services, the manufacture, sale and rental of
specialized oil well equipment and fishing tools, the development,
manufacture, sale and rental of oil and gas drilling instrumentation and
computerized rig data acquisition systems, and the development, manufacture
and sale of oil spill containment booms and ancillary equipment.
Recent Developments
On September 16, 1996, Superior acquired Dimensional Oil Field Services,
Inc. ("Dimensional") through the merger of Dimensional with and into a
wholly-owned subsidiary of the Company (the "Dimensional Acquisition").
Shareholders of Dimensional received an aggregate of 1,000,000 shares of
Common Stock, $1.5 million cash and $1 million principal amount of
promissory notes. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements included
herein.
The Company's executive offices are located at 1503 Engineers Road,
Belle Chase, Louisiana and its telephone number at such address is (504)
393-7774.
The Offering
Common Stock offered 6,296,251 shares
Nasdaq National Market symbol SESI
Use of proceeds(1) The Company intends to use the
net proceeds of this Offering, if
any, for general corporate
purposes. See "Use of Proceeds."
Risk factors The Common Stock offered hereby
involves a high degree of risk.
See "Risk Factors."
_________________
(1) There can be no assurance that any of the Class A Warrants or Class B
Warrants will be exercised before they expire and, as a result, that the
Company will receive any proceeds from this Offering. Even if exercised,
the Company cannot predict when the Class A Warrants or Class B Warrants
will be exercised and the proceeds received.
<TABLE>
<CAPTION>
Summary Consolidated Financial Data
(in thousands, except per share data)
At or for the At or for the
six months ended year ended
June 30, December 31,
__________________________________ ________________________________
Pro forma Pro forma
combined combined
as adjusted as adjusted
1996 1996 1995 1995 1995 1994
____________ _________ _________ ____________ ________ __________
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues $ 12,798 $ 9,330 $ 6,147 $ 25,870 $ 12,338 $ 11,088
Income (loss) from operations 2,344 2,138 897 (3,339) (2,708) 1,730
Other income (expense) 94 132 8 (172) (7) 74
Income (loss) before income
taxes 2,438 2,270 905 (3,511) (2,715) 1,804
Net income (loss) 1,596 1,589 570(1) (4,498)(1) (3,355)(1) 1,137(1)
Net income (loss) per common
share $ .09 $ .09 $ .06 $ (.43) $ (.38) $ .14
Weighted average common shares
outstanding 18,629,763 17,079,763 8,400,000 10,397,946 8,847,946 8,400,000
Balance Sheet Data:
Working capital $ 1,002 $ 2,796 $ 1,262 -- $ 976 $ 1,274
Total assets 26,882 20,145 5,300 -- 22,984 4,422
Long-term debt 515 -- 29 -- -- --
Stockholders' equity 18,006 14,718 2,487 -- 13,094 2,273
(1)Prior to the Reorganization on December 13, 1995, the Superior
Companies, with the exception of Superior Tubular Services, Inc., were
sub-chapter S corporations for income tax reporting purposes. Net income
(loss) reflects pro forma income tax expense as if Superior had been a
taxable entity for the entire periods presented.
</TABLE>
RISK FACTORS
Prospective investors should carefully consider the following factors, in
addition to other information contained in this Prospectus, regarding an
investment in the Common Stock offered hereby.
Industry Volatility. The demand for oil field services has traditionally
been cyclical. Demand for the Company's services is significantly affected
by the number and age of producing wells and the drilling and completion of
new oil and gas wells. These factors are affected in turn by the
willingness of oil and gas operators to make capital expenditures for the
exploration, development and production of oil and natural gas. The levels
of such capital expenditures are influenced by oil and gas prices, the cost
of exploring for, producing and delivering oil and gas, the sale and
expiration dates of leases in the United States and overseas, the discovery
rate of new oil and gas reserves, local and international political and
economic conditions and the ability of oil and gas companies to generate
capital. Although the production sector of the oil and gas industry is
less immediately affected by changing prices, and, therefore, less volatile
than the exploration sector, producers would likely react to declining oil
and gas prices by reducing expenditures, which could adversely affect the
business of the Company. No assurance can be given as to the future price
of oil and natural gas or the level of oil and gas industry activity.
Seasonality. The businesses conducted by the Company are subject
to seasonal fluctuation. The nature of the offshore oil and gas industry
in the Gulf of Mexico is seasonal and depends in part on weather
conditions. Purchases of the Company's products and services are also to a
substantial extent, deferrable in the event oil and gas companies reduce
capital expenditures as a result of conditions existing in the oil and gas
industry or general economic downturns. Fluctuations in the Company's
revenues and costs may have a material adverse effect on the Company's
business and operations. Accordingly, the Company's operating results may
vary from quarter to quarter, depending upon factors outside of its
control.
Dependence on Oil and Gas Industry; Dependence Upon Significant
Customers. The Company's business depends in large part on the conditions
of the oil and gas industry, and specifically on the capital expenditures
of the Company's customers. Purchases of the Company's products and
services are also, to a substantial extent, deferrable in the event oil and
gas companies reduce capital expenditures as a result of conditions
existing in the oil and gas industry or general economic downturns. The
Company derives a significant amount of its revenues from a small number
independent and major oil and gas companies. The inability of the Company
to continue to perform services for a number of its large existing
customers, if not offset by sales to new or existing customers, could have
a material adverse effect on the Company's business and operations.
Technology Risks. Sales of certain of the Company's products are
based primarily on its proprietary technology. The Company's success in
the sales of these products depends to a significant extent on the
development and implementation of new product designs and technologies.
Many of the Company's competitors and potential competitors have more
significant resources than the Company. While the Company has patents on
certain of its technologies and products, there is no assurance that any
patents secured by the Company will not be successfully challenged by
others or will protect them from the development of similar products by
others.
Intense Competition. The Company competes in highly competitive
areas of the oil field business. The volatility of oil and gas prices has
led to a consolidation of the number of companies providing services
similar to the Company. This reduced number of companies competes
intensely for available projects. Many of the competitors of the Company
are larger and have greater financial and other resources than the Company.
Although the Company believes that it competes on the basis of technical
expertise and reputation of service, there can be no assurance that the
Company will be able to maintain its competitive position.
Potential Liability and Insurance. The operations of the Company
involve the use of heavy equipment and exposure to inherent risks,
including blowouts, explosions and fire, with attendant significant risks
of liability for personal injury and property damage, pollution or other
environmental hazards or loss of production. The equipment that the
Company sells and rents to customers are also used to combat oil spills.
Failure of this equipment could result in property damage, personal injury,
environmental pollution and resulting damage. Litigation arising from a
catastrophic occurrence at a location where the Company's equipment and
services are used may in the future result in large claims. The frequency
and severity of such incidents affect the Company's operating costs,
insurability and relationships with customers, employees and regulators.
Any increase in the frequency or severity of such incidents, or the general
level of compensation awards with respect thereto, could affect the ability
of the Company to obtain projects from oil and gas operators or insurance
and could have a material adverse effect on the Company. In addition, no
assurance can be given that the Company will be able to maintain adequate
insurance in the future at rates it considers reasonable.
Laws and Regulations. The Company's business is significantly
affected by laws and other regulations relating to the oil and gas
industry, by changes in such laws and by changing administrative
regulations. The Company cannot predict how existing laws and regulations
may be interpreted by enforcement agencies or court rulings, whether
additional laws and regulations will be adopted, or the effect such changes
may have on it, its businesses or financial condition. Federal and state
laws require owners of non-producing wells to plug the well and remove all
exposed piping and rigging before the well is abandoned. A decrease in the
level of enforcement of such laws and regulations in the future would
adversely affect the demand for the Company's services and products.
Numerous state and federal laws and regulations affect the level of
purchasing activity of oil containment boom and consequently the Company's
business. There can be no assurance that a decrease in the level of
enforcement of laws and regulations in the future would not adversely
affect the demand for the Company's products.
Environmental Regulation. The Company believes that its present
operations substantially comply with applicable federal and state pollution
control, and environmental protection laws and regulations and that
compliance with such laws has had no material adverse effect upon its
operations to date. No assurance can be given that environmental laws will
not, in the future, materially adversely affect the Company's operations
and financial condition.
Shares Eligible for Future Sale. As of the date of this
Prospectus, the Company had 18,597,045 shares of Common Stock outstanding,
of which 6,174,419 have been registered under the Securities Act and
generally are freely transferable, (other than shares acquired by
"affiliates" of the Company as such term is defined by Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act")). None of the
12,422,626 remaining shares of Common Stock issued by the Company were
acquired in transactions registered under the Securities Act and,
accordingly, such shares may not be sold except in transactions registered
under the Securities Act or pursuant to an exemption from registration.
Approximately 520,000 shares of Common Stock are eligible for sale in
reliance upon exemptions from registration. The Company is unable to
estimate the number of shares that will be sold since this will depend on
the market price for the Common Stock, the personal circumstances of the
sellers and other factors. Any future sale of substantial amounts of
Common Stock in the open market may adversely effect the market price of
the Common Stock offered hereby.
Concentration of Common Stock Ownership. The Company's directors
and executive officers and certain of their affiliates beneficially own
55.5% of the outstanding shares of Common Stock. Accordingly, these
shareholders will have the ability to control the election of the Company's
directors and the outcome of most other matters submitted to a vote of the
Company's shareholders.
Possible Volatility of Securities Prices. The market price of the
Common Stock has in the past been, and may in the future continue to be,
volatile. A variety of events, including quarter to quarter variations in
operating results, news announcements or the introduction of new products
by the Company or its competitors, as well as market conditions in the oil
and gas industry, or changes in earnings estimates by securities analysts
may cause the market price of the Common Stock to fluctuate significantly.
In addition, the stock market in recent years has experienced significant
price and volume fluctuations which have particularly affected the market
prices of equity securities of many companies that service the oil land gas
industry and which often have been unrelated to the operating performance
of such companies. These market fluctuations may adversely affect the
price of the Common Stock.
No Dividends.The Company's Board of Directors has not paid any
dividends on its Common Stock. The Company does not expect to declare or
pay any dividends in the foreseeable future.
Potential Adverse Effect of Issuance of Preferred Stock Without
Stockholder Approval. The Company's Certificate of Incorporation
authorizes the issuance of 5,000,000 shares of preferred stock, $.01 par
value per share, with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the
Board of Directors is empowered, without stockholder approval, to issue
preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of the Common Stock and, in certain circumstances, depress the
market price of the Common Stock. In the event of issuance, the preferred
stock could be utilized under certain circumstances as a method of
discouraging, delaying or preventing a change in control of the Company.
There can be no assurance that the Company will not issue shares of
preferred stock in the future. See "Description of Securities."
Key Personnel. The Company depends to a large extent on the
abilities and continued participation of the its executive officers and key
employees. The loss of the services of any of these persons would have a
material adverse effect on the Company's business and operations.
Forward-Looking Statements
This Prospectus contains certain forward-looking statements
concerning the Company's operations, economic performance and financial
condition, including in particular, the integration of the Company's recent
and pending acquisitions into the Company's existing operations. Such
statements are subject to various risks and uncertainties. Actual results
could differ materially from those currently anticipated due to a number of
factors, including those identified under "Risk Factors" and elsewhere in
this Prospectus.
USE OF PROCEEDS
The net proceeds to the Company, if any, from the Offering will be up
to $25.4 million. The Company will use the net proceeds of the Offering,
if any, for working capital and other general corporate purposes. There
can be no assurance that any of the Class A or Class B Warrants will be
exercised before such Warrants expire and, as a result, that the Company
will receive any proceeds from this Offering. Even if exercised, the
Company cannot predict when the Class A or Class B Warrants will be
exercised and the proceeds received.
DIVIDENDS AND PRICE RANGE OF COMMON STOCK
The Common Stock is traded on the Nasdaq National Market under the
symbol "SESI." The following table sets forth the high and low closing bid
prices per share of the Common Stock as reported by the Nasdaq National
Market for each fiscal quarter during the past three calendar years.
Quotes represent "inter-dealer" prices without adjustments for mark-ups,
mark-downs or commissions and may not represent actual transactions.
Common Stock
Period High Low
1994
First Quarter 6-1/4 4-1/8
Second Quarter 4-5/8 4
Third Quarter 5-1/4 4-1/4
Fourth Quarter 5-1/4 3-1/2
1995
First Quarter 3-3/4 2-1/2
Second Quarter 3-1/8 2
Third Quarter 3 1-3/4
Fourth Quarter 2-11/16 1-1/2
1996
First Quarter 1-13/16 1-3/4
Second Quarter 3-1/8 1-15/16
Third Quarter 3 1-13/16
Fourth Quarter (through 3-5/8 2-5/8
November 8, 1996)
On November 8, 1996, the last reported sales price of the Common
Stock on the Nasdaq National Market was $3-3/8 per share. At November 8,
1996, there were 65 record holders of the Common Stock.
The Company has never declared or paid any cash dividends on the
Common Stock and does not presently intend to pay cash dividends on the
Common Stock in the foreseeable future. The Company intends to retain
future earnings for reinvestment in its business. In addition, the
Company's ability to declare or pay cash dividends is affected by the
ability of the Company's present and future subsidiaries to declare and pay
dividends or otherwise transfer funds to the Company since the Company
conducts its operations entirely through its subsidiaries. Future loan
facilities, if any, obtained by the Company or its subsidiaries may
prohibit or restrict the payment of dividends or other distributions by the
Company to its stockholders and the payment of dividends or other
distributions by the Company's subsidiaries to the Company. Subject to
such limitations, the payment of cash dividends on the Common Stock will be
within the discretion of the Company's Board of Directors and will depend
upon the earnings of the Company, the Company's capital requirements,
applicable requirements of the applicable loan and other factors that are
considered relevant by the Company's Board of Directors.
CAPITALIZATION
The following table sets forth the consolidated unaudited
capitalization of the Company on June 30, 1996 and on a pro forma basis to
give effect to the Dimensional and Baytron Acquisitions and pro forma as
adjusted to give effect to the exercise of the Class A and Class B
Warrants. This table should be read in conjunction with the financial
statements of the Company and Dimensional appearing elsewhere in this
Prospectus. See "Index to Financial Statements."
At June 30, 1996
_______________________
Pro Forma Combined
Actual Combined, as adjusted,
________ __________ ____________
(In thousands)
Long-term debt,
including current maturities $ 1,490 $ 3,318 $ 3,318
Stockholders' equity:
Preferred Stock, $.01 par
value per share,
5,000,000 shares
authorized; no shares
outstanding $ -- $ -- $ --
Common Stock, $.001 par
value per share, 40,000,000 shares
authorized; 18,597,045
shares issued and
outstanding as adjusted for the
Dimensional and Baytron
acquisitions $ 17 $ 19 $ 25
Additional paid-in capital 16,265 19,551 44,902
Accumulated deficit (1,564) (1,564) (1,564)
Total stockholders'equity $14,718 $18,006 $43,363
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reorganization
For purposes of this discussion, the term "Small's" refers to the
Company as of dates and periods prior to the Reorganization and the term
"Company" refers to the combined operations of Small's, Oil Stop and
Superior after the consummation of the Reorganization.
On December 13, 1995, the Company consummated a share exchange (the
"Reorganization") whereby it (i) acquired all of the outstanding capital
stock of Superior Well Service, Inc., Connection Technology, Ltd. and
Superior Tubular Services, Inc. (collectively "Superior") in exchange for
8,400,000 shares of Common Stock and (ii) acquired all of the outstanding
capital stock of Oil Stop, Inc. ("Oil Stop") in exchange for 1,800,000
Common Stock and $2.0 million cash payable January 2, 1996.
Due to the controlling interest the Superior shareholders have in the
Company as a result of the Reorganization, among other things, the
Reorganization has been accounted for as a reverse (i.e., a purchase of
Small's by Superior) under the "purchase" method of accounting. As such,
the Company's financial statements and other financial information now
reflect the historical operations of Superior for periods and dates prior
to the Reorganization. The net assets of Small's and Oil Stop have been
reflected at their estimated fair value pursuant to purchase accounting at
the date of the Reorganization. The net assets of Superior are reflected
at their historical book values.
Comparison of the Results of Operations for the Six Months ended June 30,
1996 and 1995
Revenues increased 52% for the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995. Of this increase, 30% is a
result of increased levels of activity and 70% is the result of the
acquisitions mentioned above.
Cost of services for the six months ended June 30, 1996 increased 19%
over the six months ended June 30, 1995. Of this increase, 26% is as a
result of increased levels of activity and 74% is the result of the
acquisitions. Depreciation increased $502,000 in the six months ended June
30, 1996 as compared to the six months ended June 30, 1995. The increase
is primarily the result of the acquisitions made by the Company during
1996. General and administrative expenses increased 51% for the six months
ended June 30, 1996 over the same period in 1995. Of this increase, 64% is
the result of the acquisitions and 36% is the result of increased levels of
activity.
For the year ended August 31, 1995, Small's incurred a loss of
$1,586,000 followed by a loss of $378,000 for the quarter ended November
30, 1995. The Company, in an effort to eliminate these continued losses,
entered into a joint venture for its West Texas rental tool and fishing
operations on January 15, 1996. As a result of the joint venture, the
Company will have no liability for any operating losses that may be
incurred by the joint venture. The Company's share of distributions will
be $110,000 a month for the first 24 months and $80,000 a month for the
remaining 36 months of the term of the joint venture.
Comparison of the Results of Operations for the Years Ended December 31,
1995 and December 31, 1994
Revenues increased 6.0%, exclusive of Small's and Oil Stop since the
consummation of the Reorganization, for the year ended December 31, 1995
primarily due to increased activity levels during the fourth quarter of
1995. Fourth quarter service revenues were 25.8% of the total year in
1995, as compared to 20.5% in 1994 and 18.7% in 1993.
In 1995, cost of services, exclusive of Small's and Oil Stop,
increased 7.8%. This increase is primarily due to the cost of support
services required to maintain and support the Company's major customers
primarily with engineering services. In 1995 and 1994, selling, general
and administrative expenses, exclusive of Small's and Oil Stop, increased
19.6% and 23.6%, respectively. In 1995, 75% of the increase is the result
of including a full year of Ace Rental and in 1994, 47% of the increase is
a result of including Ace Rental for the six-month period ended December
31, 1994. The remaining increases are related primarily to increases in
employee, travel and insurance expenses. Depreciation expense, exclusive
of Small's and Oil Stop, increased 43.6% in 1995 and 40.0% in 1994. These
increases were a result of additional equipment being placed in service.
For the year ended August 31, 1995, Small's incurred a loss of
$1,586,000 followed by a loss of $378,000 for the quarter ended November
30, 1995. The Company, in an effort to eliminate these continued losses
entered into a joint venture for its West Texas rental tool and fishing
operations subsequent to December 31, 1995. As a result of the joint
venture, the Company will have no liability for any operating losses that
may be incurred in the joint venture. The Company's share of distributions
will be $110,000 a month for the first 24 months and $80,000 a month for
the remaining 36 months of the term of the joint venture.
At December 31, 1995, the Company elected the early adoption of
Statement of Financial Accounting Standards (FAS) No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of. The undiscounted net cash flows from the joint venture were
less than the carrying value of the associated fixed assets and associated
goodwill indicating that an impairment had taken place. This resulted in
the Company recognizing a non-cash charge for the impairment of long-lived
assets of $4,042,000, consisting of a write-off of goodwill of $3,520,000
associated with the acquisition of Small's and a write off of $522,000 of
property, plant and equipment.
On December 13, 1995, simultaneous with the consummation of the
Reorganization, the Company completed a public offering of 1,500,000 Units
("Units"), with each Unit consisting of three shares of the Company's
common stock and three Class B redeemable Common Stock Purchase Warrants.
On December 27, 1995, the Company sold an additional 225,000 Units. The
offering, after the underwriting discount, non-accountable expenses and all
other offering related expenses, provided the Company with approximately
$9.3 million. The Company used the net proceeds provided by the offerings
to repay a majority of Small's existing bank debt, fund the cash portion of
the purchase price of Oil Stop and provide additional working capital for
operations.
Capital Resources and Liquidity
Net cash provided by operating activities was $415,000 for the six
months ended June 30, 1996. This is a decrease of $261,000 as compared to
the six months ended June 30, 1995. This is primarily the result of a $1.6
million reduction in the Company's accounts payable. Of the $1.6 million,
$1.2 million is a result of a permanent reduction of Small's remaining
obligations.
The Company's working capital position improved to $2,796,000 at June
30, 1996 as compared to $976,000 at December 31, 1995. This was primarily
the result of a $2,000,000 final payment made in connection with the
acquisition of all the capital stock of Oil Stop as well as a reduction of
debt of approximately $1.2 million. The Company's current ratio also
improved from 1.10 at December 31, 1995 to 1.56 at June 30, 1996.
The Company, in connection with the joint venture for its West Texas
fishing and rental tool operations, sold land for $300,000. During the
first six months of 1996 it also sold various equipment for approximately
$57,000. Both these sales resulted in no gain or loss. In the first six
months of 1996, the Company purchased approximately $572,000 of machinery
and equipment. These purchases were funded primarily from cash generated
from operations.
On July 31, 1996, the company consummated its purchase of Baytron,
Inc. for $1,100,000 of cash and 550,000 Common Stock. The cash portion of
the purchase was made with available funds.
On September 16, 1996, Superior acquired Dimensional through the
merger of Dimensional with and into a wholly-owned subsidiary of the
Company. Shareholders of Dimensional received an aggregate of 1,000,000
shares of Common Stock, $1.5 million cash and $1 million principal amount
of promissory notes.
The Company maintains a revolving credit facility which was increased
in June 1996 from $1.4 million to $4.0 million. As of June 30, 1996, there
were no amounts outstanding under this facility. The Company believes that
its available funds, together with cash generated from operations and
available borrowing capacity should be sufficient to support the Company's
strategic and capital spending initiatives.
Prior to the consummation of the Reorganization, Superior was a
privately-held company that distributed substantially all of its earnings
to its shareholders. As part of the Reorganization, Small's agreed that
all sub-chapter S earnings prior to January 1, 1995, not previously
distributed would be distributed to Superior shareholders in the form of a
note. Accordingly, during 1995 $1,091,000 was distributed to the Superior
shareholders and the Superior shareholders also received notes having an
aggregate principal amount of $1,374,000 at the closing of the
Reorganization. As a result of Superior's transition to public ownership
as part of the Reorganization, these payments and distributions will not
occur in future reporting periods.
Inflation has not had a significant effect on the Company's financial
conditions or operations in recent years.
Accounting Standard Issued but not Adopted
In October 1995, Statement of Financial Accounting Standards (FAS)
No. 123, Accounting for Stock-Based Compensation, was issued. FAS No. 123
encourages a fair value based method of accounting for the compensation
costs associated with employee stock option and similar plans. However, it
also permits the continued use of the intrinsic value based method
prescribed by the Accounting Principles Board's Opinion No. 25 (Opinion No.
25), Accounting for Stock Issued to Employees. If the accounting
prescribed by Opinion No. 25 is continued, then pro forma disclosure of net
income and earnings per share must be presented as if the method of
accounting defined in FAS No. 123 had been applied in both 1995 and 1996.
FAS No. 123 is effective for the Company's 1996 fiscal year, though it may
be adopted earlier.
The Company has elected to continue to apply the provisions of
Opinion No. 25 and will calculate compensation cost prescribed by FAS No.
123 and present pro forma disclosures in 1996. Until such calculations are
completed, the Company cannot estimate the impact such will have on the pro
forma disclosures.
<PAGE>
BUSINESS
General
Superior Energy Services, Inc. (the "Company"), through its
subsidiaries, provides an integrated range of specialized oilfield services
in the Gulf of Mexico including oil and gas well plug and abandonment,
wireline and workover services, the manufacture, sale and rental of
specialized oil well equipment and fishing tools, the development,
manufacture, sale and rental of oil and gas drilling instrumentation and
computerized rig data acquisition systems, and the development, manufacture
and sale of oil spill containment booms and ancillary equipment.
On December 13, 1995, the Company consummated a share exchange (the
"Reorganization") whereby it: (i) acquired all of the outstanding capital
stock of Superior Well Service, Inc., Connection Technology, Ltd., Superior
Tubular Services, Inc. and Ace Rental Tools, Inc. (collectively,
"Superior") in exchange for 8,400,000 shares of Common Stock and (ii)
acquired all of the outstanding capital stock of Oil Stop, Inc. ("Oil
Stop") in exchange for 1,800,000 shares of Common Stock and $2.0 million
cash payable on January 2, 1996.
As a result of the controlling interest the Superior shareholders
have in the Company as a result of the Reorganization, the Reorganization
has been accounted for as a reverse acquisition (i.e., a purchase of the
Company by Superior) under the "purchase" method of accounting.
Accordingly, the Company's financial statements and other financial
information reflect the historical operations of Superior for periods and
dates prior to the Reorganization. The Company's and Oil Stop's net assets
at the time of the Reorganization have been reflected at their estimated
fair value pursuant to purchase accounting at the date of the
Reorganization. The net assets of Superior are reflected at their
historical book values.
Business
The Company provides plugging and abandonment and wireline services
to oil and gas companies operating primarily in the Gulf of Mexico. When a
well ceases producing oil and gas the owner is required by state and/or
federal law to plug the well and remove all exposed piping and rigging. In
order to plug the well, concrete is pumped into the well to form plugs that
prevent debris, gas, oil or other material from escaping and contaminating
the surrounding environment.
Superior provides services and specialized equipment for plugging and
abandonment jobs, as well as for non-plugging and abandonment jobs such as
logging and pipe recovery. Wireline service personnel are cross-trained to
work (i) plugging and abandonment jobs and (ii) perform wireline services
in connection with remedial activities.
The Company designs, manufactures and sells worldwide specialized
computerized electronic torque and pressure control equipment used in
connection with drilling and workover operations, as well as the
manufacture of oil field tubular goods. The torque control equipment
monitors the relationship between size, weight, grade, rate of makeup,
torque and penetration of tubular goods to ensure a leak-free connection
within the pipe manufacturer's specification. The electronic pressure
control equipment monitors and documents internal and external pressure
testing of tubular goods connections. The Company's patented thread
protectors are used during drilling and workover operations to protect the
pin end of tubular goods while being transported from the pipe rack to the
drill floor.
The Company manufactures, through third-party manufacturers, and
sells oil spill containment inflatable boom and ancillary
storage/deployment/retrieval equipment. The Company's inflatable boom
utilizes continuous single-point inflation technology with air feeder
sleeves in combination with mechanical check valves to permit continuous
inflation of the boom material. The Company sells, rents and licenses oil
spill containment technology to domestic and foreign oil companies, oil
spill response companies and cooperatives, the United States Coast Guard
and to foreign governments and their agencies.
The Company rents specialized equipment onshore and offshore in oil
and gas well drilling and other specialized rental equipment and fishing
tools used in well work-over, completion and production activities. In
connection with the rental of certain specialized equipment, such as
fishing tools, the Company generally provides to the customer an operator
who supervises the operations of the rental equipment on the well site.
The Company's rental items include, in addition to the above, bits, gauges,
hoses, pumps, spools and tubing which are supplied as equipment only. In
January 1996, the Company entered into a joint venture with G&L Tool
Company in which it contributed assets in West Texas to the joint venture.
Potential Liability and Insurance
The Company's operations involve a high degree of operational risk,
particularly of personal injuries and damage to equipment. The Company
maintains insurance against risks that are consistent with industry
standards and required by its customers. Although management believes that
the Company's insurance protection is adequate, and that the Company has
not experienced a loss in excess of policy limits, there can be no
assurance that the Company will be able to maintain adequate insurance at
rates which management considers commercially reasonable, nor can there be
any assurance such coverage will be adequate to cover all claims that may
arise.
Laws, Regulations and Environmental Matters
The Company's operations are affected by governmental regulations in
the form of federal and state laws and regulations, as well as private
industry organizations. In addition, the Company depends on the demand for
its services from the oil and gas industry and, therefore, is affected by
changing taxes and other laws and regulations relating to the oil and gas
industry generally.
The exploration and development of oil and gas properties located on
the outer continental shelf of the United States is regulate primarily by
the Minerals Management Service of the United States Department of the
Interior (the "MMS"). The MMS has promulgated federal regulations
governing the plugging and abandonment of wells located offshore and the
removal of all production facilities. The Company believes that its
operations are in material compliance with these and all other regulations
affecting the conduct of its business on the outer continental shelf of the
United States.
The Company's operations are also affected by numerous federal, state
and local environmental protection laws and regulations. The technical
requirements of these laws and regulations are becoming increasingly
expensive, complex and stringent. These laws may provide for strict
liability for damages to natural resources or threats to public health and
safety. Sanctions for noncompliance may include revocation of permits,
corrective action orders, administrative or civil penalties and criminal
prosecution. Certain environmental laws provide for joint and several
strict liabilities for remediation of spills and releases of hazardous
substances. In addition, companies may be subject to claims alleging
personal injury or property damage as a result of alleged exposure to
hazardous substances. The Company's compliance with these laws and
regulations has entailed certain additional expenses and changes in
operating procedures. The Company believes the compliance with these laws
and regulations will not have a material adverse effect on the Company's
business or financial condition.
Competition and Customers
The Company operates in highly competitive markets and, as a result,
its revenue and earnings can be affected by competitive action such as
price changes, new product developments, or improved availability and
delivery. Competition in both services and products is based on a
combination of price, service (including the ability to deliver services
and products on a "as needed, where needed" basis), product quality and
technical proficiency. The Company's competition includes small, single
location companies, large companies with multiple operating locations and
extensive inventories and subsidiaries of large companies having
significant financial resources. The Company believes it competes based
upon its technical capabilities, experience and personnel. Customers which
accounted for 10% or more of the Company's revenue for the years ended
December 31, 1995 and 1994 were as follows:
1995 1994
Chevron USA 23.7% 16.8%
Conoco, Inc. 16.4% 18.8%
Employees
As of October 31, 1996, the Company had approximately 188 employees.
None of the Company's employees is represented by a union or covered by a
collective bargaining agreement. The Company believes that its relations
with its employees is good.
MANAGEMENT
Executive Officers and Directors
The following table sets forth certain information as of October 31,
1996 with respect to the directors and executive officers of Superior.
Name Age Position
Terence E. Hall 51 Chairman of the Board, Chief
Executive Officer,
President and Director
Ernest J. Yancey, Jr. 47 Vice President and Director
James E. Ravannack 35 Vice President and Director
Robert S. Taylor 42 Chief Financial Officer
Richard J. Lazes 48 President of Oil Stop and
Director
Kenneth C. Boothe 51 Director and President of
Superior Fishing
Bradford Small 32 Director
Justin L. Sullivan 56 Director
Terence E. Hall has served as the Chairman of the Board, Chief
Executive Officer, President and a Director of the Company since the
consummation of the Reorganization. Since 1989, he has served as President
and Chief Executive Officer of each of Superior Well Service, Inc.,
Connection Technology, Ltd. and Superior Tubular Services, Inc.
Ernest J. Yancey, Jr. has served as a Vice President and Director of
the Company since the consummation of the Reorganization. Since 1989, he
has served as Vice President - Operations of Superior Well Service, Inc.
James E. Ravannack has served as a Vice President and Director of the
Company since the consummation of the Reorganization. Since, 1989, he has
served as Vice President - Sales of Superior Well Service, Inc.
Richard J. Lazes has served as a Director of the Company since the
consummation of the Reorganization. Mr. Lazes founded Oil Stop in May 1990
and has served as its President since then.
Robert S. Taylor has served as Chief Financial Officer since March
1996. From May 1994 to January 1996, he served as Chief Financial Officer
of Kenneth Gordon (New Orleans), Ltd. From November of 1989 to May 1994 he
served as Chief Financial Officer of Plywood Panels, Inc., a manufacturer
and distributor of plywood paneling and related wood products. Prior
thereto, Mr. Taylor served as Controller for Plywood Panels, Inc. and
Corporate Accounting Manager of D. H. Holmes Company, Ltd.
Kenneth C. Boothe has served as a director since 1991. Mr. Boothe
served as Chief Executive Officer and President of the Company from October
1993 until consummation of the Reorganization and as President of the
Company's operating subsidiary, Small's Fishing & Rental, Inc. until May
1996. Mr. Boothe is now the senior partner with Boothe, Vassar, Fox & Fox,
certified public accountants, Big Spring, Texas.
Bradford Small has served as a Director of the Company since December
1993. From 1989 to January 1991, Mr. Small served as a minister of the
Southern Hills Church of Christ in Abilene, Texas. From January 1991 until
May 1995 he served as minister of Western Hills Church of Christ in
Amarillo, Texas. From May 1995 to May 1996 he served as minister of
Highlands Church of Christ in Lakeland, Florida. From May 1996 to the
present, Mr. Small's has been the minister of Amarillo South Church of
Christ in Amarillo, Texas.
Justin L. Sullivan has served as a Director of the Company since
consummation of the Reorganization. Mr. Sullivan has been a business
consultant to various companies since May 1993. From October 1992 to May
1993, Mr. Sullivan served as President of Plywood Panels, Inc., a
manufacturer and distributor of plywood paneling and related wood products.
From 1967 to September 1992, he served as Vice-President, Treasurer and
Director of Plywood Panels, Inc. and its predecessor entities.
Summary Executive Officer Compensation
The following summary compensation table sets forth information for
each of the three fiscal years in the period ended December 31, 1995,
concerning compensation for services in all capacities awarded to, earned
by or paid to the most highly compensated executive officers of the Company
whose aggregate cash compensation exceeded $100,000 (collectively, the
"Named Executives").
Summary Compensation Table
Name and Principal
Position
_____________________
Annual Compensation Long Term Compensation
_____________________ ______________________
Year Ended Other Annual Securities
Name and Principal December Salary$ Compensation($) Underlying Options(#)
___________________ ___________ _________ ______________ ____________________
T. Hall, President,
CEO(1) 1995 12,500 None 44,000
K. Boothe, President
CEO(2) 1995 120,000 None None
President, CEO, CFO 1994 120,000 None None
Secretary, Treasurer(3)1993 75,000 None None
(1) Terence Hall became Chairman of the Board, CEO and President on
December 13, 1995 upon consummation of the Reorganization.
(2) Kenneth Boothe served as President and CEO until consummation of the
Reorganization on December 13, 1995.
(3) Became President and CEO in October 1993.
In connection with the Reorganization, the Company entered into
employment agreements with each of Terence E. Hall, Kenneth C. Boothe,
Ernest J. Yancey, Jr., James E. Ravannack, Kenneth Blanchard and Richard J.
Lazes (the "Executives"), providing for minimum annual salaries of
$300,000, $120,000, $120,000, $120,000, $120,000 and $162,500 respectively,
with 5% increases over and above the preceding year's salary during the
term of the agreement. Under the employment agreements, Messrs. Hall,
Yancey, Ravannack and Blanchard were granted ten-year options to purchase
44,000, 44,000, 44,000 and 18,000 shares of Common Stock, respectively, at
$2.53 per share. Under the agreements, the Executives will also be
provided with benefits under any employee benefit plan maintained by the
Company for its employees generally, or for its executives and key
management employees in particular, on the same terms as are applicable to
other senior executives of the Company. Mr. Boothe's employment agreement
was terminated May 1996.
In addition to annual compensation and benefits, each of Messrs.
Hall, Yancey, Ravannack and Blanchard will receive an annual bonus
calculate as a percentage of the Company's year-end pre-tax, pre-bonus
annual income ("Company's Income"), Mr. Boothe will receive an annual bonus
calculated as a percentage of Superior Fishing's year-end pre-tax, pre-
bonus annual income ("Superior Fishing Income") and Mr. Lazes will receive
an annual bonus calculated as a percentage of Oil Stop's year-end pre-tax,
pre-bonus annual income ("Oil Stop Income"). Mr. Hall's bonus will be in
an amount equal to 1% of the Company's Income if the Company's Income is
greater than $1.8 million but less than or equal to $2.0 million, 2% of the
Company's Income if the Company's Income is greater than $2.0 million but
less than or equal to $2.25 million, or 3% of the Company's Income if the
Company's Income is greater than $2.25 million. The bonus for each of
Messrs. Yancey, Ravannack and Blanchard will be in an amount equal to .443%
of the Company's Income if the Company's Income is greater than $1.8
million but less than or equal to $2.0 million, .886% of the Company's
Income if the Company's Income is greater than $2.0 million but less than
or equal to $2.25 million, or 1.33% of the Company's Income if the
Company's Income is greater than $2.25 million. Mr. Boothe's bonus will be
in an amount equal to 5% of Superior Fishing Income if Superior Fishing
Income is greater than $250,000 and less than or equal to $500,000; and 7%
of Superior Fishing Income that is greater than $500,000. Mr. Lazes' bonus
will be in an amount equal to 5% of Oil Stop's Income that is greater than
$1.0 million but less than or equal to $1.5 million, 7.25% of Oil Stop's
Income that is greater than $1.5 million but less than or equal to $2.0
million, and 10% of Oil Stop's Income that is greater than $2.0 million.
The term of the employment agreements, except for Mr. Hall's
agreement, will continue until December 13, 1998 unless earlier terminated
as described below. The term of Mr. Hall's employment agreement will
continue until December 13, 2000 unless earlier terminated as described
below. The term of Mr. Hall's agreement will automatically be extended for
one additional year unless the Company gives at least 90 days' prior notice
that it does not wish to extend the term.
Each employment agreement provides for the termination of the
Executive's employment: (i) upon the Executive's death; (ii) by the
Company or the Executive upon the Executive's disability; (iii) by the
Company for cause, which includes willful and continued failure
substantially to perform the Executive's duties, or willful engaging in
misconduct that is materially injurious to the Company, provided, however,
that prior to termination, the Board of Directors must find that the
Executive was guilty of such conduct; or (iv) by the Executive for good
reason, which includes a failure by the Company to comply with any material
provision of the agreement that has not been cured after ten days' notice.
For a period of two years after any termination, the Executive will be
prohibited from competing with the Company.
Upon termination due to death or disability, the Company will pay the
Executive all compensation owing through the date of termination and a
benefit in an amount equal to nine-month's salary. Upon termination by the
Company for cause or for termination by the Executive for other than good
reason, the Executive will be entitled to all compensation owing through
the date of termination. Upon termination by the Executive for good
reason, the Executive will be entitled to all compensation owing through
the date of termination plus his current compensation and the highest
annual amount payable to Executive under the Company's compensation plans
multiplied by the greater of two or the number of years remaining in the
term of the Executive's employment under the agreement. In addition, if
the termination arises out of a breach by the Company, the Company will pay
all other damages to which the Executive may be entitled as a result of
such breach.
The following table sets forth information with respect to options
granted to each of the Named Executives during the year ended December 31,
1995.
<TABLE>
<CAPTION> Individual Grants
Number of Securities % of Total Options/SARs
Underlying options/SARs Granted to Employee Exercise or Base Expiration
Name Granted Employees Fiscal Year Price ($/SH) Date
______________________________________________________________________________________________
<S> <C> <C> <C> <C>
Terence E. Hall 44,000 29% $2.53 December 13, 2005
Kenneth C. Boothe - - - -
</TABLE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as of October 31, 1996 certain
information regarding beneficial ownership of the Common Stock by (i) each
stockholder known by Superior to be the beneficial owner of more than 5% of
the outstanding Common Stock after giving effect to the Offering, (ii) each
director of Superior, (iii) each executive officer of Superior listed in
the Summary Compensation Table set forth elsewhere herein, and (iv) all of
Superior's directors and executive officers as a group. Unless otherwise
indicated, Superior believes that the stockholders listed below have sole
investment and voting power with respect to their shares based on
information furnished to Superior by such owners.
Number of Shares
Name and Address Percentage Beneficially
of beneficial owner(1) Percentage Owned (2)
_______________________ _________________ ___________________
Terence E. Hall 19.2% 3,584,000(3)
Ernest J. Yancey, Jr. 13.0% 2,416,000(3)
James E. Ravannack 13.0% 2,424,000(3)
Richard J. Lazes 9.7% 1,800,000
Justin L. Sullivan - -
Kenneth C. Boothe * 165,944(4)
Bradford Small * 25,000(5)
All Directors and Executive 55.5% 10,414,944
Officers as a group
________________
* Less than 1%.
(1) The address of Messrs. Hall, Yancey and Ravannack is 1503 Engineers
Road, Belle Chasse, Louisiana 70037.
Mr. Sullivan's address is 100 Napoleon Avenue, New Orleans, Louisiana
70115.
Mr. Boothe's address is 1001 East FM 700, Big Spring, Texas 79720.
Mr. Small's address is 4101 W. 45th, #2004, Amarillo, Texas 79109.
(2) Beneficial ownership has been determined in accordance with Rule 13d-
3 under the Securities Exchange Act of 1934.
(3) Includes 44,000 shares subject to issuance upon the exercise of
options granted under the Incentive Plan.
(4) Represents 42,000 Common Stock owned outright, 41,926 Common Stock
held in a trust, of which Kenneth Boothe is the sole voting trustee,
57,018 Common Stock held in a corporation for the benefit of Darnell
Small, Kenneth Boothe and Bradford Small with respect to which
Kenneth Boothe has the sole voting discretion and 25,000 Common Stock
subject to issuance upon the exercise of options.
(5) Represents 25,000 Common Stock that may be acquired upon the exercise
of warrants and represents less than one percent.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Superior consists of 40 million
shares of common stock, $.001 par value per share (the "Common Stock"), and
5 million shares of preferred stock, $.01 par value per share, issuable in
series (the "Preferred Stock"). As of October 31, 1996, 18,597,045 shares
of Common Stock were outstanding and held of record by approximately 65
persons, and no shares of Preferred Stock were outstanding. The following
description of the capital stock and other security of Superior is
qualified in its entirety by reference to Superior's Certificate of
Incorporation (the "Certificate"), Bylaws and other documents evidencing
the warrants, copies of which are filed as exhibits to the registration
statement of which this Prospectus forms a part.
Common Stock
Each holder of Common Stock is entitled to one vote for each share of
Common Stock held of record on all matters on which stockholders are
entitled to vote; stockholders may not cumulate votes for the election of
directors. Subject to the preferences accorded to the holders of the
Preferred Stock, if and when issued by the Board of Directors, holders of
Common Stock are entitled to dividends at such times and in such amounts as
the Board of Directors may determine. Superior has never paid cash
dividends on its Common Stock and does not intend to pay dividends for the
foreseeable future. See "Risk Factors - Dividend Policy." Upon the
dissolution, liquidation or winding up of Superior, after payment of debts
and expenses and payment of the liquidation preference plus any accrued
dividends on any outstanding shares of Preferred Stock, the holders of
Common Stock will be entitled to receive all remaining assets of Superior
ratably in proportion to the number of shares held by them. Holders of
shares of Common Stock have no preemptive, subscription, conversion or
redemption rights and are not subject to further calls or assessments, or
rights of redemption by Superior. The outstanding shares of Common Stock
are, and the shares of Common Stock being sold in the Offering will be,
validly issued, fully paid and nonassessable.
Preferred Stock
Superior's Board of Directors has the authority, without approval of
the stockholders, to issue shares of Preferred Stock in one or more series
and to fix the number of shares and rights, preferences and limitations of
each series. Among the specific matters that may be determined by the
Board of Directors are the dividend rights, the redemption price, if any,
the terms of a sinking fund, if any, the amount payable in the event of any
voluntary liquidation, dissolution or winding up of the affairs of
Superior, conversion rights, if any, and voting powers, if any.
One of the effects of the existence of authorized but unissued Common
Stock and undesignated Preferred Stock may be to enable the Board of
Directors to make more difficult or to discourage an attempt to obtain
control of Superior by means of a merger, tender offer, proxy contest or
otherwise, and thereby to protect the continuity of Superior's management.
If, in the exercise of its fiduciary obligations, the Board of Directors
were to determine that a takeover proposal was not in Superior's best
interest, such shares could be issued by the Board of Directors without
stockholder approval in one or more transactions that might prevent or make
more difficult or costly the completion of the takeover transaction by
diluting the voting or other rights of the proposed acquiror or insurgent
stockholder group, by creating a substantial voting block in institutional
or other hands that might undertake to support the position of the
incumbent Board of Directors, by effecting an acquisition that might
complicate or preclude the takeover, or otherwise. In this regard,
Superior's Certificate grants the Board of Directors broad power to
establish the rights and preferences of the authorized and unissued
Preferred Stock, one or more series of which could be issued entitling
holders (i) to vote separately as a class on any proposed merger or
consolidation, (ii) to cast a proportionately larger vote together with the
Common Stock on any such transaction or for all purposes, (iii) to elect
directors having terms of office or voting rights greater than those of
other directors, (iv) to convert Preferred Stock into a greater number of
shares of Common Stock or other securities, (v) to demand redemption at a
specified price under prescribed circumstances related to a change of
control or (vi) to exercise other rights designated to impede a takeover.
The issuance of shares of Preferred Stock pursuant to the Board of
Directors' authority described above may adversely effect the rights of
holders of the Common Stock.
In addition, certain other charter provisions that are described
below may have the effect of either alone, in combination with each other
or with the existence of authorized but unissued capital stock of making
more difficult or discouraging an acquisition of Superior deemed
undesirable by the Board of Directors.
Class B Warrants
The Class B Warrants entitle the holder thereof to purchase one share
of Common Stock for $3.60, subject to adjustments in certain circumstances,
during the four-year period commencing December 8, 1996. The Company may
call the Class B Warrants for redemption, in whole and not in part, at a
price of $.01 per Class B Warrant at any time after they become exercisable
on not less than 30 days' prior written notice to the Class B Warrant
holders if the last sales price of the Common Stock has been at least 150%
(initially $5.40) of the then current exercise price of the Class B
Warrants per Common Stock for the 20 consecutive days ending on the third
day prior to the date on which notice of redemption is given. The holders
will have the right to exercise the Class B Warrants until the close of
business on the date fixed for redemption.
The Class B Warrants are issued in registered form under a warrant
agreement, between the Company and American Stock Transfer & Trust Company,
as Warrant Agent ("Warrant Agreement"). Reference is made to the Warrant
Agreement (which has been filed as an exhibit to the Registration Statement
of which this Prospectus is a part) for a complete description of the terms
and conditions applicable to the Class B Warrants (the description herein
contained being qualified in its entirety by reference to such Warrant
Agreement).
The exercise price, number of Common Stock issuable on exercise of
the Class B Warrants and the redemption price are subject to adjustment in
certain circumstances, including a stock dividend, recapitalization,
reorganization, merger or consolidation of the Company. However, the Class
B Warrants are not subject to adjustment for issuance of Common Stock at a
price below the exercise price of the Class B Warrants.
The Class B Warrants will be exercisable commencing December 8, 1996
if at the time of exercise there is a current prospectus covering the
Common Stock issuable upon exercise of such Class B Warrants under an
effective registration statement filed with the Securities and Exchange
Commission and such Common Stock have been qualified for sale or are exempt
from qualification or the registration requirements under the securities
laws of the state of residence of the holder of such Class B Warrants.
Although the Company has committed to have all Common Stock so qualified
for sale in those states and to maintain a current prospectus thereto until
the expiration of the Class B Warrants, subject to the terms of the Warrant
Agreement, there can be no assurance that it will be able to do so.
The Class B Warrants may be exercised upon the surrender of the Class
B Warrant certificate on or prior to the expiration date at the offices of
the warrant agent, with the exercise form on the reverse side of the Class
B Warrant certificate completed and executed as indicated, accompanied by
full payment of the exercise price for the number of Class B Warrants. The
holders do not have the rights or privileges of holders of Common Stock
prior to the exercise of the Class B Warrants.
No fractional Common Stock will be issued upon exercise of the Class
B Warrants. However, if a warrant holder exercises all Class B Warrants
then owned of record by him, the Company will pay to such warrantholder, in
lieu of the issuance of any fractional Common Stock which is otherwise
issuable to such warrantholder, an amount based on the market value of the
Common Stock on the last trading day prior to the date of exercise.
Class A Warrants
Each Class A Warrant entitles the registered holder thereof to
purchase one share of Common Share at an exercise price of $6.00 per share,
subject to adjustment, until July 6, 1997. The Class A Warrants were
issued in registered form pursuant to the terms of a warrant agreement (the
"Class A Warrant Agreement"). Reference is made to the Class A Warrant
Agreement (which has been filed as an exhibit to the Registration Statement
of which this Prospectus is a part) for a complete description of the terms
and conditions applicable to the Class A Warrants (the description herein
contained being qualified in its entirety by reference to the Class A
Warrant Agreement).
The Company may call the Class A Warrants for redemption, in whole or
in part, at a price of $.01 per warrant, at any time with the consent of
Gaines, Berland Inc., upon not less 30 days' prior written notice to the
holders, if the last sale price of the Common Stock has been at least $9.00
per share (150% of the then effective exercise price) for the 20
consecutive trading days ending on the third day prior to the date on which
the notice of redemption is given. The holders will have the right to
exercise the Class A Warrants until the close of business on the date fixed
for redemption.
The exercise price, number of Common Stock issuable on exercise of
the Class A Warrants and redemption price are subject to adjustment in
certain circumstances, including in the event of a stock dividend,
recapitalization, reorganization, merger or consolidation of the Company.
However, the Class A Warrants are not subject to adjustment for issuances
of Common Stock at prices below their exercise price.
Limitation of Liability and Indemnification Matters
The Company's Certificate of Incorporation provides that directors of
the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the directors' duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General
Corporation Law ("DGCL") relating to prohibited dividends or distributions
or the repurchase or redemption of stock, or (iv) for any transaction from
which the director derives an improper personal benefit. The provision
does not apply to claims against directors for violations of certain laws,
including federal securities laws. If the DGCL is amended to authorize
further elimination or limitation of directors' liability, then the
liability of directors of the Company shall automatically be limited to the
fullest extent provided by law. The Certificate of Incorporation and the
Bylaws of the Company also contain provisions to indemnify the directors,
officers, employees or other agents to the fullest extent permitted by the
DGCL. These provisions may have the practical effect in certain cases of
eliminating the ability of stockholders to collect monetary damages from
directors. The Company believes that these provisions in the Certificate
of Incorporation and Bylaws of the Company are necessary to attract and
retain qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act"), may be permitted
to directors, officers and controlling persons of the Company pursuant to
the foregoing provisions, or otherwise, the Company has been advised that
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
Certain Charter and Bylaw Provisions
Size of the Board of Directors; Removal of Directors; Filling of
Vacancies on the Board of Directors. The Company's Bylaws provide that the
number of directors shall be fixed by the Board of Directors but shall not
be less than three nor more than eleven. The Company's Bylaws also provide
that a newly created directorship resulting from an increase in the number
of directors and any vacancies on the Board of Directors resulting from
death, resignation, removal or other cause may be filled by the affirmative
of the majority of the remaining directors then in office, although less
than a quorum, or by a sole remaining director. In addition, these
provisions specify that directors elected to fill a vacancy or a newly
created directorship on the Board of Directors will serve until the next
annual meeting of stockholders and until their successors are elected and
qualified, or until their earlier resignation or removal.
Stockholder Action by Written Consent. Under Delaware law and under
the Company's Bylaws, unless the certificate of incorporation specifies
otherwise, any action that could be taken by stockholders at an annual or
special meeting may be taken, instead, without a meeting and without notice
to or a vote of other stockholders if a consent in writing is signed by
holders of outstanding stock having voting power that would be sufficient
to take such action at a meeting at which all outstanding shares were
present and voted. As a result, stockholders may act upon any matter by a
duly called meeting or by written consent.
Amendment of the Bylaws. Under Delaware law, the power to adopt,
amend or repeal bylaws is conferred upon the stockholders; however, a
corporation may in its certificate of incorporation also confer upon the
board of directors the power to adopt, amend or repeal its bylaws. The
Company's Certificate and Bylaws grant the Board of Directors the power to
adopt, amend and repeal the Bylaws.
Special Meetings of the Stockholders. The Company's Bylaws permit
the directors to call special meeting of the stockholders. The Bylaws do
not permit stockholders to call special meetings.
Delaware Anti-Takeover Statute
The Company is subject to Section 203 of the Delaware General
Corporation Law, which prohibits Delaware corporations from engaging in a
wide range of specified transactions with any interested stockholder,
defined to include, among others, any person other than such corporation
and any of its majority-owned subsidiaries who own 15% or more of any class
or series of stock entitled to vote generally in the election of directors,
unless, among other exceptions, the transaction is approved by (i) the
Board of Directors prior to the date the interested stockholder obtained
such status, or (ii) the holders of two-thirds of the outstanding shares of
each class or series of stock entitled to vote generally in the election of
directors, not including those shares owned by the interested stockholder.
The provisions described above may tend to deter any potential
unfriendly offers or other efforts to obtain control of the Company that
are not approved by the Board of Directors and thereby deprive the
stockholders of opportunities to sell shares of Common Stock at prices
higher than the prevailing market price. On the other hand, these
provisions will tend to assure continuity of management and corporate
policies and to induce any person seeking control of the Company or a
business combination with the Company to negotiate or terms acceptable to
the then elected Board of Directors.
Transfer Agent, Warrant Agent and Exchange Agent
The transfer and warrant agent and registrar for the Company's Common
Stock is American Stock Transfer & Trust Company, 40 Wall Street, 46th
Floor, New York, New York 10005.
PLAN OF DISTRIBUTION
The Common Stock offered hereby is being offered by the Company
exclusively to the holders of the Company's Class A and Class B Warrants.
The Company does not have any agreement with any underwriter or other party
for the distribution of the Common Stock offered hereby. The Common Stock
is being offered by the Company through the Prospectus, and no commissions
or other remunerations will be paid to any person for soliciting the
exercise of the Class A and Class B Warrants and the sale of the Common
Stock.
Certain persons who acquire Common Stock upon exercise of the Class A
and Class B Warrants may be deemed to be "issuers@ under the Securities Act
of 1933, as amended (the "Securities Act") because of their relationship
with the Company ("Affiliates") and, therefore, may be required to deliver
a copy of this Prospectus, including a Prospectus Supplement, to any person
who purchases shares of Common Stock acquired by such Affiliate through
exercise of the Class A and/or Class B Warrants ("Restricted Shares"). In
addition, any broker or dealer participating in any distribution of the
Restricted Shares may be deemed to be an "underwriter" within the meaning
of the Securities Act and, therefore, may be required to deliver a copy of
this Prospectus, including a Prospectus Supplement, to any person who
purchases any Restricted Shares from or through such broker or dealer.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon
for Superior by Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P., New Orleans, Louisiana.
EXPERTS
The consolidated financial statements of Superior as of and for the
two years ended December 31, 1995 included in this Prospectus and elsewhere
in the Registration Statement have been audited by KMPG Peat Marwick LLP,
independent certified public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of
such firm as experts in accounting and auditing. The report of KPMG Peat
Marwick LPP covering Superior's consolidated financial statements refers
to the adoption in 1995 of the methods of accounting for the impairment of
long-lived assets and for long-lived assets to be disposed of prescribed by
Statement of Financial Accounting Standards No. 121.
The financial statements of Dimensional as of and for the year ended
December 31, 1995 included in this Prospectus and elsewhere in the
Registration Statement have been audited by KMPG Peat Marwick LLP,
independent certified public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of
such firm as experts in accounting and auditing.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Superior Energy Services, Inc.
Independent Auditors Report F-1
Consolidated Balance Sheets at December 31, 1995 and 1994 F-2
Consolidated Statements of Operations for the years ended December 31,
1995 and 1994 F-3
Consolidated Statements of Changes in Stockholders' Equity for the years
ended December 31, 1995 and 1994 F-4
Consolidated Statements of Cash Flows for the years ended December 31,
1995 and 1994 F-5
Notes to Consolidated Financial Statements F-6
Condensed Consolidated Balance Sheets as of June 30, 1996 (unaudited)
and December 31, 1995 F-19
Condensed Consolidated Statements of Operations for the Three and Six
Months ended June 30, 1996 and 1995 (unaudited) F-20
Condensed Consolidated Statements of Cash Flows for the Six Months ended
June 30, 1996 and 1995 (unaudited) F-21
Notes to Condensed Consolidated Financial Statements F-22
Dimensional Oil Field Services, Inc.
Independent Auditors Report F-26
Balance Sheet at December 31, 1995 F-27
Statement of Operations and Retained Earnings for the year ended
December 31, 1995 F-28
Statement of Cash Flows for the year ended December 31, 1995 F-29
Notes to Financial Statements F-30
Balance Sheet at June 30, 1996 (unaudited) F-33
Statements of Operations and Retained Earnings for the Six Months ended
June 30, 1996 and 1995 (unaudited) F-34
Statements of Cash Flows for the Six Months ended June 30, 1996 and 1995
(unaudited) F-35
Notes to Unaudited Financial Statements F-36
Pro Forma Consolidated Financial Statements
Unaudited Pro Forma Condensed Balance Sheet as of June 30, 1996 F-38
Unaudited Pro Forma Condensed Statement of Earnings for the six months
ended June 30, 1996 F-40
Unaudited Pro Forma Condensed Statement of Earnings for the year ended
December 31, 1995 F-41
Notes to Unaudited Pro Forma Condensed Financial Information F-42
<PAGE>
Independent Auditors' Report
The Boards of Directors and Shareholders
Superior Energy Services, Inc.:
We have audited the consolidated balance sheets of Superior Energy
Services, Inc. and subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of operations, changes in
stockholdersO equity and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the
CompanyOs management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Superior Energy Services, Inc. and subsidiaries as of
DecemberE31, 1995 and 1994, and the results of their operations and
their cash flows for each of the years then ended in conformity with
generally accepted accounting principles.
As discussed in note 9 to the consolidated financial statements, in
1995 the Company adopted the methods of accounting for the impairment
of long-lived assets and assets to be disposed of prescribed by
Statement of Financial Accounting Standards No. 121.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
March 15, 1996
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1995 and 1994
(in thousands)
Assets 1995 1994
______ _____ _____
Current assets:
Cash and cash equivalents $ 5,068 $ 207
Accounts receivable - net of allowance
for doubtful accounts of $204,000 in
1995 and none in 1994 3,759 2,072
Notes receivable:
Employees - 108
Other - 120
Inventories 968 242
Deferred income taxes 256 -
Due from shareholders - 267
Other 227 213
________ ________
Total current assets 10,278 3,229
Property, plant and equipment - net 6,904 1,193
Goodwill - net 4,576 -
Patent - net 1,226 -
________ ________
$ 22,984 $ 4,422
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 1,249 $ 750
Accounts payable 2,345 826
Due to shareholders 3,422 179
Unearned income 1,085 -
Accrued expenses 456 -
Income taxes payable 545 -
Other 200 200
________ ________
Total current liabilities 9,302 1,955
________ ________
Deferred income taxes 408 -
Other 180 194
StockholdersO equity:
Preferred stock of $.01 par value.
Authorized - 5,000,000 shares;
none issued - -
Common stock of $.001 par value.
Authorized - 25,000,000 shares;
issued - 17,032,916 17 248
Additional paid-in capital 16,230 -
Retained earnings (deficit) (3,153) 2,025
________ ________
Total stockholders' equity 13,094 2,273
________ ________
$ 22,984 $ 4,422
======== =========
See accompanying notes to consolidated financial statements.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1995 and 1994
(in thousands, except
per share data)
1995 1994
______ _______
Revenues $ 12,338 $ 11,088
Costs and expenses:
Costs of services 7,487 6,785
Depreciation and amortization 259 149
Impairment of long-lived assets 4,042 -
General and administrative 3,258 2,424
________ ________
Total costs and expenses 15,046 9,358
________ ________
Income (loss) from operations (2,708) 1,730
Other income (expense):
Interest (86) (40)
Other 79 114
________ ________
Income (loss) before income taxes (2,715) 1,804
Provision for income taxes 131 -
________ ________
Net income (loss) $ (2,846) $ 1,804
======== ========
Net income (loss) as adjusted for pro forma
income taxes (unaudited):
Income (loss) before income taxes as
per above $ (2,715) $ 1,804
Pro forma income taxes 640 667
___________ _________
Net income (loss) as adjusted for
pro forma income taxes $ (3,355) $ 1,137
=========== =========
Net income (loss) per common share and common
share equivalent $ (.38) $ .14
=========== ==========
Weighted average shares outstanding 8,847,946 8,400,000
=========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
December 31, 1995 and 1994
(in thousands, except share data)
Common Additional Retained
stock Common paid-in earnings
shares stock capital (deficit) Total
________ ________ ________ __________ _________
Balance, December 31, 1993 3,550 $ 248 $ - $ 1,689 $ 1,937
Net income - - - 1,804 1,804
Shareholder
distributions - - - (1,468) (1,468)
________ _________ _________ _________ _________
Balance, December 31, 1994 3,550 248 - 2,025 2,273
Net loss - - - (2,846) (2,846)
Shareholder
distributions - - - (2,465) (2,465)
Acquisition of Oil
Stop, Inc. 1,800,000 2 3,598 - 3,600
Share exchange for the
Superior Companies 10,037,700 (238) 3,350 133 3,245
Sale of common stock 5,175,000 5 9,265 - 9,270
Exercise of private
warrants 16,666 - 17 - 17
__________ __________ __________ __________ _________
Balance, December
31, 1995 17,032,916 $ 17 $ 16,230 $(3,153) $ 13,094
=========== ========== ========== ========== =========
See accompanying notes to consolidated financial statements.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1995 and 1994
(in thousands)
1995 1994
_____ _____
Cash flows from operating activities:
Net income (loss) $(2,846) $ 1,804
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 259 149
Unearned income 1,085 -
Impairment of long-lived assets 4,042 -
Gain on sale of property and equipment - (98)
Deferred income taxes (444) -
Changes in operating assets and liabilities,
net of acquisitions:
Accounts receivable (384) 162
Notes receivable 120 -
Inventories 61 (223)
Other, net 141 8
Accounts payable (332) (170)
Due to shareholders 1,243 -
Accrued expenses 58 -
Income taxes payable 613 -
_________ __________
Net cash provided by operating activities 3,616 1,632
_________ _________
Cash flows from investing activities:
Proceeds from sale of property and equipment - 118
Payments for purchases of property and equipment (610) (550)
_________ _________
Net cash used in investing activities (610) (432)
_________ _________
Cash flows from financing activities:
Notes payable (5,264) 206
Due from (to) shareholders 297 (48)
Shareholder distributions (2,465) (1,468)
Advances on notes receivable - (120)
Proceeds from sale of common stock 9,287 -
_________ _________
Net cash provided by (used in)
financing activities 1,855 (1,430)
_________ _________
Net increase (decrease) in cash 4,861 (230)
Cash and cash equivalents at beginning of year 207 437
_________ _________
Cash and cash equivalents at end of year $ 5,068 $ 207
========= =========
See accompanying notes to consolidated financial statements.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1995 and 1994
(1) Reorganization
On December 13, 1995, the Company consummated a share exchange
(the "Reorganization") whereby it (i) acquired all of the
outstanding capital of Superior Well Service, Inc., Connection
Technology, Ltd. and Superior Tubular Services, Inc.
(collectively, "Superior") in exchange for 8,400,000 Common
Shares and (ii) acquired all of the outstanding capital stock of
Oil Stop, Inc. ("Oil Stop") in exchange for 1,800,000 Common
Shares and $2.0 million cash payable on JanuaryE2, 1996.
As used in the consolidated financial statements for Superior
Energy Services, Inc., the term "Smalls" refers to the Company
as of dates and periods prior to the Reorganization and the term
"Company" refers to the combined operations of Small's, Oil Stop
and Superior after the consummation of the Reorganization.
Prior to the Reorganization, Small's was a holding company, the
only operating subsidiary of which was Small Fishing and Rental,
Inc. which has changed its name to Superior Fishing & Rental,
Inc. ("Superior Fishing").
As a result of the controlling interest the Superior
shareholders have in the Company as a result of the
Reorganization, among other factors, the Reorganization has been
accounted for as a reverse acquisition (i.e., a purchase of
Small's by Superior) under the "purchase" method of accounting.
As such, the Company's consolidated financial statements and
other financial information reflect the historical operations of
Superior for periods and dates prior to the Reorganization. The
net assets of Small's and Oil Stop, at the time of the
Reorganization, have been reflected at their estimated fair
value pursuant to purchase accounting at the date of the
Reorganization. The net assets of Superior have been reflected
at their historical book values.
On December 13, 1995, simultaneous with the consummation of the
Reorganization, the Company completed a public offering of
1,500,000 Units ("Units"), with each Unit consisting of three
shares of the Company's common stock and three Class B
redeemable Common Stock Purchase Warrants. On December 27,
1995, the Company sold an additional 225,000 Units. The
offerings after the underwriting discount, non-accountable
expenses and all other offering related expenses provided the
Company with approximately $9.3 million. Expenses associated
with the offering were greater than anticipated as a result of
professional costs.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The consolidated financial statements include the accounts of
Superior for the two years presented and those of Small's and
Oil Stop from the date of the Reorganization. All
significant intercompany accounts and transactions are
eliminated in consolidation. The Company's fiscal year ends
on December 31. Certain previously reported amounts have been
reclassified to conform to the 1995 presentation.
(b) Business
The Company is engaged in the business of providing offshore
plugging and abandonment and wireline services, the
development, manufacture and sale of electronic torque and
pressure control equipment and thread protectors which are
used in connection with oil and gas exploration, the
development, manufacture and sale of oil spill containment
boom and ancillary equipment and the rental of specialized oil
well equipment and fishing tools. A majority of the Company's
business is conducted with major oil and gas exploration
companies. The Company continually evaluates the financial
strength of their customers but does not require collateral to
support the customer receivables. The Company operated as one
segment in 1995 and 1994.
Customers which accounted for 10 percent or more of revenue
for the years ended December 31, 1995 and 1994, were as
follows:
1995 1994
Chevron USA 23.7% 16.8%
Conoco Inc. 16.4% 18.8%
(c) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(d) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation
is computed using the straight-line method over the estimated
useful lives of the related lives as follows:
Buildings 30 years
Machinery and equipment 5 to 15 years
Automobiles, trucks, tractors and trailers 2 to 5 years
Furniture and equipment 5 to 7 years
Effective in the fourth quarter of 1995, the Company began
assessing the impairment of capitalized costs of long-lived
assets in accordance with Statement of Financial Accounting
Standards (FAS) No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
Under this method, the Company assesses its capitalized costs
utilizing its current estimate of future revenues and
operating expenses. In the event net undiscounted cash flow
is less than capitalized costs, an impairment loss is recorded
based on estimated fair value, which would consider discounted
future net cash flows.
(e) Goodwill
The Company amortizes costs in excess of fair value of net
assets of businesses acquired using the straight-line method
over a period of 20 years. Recoverability will be reviewed
periodically by comparing the undiscounted fair value of cash
flows of the assets to which the goodwill applies to the net
book value, including goodwill, of assets.
(f) Inventories
Inventories are stated at the lower of average cost or market.
The cost of booms and parts are determined principally on the
first-in, first-out method.
(g) Cash Equivalents
The Company considers all short-term deposits with a maturity
of ninety days or less to be cash equivalents.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(h) Revenue Recognition
The Company recognizes revenues when services are provided and
upon the completion of job orders from its customers. Rental
income is recognized on a straight-line basis. Unearned income
is recorded for lease payments in excess of rental income
recognized.
(i) Income Taxes
The Company provides for income taxes in accordance with
Statement of Financial Accounting Standards (FAS) No. 109,
Accounting for Income Taxes. FAS No. 109 requires an asset and
liability approach for financial accounting and reporting for
income taxes. Deferred income taxes reflect the impact of
temporary differences between amounts of assets for financial
reporting purposes and such amounts as measured by tax laws.
(j) Patents
Patents are amortized using the straight-line method over the
term of each patent.
(k) Pro Forma Income Taxes and Earnings per Share
Pro forma income tax expense and net income (loss) as adjusted for
income taxes is presented on the Statement of Operations in
order to reflect the impact on income taxes as if Superior had
been a taxable entity for the entire two years presented. In
computing weighted average share outstanding, 8,400,000 shares
issued in exchange for Superior's capital stock is assumed to
be outstanding as of January 1, 1994. All other common shares
issued or sold are included in the weighted average shares
outstanding calculation from the date of issuance or sale.
(l) Financial Instruments
The Company's financial instruments consist of cash and cash
equivalents, accounts receivable, accounts payable and notes
payable. The carrying amount of these financial instruments
approximates their fair value.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3) Business Combinations
On December 13, 1995, Small's acquired all of the capital stock
of Superior for 8,400,000 Common Shares. Because of the
controlling interest that Superior shareholders have in the
combined entity, among other factors, the transaction has been
accounted as a reverse acquisition which has resulted in the
adjustment of the net assets of Small's to its estimated fair
value as required by the rules of purchase accounting. The net
assets of Superior are reflected at its historical book values.
The valuation of Small's net assets is based upon the 1,641,250
Common Shares outstanding prior to the Reorganization at the
approximate trading price of $2.00 at the time of the
renegotiation of the Reorganization on August 25, 1995. The
purchase price allocated to net assets was $3,283,000. The
revaluation resulted in a substantial reduction in the carrying
value of Small's property and equipment. The revaluation
reflected excess purchase price of $3,520,000 over the fair
value of tangible assets which was recorded as goodwill. At
December 31, 1995, in applying the rules of FAS No. 121 (see
Note 9), this goodwill was written off and the property and
equipment was written down an additional $522,000.
On December 13, 1995, the Company also acquired Oil Stop for the
sum of $2.0 million in cash and 1.8 million Common Shares at the
approximate trading price of $2.00 at the time of the
renegotiation of the Reorganization on August 25, 1995 for a
total purchase price of $5,600,000. The book values of Oil
Stop's assets and liabilities approximated their fair values
under the rules of purchase accounting. The excess purchase
price over the fair value of the net assets of Oil Stop at
December 13, 1995 of $4,585,000 was allocated to goodwill to be
amortized over 20 years.
Amortization expense was $10,000 in 1995 and none in 1994.
Accumulated amortization expense at December 31, 1995 and 1994
was $10,000 and none, respectively.
The following unaudited pro forma information presents a summary
of consolidated results of operations of Superior, Small's and
Oil Stop as if the Reorganization had occurred on January 1,
1994, with pro forma adjustments to give effect to amortization
of goodwill, depreciation and certain other adjustments together
with related income tax effects (in thousands except per share
amounts):
1995 1994
_______ _______
Net sales $ 19,747 $ 22,041
=========== ==========
Net earnings (loss) $ (3,880) $ 808
=========== ==========
Earnings (loss) per share $ (0.23) $ 0.05
=========== ===========
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The above pro forma financial information is not necessarily
indicative of the results of operations as they would have been
had the Reorganization been effected on the assumed date.
(4) Leased Equipment
In April 1993, Oil Stop, Inc. entered into an agreement to
lease equipment (boom) to National Response Corporation for the
period June 1993 through December 31, 1997. The lease is an
operating lease. Equipment was delivered in four stages on
separate delivery dates that commenced June 7, 1993 and ended
August 15, 1993. The lessee has the option to purchase the
equipment at the end of the lease term for $450,000. Rental
payments are as follows (in thousands):
1993 $ 700
1994 700
1995 1,400
1996 300
__________
$ 3,100
==========
Rental income is recognized on a straight-line basis. Unearned
income is recorded for lease payments in excess of rental income
recognized.
(5) Property, Plant and Equipment
A summary of property, plant and equipment at December 31, 1995
and 1994 (in thousands) is as follows:
1995 1994
_______ _________
Buildings $ 462 $ -
Machinery and equipment 5,669 989
Automobiles, trucks, trailers
and tractors 839 467
Furniture and fixtures 74 10
Construction-in-progress 360 131
Land 320 -
_________ _________
7,724 1,597
Less accumulated depreciation 820 404
_________ __________
Property, plant and
equipment, net $ 6,904 $ 1,193
========= ==========
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Notes Payable
The Company's notes payable as of December 31, 1995 and 1994
consist of the following (in thousands):
1995 1994
_____ ______
Revolving line of credit in the original amount
of $1,000,000 bearing a variable rate of interest
which equals the Wall Street Journal posted
prime rate (8.5% at December 31, 1995)
plus 2%; principal due March 31, 1996 $ 918 $ -
Master note loan agreement with bank with a
maximum principal amount of $1,400,000 bearing
interest at the bank's prime rate plus 1/2% (10% at
December 31, 1995) - 605
Installment notes payable, annual interest rates
of 8.00% to 8.75% at December 31, 1995 90 55
Notes payable to insurance company, due July
1996, annual interest rate of 7.5% 96 90
Other installment notes payable with interest
rates ranging from 7.35% to 12.0% due in monthly
installments through 1996 145 -
__________ _________
$ 1,249 $ 750
========== =========
(7) Income Taxes
Prior to the Reorganization on December 13, 1995, the Superior
Companies, with the exception of Superior Tubular Services,
Inc., which is a sub-chapter C corporation, were sub-chapter S
corporations for income tax reporting purposes. Therefore,
through December 13, 1995, no provision for federal and state
income taxes had been made. In accordance with the terms of the
Reorganization, the sub-chapter S shareholders received a note
to be paid in five equal installments during the twelve-month
period ended NovemberE1, 1997 for undistributed earnings prior
to January 1, 1995 in the amount of $1,374,000. In addition,
they received $1,091,000 primarily to pay taxes on earnings from
January 1, 1995 through December 13, 1995.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
Notes to Consolidated Financial Statements
Proforma income tax expense and net income (loss) as adjusted
for income taxes is presented on the Statements of Operations in
order to reflect the impact of income taxes as if Superior had
been a taxable entity for the entire two years presented.
The components of income tax expense for the year ended December
31, 1995 are as follows (in thousands):
Current:
Federal $ 497
State 78
_______
575
Deferred: _______
Federal (384)
State (60)
_______
(444)
_______
$ 131
=======
The significant components of deferred tax assets and
liabilities at December 31, 1995 are as follows ( in thousands):
Deferred tax assets:
Property, plant and equipment $ 527
Unearned income 401
Allowance for doubtful accounts 75
Net operating loss carryforward 1,118
_______
2,121
Valuation allowance (1,900)
_______
Net deferred tax asset 221
_______
Deferred tax liability , patent (373)
_______
$ (152)
=======
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
A valuation allowance is provided to reduce the deferred tax
assets to a level which, more likely than not, will be realized.
The net deferred tax assets reflect management's estimate of the
amount which will be realized from future profitability which
can be predicted with reasonable certainty.
As of December 31, 1995, the Company has a net operating loss
carryforward of approximately $4.8 million which is available to
reduce future Federal taxable income through 2010. The
utilization of the net operating loss carryforward is limited to
approximately $200,000 a year and will limit the ultimate
utilization of the net operating loss carryforward to
approximately $3.0 million.
A reconciliation between the statutory federal income rate and
the Company's effective tax rate on pretax income (loss) for the
year ended December 31, 1995 is as follows:
Federal income tax rate (34.0)%
Impairment of long lived assets 50.6
Sub-chapter S income not subject to corporate tax (17.2)
Other 5.4
________
Effective income tax rate 4.8%
========
(8) Joint Venture
Subsequent to year end, on January 15, 1996, the Company entered
into a joint venture with the G&L Tool Company ("G&L"), an
unrelated party, which extends through JanuaryE31, 2001. The
Company has contributed assets of Superior Fishing with a book
value of approximately $4.5 million to the joint venture which
will be engaged in the business of renting specialized oil well
equipment and fishing tools to the oil and gas industry in
connection with the drilling, development and production of oil,
gas and related hydrocarbons.
Superior Fishing will receive as its share of distributions from
operations $110,000 a month commencing February 1996 through
January 1998 and $80,000 a month for the period February 1998
through January 2001. The Company's share of distributions is
personally guaranteed by a principal of G&L. In connection with
the joint venture, Superior Fishing also sold G&L land for
$300,000.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The responsibility and authority for establishing policies
relating to the strategic direction of the joint venture
operations and ensuring that such policies are implemented have
been vested in a policy committee consisting of three members,
one of which is a Company employee. G&L will be responsible for
the maintenance and repair, insurance and licenses and permits
for all joint venture assets.
At the end of the joint venture term, G&L will have at its
election, the option to purchase all of the Superior Fishing
assets contributed to the joint venture for $2 million.
(9) Impairment of Long-Lived Assets
The Company has elected the early adoption of Statement of
Financial Accounting Standards (FAS) No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of. FAS No. 121 requires that when events or changes
in circumstances indicate that carrying amounts of an asset may
not be recoverable, there has been an impairment, and the asset
should be written down to its fair asset value. In such
instances where there is goodwill associated with the asset as a
result of a business combination accounted for using the
purchase method, the goodwill is eliminated before making any
reduction of the carrying amounts of the impaired long lived
asset.
Subsequent to year end, the Company, through Superior Fishing,
entered into the joint venture described in Note 8. The joint
venture involves the utilization of the equipment and tools,
buildings, autos and trucks of Superior Fishing. The
undiscounted net cash flows from the joint venture were less
than the carrying value of the above fixed assets and associated
goodwill indicating that an impairment had taken place.
The fair value of the fixed assets was determined by discounting
the estimated net cash flows from the joint venture. The result
was an impairment charge of $4,042,000, consisting of a write-
off of goodwill of $3,520,000 associated with the acquisition of
Small's and a write-off of $522,000 of property, plant and
equipment.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(10) Stockholders' Equity
Subsequent to year end at a special meeting of stockholders on
February 23, 1996, the shareholders approved increasing the
authorized number of common stock to 40,000,000. At December
31, 1995, the following were outstanding:
(a) Class A Warrants issued in connection with the
Company's initial public offering, entitling the
holders to purchase an aggregate of 1,121,251 Common
Shares until July 6, 1997 at an exercise price of $6.00
per Common Share;
(b) Class B Warrants issued December 13, 1995 entitling
the holder to purchase an aggregate of 4,500,000 Common
Shares until December 13, 1999 at an exercise price of
$3.60 per Common Share;
(c) Warrants entitling the holders thereof to purchase an
aggregate of 66,666 Common Shares until January 17,
2000 at an exercise price of $1.00 per share;
(d) Options to purchase an aggregate of 75,000 Common
Shares at an exercise price of $3.60 per share;
(e) Options issued to management of Small's to purchase an
aggregate of 150,000 Common Shares at an exercise price
of $4.75 per share;
(f) Options issued in July 1992 to purchase (a) an
aggregate of 210,000 Common Shares until July 6, 1997
at an exercise price of $3.60 per share and (b) Class A
Warrants at an exercise price of $.07 per warrant,
which Class A Warrants entitle the holders thereof to
purchase an aggregate of 210,000 Common Shares at a
price of $6.00 per Common Share, and
(g) Underwriters Unit Purchase Options issued December 13,
1995 entitling the holder to purchase up to 150,000
Units until December 13, 1999 at an exercise price of
$10.40.
In connection with the Reorganization, the Company entered into
employment agreements with six executives. Under the employment
agreements four executives were granted ten-year options to
purchase 150,000 common shares at an exercise price equal to the
fair market value of $2.53 on the date of the grant.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Under a Stock Option Plan (1991 Option Plan), approved by
Small's stockholders and Board of Directors, the Company may
grant to officers, directors, employees, consultants and agents
stock options for up to 75,000 shares of the Company's common
stock. Stock options are exercisable at the greater of the fair
market value of the common shares on the date of grant or $5.00
and options may not be granted to persons who hold 10% or more
of the Company outstanding common shares on the date of a
proposed grant. All options expire ten years from the date of
grant. None of the stock options under the 1991 Option Plan has
been granted.
In October 1995, the shareholders approved the 1995 Stock
Incentive Plan (Incentive Plan) to provide long-term incentives
to its key employees, including officers and directors who are
employees of the Company (Eligible Employees). Under the
Incentive Plan, the Company may grant incentive stock options,
non-qualified stock options, restricted stock, stock awards or
any combination thereof to Eligible Employees for up to 600,000
shares of the Company's Common Stock. The Compensation
Committee of the Board of Directors establishes the exercise
price of any stock options granted under the Incentive Plan,
provided the exercise price may not be less than the fair market
value of a common share on the date of grant. Pursuant to
employment agreements, four executives in December 1995 were
granted ten-year options under the Incentive Plan to purchase
150,000 common shares at an exercise price equal to the fair
market value of $2.53 on the date of grant. The options will
vest and be exercisable six months from grant.
In October 1995, Statement of Financial Accounting Standards
(FAS) No. 123, Accounting for Stock-Based Compensation, was
issued. FAS No. 123 encourages a fair value based method of
accounting for the compensation costs associated with employee
stock option and similar plans. However, it also permits the
continued use of the intrinsic value based method prescribed by
the Accounting Principles Board's Opinion No. 25 (Opinion No.
25), "Accounting for Stock Issued to Employees." If the
accounting prescribed by Opinion No. 25 is continued, then pro
forma disclosure of net income and earnings per share must be
presented as if the method of accounting defined in FAS No. 123
had been applied in both 1995 and 1996. FAS No. 123 is
effective for the Company's 1996 fiscal year, though it may be
adopted earlier.
The Company has elected to continue to apply the provisions of
Opinion No. 25 and will calculate compensation cost prescribed
by FAS No. 123 and present pro forma disclosures in 1996. Until
such calculations are completed, the Company cannot estimate the
impact such will have on the pro forma disclosures.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Commitments and Contingencies
The Company leases certain office, service and assembly
facilities under operating leases. The leases expire at various
dates over the next several years. Total rent expense was
$85,000 in 1995 and $62,000 in 1994. Future minimum lease
payments under non-cancelable leases for the five years ending
December 31, 1996 through 2000 are as follows: $133,000,
$133,000, $108,000, $18,000 and none, respectively.
From time to time, the Company is involved in litigation arising
out of operations in the normal course of business. In
management's opinion, the Company is not involved in any
litigation, the outcome of which would have a material effect on
its business or operations.
(12) Related Party Transactions
The Company has entered into certain transactions which have
given rise to amounts receivable from and payable to the
shareholders. The balances at December 31, 1995 and 1994 were
as follows (in thousands):
1995 1994
_____ _____
Due from shareholders $ - $ 267
======= ======
Due to shareholders $ 3,422 $ 179
======= ======
Due from shareholders at December 31, 1994 consisted of demand
loans made in 1993 and 1994 which were repaid in 1995. Due to
shareholders at December 31, 1995 consists of $2,000,000 due
January 2, 1996 to the former sole shareholder of Oil Stop in
the acquisition of that company and approximately $1,374,000
due to the former shareholders of Superior for undistributed
earnings in sub-chapter S corporations prior to December 31,
1994. In 1994, the due to shareholders represents primarily
amounts due for the purchase of various property and equipment
in 1988 and 1992.
The Company paid consulting fees to a director, who is not an
employee, of $25,000 in 1995 and $23,000 in 1994. The Company
also paid a director, who is also an employee and a shareholder
approximately $2,400 for rent in 1995. The Company is obligated
to make such rent payments in the future as follows: $46,200 in
1996, $46,200 in 1997 and $46,200 in 1998. The Company also
paid an employee $36,000 in 1995 and $15,000 in 1994 for the
rent of two facilities. As of December 31, 1995, the Company
negotiated the cancellation of lease with an officer and
director in the amount of $125,000.
<PAGE>
Superior Energy Services, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
June 30, 1996 and December 31, 1995
(in thousands)
6/30/96 12/31/95
(Unaudited) (Audited)
___________ ____________
ASSETS
Current assets:
Cash and cash equivalents $ 2,114 $ 5,068
Accounts receivable - net 4,050 3,759
Inventories 1,200 968
Deferred income taxes 256 256
Other 195 227
____________ ____________
Total current assets 7,815 10,278
Property, plant and equipment - net 6,693 6,904
Goodwill - net 4,461 4,576
Patent - net 1,176 1,226
____________ ____________
Total assets $ 20,145 $ 22,984
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - bank $ 94 $ 1,249
Accounts payable 734 2,345
Notes payable - other 1,396 3,422
Unearned income 738 1,085
Accrued expenses 642 456
Income taxes payable 1,215 545
Other 200 200
____________ ____________
Total current liabilities 5,019 9,302
____________ ____________
Deferred income taxes 408 408
Other - 180
Stockholders' equity:
Preferred stock of $.01 par value.
Authorized,
5,000,000 shares; none issued - -
Common stock of $.001 par value.
Authorized,
40,000,000 shares; issued,
17,047,045 17 17
Additional paid-in capital 16,265 16,230
Accumulated deficit (1,564) (3,153)
____________ _____________
Total stockholders' equity 14,718 13,094
____________ _____________
Total liabilities and
stockholders' equity $20,145 $22,984
============= ==============
<PAGE>
Superior Energy Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 1996 and 1995
(in thousands, except per share data)
(unaudited)
Three Months Six Months
_____________________ ____________________
1996 1995 1996 1995
____ _____ ____ _____
REVENUES $ 4,690 $ 3,211 $ 9,330 $ 6,147
Costs and expenses:
Costs of services 2,142 1,934 4,413 3,713
Depreciation and amortization 297 47 590 88
General and administrative 1,007 733 2,189 1,449
__________ __________ _________ _________
Total costs and expenses 3,446 2,714 7,192 5,250
__________ __________ _________ _________
Income from operations 1,244 497 2,138 897
Other income (expense):
Interest expense (18) (29) (48) (48)
Other 15 (3) 180 56
__________ __________ __________ __________
Income before income taxes 1,241 465 2,270 905
Provision for income taxes 372 - 681 -
__________ __________ __________ __________
Net income $ 869 $ 465 $ 1,589 $ 905
========== ========== ========== ==========
Income before income taxes Pro forma(1) Pro forma(1)
as per above $ 465 905
Pro forma income taxes 172 335
______________ _____________
Net income as adjusted for pro
forma income taxes $ 293 570
============== =============
Net income per common share and
common share equivalent $ 0.05 $ 0.03 $ 0.09 $ 0.06
======== ======== ======== ========
Weighted average
shares outstanding 17,086,611 8,400,000 17,079,763 8,400,000
========== ========= ========== =========
(1) Net income as adjusted for pro forma income taxes
<PAGE>
Superior Energy Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995
(in thousands)
(unaudited)
1996 1995
_____ _____
Cash flows from operating
activities:
Net income $ 1,589 $ 905
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 590 88
Unearned income (347) -
Changes in operating assets and liabilities:
Accounts receivable (336) (626)
Notes receivable - 110
Inventories (232) (46)
Other - net (68) (7)
Accounts payable (1,611) 203
Due to shareholders (26) 49
Accrued expenses 186 -
Income taxes payable 670 -
_____________ _____________
Net cash provided by operating activities 415 676
_____________ _____________
Cash flows from investing activities:
Proceeds from sale of property and equipment 357 -
Payments for purchases of property and equipment (572) (342)
______________ ______________
Net cash provided by (used in)
investing activities (215) (342)
______________ ______________
Cash flows from financing activities:
Notes payable - bank (1,154) 462
Deferred payment for acquisition of
Oil Stop, Inc. (2,000) -
Shareholder distributions - (691)
_____________ ______________
Net cash provided by (used in)
financing activities (3,154) (229)
_____________ _____________
Net increase (decrease) in cash (2,954) 105
Cash and cash equivalents at beginning of period 5,068 207
_____________ _____________
Cash and cash equivalents at end of period $ 2,114 $ 312
============= =============
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Six Months Ended June 30, 1996 and 1995
(1) Reorganization
On December 13, 1995, the Company consummated a share exchange
(the "Reorganization") whereby it (i) acquired all of the
outstanding capital stock of Superior Well Service, Inc.,
Connection Technology, Ltd. and Superior Tubular Services, Inc.
(collectively, "Superior") in exchange for 8,400,000 Common
Shares and (ii) acquired all of the outstanding capital stock of
Oil Stop, Inc. ("Oil Stop") in exchange for 1,800,000 Common
Shares and $2.0 million cash.
As used in the consolidated financial statements, the term
"Small's" refers to the Company as of dates and periods prior to
the Reorganization and the term "Company" refers to the combined
operations of Small's, Oil Stop and Superior after the
consummation of the Reorganization.
As a result of the controlling interest the Superior shareholders
have in the Company following the Reorganization, among other
factors, the Reorganization has been accounted for as a reverse
acquisition (i.e., a purchase of Small's by Superior) under the
"purchase" method of accounting. As such, the Company's
consolidated financial statements and other financial information
reflect the historical operations of Superior for periods and
dates prior to the Reorganization. The net assets of Small's and
Oil Stop, at the time of the Reorganization, were reflected at
their estimated fair value pursuant to purchase accounting at the
date of the Reorganization. The net assets of Superior have been
reflected at their historical book values.
(2) Basis of Presentation
Certain information and footnote disclosures normally in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to rules and regulations of the Securities and Exchange
Commission; however, management believes that this information is
fairly presented. These financial statements and footnotes
should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-
KSB for the year ended December 31, 1995 and the accompanying
notes and Management's Discussion and Analysis or Plan of
Operation.
<PAGE>
(Continued)
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
The financial information for the six months ended June 30, 1996
and 1995, has not been audited. However, in the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the results of
operations for the periods presented have been included therein.
The results of operations for the first six months of the year
are not necessarily indicative of the results of operations which
might be expected for the entire year.
(3) Pro Forma Income Taxes and Earnings per Share
Prior to the Reorganization, the Superior Companies, with the
exception of Superior Tubular Services, Inc., which was a sub-
chapter C corporation, were sub-chapter S corporations for income
tax reporting purposes. Therefore, through June 30, 1995, no
provision for federal and state income taxes had been made. Pro
forma income tax expense and net income as adjusted for income
taxes is presented for the three and six months ended June 30,
1995 on the Statement of Operations in order to reflect the
impact on income taxes as if Superior had been a taxable entity
during those periods. In computing weighted average share
outstanding, 8,400,000 shares issued in exchange for Superior's
capital stock is assumed to be outstanding as of January 1, 1995.
All other common shares issued or sold are included in the
weighted average shares outstanding calculation from the date of
issuance or sale.
(4) Joint Venture
On January 15, 1996, the Company entered into a joint venture
with G&L Tool Company ("G&L"), an unrelated party, which extends
through January 31, 2001. The Company has contributed assets of
Superior Fishing with a book value of approximately $4.5 million
to the joint venture which is engaged in the business of renting
specialized oil well equipment and fishing tools to the oil and
gas industry in connection with the drilling, development and
production of oil, gas and related hydrocarbons.
Superior Fishing receives as its share of distributions from
operations $110,000 a month commencing February 1996 through
January 1998 and $80,000 a month for the period February 1998
through January 2001. The distributions are included in revenues
on the Condensed Consolidated Statement of Operations. The Company's
share of distributions is personally guaranteed by a principal of
G&L. In connection with the joint venture, Superior Fishing also
sold G&L land for $300,000.
<PAGE>
(Continued)
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
The responsibility and authority for establishing policies
relating to the strategic direction of the joint venture
operations and ensuring that such policies are implemented have
been vested in a policy committee consisting of three members,
one of which is a Company employee. G&L will be responsible for
the maintenance and repair, insurance and licenses and permits
for all joint venture assets.
At the end of the joint venture term, G&L will have at its
election, the option to purchase all of the Superior Fishing
assets contributed to the joint venture for $2 million.
(5) Stockholder's Equity
At a special meeting of stockholders on February 23, 1996, the
shareholders approved increasing the authorized number of shares
of common stock to 40,000,000.
(6) Subsequent Event
Subsequent to June 30, 1996, the Company purchased Baytron, Inc.
for $1,100,000 cash and 550,000 Common Shares. Baytron, Inc.
designs, manufactures, sells and rents oil and gas drilling
instrumentation and computerized rig data acquisitions systems
used to monitor, display and record drill site functions. For
the nine months ended June 30, 1996, Baytron recorded revenues of
$2.0 million.
<PAGE>
Independent Auditors' Report
The Board of Directors
Dimensional Oil Field Services, Inc.:
We have audited the accompanying balance sheet of Dimensional Oil Field
Services, Inc. as of December 31, 1995, and the related statements of
operations and retained earnings and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
that supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Dimensional Oil Field
Services, Inc. as of December 31, 1995, and the results of its operations and
its cash flows for the year then ended, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
November 11, 1996
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Balance Sheet
December 31, 1995
Assets
Current assets:
Cash and cash equivalents $ 103,198
Accounts receivable - net of allowance
for doubtful accounts of $39,342 1,056,978
Prepaid expenses 73,593
_________________
Total current assets 1,233,769
Property and equipment - net 1,140,054
Certificate of deposit 50,000
Other assets 103,339
________________
$ 2,527,162
================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 907,563
Current portion of notes payable 225,756
_________________
Total current liabilities 1,133,319
_________________
Notes payable 287,500
Other liabilities 26,872
Stockholders' equity :
Common stock no par value, authorized-100,000 shares;
issued - 100,000 shares 17,663
Retained earnings 1,061,808
________________
Total stockholders' equity 1,079,471
________________
$ 2,527,162
================
See accompanying notes to financial statements.
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Statement of Operations and Retained Earnings
Year ended December 31, 1995
Revenues $ 4,123,376
____________
Expenses:
Cost of services 3,028,381
Selling, general and administrative 861,279
Interest 62,489
Depreciation 181,371
_____________
Loss from continuing operations (10,144)
Discontinued operations (note 6 ):
Loss from operations of the
discontinued wireline division (20,708)
______________
Net loss (30,852)
Stockholder distributions
(132,538)
Retained earnings at beginning of year 1,225,198
______________
Retained earnings at end of year $ 1,061,808
==============
See accompanying notes to financial statements
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Statement of Cash Flows
Year ended December 31, 1995
Cash flows from operating activities:
Net loss from continuing operations $ ( 10,144)
Adjustments to reconcile net loss from continuing
operations to net cash provided by operating activities:
Depreciation 181,371
Allowance for doubtful accounts 39,342
Changes in operating assets and
liabilities:
Accounts receivable (463,629)
Prepaid expense 41,379
Accounts payable and accrued expenses 502,542
Other assets and liabilities, net 46,528
Net cash provided by continuing operations 337,389
Net cash provided by discontinued operations 36,695
_________
Net cash provided by operating activities 374,084
_________
Cash flows from investing activities:
Payments for purchases of property and equipment (15,978)
Certificate of deposit (50,000)
__________
Net cash used in investing activities (65,978)
__________
Cash flows from financing activities:
Notes payable (198,739)
Stockholder distributions (16,100)
__________
Net cash used in financing activities (214,839)
__________
Net increase in cash 93,267
Cash and cash equivalents at beginning of year 9,931
__________
Cash and cash equivalents at end of year $ 103,198
==========
Supplemental disclosures on cash flow information -
cash paid during the year for interest $ 79,306
==========
See accompanying notes to financial statements.
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Notes to Financial Statements
December 31, 1995
(1) Organization and Summary of Significant Accounting Policies
(a) Organization
Dimensional Oil Field Services, Inc. (the Company) was
incorporated under the laws of Louisiana and began its operations in 1979.
The Company provides offshore oil and gas plug and abandonment services.
(b) Use of Estimates
The preparation of financial statements requires management to
make estimates and assumptions that effect the reported amounts in the
financial statements and related disclosures. Actual results could
differ from these estimates.
(c) Property and Equipment
Property and equipment is carried at cost. Depreciation is
computed using the straight-line method based on the following estimated
useful lives:
Estimated
Description useful lives
Machinery and equipment 5-15 years
Automobiles, trucks, trailers
and tractors 3-5 years
Furniture and equipment 5-7 years
(d) Income Taxes
The Company with the consent of its stockholders, has elected
under applicable provisions of the Internal Revenue Code not to be taxed
as a corporation but to have its income taxed to the individual stockholders.
Therefore, no provision for federal and state income taxes has been made in
the accompanying financial statements.
(e) Cash Flows
For purposes of the statement of cash flows, cash equivalents
include demand deposits with original maturities of less than three months.
(f) Financial Instruments
The Company's financial instruments consist of cash and cash
equivalents, accounts receivable accounts payable and notes payable.
The carrying amount of these financial instruments approximates their fair
value.
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Notes to Financial Statements
g) Revenue Recognition
The Company recognizes revenues as services are provided.
(h) Employee Benefit Plan
The Company has an elective employee benefit program which
qualifies under section 401(k) of the Internal Revenue Code. The Company can
make both discretionary and matching contributions at the discretion of the
Board of Directors. In 1995, the Company matched up to 50% of the first six
percent of participant retirement contributions. The Company's contribution
was approximately $25,000 in 1995.
(i) New Accounting Pronouncement
In March 1995, Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," was issued by the Financial Accounting Standards
Board. This statement is effective for fiscal years beginning after December
15, 1995. Management does not believe that this pronouncement will have a
material impact on its financial statements.
(2) Concentration of Credit Risk
The Company's financial instruments that are exposed to concentrations
of credit risk consist primarily of cash and cash equivalents and trade
accounts receivable. The Company places cash and temporary cash investments
with high quality financial institutions and currently invests primarily in
certificates of deposit.
A majority of the Company's business is conducted with major oil and gas
exploration companies with operations in the Gulf of Mexico. The Company
continually evaluates the financial strength of their customers but does not
require collateral to support the customer receivables.
Customers which accounted for 10 percent or more of operating revenue
were as follows for the year ended December 31, 1995:
1995
Chevron USA 18.1%
Murphy Oil Corporation 17.2%
Louisiana Department of Natural Resources 16.0%
Unocal 15.3%
The Company's largest six customers accounted for approximately 82% of
total revenues
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Notes to Financial Statements
(3) Property and Equipment
A summary of property and equipment at December 31, 1995 follows:
Machinery and equipment $ 2,848,789
Automobiles, trucks, trailers and tractors 157,622
Leasehold improvements 11,749
______________
3,018,160
Less accumulated depreciation 1,878,106
______________
Net property and equipment $ 1,140,054
(4) Notes Payable
A summary of notes payable at December 31, 1995 follows:
Installment note payable, annual interest
rate of 12.0%, due February 2003 $ 333,500
Note payable to insurance company, due
March 1996, annual interest rate of 7.19% 33,269
Note payable to bank, annual interest rate of 10.0%,
due January 1996 121,360
Other installment notes payable with
interest rates ranging from 7.0 % to 9.0 %
due in monthly installments through 25,127
_____________
513,256
Less current portion 225,756
_____________
$ 287,500
=============
Maturities of long-term debt for the five years ended December 31, 2000
are as follows: $225,756, $46,000, $46,000, $46,000 and $46,000.
(5) Commitments and Contingencies
The Company leases, from its principal shareholder, an office and
service facility under an operating lease. Total rent expense in 1995 was
$56,000. Subsequent to year end, the Company renewed its lease for this
facility through December 31, 2000. Future minimum lease payments under this
non-cancelable lease are $54,000 annually through December 31, 2000.
From time to time the Company is involved in litigation arising out of
operations in the normal course of business. In management's opinion, the
Company is not involved in any litigation, the outcome of which would have a
material effect on its business operations.
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Notes to Financial Statements
(6) Discontinued Operations
On December 29, 1995, the Company in a series of agreements distributed
the assets of it's wireline division with a net book value of approximately
$116,000 for 100,000 shares of Wireline Common Stock. The Company immediately
distributed Wireline Common Stock to the stockholders of the Company. The net
book value of approximately $116,000 is included in stockholder distributions.
During the period ended December 29, 1995, Wireline lost $20,708 on revenues
of $1,100,000.
(7) Related Party Transaction
The Company and the principal stockholder have entered into certain
transactions which have given rise to a net due to shareholders of $23,128.
This consists primarily of $50,000 which was loaned to the Company to
obtain a letter of credit.
(8) Subsequent Event
On September 15, 1996, the stockholders, pursuant to a merger agreement,
sold all its common stock for cash of $1,500,000, a promissory note of
$1,000,000 and 1,000,000 share of Superior Energy Services, Inc.'s common
stock. Promissory notes having an aggregate value of $750,000 are subject to a
custodial agreement under which the notes will be released to the former
Dimensional shareholders upon Dimensional's meeting specified earnings levels
through December 31, 1998.
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Balance Sheet
(Unaudited)
June 30, 1996
Assets
Current assets:
Cash and cash equivalents $ 11,957
Accounts receivable - trade 1,354,269
Prepaid expenses 220,781
______________
Total current assets 1,587,007
Property and equipment - net 1,113,945
Certificate of deposit 50,000
Other assets 44,660
______________
$ 2,795,612
==============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 878,765
Current portion of notes payable 351,294
______________
Total current liabilities 1,230,059
______________
Notes payable 264,500
Other liabilities 50,000
Stockholders' equity:
Common stock no par value authorized -
100,000 shares; issued - 100,000 shares 17,663
Retained earnings 1,233,390
_______________
Total stockholders' equity 1,251,053
_______________
$ 2,795,612
===============
See accompanying notes to financial statements.
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Statements of Operations and Retained Earnings
(Unaudited)
Six Months Ended June 30, 1996 and 1995
1996 1995
_______ _______
Revenues $ 2,352,463 $ 1,241,916
Expenses:
Cost of services 1,223,912 880,583
Selling, general and administrative 848,485 314,235
Interest 30,983 26,643
Depreciation 77,501 72,978
_______________ ________________
Income (loss) from continuing
operations 171,582 (52,523)
Discontinued operations:
Income from operations of the
discontinued wireline division - 56,681
_______________ ________________
Net income 171,582 4,158
Stockholder distributions - (16,100)
Retained earnings at beginning of year 1,061,808 1,225,198
_______________ _______________
Retained earnings at end of year $ 1,233,390 $ 1,213,256
=============== ================
See accompanying notes to financial statements
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Statements of Cash Flows
(Unaudited)
Six Months Ended June 30, 1996 and 1995
1996 1995
_______ ________
Cash flows from operating activities:
Net income (loss) $ 171,582 $ (52,523)
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation 77,501 72,978
Changes in operating assets and
liabilities:
Accounts receivable (296,929) (232,542)
Other current assets and liabilities, net 34,913 (85,690)
Accounts payable and accrued expenses (211,261) (42,868)
Other non-current assets & liabilities, net 81,807 77,811
_____________ ____________
Net cash used by continuing operations (142,387) (262,834)
Net cash provided by discontinued operations - 102,343
_____________ ____________
Net cash used by operating activities (142,387) (160,491)
_____________ ____________
Cash flows from investing activities:
Payments for purchases of property and equipment (51,392) -
Certificate of deposit - (50,000)
____________ ___________
Net cash used in investing activities (51,392) (50,000)
_____________ ___________
Cash flows from financing activities:
Notes payable 125,538 248,449
Long term debt (23,000) (23,000)
Stockholder distributions - (16,100)
_____________ ____________
Net cash provided by financing activities 102,538 209,349
_____________ ___________
Net increase (decrease) in cash (91,241) (1,142)
Cash and cash equivalents at beginning of year 103,198 9,931
_____________ __________
Cash and cash equivalents at end of year $ 11,957 $ 8,789
============= ==========
See accompanying notes to financial statements.
<PAGE>
DIMENSIONAL OIL FIELD SERVICES, INC.
Notes to Financial Statements
(Unaudited)
June 30, 1996 and 1995
(1) Basis of Presentation
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to rules and regulations of
the Securities and Exchange Commission; however, management of Dimensional Oil
Field Services, Inc. believes the disclosures which are made are adequate to
make the information presented not misleading. These financial statements and
footnotes should be read in conjunction with the financial statements and
notes thereto included in Dimensional Oil Field Services, Inc. historical
financial statements for the years ended December 31, 1995 included elsewhere
herein.
The unaudited financial information for the six months June 30, 1996 and 1995
has not been audited by independent accountants; however, in the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the results of operations for the periods
presented have been included therein. The results of operations for the first
six months of the year are not necessarily indicative of the results of
operations which might be expected for the entire year.
(2) Adoption of Accounting Pronouncement
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121 (SFAS No. 121) "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 121
sets forth guidelines regarding when to recognize an impairment of long-lived
assets and how to measure such impairment. The adoption of SFAS No. 121 did
not have an effect on the Company's financial position or results of
operations.
<PAGE>
Pro Forma Financial Information:
The following unaudited pro forma condensed financial information is
derived from the historical financial statements of Superior Energy Services,
Inc., Small's, Oilstop, Dimensional Oilfield Services, Inc. and Baytron, Inc..
Adjustments have been made to reflect the financial impact of the
Reorganization and purchase accounting for the Dimensional and Baytron
acquisitions which would have been effected had the Reorganization and
acquisitions taken place on January 1, 1995 with respect to the operating
data and June 30, 1996 with respect to the balance sheet data. The pro forma
adjustments are described in the accompanying notes and are based upon
preliminary estimates and certain assumptions that management of the companies
believe reasonable in the circumstances. This pro forma information is not
necessarily indicative of the results of operations had the acquisitions
been effected on the assumed date.
The Company, pursuant to a merger, acquired all the common stock of
Baytron, Inc. on July 31, 1996. Although Baytron, Inc. did not meet the
reporting requirements under regulation S-B, it has been included in the
following pro forma financial information.
<PAGE>
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 1996
(in thousands)
<TABLE>
<CAPTION>
Historical Historical Historical Pro forma
Superior Dimensional Baytron Adjustments Pro forma
____________ ______________ ____________ ______________ ___________
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,114 $ 12 $ 83 $ (600)(A) $ 509
(1,100)(B)
Accounts receivable -net 4,050 1,354 354 5,758
Inventories 1,200 - - 1,200
Deferred income taxes 256 - - 256
Other 195 316 8 519
____________________________________________________________________
Total current assets 7,815 1,682 445 (1,700) 8,242
Property, plant and
equipment - net 6,693 1,114 241 550 (B) 9,001
403 (A)
Goodwill - net 4,461 - - 1,209 (B) 8,463
2,793 (A)
Patent - net 1,176 - - - 1,176
____________________________________________________________________
Total assets $ 20,145 $ 2,796 $ 686 $ 3,255 $ 26,882
====================================================================
</TABLE>
<PAGE>
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 1996
(in thousands)
Continued
<TABLE>
<CAPTION>
Historical Historical Historical Pro forma
Superior Dimensional Baytron Adjustments Pro forma
____________ ______________ ____________ ______________ ___________
<S> <C> <C> <C> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - bank $ 94 $ 351 $ 12 $ ( 900) (B) $ 1,357
Accounts Payable 734 879 29 - 1,642
Notes payable - other 1,396 50 - - 1,446
Unearned income 738 - - - 738
Accrued expenses 642 - - - 642
Income taxes payable 1,215 - - - 1,215
Other 200 - - - 200
______________________________________________________________________
Total current liabilities 5,019 1,280 41 (900) 7,240
______________________________________________________________________
Notes payable - 265 - (250) (A) 515
Deferred income taxes 408 - 43 (161) (B) 1,121
(509) (A)
Stockholders' equity:
Common stock 17 18 23 23 (B) 19
(1) (B)
18 (A)
(1) (A)
Additional paid in capital 16,265 - - (1,099) (B) 19,551
(2,187) (A)
Retained earnings (deficit) (1,564) 1,233 579 579 (B) (1,564)
1,233 (A)
________________________________________________________________________
Total stockholder equity 14,718 1,251 602 (1,435) 18,006
_________________________________________________________________________
Total liabilities &
stockholders' equity $ 20,145 $ 2,796 $ 686 $ (3,255) $ 26,882
=========================================================================
</TABLE>
<PAGE>
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
Historical Historical Historical Pro forma
Superior Dimensional Baytron Adjustments Pro forma
____________ ______________ ____________ ______________ ___________
<S> <C> <C> <C> <C> <C>
Revenues $ 9,330 $ 2,353 $ 1,115 - $ 12,798
_____________________________________________________________________
Costs and expenses:
Costs of services 4,413 1,224 253 5,890
Depreciation & Amortization 590 78 34 $ (15) (I) 811
23 (L)
30 (K)
71 (H)
General and administrative 2,189 848 716 - 3,753
Total costs and expenses 7,192 2,150 1,003 109 10,454
______________________________________________________________________
Income from operations 2,138 203 112 (109) 2,344
Other Income (expense):
Interest expense (48) (31) (7) - (86)
Other 180 - - - 180
_______________________________________________________________________
Income before income tax 2,270 172 105 (109) 2,438
131 (J)
Provision for income taxes 681 - - 30 (M) 842
________________________________________________________________________
Net income $ 1,589 $ 172 $ 105 $(270) $ 1,596
========================================================================
Net income (loss) per Common
Share and Common Share
Equivalent $ .09 $ .09
============ ============
Weighted Average Shares
Outstanding 17,079,763 18,629,763
=============== ==============
</TABLE>
<PAGE>
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORM A CONDENSED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
(in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
Superior
Historical Historical Historical ProForma after Historical Historical Pro Forma
Superior Small's Oil Stop Adjustments Reorganization Dimensional Bayton Adjustments Pro Forma
______________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 12,338 $6,020 $1,969 580(O) $19,747 $4,123 $ 2,000 -- $25,870
________________________________________________________________________________________________________
Costs and expenses:
Cost of
Services 7,487 5,528 575 (1,118)(O) 12,472 3,028 500 $ 35 (H) 16,000
Depreciation and 259 1,596 244 229 (F) 2,036 181 79 (55) (L) 2,478
amortization (464)(D) 60 (I)
172 (C) 142 (K)
Impairment of long-
lived assets 4,042 -- -- -- 4,042 -- -- -- 4,042
General and
administrative 3,258 287 980 250 (E) 4,775 861 1,053 6,689
__________________________________________________________________________________________________________
Total costs and
expenses 15,046 7,411 1,799 (931) 23,325 4,070 1,632 182 29,209
__________________________________________________________________________________________________________
Income (loss) from
operations (2,708) (1,391) 170 351 (3,578) 53 368 (182) (3,339)
Other income (expense):
Interest expense (86) (422) (82) (422) (168) (62) (23) -- (253)
Other 79 2 -- -- 81 -- -- -- 81
__________________________________________________________________________________________________________
Income (loss) before
income tax (2,715) (1,811) 88 773 (3,665) (9) 345 (182) (3,511)
Provision for income
tax 131 (69) 37 116(G) 215 -- 33 82 (M) 347
17 (J)
__________________________________________________________________________________________________________
Net income(loss) $(2,846) $(1,742) $ 51 $ 657 $ (3,880) $ (9) $ 312 $ (281) $(3,858)
==========================================================================================================
Net income (loss) as adjusted
for pro-forma income taxes:
Income (loss) before
income taxes as per
above $(2,846) $(3,858)
Pro forma income
taxes 640 640
_________ _________
Net income (loss) as
adjusted pro forma
income taxes $(3,355) $(4,498)
========= =========
Net income (loss) per
common share and
common share
equivalent $ (.38) $ (.43)
========= =========
Weighted average shares
outstanding 8,847,946 10,397,946
========== ==========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
A. To reflect the purchase price adjustments related to the acquisition of
Dimensional Oil Field Services, Inc. The purchase price is the sum of
$1,500,000 in cash, a promissory note of $1,000,000 and 1,000,000 Common
Shares at the current approximate $2 3/16 market price at the date of
purchase. Promissory notes having an aggregate value of $750,000 are subject
to certain minimum earnings requirements and are not reflected in the purchase
price which approximates $3,984,000. The property, plant and equipment of
Dimensional were valued at their estimated fair market value of approximately
$1,517,000. Deferred taxes have been provided for the difference between the
book and tax basis of the property, plant and equipment acquired. The
remaining assets and liabilities approximated their fair values. The excess
purchase price over the fair value of the net assets of Dimensional at
September 15, 1996 of approximately $2,793,000 was allocated to goodwill to be
amortized over 20 years.
B. To reflect the purchase price adjustments related to the acquisition of
Baytron, Inc. The purchase price is the sum of $1.1 million in cash and
550,000 Common Shares at the current approximate $2.00 market price at date of
purchase for a total purchase price of $2,200,000. The property, plant and
equipment of Baytron were valued at their estimated fair market value of
approximately $791,000. Deferred taxes have been provided for the difference
between the book and tax basis of the property, plant and equipment acquired.
The remaining assets and liabilities approximated their fair values. The
excess purchase price over the fair value of the net assets of Baytron at July
31, 1996 of $1,209,000 was allocated to goodwill to be amortized over 20
years.
C. To reflect the amortization of goodwill associated with Small's.
D. To reflect the adjustment to depreciation associated with the
application of purchase accounting to Small's property, plant and
equipment.
E. To reflect an adjust for compensation associated with the
Reorganization.
F. To reflect the amortization of goodwill associated with Oil Stop.
G. To provide income tax expense on a pro forma basis for Oil Stop and
Small's.
H. To reflect the amortization of goodwill associated with Dimensional.
I. To reflect the additional depreciation associated with the application
of purchase accounting to Dimensional's fixed assets.
J. To provide income tax expense on the pro forma income of Dimensional.
K. To reflect the amortization of goodwill associated with Baytron.
L. To reflect the additional depreciation associated with the application
of purchase accounting to Baytron's fixed assets.
M. To provide income tax expense on the pro form income of Baytron.
N. Represents loss from continuing operations.
O. To eliminate revenues and cost of services of Small's and Oil Stop
included in historical Superior from the date of the acquisition.
<PAGE>
No dealer, salesperson or
any other person has been
authorized to give any
information or to make any
representation other than is [LOGO]
contained in this Prospectus,
and, if given or made, such
information or representation
must not be relied upon as
having been authorized by
Superior. Neither the ________ Shares
delivery of this Prospectus
nor any sale made hereunder
shall under any circumstances Superior Energy
create any implication that Services, Inc.
there has been no change in
the affairs of Superior since
any of the dates as to which
information is furnished
herein or since the date
hereof. This Prospectus does
not constitute an offer to Common Stock
sell or a solicitation of an
offer to buy any of the
securities offered hereby to
any person or in any
jurisdiction in which such
offer or solicitation is not
authorized or in which the ______________
person making the offer or
solicitation is not qualified PROSPECTUS
to do so, or to make such ______________
offer or solicitation in such
jurisdiction.
____________________
TABLE OF CONTENTS
Page
November , 1996
Available Information
Prospectus Summary
The Company
Risk Factors
Use of Proceeds
Dividends and Price Range of
Common Stock
Capitalization
Management's Discussion and
Analysis of Financial
Condition and Results
of Operations
Business
Management
Principal Stockholders
Description of Capital Stock
Plan of Distribution
Legal Matters
Experts
Index to Consolidated
Financial Statements
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify its directors and officers in a variety of
circumstances, which may include liabilities under the Securities Act of 1933.
In addition, Registrant's By-laws and Article Tenth of its Certificate of
Incorporation, as amended, a copy of which is filed as Exhibit 3.1 and
incorporated herein by reference, provides for the indemnification of
directors and officers against expenses and liabilities incurred in connection
with defending actions brought against them for negligence or misconduct in
their official capacities. The Registrant also has indemnity agreements, a
form of which is filed as Exhibit 10.1, with each of its directors, which
provide for indemnification of such directors.
Item 25. Other Expenses of Issuance and Distribution.
SEC registration fee $ 100
Accounting fees 5,000
Legal fees and expenses 15,000
Miscellaneous expenses 4,900
___________
Total $ 30,000
Item 26. Recent Sales of Unregistered Securities.
The following securities were sold and issued by the Company within the
past three years and were not registered under the Securities Act of 1933, as
amended (the "Securities Act"). Each of the transactions are claimed to be
exempt from registration pursuant to Section 4(2) of the Securities Act as
transactions by an issuer not involving a public offering, or Section 4(6) of
the Securities Act as transactions by an issuer solely to one or more
accredited investors. All of such securities are deemed to be restricted
securities for the purposes of the Securities Act. All certificates
representing such issued and outstanding restricted securities of the Company
have been properly legended and the Company has issued "stop transfer"
instructions to its transfer agent with respect to such securities, which
legends and stop transfer instructions are presently in effect unless such
securities have been registered under the Securities Act or have been
transferred pursuant to an appropriate exemption from the registration
provisions of the Securities Act.
A. Warrants. In January 1996, the Company sold seven units
consisting of promissory notes and warrants to purchase Common Stock for
$100,000 per Unit. Each Unit consisted of a $100,000 secured promissory note
of the Company and a Private Warrant to purchase up to an aggregate of 16,667
Common Shares. The promissory notes were repaid in December 1995. One of the
seven Private Warrants to purchase 16,667 Common Shares was returned to the
Company in November 1995.
B. Common Stock. On April 12, 1996, the Company issued 14, 129
shares of its Common Stock to Len W. Owens in connection with an Agreement and
Plan of Merger among the Company and Ace Tool Rental, Inc.
C. Common Stock. On July 30, 1996, the Company issued 310,000 and
240,000 shares of its Common Stock to James M. Edwards and Judy Anglin
Edwards, respectively, in connection with an Agreement and Plan of Merger
among the Company, Baytron Acquisition, Inc. and Baytron, Inc.
D. Common Stock. On September 15, 1996, the Company issued 375,500
shares of Common Stock to each of Emmett E. Crockett and Evelyn Crockett and
124,500 to each of Robert L. Crockett and George Crockett in connection with
an Agreement and Plan of Merger among the Company, Dimensional Oil Field
Acquisition, Inc., Dimensional Oil Field Services, Inc. and Emmett E.
Crockett, Evelyn Crockett, George K. Crockett and Robert L. Crockett.
Item 27. Exhibits.
Exhibit
Number Description of Exhibits
2.1 Agreement and Plan of Reorganization, dated March 23, 1995, as
amended, among the Company, Terence E. Hall, Ernest J. Yancey,
Jr., James Ravannach and Superior Well Service, Inc., Superior
Tubular Services, Inc. and Connection Technology, Inc..(1)
2.2 Agreement and Plan of Reorganization, dated May 22, 1995, as
amended, among the Company, Oil Stop, Inc. and Richard J.
Lazes.(1)
3.1 Composite of the Company's Certificate of Incorporation.(2)
3.2 Composite of the Company's By-Laws.
4.1 Form of Underwriters' Unit Purchase Option.(3)
4.2 Warrant Agreement regarding Class B Warrants between the Company
and American Stock Transfer & Trust Company.(3)
4.3 Specimen Class B Warrant.(4)
4.4 Specimen Stock Certificate.(4)
4.5 Form of Purchase Option dated July 7, 1992, as amended on August
16, 1995.(5)
4.6 Form of Private Warrant dated January 18, 1995.(5)
4.7 Class A Warrant Agreement dated July 7, 1992 between the Company
and American Stock Transfer & Trust Company.(6)
4.8 Specimen Class A Warrant Certificate.(6)
5.1 Opinion of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P. regarding the legality of the securities being
registered.
10.1 Form of Indemnity Agreement between the Company and each of its
directors.
10.2 Commercial Business Loan Agreement dated June 6, 1996 by and
among Whitney National Bank and the Company.(7)
10.3 Agreement and Plan of Merger dated September 15, 1996, by and
among the Company, Dimensional Oil Field Acquisition, Inc.,
Dimensional Oil Field Services, Inc. and Emmett E. Crockett,
Evelyn Crockett, George K. Crockett and Robert L. Crockett.(8)
10.4 Agreement and Plan of Merger dated July 30, 1996 by and among
the Company, Baytron Acquisition, Inc., Baytron, Inc., James
Edwards and Judy Edwards dated July 30, 1996.
10.5 The Company's 1991 Stock Option Plan.(1)
10.6 The Company's 1995 Stock Incentive Plan.(1)
10.7 Form of Consultant Option, as amended.(3)
10.8 Shareholders Agreement between the Company and Richard Lazes.(9)
10.9 Shareholders Agreement among the Company and Terence E. Hall,
Ernest J. Yancey, Jr. and James Ravannack.(9)
10.10 Employment Agreement between the Company and each of Terence E.
Hall, Ernest J. Yancey, Jr. and James Ravannack.(9)
10.11 Employment Agreement between the Company and Richard J.
Lazes.(9)
21 Subsidiaries of the Company.
23.1 Consent of KPMG Peat Marwick LLP regarding the Company.
23.2 Consent of KPMG Peat Marwick LLP regarding Dimensional Oil Field
Services, Inc.
23.2 Consent of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P. ( included in Exhibit 5).
24 Power of Attorney (included in Signature Page to the
Registration Statement).
_______________________
(1) Incorporated by reference to Appendix A of the Company's Definitive
Proxy Statement dated September 29, 1995.
(2) Incorporated by reference to the Company's Form 10-QSB for the quarter
ended March 31, 1996.
(3) Incorporated by reference to Amendment No. 1 to the Company's Form S-4
on Form SB-2 (Registration Statement No. 33-94454).
(4) Incorporated by reference to Amendment No. 6 to the Company's Form S-4
on Form SB-2 (Registration Statement No. 33-94454).
(5) Incorporated by reference to Amendment No. 3 to the Company's Form S-4
on Form SB-2 ((Registration Statement No. 33-94454).
(6) Incorporated by reference to the Company's Registration Statement on
Form S-18 (Registration Statement No. 33-48460FW).
(7) Incorporated by reference to the Company's Form 10-QSB for the quarter
ended June 30, 1996.
(8) Incorporated by reference to the Company's Form 8-K dated September 16,
1996.
(9) Incorporated by reference to the Company's Form S-4 (Registration
Statement No. 33-94454).
Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions or otherwise, the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of the small
business issuer in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, the small business issuer will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The small business issuer will:
(1) For determining any liability under the Securities Act,
treat the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the small business issuer under Rule
424(b)(1) or (4) or 497(h) under the Securities Act as part of this
registration statement as of the time the Commission declared it
effective.
(2) For determining any liability under the Securities Act,
treat each post-effective amendment that contains a form of prospectus
as a new registration statement for the securities offered in the
registration statement and that offering of the securities at that time
as the initial bona fide offering of those securities.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has duly caused this Registration Statement to be
signed on its behalf by the undersigned in the City of Belle Chasse, State of
Louisiana, on November 12, 1996.
SUPERIOR ENERGY SERVICES, INC.
By: /s/ Terence E. Hall
Terence E. Hall
Chairman of the Board,
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
immediately below constitutes and appoints Terence E. Hall his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration
statement, and to file the same with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Terence E. Hall Chairman of the Board, November 12, 1996
Terence E. Hall President and Chief Executive Officer
(Principal Executive Officer)
/s/ Robert S. Taylor Chief Financial Officer (Principal November 12, 1996
Robert S. Taylor Financial Officer and Accounting Officer)
/s/ Ernest J. Yancey, Jr. Director November 12, 1996
Ernest J. Yancey, Jr.
/s/ James E. Ravannack Director November 12, 1996
James E. Ravannack
/s/ Richard J. Lazes Director November 12, 1996
Richard J. Lazes
/s/ Kenneth C. Boothe Director November 12, 1996
Kenneth C. Boothe
/s/ Bradford Small Director November 12, 1996
Bradford Small
/s/ Justin L. Sullivan Director November 12, 1996
Justin L. Sullivan
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
2.1 Agreement and Plan of Reorganization, dated March 23, 1995, as
amended, among the Company, Terence E. Hall, Ernest J. Yancey,
Jr., James Ravannach and Superior Well Service, Inc., Superior
Tubular Services, Inc. and Connection Technology, Inc..(1)
2.2 Agreement and Plan of Reorganization, dated May 22, 1995, as
amended, among the Company, Oil Stop, Inc. and Richard J.
Lazes.(1)
3.1 Composite of the Company's Certificate of Incorporation.(2)
3.2 Composite of the Company's By-Laws.
4.1 Form of Underwriters' Unit Purchase Option.(3)
4.2 Warrant Agreement regarding Class B Warrants between the Company
and American Stock Transfer & Trust Company.(3)
4.3 Specimen Class B Warrant.(4)
4.4 Specimen Stock Certificate.(4)
4.5 Form of Purchase Option dated July 7, 1992, as amended on August
16, 1995.(5)
4.6 Form of Private Warrant dated January 18, 1995.(5)
4.7 Class A Warrant Agreement dated July 7, 1992 between the Company
and American Stock Transfer & Trust Company.(6)
4.8 Specimen Class A Warrant Certificate.(6)
5.1 Opinion of Jones, Walker, Waechter, Poitevent, Carrre &
Dengre, L.L.P. regarding the legality of the securities being
registered.
10.1 Form of Indemnity Agreement between the Company and each of its
directors.
10.2 Commercial Business Loan Agreement dated June 6, 1996 by and
among Whitney National Bank and the Company.(7)
10.3 Agreement and Plan of Merger dated September 15, 1996, by and
among the Company, Dimensional Oil Field Acquisition, Inc.,
Dimensional Oil Field Services, Inc. and Emmett E. Crockett,
Evelyn Crockett, George K. Crockett and Robert L. Crockett.(8)
10.4 Agreement and Plan of Merger dated July 30, 1996 by and among
the Company, Baytron Acquisition, Inc., Baytron, Inc., James
Edwards and Judy Edwards dated July 30, 1996.
10.5 The Company's 1991 Stock Option Plan.(1)
10.6 The Company's 1995 Stock Incentive Plan.(1)
10.7 Form of Consultant Option, as amended.(3)
10.8 Shareholders Agreement between the Company and Richard Lazes.(9)
10.9 Shareholders Agreement among the Company and Terence E. Hall,
Ernest J. Yancey, Jr. and James Ravannack.(9)
10.10 Employment Agreement between the Company and each of Terence E.
Hall, Ernest J. Yancey, Jr. and James Ravannack.(9)
10.11 Employment Agreement between the Company and Richard J.
Lazes.(9)
21 Subsidiaries of the Company.
23.1 Consent of KPMG Peat Marwick LLP regarding the Company.
23.2 Consent of KPMG Peat Marwick LLP regarding Dimensional Oil Field
Services, Inc.
23.2 Consent of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P. ( included in Exhibit 5).
24 Power of Attorney (included in Signature Page to the
Registration Statement).
_______________________
(1) Incorporated by reference to Appendix A of the Company's Definitive
Proxy Statement dated September 29, 1995.
(2) Incorporated by reference to the Company's Form 10-QSB for the quarter
ended March 31, 1996.
(3) Incorporated by reference to Amendment No. 1 to the Company's Form S-4
on Form SB-2 (Registration Statement No. 33-94454).
(4) Incorporated by reference to Amendment No. 6 to the Company's Form S-4
on Form SB-2 (Registration Statement No. 33-94454).
(5) Incorporated by reference to Amendment No. 3 to the Company's Form S-4
on Form SB-2 ((Registration Statement No. 33-94454).
(6) Incorporated by reference to the Company's Registration Statement on
Form S-18 (Registration Statement No. 33-48460FW).
(7) Incorporated by reference to the Company's Form 10-QSB for the quarter
ended June 30, 1996.
(8) Incorporated by reference to the Company's Form 8-K dated September 16,
1996.
(9) Incorporated by reference to the Company's Form S-4 (Registration
Statement No. 33-94454).
BYLAWS
OF
SMALL'S OILFIELD SERVICES CORPORATION.
(a Delaware Corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates
representing stock in the corporation shall be signed by or
in the name of, the corporation by the Chairman or Vice
Chairman of the Board of Directors, if any, or by the
President or a Vice -President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant
Secretary of the corporation. Any or all of the signatures
on any such certificate may be facsimile. In case any
officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be
issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of
issue.
Whenever the corporation shall be authorized to issue
more than one class of stock or more than one series of any
class of stock, and whenever the corporation shall issue any
shares of its stock as partly paid stock, the certificates
representing shares of any such class or series or of any
such partly paid stock shall set forth thereon the
statements prescribed by the General Corporation Law. Any
restrictions on the transfer or registration of transfer of
any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate
theretofore issued by it, alleged to have been lost, stolen,
or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his
legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss,
theft, or destruction of any such certificate or the
issuance of any such new certificate or uncertificated
shares.
2. UNCERTIFIED SHARES. Subject to any conditions
imposed by the General Corporation Law, the Board of
Directors of the corporation may provide by resolution or
resolutions that some or all of any or all classes or series
of the stock of the corporation shall be uncertificated
shares. Within a reasonable time after the issuance or
transfer of any uncertificated shares, the corporation shall
send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTEREST. The corporation may,
but shall not be required to, issue fractions of a share.
If the corporation does not issue fractions of a share, it
shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the
fair value of fractions of a share as of the time when those
entitled to receive such fractions are determined, or (3)
issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer
form (represented by a certificate) which shall entitle the
holder to receive a full share upon the surrender of such
scrip or warrants aggregating a full share. A certificate
for a fractional share or an uncertificated fractional share
shall, by a scrip or warrants shall not unless otherwise
provided therein, entitle the holder to exercise voting
rights, to receive dividends thereon, and to participate in
any of the assets of the corporation in the event of
liquidation. The Board of Directors may cause scrip or
warrants to be issued subject to the conditions that they
shall become void if not exchanged for certificates
representing the full shares or uncertificated full shares
before a specified date, or subject to the conditions that
the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject
to any other conditions which the Board of Directors may
impose.
4. STOCK TRANSFERS. Upon compliance with provisions
restricting the transfer or registration of transfer of
shares of stock, if any, transfers or registration of
transfers of shares of stock of the corporation shall be
made only on the stock ledger of the corporation by the
registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with
the Secretary of the corporation or with a transfer agent or
a registrar, if any, and, in the case of shares represented
by certificates, on surrender of the certificate or
certificates for such shares of stock properly endorsed and
the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the
corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be
more than sixty nor less than ten days before the date of
such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day
next preceding the day on which the meeting is held. A
termination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the
adjourned meeting. In order that the corporation may
determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which date shall not
be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of
Directors, the record date for determining the stockholders
entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is
required by the General Corporation Law, shall be the first
date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an
officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail,
return receipt requested. If no record date has been fixed
by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the
record date for determining stockholders entitled to consent
to corporate action in writing without a meeting shall be at
the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other
distribution or allotment of any rights in respect of any
change, conversion, or exchange of stock, or for the purpose
of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the
record date for determining stockholders for any such
purpose shall be at the close of business on the day of
which the Board of Directors adopts the resolution relating
thereto.
6. MEANING OF CERTAIN TERMS. As used herein in
respect of the right to notice of a meeting of stockholders
or waiver thereof or to participate or vote thereat or to
consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of
stock" or "shares of stock" or "stockholder" or
"stockholders" refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding
shares of stock of any class upon which or upon whom the
certificate of incorporation confers such rights or where
there are two or more classes or series of shares of stock
or upon which or upon whom the General Corporation Law
confers such rights notwithstanding that the certificate of
incorporation may provide for more than one class or series
of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no
such right shall vest in the event of an increase or a
decrease in the authorized number of shares of stock of any
class or series which is otherwise denied voting rights
under the provisions of the certificate of incorporation,
except as any provision of law may otherwise require.
7. STOCKHOLDER MEETINGS.
-TIME. The annual meeting shall be held on the date
and at the time fixed, from time to time, by the directors,
provided, that the first annual meeting shall be held on a
date within thirteen months after the organization of the
corporation, and each successive annual meeting shall be
held on a date within thirteen months after the date of the
preceding annual meeting. A special meeting shall be held
on the date and at the time fixed by the directors.
-PLACE. Annual meetings and special meetings shall be
held at such place, within or without the State of Delaware,
as the directors may, from time to time, fix. Whenever the
directors shall fail to fix such place, the meeting shall be
held at the registered office of the corporation in the
State of Delaware.
-CALL. Annual meetings and special meetings may be
called by the directors or by an officer instructed by the
directors to call the meeting. A special meeting may also
be called by stockholders owning at least 10% in interest of
the capital stock of the Company.
-NOTICE OR WAIVER OF NOTICE. Written notice of all
meetings shall be given, stating the place, date and hour of
the meeting and stating the place within the city or other
municipality or community at which the list of stockholders
of the corporation may be examined. The notice of an annual
meeting shall state that the meeting is called for the
election of directors and for the transaction of other
business which may properly come before the meeting and
shall (if any other action which could be taken at a special
meeting is to be taken at such annual meeting) state the
purpose or purposes. The notice of a special meeting shall
in all instances state the purpose or purposes for which the
meeting is called. The notice of any meeting shall also
include, or be accompanied by, any additional statements,
information, or documents prescribed by the General
Corporation Law. Except as otherwise provided by the
General Corporation Law, a copy of the notice of any meeting
shall be given, personally or by mail, not less than ten
days nor more than sixty days before the date of the
meeting, unless the lapse of the prescribed period of time
shall have been waived, and directed to each stockholder at
his record address or at such other address which he may
have furnished by request in writing to the Secretary of the
corporation. Notice by mail shall be deemed to be given
when deposited, with postage thereon prepaid, in the United
States Mail. If a meeting is adjourned to another time, not
more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and/or place is made
at the meeting, it shall not be necessary to give notice of
the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned
meeting. Notice need not be given to any stockholder who
submits a written waiver of notice signed by him before or
after the time stated therein. Attendance of a stockholder
at a meeting of stockholders shall constitute a waiver of
notice of such meeting, except when the stockholder attends
the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders need
be specified in any written waiver of notice.
-STOCKHOLDER LIST. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of stockholders a
complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any
stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten
days prior to the meeting, either at a place within the city
or other municipality or community where the meeting is to
be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock
ledger, the list required by this section or the books of
the corporation, or to vote at any meeting of stockholders.
-CONDUCT OF MEETING. Meetings of the stockholders
shall be presided over by one of the following officers in
the order of seniority and if present and acting -- the
Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, the President, a Vice President, or, if none
of the foregoing is in office and present and acting, by a
chairman to be chosen by the stockholders. The Secretary of
the corporation, or in his absence, an Assistant Secretary,
shall act as a secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the
Chairman of the meeting shall appoint a secretary of the
meeting.
-PROXY REPRESENTATION. Every stockholder may authorize
another person or persons to act for him by proxy in all
matters in which a stockholder is entitled to participate,
whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the
stockholder or by his attorney-in-fact. No proxy shall be
voted or acted upon after three years from its date unless
such proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled with
an interest sufficient in law to support an irrevocable
power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest
in the stock itself or an interest in the corporation
generally.
-INSPECTORS. The directors, in advance of any meeting,
may, but need not, appoint one or more inspectors of
election to act at the meeting or any adjournment thereof.
If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or
more inspectors. In case any person who may be appointed as
an inspector fails to appear or act, the vacancy may be
filled by appointment made by the person presiding thereat.
Each inspector, if any, before entering upon the discharge
of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares of
stock outstanding and voting power of each, the shares of
stock represented at the meeting, the existence of a quorum,
the validity and effect of proxies, and shall receive votes,
ballots, or consents, hear and determine all challenges and
questions arising in connection with the right to vote,
count and tabulate all votes, ballots, or consents,
determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all
stockholders. On request of the person presiding at the
meeting, the inspector or inspectors, if any, shall make a
report in writing of any challenge, question or matter
determined by him or them and execute a certificate of any
fact found by him or them.
-QUORUM. The holders of a majority of the outstanding
shares of stock shall constitute a quorum at a meeting of
stockholders for the transaction of any business. The
stockholders present may adjourn the meeting despite the
absence of a quorum.
-VOTING. Each share of stock shall entitle the holder
thereof to one vote. Directors shall be elected by a
plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on
the election of directors. Any other action shall be
authorized by a majority of the votes cast except where the
General Corporation Law prescribes a different percentage of
votes and/or a different exercise of voting power, and
except as may be otherwise prescribed by the provisions of
the certificate of incorporation and these Bylaws. In the
election of directors, and for any other action, voting need
not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action
required by the General Corporation Law to be taken at any
annual or special meeting of stockholders, or any action
which may be taken at any annual or special meeting of
stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of
votes that would be necessary to authorized or take such
action at a meeting at which all shares entitled to vote
thereon were present and voted. Prompt notice of the taking
of the corporate action without a meeting by less than
unanimous written consent shall be given to those
stockholders who have not consented in writing. Action
taken pursuant to this paragraph shall be subject to the
provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITIONS. The business and
affairs of the corporation shall be managed by or under the
direction of the Board of Directors of the corporation. The
Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase
"whole board" herein refers to the total number of directors
which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be
a stockholder, a citizen of the United States, or a resident
of the State of Delaware. The Board of Directors shall
consist of not less than three nor more than eleven members,
the number thereof to be fixed from time to time by action
of the directors, or, if the number is not otherwise fixed,
the number shall be seven. The number of directors may be
increased or decreased by action of the directors.
3. ELECTION AND TERM. Directors who are elected at
an annual meeting of stockholders, and directors who are
elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual
meeting of stockholders, and until their successors are
elected and qualified, or until their earlier resignation or
removal. Any director may resign at any time upon written
notice to the corporation. Except as the General
Corporation Law may otherwise require, in the interim
between annual meetings of stockholders or of special
meetings of stockholders called for the election of
directors and/or for the removal of one or more directors
and for the filling of any vacancy in that connection, newly
created directorships and any vacancies in the Board of
Directors resulting from death, resignation or removal,
including unfilled vacancies resulting from the removal of
directors for cause or without cause, may be filled by the
affirmative vote of a majority of the remaining directors
then in office, although less than a quorum, or by a sole
remaining director.
4. MEETINGS.
-TIME. Meetings shall be held at such time as the
Board shall fix, except that the first meeting of a newly
elected Board shall be held as soon after its election as
the directors may conveniently assemble.
-PLACE. Meetings shall be held at such place within or
without the State of Delaware as shall be fixed by the
Board.
-CALL. No call shall be required for regular meetings
for which the time and place have been fixed. Special
meetings may be called by or at the direction of the
Chairman of the Board, if any, or the Vice -Chairman of the
Board, if any, or the President, or by a majority of the
Board if the time and place have not been fixed. Written,
oral, or any other mode of notice of the time and place
shall be given for special meetings in sufficient time for
the convenient assembly of the directors thereat. Notice
need not be given to any director or to any member of a
committee of directors who submits a written waiver of
notice signed by him before or after the time stated
therein. Attendance of any such person at a meeting shall
constitute a waiver of notice of such meeting, except when
he attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the directors
need be specified in any written waiver of notice.
-QUORUM AND ACTION. A majority of the whole Board
shall constitute a quorum except when a vacancy or vacancies
prevents such majority, whereupon a majority of the
directors in office shall constitute a quorum, provided,
that such majority shall constitute at least one-third of
the whole Board. A majority of the directors present,
whether or not a quorum is present, may adjourn a meeting to
another time and place. Except as herein otherwise provided
and except as otherwise provided by the General Corporation
Law the vote of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the
Board. The quorum and voting provisions herein stated shall
not be construed as conflicting with any provisions of the
General Corporation Law and these Bylaws which govern a
meeting of directors held to fill vacancies and newly
created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of
any committee designated by the Board, may participate in a
meeting of the Board, or any such committee, as the case may
be, by means of conference telephone or similar
communication equipment by means of which all persons
participating in the meeting can hear each other.
-CHAIRMAN OF THE MEETING. The Chairman of the Board,
if any and if present and acting, shall preside at all
meetings. Otherwise, the Vice-Chairman of the Board, if any
and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall
preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be
provided by the General Corporation Law, any director or the
entire Board of Directors may be removed, with or without
cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by
resolution passed by a majority of the whole Board,
designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate
members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the
absence or disqualification of any member of any such
committee or committees, the member or members thereof
present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors
to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent
provided in the resolution of the Board, shall have and may
exercise the powers and authority of the Board of Directors
in the management of the business and affairs of the
corporation with the exception of any authority the
delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the
corporation to be affixed to all papers which may require
it.
7. WRITTEN ACTION. Any action required or permitted
to be taken at any meeting of the Board of Directors or any
committee thereof may be taken without a meeting if all
members of the Board or committee, as the case may be,
consent thereto in writing, and writing or writings are
filed with the minutes of proceedings of the Board or
committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a
President, a Secretary, a Treasurer, and, if deemed
necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, a Vice-Chairman of the
Board, an Executive Vice-President, one or more other Vice-
Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers with such
titles as the resolution of the Board of Directors choosing
then shall designate. Except as may otherwise be provided
in the resolution of the Board of Directors choosing him, no
officer other than the Chairman or Vice-Chairman of the
Board, if any, need be a director. Any number of officers
may be held by the same person, as the directors may
determine.
Unless otherwise provided in the resolution choosing
him, each officer shall be chosen for a term which shall
continue until the meeting of the Board of Directors
following the next annual meeting of stockholders and until
his successor shall have been chosen and qualified. Any
officer may be removed, with or without cause, by the Board
of Directors. Any vacancy in any office may be filled by
the Board of Directors.
1. CHAIRMAN. The Chairman of the Board of Directors,
if one be elected, shall preside at all meetings of the
Board of Directors and shall have and perform such other
duties as from time to time may be assigned to him by the
Board of Directors.
2. PRESIDENT. The President shall be the chief
executive officer of the corporation and shall have the
general powers and duties of supervision and management
usually vested in the office of President of a corporation.
He shall preside at all meetings of the stockholders if
present thereat, and, in the absence or non-election of the
Chairman of the Board of Directors, at all meetings of the
Board of Directors, and shall have general supervision,
direction and control of the business of the corporation.
Except as the Board of Directors shall authorize the
execution thereof in some other manner, he shall execute
bonds, mortgages and other contracts on behalf of the
corporation, and shall cause the seal to be affixed to any
instrument requiring it and when so affixed the seal shall
be attested by the signature of the Secretary or the
Treasurer or an Assistant Secretary or an Assistant
Treasurer.
3. VICE -PRESIDENT. Each Vice-President shall have
such powers and shall perform such duties as shall be
assigned to him by the directors.
4. TREASURER. The Treasurer shall have the custody
of the corporate funds and securities and shall keep full
and accurate account of receipts and disbursements in books
belonging to the corporation. He shall deposit all moneys
and other valuables in the name and to the credit of the
corporation in such depositaries as may be designated by the
Board of Directors.
The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board of Directors, or
the President, taking proper vouchers for such
disbursements. He shall render to the President and Board
of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of
all his transactions as Treasurer and of the financial
condition of the corporation. If required by the Board of
Directors, he shall give the corporation a bond for the
faithful discharge of his duties in such amount and with
such surety as the board shall prescribe.
5. SECRETARY. The Secretary shall give, or cause to
be given, notice of all meetings of stockholders and
directors, and all other notices required by law or by these
By-laws, and in case of his absence or refusal or neglect so
to do, any such notice may be given by any person thereunto
directed by the President, or by the directors, or
stockholders, upon whose requisition the meeting is called
as provided in these By-laws. He shall record all the
proceedings of the meetings of the corporation and of the
directors in a book to be kept for that purpose, and shall
perform such other duties as may be assigned to him by the
directors or the President. He shall have the custody of
the seal of the corporation and shall affix the same to all
instruments requiring it, when authorized by the directors
or the President, and attest the same.
6. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.
Assistant Treasurers and Assistant Secretaries, if any,
shall be elected and shall have such powers and shall
perform such duties as shall be assigned to them,
respectively, by the directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board
of Directors shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed and
shall be subject to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of
incorporation and the provisions of the General Corporation
Law, the power to amend, alter, or repeal these Bylaws and
to adopt new Bylaws may be exercised by the Board of
Directors or by the stockholders.
COR\48315.1
EXHIBIT 5
Jones, Walker
Waechter, Poitevent
Carrere & Denegre, L.L.P.
November 12 1996
Superior Energy Services, Inc.
1503 Engineers Road
P. O. Box 6220
New Orleans, Louisiana 70174
Dear Sirs:
We have acted as your counsel in connection
with the preparation of the registration statement
on Form SB-2 (the "Registration Statement") filed
by you with the Securities and Exchange Commission
on the date hereof, with respect to the offer and
sale of shares of common stock, $.001 par value per
share (the "Shares"), upon exercise of certain
Class A and Class B Redeemable Common Stock
Purchase Warrants previously issued by Superior
Energy Services, Inc. (the "Company"). In so
acting, we have examined original, or photostatic
or certified copies, of the Warrant Agreement dated
July 7, 1992 and the Warrant Agreement dated
December 12, 1995 (collectively, the "Warrant
Agreements") and such records of the Company,
certificates of officers of the Company and of
public officials, and such other documents as we
have deemed relevant. In such examination, we have
assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as
originals, the conformity to original documents of
all documents submitted to us as certified or
photostatic copies and the authenticity of the
originals of such documents.
Based upon the foregoing, we are of the
opinion that the Shares, when issued in accordance
with the terms and conditions of the Warrant
Agreements, shall be duly authorized, validly
issued, fully paid and non-assessable shares of the
Company's common stock.
We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement
and the reference to us under the caption "Legal
Matters" as counsel for the Company. In giving
this consent, we do not admit that we are within
the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as
amended, or the general rules and regulations of
the Commission.
Very truly yours,
/s/ Jones, Walker, Waechter,
Poitevent, Carrere
& Denegre, L.L.P.
JONES, WALKER, WAECHTER,
POITEVENT, CARRERE & DENEGRE, L.L.P.
INDEMNITY AGREEMENT
Between
SUPERIOR ENERGY SERVICES, INC.
and
___________________
<PAGE>
INDEMNITY AGREEMENT
This Agreement is made as of the ____ day of __________, 1995,
by and between Superior Energy Services, Inc., a Delaware
corporation (the "Corporation"), and _____________ ("Indemnitee").
In consideration of Indemnitee's continued service after the
date hereof, the Corporation and Indemnitee do hereby agree as
follows:
1. Agreement to Serve. Indemnitee shall serve or continue
to serve as a director of the Corporation and any other
corporation, subsidiary, partnership, joint venture or trust or
other enterprise of which he is serving at the request of the
Corporation and agrees to serve in that capacity for so long as
he is duly elected or appointed and qualified or until such
earlier time as he tenders his resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term "Claim" shall mean any threatened,
pending or completed claim, action, suit or proceeding, including
appeals, whether civil, criminal, administrative or investigative
and whether made judicially or extra-judicially, including any
action by or in the right of the Corporation or any separate
issue or matter therein, as the context requires.
(b) The term "Determining Body" shall mean (i) those
members of the Board of Directors who do not have a direct or
indirect interest in the Claim for which indemnification is being
sought ("Impartial Directors"), if there are at least two
Impartial Directors, or (ii) a committee of at least two
directors appointed by the Board or a duly authorized committee
thereof (regardless whether the directors voting on such appoint-
ment are Impartial Directors) and composed of Impartial Directors
or (iii) if there are fewer than two Impartial Directors or if
the Board of Directors or a duly authorized committee thereof so
directs (regardless whether the members thereof are Impartial
Directors), independent legal counsel, which may be the regular
outside counsel of the Corporation, as determined by the
Impartial Directors or, if no such directors exist, the full
Board of Directors.
(c) The term "Disbursing Officer" shall mean the Chief
Financial Officer of the Corporation or, if the Chief Financial
Officer has a direct or indirect interest in the Claim for which
indemnification is being sought, any officer who does not have
such an interest and who is designated by the Chief Executive
Officer to be the Disbursing Officer with respect to in-
demnification requests related to the Claim, which designation
shall be made promptly after receipt of the initial request for
indemnification with respect to such Claim.
(d) The term "Expenses" shall mean any expenses or
costs including, without limitation, attorney's fees, judgments,
punitive or exemplary damages, fines, excise taxes or amounts
paid in settlement. If any of the foregoing amounts paid on
behalf of Indemnitee are not deductible by Indemnitee for federal
or state income tax purposes, the Corporation shall reimburse
Indemnitee for any resulting tax liability with respect thereto
by paying to Indemnitee an amount which, after taking into
account taxes on such amount, equals Indemnitee's incremental tax
liability as a result of such expense or cost.
3. Limitation of Liability. To the fullest extent
permitted by the Certificate of Incorporation and By-laws of the
Corporation (each as in effect on the date hereof and, if and to
the extent such provisions are amended to permit further
limitations, in effect at any time prior to the determination of
liability that would exist but for the provisions of this
Agreement) Indemnitee shall not be liable for breach of his
fiduciary duty as a director or officer.
4. Insurance. The Corporation currently does not have in
effect policies of insurance providing insurance protection to
its directors, officers and employees against some liabilities
which may be incurred by them on account of their services to the
Corporation. If such insurance is purchased by the Corporation,
the insurance, to the extent of the coverage it provides, shall
be primary and indemnification shall be made pursuant to this
Agreement only to the extent that the director or officer is not
reimbursed pursuant to such insurance coverage. If such
insurance is not purchased by the Corporation, the Indemnitee
shall be entitled to indemnification by the Corporation in
accordance with the provisions of this Agreement.
5. Additional Indemnity.
(a) To the extent any Expenses incurred by Indemnitee
are in excess of the amounts reimbursed or indemnified pursuant
to the provisions of Section 4 hereof, the Corporation shall
indemnify, defend and hold harmless Indemnitee against any
Expenses actually and reasonably incurred by Indemnitee (as they
are incurred) in connection with any Claim against Indemnitee
(whether as a subject of or party to, or a proposed or threatened
subject of or party to, the Claim), or involving Indemnitee
solely as a witness or person required to give evidence, by
reason of Indemnitee's position (i) as a director or officer of
the Corporation, (ii) as a director or officer of any subsidiary
of the Corporation or as a fiduciary with respect to any employee
benefit plan of the Corporation, or (iii) as a director, officer,
partner, employee or agent of another corporation, partnership,
joint venture, trust or other for profit or not for profit entity
or enterprise, if such position is or was held at the request of
the Corporation, whether relating to service in such position
before or after the effective date of this Agreement, if (A) the
Indemnitee is successful in his defense of the Claim on the
merits or otherwise or (B) the Indemnitee has been found by the
Determining Body to have met the Standard of Conduct (as
hereinafter defined); provided that no indemnification shall be
made in respect of any Claim as to which Indemnitee shall have
been adjudicated in a final judgment to be liable for willful or
intentional misconduct in the performance of his duty to the
Corporation or to have obtained an improper personal benefit,
unless, and only to the extent that, a court shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, Indemnitee is fairly
and reasonably entitled to indemnity for such Expenses which the
court shall deem proper.
(b) For purposes of this Agreement, the "Standard of
Conduct" is met when conduct by an Indemnitee with respect to
which a Claim is asserted was conduct performed in good faith
which he reasonably believed to be in, or not opposed to, the
best interest of the Corporation, and, in the case of a Claim
which is a criminal action or proceeding, conduct that the
Indemnitee had no reasonable cause to believe was unlawful. The
termination of any Claim by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Indemnitee did
not meet the Standard of Conduct.
(c) Promptly upon becoming aware of the existence of
any Claim as to which Indemnitee may be indemnified for Expenses
and as to which Indemnitee desires to obtain indemnification,
Indemnitee shall notify the Chief Executive Officer of the Corpo-
ration, but the failure to promptly notify the Chief Executive
Officer shall not relieve the Corporation from any obligation
under this Agreement. Upon receipt of such request, the Chief
Executive Officer shall promptly advise the members of the Board
of Directors of the request and that the establishment of a
Determining Body with respect to Indemnitee's request for
indemnification as to the Claim will be presented at the next
regularly scheduled meeting of the Board. If a meeting of the
Board of Directors is not regularly scheduled within 90 calendar
days of the date the Chief Executive Officer receives notice of
the Claim, the Chief Executive Officer shall cause a special
meeting of the Board of Directors to be called within such period
in accordance with the provisions of the Corporation's By-laws.
After the Determining Body has been established, the Determining
Body shall inform the Indemnitee of the constitution of the
Determining Body and Indemnitee shall provide the Determining
Body with all facts relevant to the Claim known to such
Indemnitee, and deliver to the Determining Body all documents
relevant to the Claim in Indemnitee's possession. Before the
60th day after its receipt from the Indemnitee of such
information (the "Determination Date"), together with such
additional information as the Determining Body may reasonably
request of Indemnitee prior to such date (the receipt of which
shall not begin a new 60-day period) the Determining Body shall
determine whether or not Indemnitee has met the Standard of
Conduct and shall advise Indemnitee of its determination. If
Indemnitee shall have supplied the Determining Body with all
relevant information, including all additional information
reasonably requested by the Determining Body, any failure of the
Determining Body to make a determination by or on the
Determination Date as to whether the Standard of Conduct was met
shall be deemed to be a determination that the Standard of
Conduct was met by Indemnitee.
(d) If at any time during the 60-day period ending on
the Determination Date, Indemnitee becomes aware of any relevant
facts not theretofore provided by him to the Determining Body,
Indemnitee shall inform the Determining Body of such facts,
unless the Determining Body has obtained such facts from another
source. The provision of such facts to the Determining Body
shall not begin a new 60 day period.
(e) The Determining Body shall have no power to revoke
a determination that Indemnitee met the Standard of Conduct
unless Indemnitee (i) submits to the Determining Body at any time
during the 60 days prior to the Determination Date fraudulent
information, (ii) fails to comply with the provisions of Section
4(d) hereof, or (iii) intentionally fails to submit information
or documents relevant to the Claim reasonably requested by the
Determining Body prior to the Determination Date.
(f) In the case of any Claim not involving any
threatened or pending criminal proceeding,
(i) if prior to the Determination Date the Deter-
mining Body has affirmatively made a determination that the
Indemnitee met the Standard of Conduct (not including a
determination deemed to have been made by inaction), the Corpo-
ration may, except as otherwise provided below, individually or
jointly with any other indemnifying party similarly notified,
assume the defense thereof with counsel reasonably satisfactory
to the Indemnitee (who shall not, except with the written consent
of Indemnitee, be counsel to the Corporation). If the Corpora-
tion assumes the defense of the Claim, it shall notify Indemnitee
of such action and keep Indemnitee informed as to the progress of
such defense, including any proposed settlements, so that
Indemnitee may make an informed decision as to the need for
separate counsel. After notice from the Corporation that it is
assuming the defense of the Claim, it will not be liable to
Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by Indemnitee in connection with the
defense other than reasonable costs of investigation or as
otherwise provided below. Indemnitee shall have the right to
employ its own counsel in such action, suit or proceeding but the
fees and expenses of such counsel incurred after such notice from
the Corporation of its assumption of the defense shall be at the
expense of Indemnitee unless (A) the employment of counsel by
Indemnitee has been authorized by the Corporation, (B) Indemnitee
shall have concluded reasonably that there may be a conflict of
interest between the Corporation and Indemnitee in the conduct of
the defense of such action or (C) the Corporation shall not in
fact have employed counsel to assume the defense of such action,
in each of which cases the fees and expenses of counsel shall be
at the expense of the Corporation. The Corporation shall not be
entitled to assume the defense of any action, suit or proceeding
brought by or in the right of the Company or as to which
Indemnitee shall have made the conclusion provided for in (B)
above; and
(ii) the Corporation shall fairly consider any
proposals by Indemnitee for settlement of the Claim. If the Cor-
poration proposes a settlement of the Claim and such settlement
is acceptable to the person asserting the Claim, or the
Corporation believes a settlement proposed by the person
asserting the Claim should be accepted, it shall inform
Indemnitee of the terms of such proposed settlement and shall fix
a reasonable date by which Indemnitee shall respond. If In-
demnitee agrees to such terms, he shall execute such documents as
shall be necessary to make final the settlement. If Indemnitee
does not agree with such terms, Indemnitee may proceed with the
defense of the Claim in any manner he chooses, provided that if
Indemnitee is not successful on the merits or otherwise, the
Corporation's obligation to indemnify such Indemnitee as to any
Expenses incurred following his disagreement shall be limited to
the lesser of (A) the total Expenses incurred by Indemnitee
following his decision not to agree to such proposed settlement
or (B) the amount that the Corporation would have paid pursuant
to the terms of the proposed settlement. If, however, the
proposed settlement would impose upon Indemnitee any requirement
to act or refrain from acting that would materially interfere
with the conduct of Indemnitee's affairs, Indemnitee may refuse
such settlement and continue his defense of the Claim, if he so
desires, at the Corporation's expense in accordance with the
terms and conditions of this Agreement without regard to the
limitations imposed by the immediately preceding sentence. In
any event, the Corporation shall not be obligated to indemnify
Indemnitee for any amount paid in a settlement that the Corpora-
tion has not approved.
(g) In the case of any Claim involving a proposed,
threatened or pending criminal proceeding, Indemnitee shall be
entitled to conduct the defense of the Claim with counsel of his
choice and to make all decisions with respect thereto; provided
that the Corporation shall not be obliged to indemnify Indemnitee
for any amount paid in settlement of such a Claim unless the
Corporation has approved such settlement.
(h) After notifying the Corporation of the existence
of a Claim, Indemnitee may from time to time request the Corpora-
tion to pay the Expenses (other than judgments, fines, penalties
or amounts paid in settlement) that he incurs in pursuing a
defense of the Claim prior to the time that the Determining Body
determines whether the Standard of Conduct has been met. The
Disbursing Officer shall pay to Indemnitee the amount requested
(regardless of Indemnitee's apparent ability to repay such
amount) upon receipt of an undertaking by or on behalf of
Indemnitee to repay such amount if it shall ultimately be de-
termined that he is not entitled to be indemnified by the Corpo-
ration under the circumstances.
(i) After it has been determined that the Standard of
Conduct has been met, for so long as and to the extent that the
Corporation is required to indemnify Indemnitee under this
Agreement, the provisions of Section 5(h) shall continue to apply
with respect to Expenses incurred after such time except that (i)
no undertaking shall be required of Indemnitee and (ii) the
Disbursing Officer shall pay to Indemnitee the amount of any
fines, penalties or judgments against him which have become final
and for which he is entitled to indemnification hereunder, and
any amount of indemnification ordered to be paid to him by a
court.
(j) Any determination by the Corporation with respect
to settlement of a Claim shall be made by the Determining Body.
(k) All determinations and judgments made by the
Determining Body hereunder shall be made in good faith.
(l) The Corporation and Indemnitee shall keep
confidential to the extent permitted by law and their fiduciary
obligations all facts and determinations provided pursuant to or
arising out of the operation of this Agreement and the
Corporation and Indemnitee shall instruct its or his agents and
employees to do likewise.
6. Enforcement.
(a) The rights provided by this Agreement shall be en-
forceable by Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his
rights under, or to recover damages for breach of, this Agree-
ment, Indemnitee shall be entitled to recover from the Corpora-
tion, and shall be indemnified by the Corporation against, any
and all expenses actually and reasonably incurred by him in con-
nection with such proceeding, but only if he prevails therein.
If it shall be determined that Indemnitee is entitled to receive
part but not all of the relief sought, then the Indemnitee shall
be entitled to be reimbursed for all expenses incurred by him in
connection with such judicial adjudication if the amount to which
he is determined to be entitled exceeds 50% of the amount of his
claim. Otherwise, the expenses incurred by Indemnitee in connec-
tion with such judicial adjudication shall be appropriately
prorated.
(c) In any judicial proceeding described in this Sec-
tion 6, the Corporation shall bear the burden of proving that In-
demnitee is not entitled to the relief sought, even if the
Determining Body prior to the Determination Date determined that
Indemnitee failed to meet the Standard of Conduct. If prior to
the Determination Date the Determining Body failed to make a
determination that Indemnitee did not meet the Standard of
Conduct, it shall not be a defense to such suit that Indemnitee
did not meet the Standard of Conduct.
7. Saving Clause. If any provision of this Agreement is
determined by a court having jurisdiction over the matter to
violate or conflict with applicable law, the court shall be
empowered to modify or reform such provision so that, as modified
or reformed, such provision provides the maximum indemnification
permitted by law and such provision, as so modified or reformed,
and the balance of this Agreement, shall be applied in accordance
with their terms. Without limiting the generality of the forego-
ing, if any portion of this Agreement shall be invalidated on any
ground, the Corporation shall nevertheless indemnify an Indemni-
tee to the full extent permitted by any applicable portion of
this Agreement that shall not have been invalidated and to the
full extent permitted by law with respect to that portion that
has been invalidated.
8. Non-Exclusivity. (a) The indemnification and
advancement of Expenses provided by or granted pursuant to this
Agreement shall not be deemed exclusive of any other rights to
which Indemnitee is or may become entitled under any statute,
certificate of incorporation, by-law, authorization of
stockholders or directors, agreement, or otherwise.
(b) It is the intent of the Corporation by this Agree-
ment to indemnify and hold harmless Indemnitee to the fullest ex-
tent permitted by law, so that if applicable law would permit the
Corporation to provide broader indemnification rights than are
currently permitted, the Corporation shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by applicable
law notwithstanding that the other terms of this Agreement would
provide for lesser indemnification.
9. Confidentiality. The Corporation and Indemnitee shall
keep confidential to the extent permitted by law and their
fiduciary obligations all information and determinations provided
pursuant to or arising out of the operations of this Agreement
and the Corporation and Indemnitee shall instruct its or his
agents and employees to do likewise.
10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute the origi-
nal.
11. Applicable Law. This Agreement shall be governed by
and construed in accordance with the substantive laws of the
State of Delaware.
12. Successors and Assigns. This Agreement shall be bind-
ing upon Indemnitee and upon the Corporation, its successors and
assigns, and shall inure to the benefit of the Indemnitee's
heirs, personal representatives, and assigns and to the benefit
of the Corporation, its successors and assigns.
13. Amendment. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in
writing signed by the Corporation and Indemnitee. Notwithstand-
ing any amendment, modification, termination or cancellation of
this Agreement or any portion hereof, Indemnitee shall be
entitled to indemnification in accordance with the provisions
hereof with respect to any acts or omissions of Indemnitee which
occur prior to such amendment, modification, termination or can-
cellation.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and signed as of the date and year
first above written.
SUPERIOR ENERGY SERVICES, INC.
By:
Name:
Title:
INDEMNITEE
AGREEMENT AND PLAN OF MERGER
Among
SUPERIOR ENERGY SERVICES, INC.,
BAYTRON ACQUISITION, INC.
and
BAYTRON, INC.
Dated July 30, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINED TERMS.................................... 1
Section 1.1 Definitions............................... 1
ARTICLE 2 THE MERGER....................................... 4
Section 2.1 Merger.................................... 4
Section 2.2 The Closing............................... 4
Section 2.3 Filing of Certificate of Merger........... 4
Section 2.4 The Effective Time; Effect of Merger...... 4
Section 2.5 Directors and Officers; Articles of
Incorporation; By-laws............................ 5
ARTICLE 3 CONVERSION OF STOCK; PAYMENT...................... 5
Section 3.1 Conversion of Shares of Baytron............ 5
Section 3.2 Delivery and Exchange of Certificates...... 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
AND BAYTRON............................................ 6
Section 4.1 Ownership.................................. 6
Section 4.2 Authority.................................. 6
Section 4.3 Noncontravention........................... 6
Section 4.4 Legal Proceedings.......................... 6
Section 4.5 Investment Representation.................. 6
Section 4.6 Organization; Qualification; Subsidiaries. 8
Section 4.7 Capital Stock.............................. 8
Section 4.8 Corporate Authorization; Enforceability. 8
Section 4.9 No Conflict................................ 9
Section 4.10 Consent................................... 9
Section 4.11 Charter and Bylaws........................ 9
Section 4.12 Baytron's Financial Statements............ 9
Section 4.13 Accounts Receivable....................... 9
Section 4.14 Absence of Certain Changes................ 10
Section 4.15 Suppliers and Customers................... 11
Section 4.16 Properties................................ 11
Section 4.17 Permits; Compliance with Laws............. 12
Section 4.18 Material Contracts........................ 12
Section 4.19 Litigation................................ 12
Section 4.20 Environmental Matters..................... 12
Section 4.21 ERISA and Related Matters................. 12
Section 4.22 Taxes..................................... 14
Section 4.23 Transactions with Certain Persons......... 17
Section 4.24 Intellectual Property..................... 17
Section 4.25 Insurance................................. 18
Section 4.26 Safety and Health......................... 18
Section 4.27 Bank Accounts; Powers of Attorney......... 18
Section 4.28 Compensation Agreements................... 18
Section 4.29 Director and Officer Indemnification...... 18
Section 4.30 Documents and Written Materials........... 18
Section 4.31 Effectiveness of Representations and
Warranties.........................................18
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SESI............. 18
Section 5.1 Organization............................... 18
Section 5.2 Capitalization............................. 18
Section 5.3 Authority; Enforceability.................. 19
Section 5.4 Consents and Approvals; Conflicts.......... 19
Section 5.5 SESI Stock................................. 20
Section 5.6 SESI Disclosure............................ 20
Section 5.7 Effectiveness of Representations and
Warranties........................................... 20
ARTICLE 6 PRE-CLOSING COVENANTS.............................. 20
Section 6.1 Legal Requirements to Merger................ 20
Section 6.2 Access to Properties and Records............ 20
Section 6.3 Conduct of Business......................... 20
Section 6.4 Public Statements........................... 21
Section 6.5 No Solicitation............................. 21
Section 6.6 Update Information.......................... 21
ARTICLE 7 CLOSING CONDITIONS................................. 21
Section 7.1 Conditions Applicable to all Parties........ 21
Section 7.2 Conditions to Obligations of SESI and
Baytron Acquisition................................ 22
Section 7.3 Conditions to Obligations of Baytron and
Shareholders....................................... 22
ARTICLE 8 POST-CLOSING COVENANTS............................. 23
Section 8.1 Bonus Pool.................................. 23
Section 8.2 Motor Home.................................. 23
Section 8.3 Location.................................... 23
Section 8.4 Registration and Repurchase Rights.......... 23
ARTICLE 9 TERMINATION AND AMENDMENT.......................... 26
Section 9.1 Termination................................. 26
Section 9.2 Effect of Termination....................... 26
Section 9.3 Amendment................................... 27
Section 9.4 Extension; Waiver........................... 27
ARTICLE 10 INDEMNIFICATION; REMEDIES......................... 27
Section 10.1 Indemnification by Seller.................. 27
Section 10.2 Indemnification by SESI.................... 27
Section 10.3 Notice and Defense of Third Party Claims. 28
ARTICLE 11 MISCELLANEOUS.................................... 28
Section 11.1 Confidentiality........................... 28
Section 11.2 Survival of Representations, Warranties
and Agreements.................................... 29
Section 11.3 Notices................................... 29
Section 11.4 Headings; Gender.......................... 29
Section 11.5 Entire Agreement; No Third Party
Beneficiaries..................................... 30
Section 11.6 Governing Law............................. 30
Section 11.7 Assignment................................ 30
Section 11.8 Severability.............................. 30
Section 11.9 Counterparts.............................. 30
Exhibits
A - Form of Certificate of Merger
B - Form of Employment Agreement
C - Form of Disclosure Schedule
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated July 30, 1996 (this
"Agreement"), is by and among Superior Energy Services, Inc., a
Delaware corporation ("SESI"), its wholly-owned subsidiary,
Baytron Acquisition, Inc., a Louisiana corporation ("Baytron
Acquisition"), and Baytron, Inc., a Louisiana corporation
("Baytron"), and the following shareholders of Baytron: James
Edwards and Judy Edwards (each of whom are referred to
collectively herein as the "Shareholders" and sometimes
individually as a "Shareholder").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Baytron and the Boards of
Directors of SESI and Baytron Acquisition have determined it to
be desirable and mutually advantageous to enter into a business
combination to be effected by the merger of Baytron with and into
Baytron Acquisition on the terms and subject to the conditions
set forth herein; and
WHEREAS, the parties hereto intend that, for federal income
tax purposes, the merger will constitute a reorganization within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Internal Revenue Code of 1986, as amended, and that this
Agreement constitute a plan of reorganization.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 Definitions. In addition to the other
defined terms used herein, as used in this Agreement, the
following terms when capitalized have the meanings indicated.
"Affiliate" shall have the meaning ascribed by Rule 12b-2
promulgated under the Exchange Act.
"Applicable Law" shall mean any statute, law, rule or
regulation or any judgement, order, writ, injunction or decree of
any Governmental Entity to which a specified Person or its
property is subject.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits hereto, all as amended or otherwise
modified from time to time.
"Baytron Annual Financial Statements" shall mean the
unaudited balance sheet and related unaudited statements of
income, stockholders' equity and cash flows, and the related
notes thereto of Baytron as of and for the fiscal year ended
September 30, 1995.
"Baytron Common Stock" shall mean the common stock, without
par value, of Baytron.
"Baytron Financial Statements" shall mean the Baytron Annual
Financial Statements and the Baytron Interim Financial
Statements, collectively.
"Baytron Interim Financial Statements" shall mean the
unaudited balance sheet, and the related unaudited statements of
income and cash flows of Baytron as of and for the seven-month
period ended April 30, 1996.
"Benefit Arrangement" shall mean any employment, severance
or similar contract, or any other contract, plan, policy or
arrangement (whether or not written) providing for compensation,
bonus, profit-sharing, stock option or other stock related rights
or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured
arrangement), health or medical benefits, disability benefits,
severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life
insurance benefits), other than the Employee Plans, that (A) is
maintained, administered or contributed to by the employer and
(B) covers any employee or former employee of the employer.
"Business Day" shall mean a day other than a Saturday, a
Sunday or a day on which national banks are closed.
"Certificate of Merger" shall mean the Certificate of Merger
in the form attached hereto as Exhibit "A."
"Closing" means the consummation of the Merger and the other
transactions contemplated by this Agreement.
"Closing Date" shall mean the date on which the Closing
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Disclosure Schedule" shall mean the disclosure schedules
and other documents attached hereto as Exhibit "C" prepared by
Baytron and the Shareholders in accordance with the applicable
provisions of this Agreement.
"Effective Time" shall have the meaning ascribed to it in
Section 2.4 hereof.
"Employee Plan" means a plan or arrangement as defined in
Section 3(3) of ERISA, that (A) is subject to any provision of
ERISA, (B) is maintained, administered or contributed to by the
employer and (C) covers any employee or former employee of the
employer.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated
thereunder.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Exercise Price" means the average of the daily last sales
price of SESI Common Stock on the Nasdaq National Market as
reported in the Wall Street Journal for the 20 consecutive
trading days immediately preceding the date SESI receives a
request for registration of Registrable Shares pursuant to
Section 8.4(a).
"Governmental Entity" shall mean any court or tribunal in
any jurisdiction or any public, governmental or regulatory body,
agency, department, commission, board, bureau or other authority
or instrumentality.
"Leases" shall mean any executory lease to which Baytron is
subject having future rental payments of more than $5,000 in the
aggregate.
"Liens" shall mean pledges, liens, defects, leases,
licenses, equities, conditional sales contracts, charges, claims,
encumbrances, security interests, easements, restrictions,
chattel mortgages, mortgages or deeds of trust, of any kind or
nature whatsoever.
"Material Contract" means any executory contract, agreement
or other understanding, whether or not reduced to writing, to
which Baytron or its property is subject, which provides for
future payments of more than $5,000 in the aggregate.
"Multiemployer Plan" means a plan or arrangement as defined
in Section 4001(a)(3) and 3(37) of ERISA.
"Permitted Liens" shall mean any mechanic's, worker's,
materialmen's, operator's, maritime or other liens arising as a
matter of law in the ordinary course of business.
"Person" shall mean an individual, firm, corporation,
general or limited partnership, limited liability company,
limited liability partnership, joint venture, trust, governmental
authority or body, association, unincorporated organization or
other entity.
"Pre-Closing Periods" shall mean all Tax periods ending at
or before the Effective Time and, with respect to any Tax period
that includes but does not end at the Effective Time, the portion
of such period that ends at and includes the Effective Time.
"Proceedings" shall mean any suit, action, proceeding,
dispute or claim before or investigation by any Governmental
Entity.
"Registrable Shares" means SESI Common Stock issued to the
Shareholders pursuant to this Agreement that cannot then be sold
without restriction under Rule 145(d) under the Securities Act.
"Returns" shall mean all returns, reports, estimates,
declarations and statements of any nature regarding Taxes for any
Pre-Closing Period required to be filed by the taxpayer relating
to its income, properties or operations.
"SESI Common Stock" means the shares of common stock, $.001
par value per share, of SESI.
"SESI Disclosure Documents" shall mean SESI's Annual Report
on Form 10-KSB for the year ended December 31, 1995, SESI's
Quarterly Report on Form 10-QSB for the quarter ended March 31,
1996 and any other document filed by SESI with the Securities and
Exchange Commission in accordance with the Exchange Act prior to
the Closing Date.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Surviving Corporation" shall mean Baytron Acquisition
following the Effective Time.
"Taxes" shall mean any federal, state, local, foreign or
other taxes (including, without limitation, income, alternative
minimum, franchise, property, sales, use, lease, excise, premium,
payroll, wage, employment or withholding taxes), fees, duties,
assessments, withholdings or governmental charges of any kind
whatsoever (including interest, penalties and additions to tax).
ARTICLE 2
THE MERGER
Section 2.1 Merger. At the Effective Time, in
accordance with the terms and subject to conditions of this
Agreement and the Louisiana Business Corporation Law, Baytron
shall merge with and into Baytron Acquisition, the separate
existence of Baytron shall cease, and Baytron Acquisition shall
continue as the Surviving Corporation.
Section 2.2 The Closing. Unless this Agreement shall
have been terminated pursuant to the provisions hereof and
subject to satisfaction or waiver of the conditions specified in
Section 7 hereof, the Closing shall take place at the offices of
Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P. in
New Orleans, Louisiana, commencing at 10:00 a.m., local time, on
or before July 31, 1996. If all conditions set forth in Section
7 hereof are satisfied or duly waived, at the Closing (a) the
certificates, agreements and instruments specified in Section 7
shall be delivered, (b) the appropriate officers of Baytron
Acquisition shall execute, deliver and acknowledge the
Certificate of Merger and the appropriate officers of Baytron and
Baytron Acquisition shall execute the certifications and
acknowledgments of this Agreement required by the Louisiana
Business Corporation Law and (c) the parties shall take such
further action as is required to consummate the transactions
contemplated by this Agreement.
Section 2.3 Filing of Certificate of Merger.
Immediately following its execution and acknowledgment, the
Certificate of Merger shall be delivered, respectively, to the
Secretary of State of Louisiana for filing, and the Certificate
of Merger shall thereafter be recorded in the manner required by
the Louisiana Business Corporation Law.
Section 2.4 The Effective Time; Effect of Merger. The
Merger shall be effective upon the filing of the Certificate of
Merger with the Secretary of State of the State of Louisiana, or
at such other time and date as is provided in the Certificate of
Merger pursuant to the mutual agreement of Baytron and SESI (the
"Effective Time"). Upon the Effective Time and by virtue of the
Merger, the Surviving Corporation shall possess all the rights,
privileges and franchises possessed by Baytron and the Surviving
Corporation shall be responsible for all of the liabilities and
obligations of Baytron in the same manner as if the Surviving
Corporation had itself incurred such liabilities or obligations,
and the Merger shall have such other effects as are provided in
the Louisiana Business Corporation Law.
Section 2.5 Directors and Officers; Articles of
Incorporation; By-laws.
(a) After the Effective Time and until their
successors shall have been duly elected or appointed, the
directors and officers of Baytron Acquisition will be the
directors and officers of the Surviving Corporation.
(b) The Articles of Incorporation of Baytron
Acquisition, as in effect immediately prior to the Effective
Time, shall be amended as provided in the Certificate of Merger
to change its name to "Baytron, Inc."
(c) The By-laws of Baytron Acquisition as in effect
immediately prior to the effective time, shall be the By-laws of
the Surviving Corporation after the Effective Time until
thereafter duly amended.
ARTICLE 3
CONVERSION OF STOCK; PAYMENT
Section 3.1 Conversion of Shares of Baytron.
(a) At the Effective Time, by reason of the Merger,
each of the issued and outstanding shares of Baytron Common Stock
immediately prior to the Effective Time shall, by virtue of the
Merger, be converted into the right to receive (i) 550 shares of
SESI Common Stock (i.e., 550,000 shares in the aggregate) and
(ii) $1,100 cash (i.e., $1,100,000 in the aggregate). Each share
of Baytron Common Stock held in treasury shall be canceled.
(b) At the Effective Time, by reason of the Merger,
each share of Baytron Common Stock outstanding immediately prior
to the Merger shall be canceled.
Section 3.2 Delivery and Exchange of Certificates.
Following the Effective Time, the Shareholders shall deliver to
Baytron Acquisition all certificates formerly representing shares
of Baytron Common Stock. Upon such delivery, SESI shall deliver
to each Shareholder a certificate representing the shares of SESI
Common Stock into which such shares of Baytron Common Stock have
been converted together with the cash payment specified in
Section 3.1(a). Until so delivered, each certificate which,
before the Effective Time, represented shares of Baytron Common
Stock, shall be deemed for all purposes to represent the number
of whole shares of SESI Common Stock into which the shares of
Baytron Common Stock theretofore represented thereby shall have
been converted.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS AND BAYTRON
Except as set forth in the Disclosure Schedule, (a) each
Shareholder, with respect to matters relating to himself or
herself, represents and warrants to and agrees with SESI and
Baytron Acquisition as set forth as follows in Sections 4.1
through 4.5 and (b) each Shareholder and Baytron, jointly,
severally and in solido, represent and warrant to and agree with
SESI and Baytron Acquisition as follows with respect to the
matters set forth in Sections 4.6 through 4.31:
Section 4.1 Ownership. Each Shareholder is, and at the
Effective Time will be, the record and beneficial owner of the
number of shares of Baytron Common Stock, which are represented
by the certificates bearing the numbers, shown opposite his or
her name in the Disclosure Schedule. Each Shareholder has and at
the Effective Time will have good and marketable title to all
such shares and the absolute right to deliver such shares in
accordance with the terms hereof, free and clear of all Liens.
Section 4.2 Authority. Each Shareholder has full legal
right, power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each
Shareholder and constitutes, and each other agreement, instrument
or documents executed or to be executed by such Shareholder in
connection with the transactions contemplated hereby has been, or
when executed will be, duly executed and delivered by such
Shareholder and constitutes, or when executed and delivered will
constitute, a valid and legally binding obligation of such
Shareholder, enforceable against such Shareholder in accordance
with their respective terms, except that such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally
and equitable principles which may limit the availability of
certain equitable remedies in certain instances.
Section 4.3 Noncontravention. The execution, delivery and
performance by each Shareholder of this Agreement and the
consummation by each Shareholder of the transactions contemplated
hereby do not and will not (a) result in the creation or
imposition of any Lien upon the Baytron Common Stock held by such
Shareholder or (b) violate any Applicable Law binding upon such
Shareholder.
Section 4.4 Legal Proceedings. There are no Proceedings
pending or, to the best of knowledge of the Shareholders
threatened seeking to restrain, prohibit or obtain damages or
other relief in connection with this Agreement or the
transactions contemplated hereby.
Section 4.5 Investment Representation.
(a) Each Shareholder is acquiring the SESI Common
Stock in connection with the Merger for investment for his or her
own account and not with a view to, or for sale or other
disposition in connection with, any distribution of all or any
part thereof except (i) in an offering covered by a registration
statement filed with the Securities and Exchange Commission under
the Securities Act covering the SESI Common Stock acquired by the
Shareholder in connection with the Merger or (ii) pursuant to an
applicable exemption under the Securities Act. In receiving the
SESI Common Stock in connection with the Merger, such Shareholder
is not offering or selling, and will not offer and sale, for SESI
in connection with any distribution of such SESI Common Stock,
and such Shareholder does not have any contract, undertaking,
agreement or arrangement with any person for the distribution of
the SESI Common Stock and will not participate in any undertaking
or in any underwriting of such an undertaking except in
compliance with Applicable Law.
(b) Each Shareholder represents that he or she is an
"accredited investor" as that term is defined in Regulation D
under the Securities Act and that he or she is able to fend for
himself or herself and can bear the economic risk of his or her
investment in the SESI Common Stock.
(c) Each Shareholder has such knowledge and experience
in financial and business matters that he or she is capable of
evaluating the merits and risks of an investment in SESI Common
Stock.
(d) Each Shareholder has received from SESI and has
reviewed with his or her representatives a copy of each of the
SESI Disclosure Documents. Each Shareholder has also been
afforded access to information about SESI and SESI's financial
position, results of operation, business, property and management
sufficient to enable him or her to evaluate an investment in SESI
Common Stock, and has had the opportunity to ask questions of and
has received satisfactory answers from SESI concerning the
foregoing matters.
(e) Each Shareholder understands that the SESI Common
Stock acquired pursuant hereto have not been registered under the
Securities Act on the basis that the sale provided for in this
Agreement and the issuance of SESI's Common Stock hereunder is
exempt from registration under the Securities Act, and that
SESI's reliance on such exemption is based, in part, upon such
Shareholder's representations set forth herein.
(f) Each Shareholder understands that the shares of
SESI Common Stock to be issued in the Merger will not be
registered under the Securities Act, that such shares will be
"restricted securities" as that term is defined in Rule 144
promulgated by the Securities and Exchange Commission under the
Securities Act, and that the Shareholder cannot transfer such
shares unless they are subsequently registered under the
Securities Act and under any applicable state securities law or
are transferred in a transfer that, in the opinion of counsel
satisfactory to SESI, is exempt from such registration. Each
Shareholder further understands that SESI will, as a condition to
the transfer of any such shares, require that the request for
transfer be accompanied by an opinion of counsel, in form and
substance satisfactory to SESI, to the effect that the proposed
transfer does not result in a violation of the Securities Act or
any applicable state securities law, unless such transfer is
covered by an effective registration statement. Each Shareholder
understands that such shares of SESI Common Stock may not be sold
publicly in reliance on the exemption from registration under the
Securities Act afforded by Rule 144 unless and until the minimum
holding period (currently two years) and other requirements of
Rule 144 have been satisfied.
(g) Each Shareholder understands and agrees that all
certificates evidencing the shares of SESI Common Stock issued
hereunder will bear restrictive legends in substantially the
following form:
The securities represented by this
certificate have not been
registered under the Securities Act
of 1933, as amended (the "Act"), or
any applicable state law, and may
not be transferred without
registration under the Act and any
such state law or an opinion of
counsel satisfactory to the
corporation that registration is
not required.
Section 4.6 Organization; Qualification; Subsidiaries.
Baytron is a corporation duly organized, validly existing and in
good standing under the laws of the State of Louisiana, having
all requisite corporate power and authority to own its property
and to carry on its business as it is now being conducted. No
actions or proceedings to dissolve Baytron are pending. Baytron
is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased
or operated by it or the conduct of its business requires such
qualification or licensing. Baytron has no subsidiaries or
equity interests in any other Person.
Section 4.7 Capital Stock. The authorized capital stock of
Baytron consists of 1,000 shares of Baytron Common Stock, of
which 1,000 shares are issued and outstanding and none are held
in its treasury. All issued and outstanding shares of Baytron
Common Stock have been duly authorized and are validly issued,
fully paid and non-assessable. There are no outstanding stock
options or other rights to acquire any shares of the capital
stock of Baytron or any security convertible into Baytron Common
Stock and Baytron has no obligation or other commitment to issue,
sell or deliver any of the foregoing or any shares of its capital
stock. All shares of Baytron Common Stock have been issued in
compliance with all legal requirements and without violation of
any pre-emptive or similar rights.
Section 4.8 No Conflict. Neither the execution and the
delivery of this Agreement by Baytron, nor the consummation of
the transactions contemplated hereby do or will (a) violate,
conflict with, or result in a breach of any provisions of, (b)
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, (c) result in
the termination of or accelerate the performance required by, (d)
result in the creation of any Lien, upon any of Baytron's
properties or assets under any of the terms, conditions or
provisions of its Articles of Incorporation or By-laws or any
note, bond, mortgage, indenture, deed of trust, lease, license,
loan agreement or other instrument or obligation to or by which
it or any of its assets is bound, or (e) violate any order, writ,
injunction, decree, statute, rule or regulation of any
Governmental Entity applicable to it or any of its assets.
Section 4.9 Consent. No consent, approval, order or
authorization of, or declaration, filing or registration with,
any Governmental Entity or other Person is required to be
obtained or made by Baytron in connection with the execution,
delivery or performance by Baytron of this Agreement or the
consummation by it of the transactions contemplated hereby.
Section 4.10 Charter and Bylaws. Baytron has made available
to SESI accurate and complete copies of (a) the Articles of
Incorporation and By-laws of Baytron, (b) the stock records of
Baytron and (c) the minutes of all meetings of the Board of
Directors of Baytron, any committees of such board and the
stockholders of Baytron (and all consents in lieu of such
meetings). Such records, minutes and consents accurately reflect
the stock ownership of Baytron and all actions taken by the Board
of Directors, committees and stockholders. Baytron is not in
violation of any provision of its Articles of Incorporation or
By-laws.
Section 4.11 Baytron's Financial Statements. The Disclosure
Schedule contains true and complete copies of the Baytron
Financial Statements. The Baytron Financial Statements (a) have
been prepared from the books and records of Baytron and are
complete, correct and in accordance with the books of account and
records of the Company and (b) accurately and fairly present
Baytron's financial position as of the respective dates thereof
and results of operations and cash flows for the periods then
ended. Baytron has not since the date of the Baytron Interim
Financial Statements incurred any liability or obligation
(whether accrued, absolute, contingent, unliquidated or
otherwise), except (i) liabilities reflected in the Baytron
Interim Financial Statements, (ii) liabilities described in the
notes accompanying the Baytron Annual Financial Statements, (iii)
current liabilities which have arisen since the date of the
Baytron Interim Financial Statements in the ordinary course of
business (none of which is a material liability for breach of
contract, tort or infringement) and (iv) liabilities arising
under executory contracts entered into in the ordinary course of
business (none of which is a material liability for breach of
contract).
Section 4.12 Accounts Receivable. All of the accounts
receivable reflected on the Baytron Interim Financial Statements
or created thereafter have arisen only from bona fide
transactions in the ordinary course of business, represent valid
obligations owing to Baytron and have been accrued in accordance
with generally accepted accounting principles. All such accounts
receivable either have been collected in full or will be
collectible in full when due, without any counterclaims, setoffs
or other defenses and without provision for any allowance for
uncollectible accounts other than such allowance as appears in
the Baytron Interim Financial Statements.
Section 4.13 Absence of Certain Changes. Since April 30,
1996 there has been no event or condition of any character that
has had, or can reasonably be expected to have, a material
adverse effect on the financial condition, results of operations,
cash flow, business or prospects of Baytron. Baytron has not
since April 30, 1996:
(a) made any material change in the conduct of its
business and operations or failed to operate its business so as
to preserve its business organization intact and to preserve the
good will of its customers, suppliers and others with whom it has
significant business relations;
(b) entered into any agreement or transaction not in
the ordinary course of business;
(c) incurred any obligation or liability, absolute or
contingent, except trade or business obligations incurred in the
ordinary course of business or sales, income, franchise, or ad
valorem taxes accruing or becoming payable in the ordinary course
of business;
(d) declared or paid any dividend or other
distribution with respect to any of its capital stock or
purchased any of its capital stock;
(e) acquired or disposed of any assets material to its
business or operations;
(f) subjected any of its assets to any Lien other than
Permitted Lien;
(g) increased the rate of compensation (including
bonuses, contingent severance payments, retirement, profit
sharing, benefit or similar payments) payable or to become
payable to any of its officers, directors or employees;
(h) adopted any employee welfare, pension, retirement,
profit sharing or similar plan or made any material addition to
or modification of existing plans;
(i) experienced any labor trouble or any controversy
or unsettled grievance involving any personnel;
(j) terminated or received notice of the termination
of any contract, commitment or transaction that is material to
it, or waived any right of material value to it;
(k) made any material change in any accounting
principle, procedure or practice followed by it;
(l) issued any stock or merged or consolidated with
any other business or agreed to do so;
(m) made any capital expenditure or entered into any
Lease;
(n) borrowed any money or guaranteed or assumed any
indebtedness of others;
(o) suffered any extraordinary losses or any material
damage, destruction or casualty with respect to its assets, or
experienced any events, conditions, losses or casualties which
have resulted in or might result in claims under its insurance
policies of an aggregate of $5,000 or more;
(p) loaned any money to any Person;
(q) defaulted under any note, loan, mortgage,
guarantee or other instrument of indebtedness or any Material
Contract;
(r) received any notification, warning or inquiry from
or given any notification to or had any communication with any
Governmental Entity, with respect to any proposed remedial action
or any violation or alleged or possible violation of any law,
rule, regulation or order relating to or affecting its business,
nor are any facts known to Baytron that may reasonably be
expected to give rise to any such notification, warning or
inquiry;
(s) transferred any asset, right or interest to, or
entered into any transaction with any Shareholder or any of their
Affiliates;
(t) amended its Articles of Incorporation or Bylaws;
(u) received notice or had knowledge or reason to
believe that any substantial customer of Baytron has terminated
or intends to terminate its relationship with Baytron;
(v) waived any right in connection with any aspect of
its business that could have a material effect on the business of
Baytron; or
(w) made any agreement or commitment to do any of the
foregoing.
Section 4.14 Suppliers and Customers. To the best knowledge
of the Shareholders, (a) no supplier providing products,
materials or services to Baytron intends to cease selling such
products, materials or services to Baytron or to limit or reduce
such sales to Baytron or materially alter the terms or conditions
of such sales and (b) no customer of Baytron intends to
terminate, limit or reduce its or their business relations with
Baytron.
Section 4.15 Properties.
(a) Baytron has good title to all material properties
and assets reflected on the Baytron Financial Statements, free
and clear of any Liens, except Permitted Liens.
(b) The Disclosure Schedule sets forth a complete and
correct list of all Leases, all of which are valid and
enforceable and in full force and effect. Complete and correct
copies of each Lease have been furnished to SESI. Baytron is in
full compliance with and has not received a notice of default
under any Lease and Baytron is not involved in any dispute under
any Lease, the effect of which would have a material adverse
effect on the business, assets or financial condition of Baytron.
(c) Baytron does not own, and has never owned, any
real property other than as described in the Disclosure Schedule.
Section 4.16 Permits; Compliance with Laws. Baytron (a) has
all necessary permits, licenses and governmental authorizations
required for the lease, ownership, occupancy or operation of its
properties and assets and the carrying on of its business, and
(b) has conducted its business in substantial compliance with and
is in substantial compliance with all applicable laws,
regulations, orders, permits, judgments, ordinances or decrees of
any Governmental Entity.
Section 4.17 Material Contracts. The Disclosure Schedule
lists and describes all Material Contracts. A complete and
correct copy of each Material Contract has been furnished to or
made available to SESI. Each Material Contract is valid, binding
and enforceable, except to the extent that enforcement may be
limited by bankruptcy, reorganization, insolvency and other
similar laws and court decisions relating to or affecting the
enforcement of creditors' rights generally and by equitable
principles. Baytron and each other party to each Material
Contract are in compliance in all material respects with the
provisions of such Material Contract.
Section 4.18 Litigation. There are no Proceedings pending
or threatened against Baytron and, to the best knowledge of the
Shareholders, there have been no events and there are no facts or
circumstances that could result in any Proceedings.
Section 4.19 Environmental Matters. Baytron is not in
violation of any applicable laws or regulations relating to the
environment and Baytron is not a party to any proposed removal,
remedy or remedial action. Baytron has not received any notice
that any investigation, administrative order, consent order and
agreement, removal or remedial action, litigation or settlement
with respect to any environmental permit, law or regulation is
proposed, threatened, anticipated or in existence with respect to
any of Baytron's leased or owned properties. The properties
currently and previously leased or owned by Baytron are not and
have never been on or associated with any "national priorities"
list or any equivalent state list or any federal or state
"superlien" list.
Section 4.20 ERISA and Related Matters.
(a) The Disclosure Schedule lists each Employee Plan
that Baytron maintains, administers, contributes to, or has any
contingent liability with respect thereto. Baytron has provided
a true and complete copy of each such Plan, current summary plan
description, (and, if applicable, related trust documents) and
all amendments thereto and written interpretations thereof
together with (i) all annual reports, if any, that have been
prepared in connection with each such Employee Plan; (ii) all
material communications received from or sent to the Internal
Revenue Service or the Department of Labor within the last two
years (including a written description of any oral
communications); and (iii) the most recent Internal Revenue
Services determination letter with respect to each Employee Plan
and the most recent application for a determination letter.
(b) The Disclosure Schedule identifies each Benefit
Arrangement that Baytron maintains, or administers. Except as
set forth in the Disclosure Schedule, Baytron has made all
contributions to and has no contingent liability with respect to
any of its Benefit Arrangements. Baytron has furnished to SESI
copies or descriptions of each Benefit Arrangement. To the
knowledge of each of the Shareholders, each Benefit Arrangement
has been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such Benefit
Arrangement.
(c) Benefits under any Employee Plan or Benefit
Arrangement are as represented in said documents and have not
been increased or modified (whether written or not written)
subsequent to the dates of such documents. Baytron has not
communicated to any employee or former employee any intention or
commitment to modify any Employee Plan or Benefit Arrangement or
to establish or implement any other employee or retiree benefit
or compensation arrangement.
(d) Baytron does not maintain, administer, or become
obligated to contribute to or have any contingent liability with
respect to any Multiemployer Plan or any Title IV Plan.
(e) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and, to the best knowledge of each of the Shareholders, no
event has occurred since such adoption that would adversely
affect such qualification and each trust created in connection
with each such Employee Plan forming a part thereof is exempt
from tax pursuant to Section 501(a) of the Code. To the best
knowledge of each of the Shareholders, each Employee Plan has
been maintained and administered in compliance with its terms and
with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, including but not
limited to ERISA and the Code.
(f) To the best knowledge of the Shareholders, full
payment has been made of all amounts which Baytron is or has been
required to have paid as contributions to any Employee Plan or
Benefit Arrangement under applicable law or under the terms of
any such plan or any arrangement.
(g) To the best knowledge of each of the Shareholders,
neither Baytron nor any of its shareholders, directors, officers
or employers has engaged in any transaction with respect to an
Employee Plan that could subject Baytron to a tax, penalty or
liability for a prohibited transaction, as defined in Section 406
of ERISA or Section 4975 of the Code.
(h) To the best knowledge of each of the Shareholders,
Baytron has no current or projected liability in respect of post-
retirement or post-employment welfare benefits for retired,
current or former employees. No health, medical, death or
survivor benefits have been provided under any Benefit
Arrangement to any person who is not an employee or former
employee of Baytron or a dependent thereof.
(i) There is no litigation, administrative or
arbitration proceeding or other dispute pending or threatened
that involves any Employee Plan or Benefit Arrangement which
could reasonably be expected to result in a liability to Baytron,
any employees or directors of Baytron, or any fiduciary (as
defined in ERISA Section 3(21)) of such Employee Plan or Benefit
Arrangement.
(j) No employee or former employee of Baytron will
become entitled to any bonus, retirement, severance, job security
or similar benefit or enhanced benefit (including acceleration of
compensation, an award, vesting or exercise of an incentive
award) or any fee or payment of any kind solely as a result of
any of the transactions contemplated hereby.
(k) Baytron is not a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately
or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code (i.e., a
golden parachute).
Section 4.21 Taxes.
(a) All Returns required to be filed by or on behalf
of Baytron have been duly filed on a timely basis and such
Returns (including all attached statements and schedules) are
true, complete and correct. All Taxes shown to be payable on the
Returns or on subsequent assessments with respect thereto have
been paid in full on a timely basis, and no other Taxes are
payable by Baytron with respect to items or periods covered by
such Returns (whether or not shown on or reportable on such
Returns) or with respect to any period prior to the Closing Date.
(b) Baytron has withheld and paid over all Taxes
required to have been withheld and paid over (including any
estimated taxes), and has complied with all information reporting
and backup withholding requirements, including maintenance of
required records with respect thereto, in connection with amounts
paid or owing to any employee, creditor, independent contractor,
or other third party.
(c) There are no Liens on any of the assets of Baytron
with respect to Taxes, other than Liens for Taxes not yet due and
payable or for Taxes that are being contested in good faith
through appropriate proceedings and for which appropriate
reserves have been established.
(d) Baytron has furnished or made available to SESI
true and complete copies of: (i) all federal and state income
and franchise tax returns of Baytron for all periods beginning on
or after January 1, 1993, and (ii) all tax audit reports, work
papers statements of deficiencies, closing or other agreements
received by Baytron or on its behalf relating to Taxes.
(e) Except as disclosed on the Disclosure Schedule or
in documents provided to or made available to SESI:
(i) The Returns of Baytron have never been
audited by a governmental or taxing authority, nor is any such
audit in process, pending or threatened (formally or informally).
(ii) No deficiencies exist or have been asserted
(either formally or informally) or are expected to be asserted
with respect to Taxes of Baytron, and no notice (either formally
or informally) has been received by Baytron that it has not filed
a Return or paid Taxes required to be filed or paid by it.
(iii) Baytron is not a party to any pending action
or proceeding for assessment or collection of Taxes, nor has such
action or proceeding been asserted or threatened (either formally
or informally) against it or any of its assets.
(iv) Except as reflected in the Returns or as
disclosed on the Disclosure Schedule, no waiver or extension of
any statute of limitations is in effect with respect to Taxes or
Returns of Baytron.
(v) No action has been taken that would have the
effect of deferring any liability for Taxes for Baytron from any
period prior to the Closing Date to any period after the Closing
Date.
(vi) There are no requests for rulings, subpoenas
or requests for information pending with respect to Baytron.
(vii) No power of attorney has been granted by
Baytron, with respect to any matter relating to Taxes.
(viii) The amount of liability for unpaid Taxes of
Baytron for all periods ending on or before the Effective Date
will not, in the aggregate, exceed the amount of the current
liability accruals for Taxes, as such accruals are reflected on
the balance sheet of Baytron as of the Closing Date.
(f) Except as disclosed on the Disclosure Schedule, or
as described in documents furnished to or made available to SESI:
(i) Baytron has not made an election, and is not
required to treat any asset as owned by another person for
federal income tax purposes or as tax-exempt bond financed
property or tax-exempt use property within the meaning of section
168 of the Code.
(ii) Baytron has not issued or assumed any
indebtedness that is subject to section 279(b) of the Code.
(iii) Baytron has not entered into any
compensatory agreements with respect to the performance of
services which payment thereunder would result in a nondeductible
expense to Section 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code.
(iv) No election has been made under Section 338
of the Code with respect to Baytron and no action has been taken
that would result in any income tax liability to Baytron as a
result of deemed election within the meaning of Section 338 of
the Code.
(v) No consent under Section 341(f) of the Code
has been filed with respect to Baytron.
(vi) Baytron has not agreed, nor is it required to
make, any adjustment under Code Section 481(a) by reason of
change in accounting method or otherwise.
(vii) Baytron has not disposed of any property
that has been accounted for under the installment method.
(viii) Baytron is not a party to any interest rate
swap, currency swap or similar transaction.
(ix) Baytron is not a United States real property
holding corporation within the meaning of Section 897(c)(2) of
the Code and SESI is not required to withhold tax on the
acquisition of the stock of Baytron.
(x) Baytron has not participated in any
international boycott as defined in Code Section 999.
(xi) Baytron is not subject to any joint venture,
partnership or other arrangement or contract that is treated as a
partnership for federal income tax purposes.
(xii) Baytron has not made any of the foregoing
elections and is not required to apply any of the foregoing rules
under any comparable state or local income tax provisions.
(xiii) Baytron does not have and has never had a
permanent establishment in any foreign country, as defined in any
applicable tax treaty or convention between the United States and
such foreign country.
(xiv) The transactions contemplated herein are not
subject to the tax withholding provisions of Section 3406 of the
Code, or of Subchapter A of Chapter 3 of the Code, or of any
other provision of law.
(g) Set forth in the Disclosure Schedule or in
documents furnished or made available to SESI is accurate and
complete information with respect to each of the following for
all tax periods beginning January 1, 1993:
(i) All material tax elections in effect with
respect to Baytron;
(ii) The current tax basis of the assets of
Baytron;
(iii)The net operating losses of Baytron by
taxable year;
(iv) The net capital losses of Baytron; and
(v) The tax credit carry overs of Baytron.
Section 4.22 Transactions with Certain Persons. Except for
employment relationships in the ordinary course of business, no
employee of Baytron or any of their Affiliates is presently a
party to any transaction with Baytron, including without
limitation any contract, agreement or other arrangement providing
for the furnishing of services by or the rental of real or
personal property from any such person or from any of their
Affiliates.
Section 4.23 Intellectual Property. Baytron either own or
has valid licenses to use all patents, copyrights, trademarks,
software, databases, and other technical information used in its
business as presently conducted, subject to limitations contained
in the agreements governing the use of same, which limitations
are customary for companies engaged in businesses similar to
Baytron. There are no limitations contained in any such
agreements which, upon consummation of the Merger, will alter any
such rights, breach any such agreement or any third-party vendor,
or require payments of additional sums thereunder. Baytron is in
compliance with all such licenses and agreements and there are no
pending or, to the best knowledge of the Shareholders, threatened
Proceedings challenging or questioning the validity or
effectiveness of any license or agreement relating to such
property or the right of Baytron to use, copy, modify or
distribute the same.
Section 4.24 Insurance. SESI has been provided access to
all insurance policies or binders which relate to Baytron's
business. All premiums due under such policies and binders have
been paid or accrued for on the Baytron Financial Statements and
all such policies and binders are in full force and effect and no
notice of cancellation or nonrenewal of any such policy or
binder has been received by Baytron and no notice of disallowance
of any claim under any insurance policy or binder, whether or not
currently in effect, has been received by Baytron. Baytron has
no liability for or exposure to any premium expense for expired
policies and there are no current claims by Baytron under any
such policy or binder nor are there any insured losses for which
claims have not been made.
Section 4.25 Safety and Health. The property and assets of
Baytron have been and are being operated in compliance with all
Applicable Laws designed to protect safety or health, or both,
including without limitation, the Occupational Safety and Health
Act, and the regulations promulgated pursuant thereto. Baytron
has not received any written notice of any violations,
deficiency, investigation or inquiry from any Governmental
Entity, employer or third party under any such law and, to the
best knowledge of the Shareholders, no such investigation or
inquiry is planned or threatened.
Section 4.26 Bank Accounts; Powers of Attorney. The
Disclosure Schedule sets forth with respect to each bank account
or cash account maintained at any bank, brokerage or other
financial firm, the name of the institution at which such account
is maintained, the number of the account, and the names of the
individuals having authority to withdraw funds from such account.
Section 4.27 Compensation Agreements. The Disclosure
Schedule lists all written employment, commission, bonus or other
compensation and consulting agreements to which Baytron is a
party. Except as set forth on the Disclosure Schedule, Baytron
is not a party to any written or oral employment, commission,
bonus or other compensation or consulting agreement which Baytron
may not terminate without any payment or penalty, at will, with
or without cause, except to the extent that employment at will
may be limited by Applicable Law.
Section 4.28 Director and Officer Indemnification. The
directors and officers of Baytron are not entitled to
indemnification by Baytron, except to the extent that
indemnification rights are provided for generally in Louisiana
and there are no pending claims for indemnification by any
director or officer of Baytron.
Section 4.29 Documents and Written Materials. Originals or
true and complete copies of all documents or other written
materials underlying items listed in the Disclosure Schedule have
been furnished or made available to SESI in the form in which
each of such documents is in effect, and will not be modified in
any material respect prior to the Closing Date without SESI's
prior written consent.
Section 4.30 Effectiveness of Representations and
Warranties. All of the representations and warranties of Baytron
and the Shareholders in this Agreement shall be true in all
material respects on the Closing Date and shall be deemed to have
been made again by Baytron and the Shareholders on and as of the
Closing Date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SESI
SESI represents and warrants to and agrees with Baytron and
the Shareholders as follows:
Section 5.1 Organization. SESI and Baytron Acquisition are
corporations duly organized, validly existing and in good
standing under the laws of Louisiana and have all requisite
corporate power and authority to own their properties and carry
on their businesses as now being conducted.
Section 5.2 Capitalization. As of the date of this
Agreement, the authorized capital stock of SESI consists of
40,000,000 shares of common stock, $.001 par value per share,
17,320,916 of which are validly issued and outstanding, and
5,000,000 of preferred stock, $.001 par value, none of which are
outstanding. SESI holds of record all of the issued and
outstanding shares of Baytron Acquisition capital stock.
Section 5.3 Authority; Enforceability. Each of SESI and
Baytron Acquisition has the requisite corporate power and
authority to execute and deliver this Agreement and to carry out
its obligations hereunder. The execution, delivery and
performance of this Agreement and the consummation of the Merger
and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of SESI
and Baytron Acquisition and no other corporate proceedings on the
part of SESI or Baytron Acquisition are necessary to authorize
this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly executed and delivered by each of
SESI and Baytron Acquisition and constitutes a valid and binding
obligation of each of SESI and Baytron Acquisition, enforceable
against them in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of
creditors' rights generally and equitable principles which may
limit the availability of certain equitable remedies in certain
instances.
Section 5.4 Consents and Approvals; Conflicts. No filing
with or notice to, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the
execution and delivery by SESI and Baytron Acquisition of this
Agreement or the consummation by SESI and Baytron Acquisition of
the transactions contemplated hereby. Neither the execution and
delivery of this Agreement by SESI and Baytron Acquisition, nor
the consummation of the transactions contemplated hereby, will
violate any of the provisions of the Articles of Incorporation or
Bylaws of either SESI or Baytron Acquisition; or conflict with or
result in a breach of, or give rise to a right of termination of,
or accelerate the performance required by, any terms of any court
order, consent decree, note, bond, mortgage, indenture, deed of
trust, or any license or agreement binding on either SESI or
Baytron Acquisition or to which either SESI or Baytron
Acquisition is subject or a party, or constitute a default
thereunder, or result in the creation of any Lien upon any of the
assets or result in the creation of any Lien upon any of the
assets of SESI or Baytron Acquisition, except for any such
conflict, breach, termination, acceleration, default or Lien
which would not have a material adverse effect on (a) the
business, assets or financial condition of SESI or Baytron
Acquisition or (b) either SESI's or Baytron Acquisition's ability
to consummate any of the transactions contemplated hereby.
Section 5.5 SESI Stock. All shares of SESI Common Stock to
be issued pursuant to this Agreement will be, when issued, duly
authorized, validly issued, fully paid and non-assessable.
Section 5.6 SESI Disclosure. The SESI Disclosure Documents
do not include any misstatement of any fact material to the
assets, business, operations, financial condition and prospects
of SESI, taken as a whole, or omit to state such a material fact
necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading.
Section 5.7 Effectiveness of Representations and Warranties.
All of the representations and warranties of SESI in this
Agreement shall be true in all material respects on the Closing
Date and shall be deemed to have been made again by SESI on and
as of the Closing Date.
ARTICLE 6
PRE-CLOSING COVENANTS
Section 6.1 Legal Requirements to Merger. Subject to the
conditions set forth in Section 7 and to the other terms and
provisions of this Agreement, each of the parties to this
Agreement agrees to take, or cause to be taken, all reasonable
actions necessary to comply promptly with all legal requirements
applicable to it with respect to the Merger and will promptly
cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them in
connection with the Merger. Each of Baytron, SESI, Baytron
Acquisition and the Shareholders will take all reasonable actions
necessary to obtain, and will cooperate with each other in
obtaining, any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity or other public or
private party, required to be obtained or made by it in
connection with the Merger or the taking or any action
contemplated by this Agreement.
Section 6.2 Access to Properties and Records. Until the
Effective Time, Baytron and the Shareholders shall allow SESI and
its authorized representatives full access, during normal
business hours and on reasonable notice, to all of Baytron's
properties, offices, vehicles, equipment, inventory and other
assets, documents, files, books and records, in order to allow
SESI a full opportunity to make such investigation and inspection
as its desires of Baytron's business and assets. Baytron and the
Shareholders shall further use their best efforts to cause the
employees, counsel and regular independent certified public
accountants of Baytron to be available upon reasonable notice to
answer questions of SESI's representatives concerning the
business and affairs of Baytron, and shall further use their best
efforts to cause them to make available all relevant books and
records in connection with such inspection and examination,
including without limitation work papers for all audits and
reviews of financial statements of Baytron.
Section 6.3 Conduct of Business. From and after the date of
this Agreement and until the Closing Date, Baytron and SESI shall
each conduct their respective businesses in the ordinary course
and consistently with past practice, except as expressly required
or otherwise permitted by this Agreement, and shall not take or
permit any action which would cause any of their representations
made in this Agreement not to be true and correct on the Closing
Date.
Section 6.4 Public Statements. Prior to the Effective Time,
none of the parties to this Agreement shall, and each party shall
use its best efforts so that none of its advisors, officers,
directors or employees shall, except with the prior written
consent of the other parties, publicize, announce or describe to
any third person, except their respective advisors and employees,
the execution or terms of this Agreement, the parties hereto or
the transactions contemplated hereby, except as required by law
or as required pursuant to this Agreement to obtain the consent
of such third person; provided, in any case, that SESI may make
such disclosures and announcements as may be necessary or
advisable under applicable securities laws.
Section 6.5 No Solicitation. The Shareholders and Baytron
will not, prior to the Effective Time or the termination of this
Agreement pursuant to Section 9.1, (nor will they permit any of
their affiliates or any of Baytron's officers, directors or
agents to) directly or indirectly solicit or participate or
engage in or initiate any negotiations or discussions, or enter
into or authorize any agreement or agreements in principle, or
announce any intention to do any of the foregoing, with respect
to any offer or proposal to acquire all or any significant part
of Baytron's business and properties or any Baytron Common Stock
whether by merger, purchase of assets, purchase of stock or
otherwise. The Shareholders and Baytron will notify SESI
promptly upon receipt of any inquiry, offer or other
communication from any third party regarding any such activities.
Section 6.6 Update Information. Each party hereto will
promptly disclose to the other any information contained in its
representations and warranties that because of an event occurring
after the date hereof is incomplete or no longer correct;
provided, however, that none of such disclosures will be deemed
or modified, amend, or supplement the representations and
warranties of such party, unless the other party consents to such
modification, amendment, or supplement in writing.
ARTICLE 7
CLOSING CONDITIONS
Section 7.1 Conditions Applicable to all Parties. The
respective obligations of each party to consummate the Merger
shall be subject to the satisfaction or, where permissible,
waiver by such party of the following conditions at or prior to
the Effective Time:
(a) No statute, rule, regulation, executive order,
decree, preliminary or permanent injunction or restraining order
shall have been enacted, entered, promulgated or enforced by any
court of competent jurisdiction or other Governmental Entity
which prohibits or restricts the consummation of the Merger and
no action, suit, claim or proceeding by a state or federal
Governmental Entity before any court or other Governmental Entity
shall have been commenced and be pending which seeks to prohibit
or restrict the consummation of the Merger.
(b) SESI and Baytron shall have received an opinion of
Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P. to
the effect that the Merger constitutes a reorganization within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code, that the Shareholders will recognize no gain or loss for
federal income tax purposes with respect to the SESI Common Stock
received by them in connection with the Merger, and that no gain
or loss for federal income tax purposes will be recognized by
SESI, Baytron Acquisition or Baytron as a result of the Merger.
(c) Each Person specified in Exhibit "B" shall have
entered into an Employment Agreement having the terms specified
therein.
Section 7.2 Conditions to Obligations of SESI and Baytron
Acquisition. The obligations of SESI and Baytron Acquisition to
effect the Merger are subject to the satisfaction of the
following conditions unless waived by SESI and Baytron
Acquisition:
(a) The representations and warranties of Baytron and
the Shareholders set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement,
and Baytron and the Shareholders shall have performed in all
material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date.
(b) All consents and approvals of third parties
necessary for consummation of the Merger shall have been
obtained. Baytron shall have used its best efforts to obtain all
necessary permits, authorizations, consents and approvals
required by such Governmental Entities prior to the Closing Date.
(c) SESI and Baytron Acquisition shall have had a full
opportunity to conduct inspections of the operating assets and
books and records of Baytron.
(d) Baytron shall have provided SESI certified copies
of its Articles of Incorporation and Bylaws and certificates of
existence, good standing and qualification to do business as a
foreign corporation, certified by the Secretary of State of the
State of Louisiana.
(e) SESI shall have received a certificate of a duly
authorized officer of Baytron, dated the Closing Date, certifying
as to the incumbency of any person executing this Agreement or
any certificate or other document delivered in connection with
this Agreement and certifying as to such other matters as SESI
shall reasonably request.
(f) Any and all changes made to the Disclosure
Schedule or to the representations and warranties of Baytron and
the Shareholders shall be satisfactory in all respects to SESI.
Section 7.3 Conditions to Obligations of Baytron and
Shareholders. The obligations of Baytron and the Shareholders to
effect the Merger are subject to the satisfaction for the
following conditions, unless waived by Baytron and all of the
Shareholders:
(a) The representations and warranties of SESI and
Baytron Acquisition set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement,
and SESI and Baytron Acquisition shall have performed in all
material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date.
(b) Baytron and the Shareholders shall have received a
certificate of a duly authorized officer of SESI and Baytron
Acquisition, dated the Closing Date, and certifying as to the
incumbency of any person executing this Agreement or any
certificate or other document delivered in connection with this
Agreement and certifying such other matters as Baytron or the
Shareholders shall reasonably request.
ARTICLE 8
POST-CLOSING COVENANTS
Section 8.1 Bonus Pool. SESI will cause Baytron Acquisition
following the Effective Time to establish an employee bonus pool
for its employees for the 12 month periods ending July 31, 1997,
1998 and 1999 in accordance with this Section 8.1. If Baytron
Acquisitions' income before bonus and income taxes as determined
in accordance with generally accepted principles exceeds
$470,000, in any of these periods then a bonus pool of $50,000
will be established for that year for the benefit of the Baytron
Acquisition's employees to be allocated as determined by Jim or
Judy Edwards.
Section 8.2 Motor Home. Prior to the Closing Date (a)
Baytron shall cause the motor home it owns to be conveyed to Mr.
Jim Edwards in such a manner so that following the Closing
Baytron Acquisition will not recognize a loss for financial
reporting purposes and (b) Mr. Edwards shall assume any
obligations, including those related to indebtedness for borrowed
money, related to the motor home.
Section 8.3 Location. SESI shall cause Baytron Acquisition
for a period of three years from the Closing Date to maintain its
principal executive office in the offices occupied by Baytron
prior to the Effective Time and will continue to pay $3,000
monthly rent pursuant to a lease agreement mutually satisfactory
to the Shareholders and Baytron Acquisition.
Section 8.4 Registration and Repurchase Rights.
(a) Subject to Section 8.4(b) at any time after
September 30, 1996, the Shareholders may, acting together,
jointly request in writing that SESI effect the registration
under the Securities Act of all or any part of the Registrable
Shares owned by the Shareholders. If the Shareholders intend to
distribute the Registrable Shares by means of an underwriting,
they shall so advise SESI in their request. Thereupon, SESI
shall, as expeditiously as possible, take such steps as are
necessary to effect the registration of all Registrable Shares
that SESI has been requested to so register. SESI shall be
obligated to prepare and file at its expense one registration
statement under the Securities Act pursuant to this Section
8.4(a); provided, however, that SESI may for up to a 90 day
period defer filing a registration statement and from time to
time suspend the ability of the Shareholders to resell
Registrable Shares pursuant to such registration statement if
SESI reasonably concludes, after consultation with the
Shareholders, that filing a registration statement or updating
the prospectus contained therein would (i) interfere with or
adversely affect the negotiation or completion of any transaction
that is being contemplated by SESI at the time the right to delay
is exercised or (ii) involve an initial or continuing disclosure
obligation that would not be in the best interest of SESI's
stockholders. If at any time SESI defers filing a registration
statement or suspends the ability to sell the Registrable Shares
pursuant to such registration statement, SESI shall use its best
efforts to file such registration statement or permit resales of
Registrable Shares pursuant to such registration statement as
soon as thereafter as practicable; provided, however, that the
foregoing shall not require SESI to alter its actions with
respect to any pending corporate developments or business
transactions of the nature described in clauses (i) and (ii)
above.
(b) If the Shareholders request that SESI effect the
registration of Registrable Shares pursuant to Section 8.4(a),
then SESI shall in lieu of proceeding with filing a registration
statement have the option exercisable within 5 business days of
receipt of such request to purchase all or any portion of the
Registrable Shares requested to be registered pursuant to Section
8.4(a) for the Exercise Price upon the terms and conditions
stated in this Section 8.4(b). This option may be exercised any
number of times and from time to time for all or a portion of the
Registrable Shares requested to be registered pursuant to Section
8.4(a). This option may be exercised by giving written notice to
the Shareholders, which notice shall state (i) the number of
Registrable Shares to be purchased, (ii) the aggregate Exercise
Price for such Registrable Shares and (iii) the date specified
for the closing of such purchase, which date shall not be more
than 10 days after giving such notice.
(c) If SESI declines to take the steps necessary to
effect the registration of Registrable Shares requested by the
Shareholders or suspends the ability of the Shareholders to
resell Registrable Shares pursuant to such registration statement
pursuant to Section 8.4(a) because of pending corporate
developments or business transactions of the nature described in
clauses (i) and (ii) thereof, then the Shareholders shall have
the right upon each such occurrence to require that SESI
repurchase up to 100,000 of the Registrable Shares for the
Exercise Price. This right may be exercised by giving written
notice to SESI, which notice shall state (i) the number of
Registrable Shares to be sold to SESI, (ii) the aggregate
Exercise Price for such Registrable Shares and (iii) the date
specified for the closing of such purchase, which date shall not
be less than 10 days after giving such notice.
(d) Whenever SESI proposes to file a registration
statement (other than pursuant to Section 8.4(a)) relating to
SESI Common Stock proposed to be sold for SESI's account at any
time and from time to time, it will, prior to such filing, given
written notice to all Shareholders of its intention to do so and,
upon the written request of a Shareholder or Shareholders given
within 30 days after SESI provides such notice (which request
shall state the intended method of disposition of such
Registrable Shares), SESI shall use its best efforts to cause all
Registrable Shares that SESI has been requested by such
Shareholder or Shareholders to register to be registered under
the Securities Act to the extent necessary to permit their sale
or other disposition in accordance with the intended methods of
distribution specified in the request of such Shareholder or
Shareholders; provided that SESI shall have the right to postpone
or withdraw any registration effected pursuant to this Section
8.4(d) without obligation to any Shareholder. In connection with
any offering under this Section 8.4(d) involving an underwriting,
SESI shall not be required to include any Registrable Shares in
such offering unless the holders thereof accept the terms of the
underwriting as agreed upon between SESI and the underwriters
selected by it (provided that such terms must be consistent with
this Agreement), and then only in such quantity as will not, in
the opinion of the underwriters, jeopardize the success of the
offering by SESI. If in the opinion of the managing underwriter
the registration of all, or part of, the Registrable Shares that
the Shareholders have requested to be included would materially
and adversely affect such public offering, then SESI shall be
required to include in the underwriting only that number of
Registrable Shares, if any, that the managing underwriter
believes may be sold without causing such adverse effect.
(e) SESI will pay all the expenses incurred by SESI in
complying with this Section 8.4, including, without limitation,
all registration and filing fees, exchange listing fees, printing
expenses, fees, and expenses of counsel for SESI, state "blue
sky" fees and expenses, and the expense of any special audits
incident to or required by any such registration, but excluding
underwriting discounts, selling commissions, and the fees and
expenses of selling Shareholders' own counsel.
(f) Each Shareholder agrees not to effect any public
sale or distribution (including sales pursuant to Rule 144) of
Registrable Shares during the seven (7) days prior to (provided
that such Shareholders receive a notice from SESI of a
commencement of such 7-day period) and up to a 180-day period
beginning on the effective date of any underwritten registration
effected pursuant to Section 8.4(a) or any registration effected
pursuant to Section 8.4(d) in which Registrable Shares are
included (except as part of such underwritten registration), that
may be requested by the underwriters managing the public
offering.
(g) If and whenever SESI is required by the provisions
of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the
Securities Act, SESI shall file with the Securities and Exchange
Commission a registration statement with respect to such
Registrable Shares and use its best efforts to cause that
registration statement to become and remain effective and any
amendments and supplements to the registration statement and the
prospectus included in the registration statement as may be
necessary to keep the registration statement effective, in the
case of a firm commitment underwritten public offering, until
each underwriter has completed the distribution of all securities
purchased by it and, in the case of any other offering, until the
earlier of the sale of all Registrable Shares covered thereby or
90 days after the effective date thereof.
(h) Each holder of Registrable Shares included in any
registration shall furnish to SESI such information regarding
such holder and the distribution proposed by such holder as SESI
may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in
this Section 8.4.
(i) SESI agrees to:
(i) comply with the requirements of Rule 144(c)
under the Securities Act with respect to current public
information about SESI;
(ii) use its best efforts to file with the
Securities and Exchange Commission in a timely manner all reports
and other documents required of SESI under the Securities Act and
the Exchange Act; and
(iii) furnish to any holder of Registrable Shares
upon request (i) a written statement by SESI as to its compliance
with the requirements of Rule 144(c) and the reporting
requirements of the Securities Act and the Exchange Act, (ii) a
copy of the most recent annual or quarterly report of SESI, and
(iii) such other reports and documents of SESI as such holder may
reasonably request to avail itself of any similar rule or
regulation of the Securities and Exchange Commission allowing it
to sell any such securities without registration.
ARTICLE 9
TERMINATION AND AMENDMENT
Section 9.1 Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the
Effective Time:
(a) by mutual consent of SESI and Baytron;
(b) by SESI or Baytron, if (a) there shall have been a
material breach of any representation, warranty, covenant or
agreement on the part of Baytron or the Shareholders or on the
part of SESI or Baytron Acquisition, as the case maybe, which
breach shall not have been cured prior to the earlier of (i) 10
days following notice of such breach and (ii) the Closing Date;
or (b) any permanent injunction or other order of a court or
other competent Governmental Entity preventing the consummation
of the Merger shall have become final and nonappealable; or
(c) by SESI, Baytron or any Shareholder if the Merger
shall not have been consummated on or before August 30, 1996;
provided, that the right to terminate this Agreement under this
Section 9.1(c) shall not be available to any party whose breach
of its representations and warranties in this Agreement or whose
failure to perform any of its covenants and agreements under this
Agreement has resulted in the failure of the Merger to occur on
or before such date.
Section 9.2 Effect of Termination. In the event of a
termination of this Agreement by either Baytron or SESI as
provided in Section 9.1, this Agreement shall forthwith become
void and there shall be no liability or obligation under any
provisions hereof on the part of SESI, Baytron Acquisition or
Baytron or their respective officers, directors or stockholders,
except (a) pursuant to the covenants and agreements contained in
Section 11.1 and this Section 9.2 and (b) to the extent that such
termination results from the willful material breach by a party
hereto of any of its representations, warranties, covenants or
agreements set forth in this Agreement, in which case the non-
breaching party shall have a right to recover its damages caused
thereby.
Section 9.3 Amendment. This Agreement may not be amended
except by an instrument in writing signed by each of the parties
hereto.
Section 9.4 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto may, in their respective sole
discretion and to the extent legally allowed, (a) extend the time
for the performance of any of the obligations or other acts of
the other parties hereto; (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant thereto; and (c) waive compliance
with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument
signed by or on behalf of such party.
ARTICLE 10
INDEMNIFICATION; REMEDIES
Section 10.1 Indemnification by Seller. Except as otherwise
expressly provided in this Section 10 the Shareholders shall
defend, indemnify and hold harmless SESI and each of SESI's
officers, directors, employees, Affiliates, successors and
assigns (SESI and such persons, collectively, "SESI's Indemnified
Persons"), and shall reimburse SESI's Indemnified Persons, for,
from and against each and every demand, claim, action, loss
(which shall include any diminution in value), liability,
judgment, damage, cost and expense (including, without
limitation, interest, penalties, costs of preparation and
investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and other professional
advisors) (collectively, "Losses") imposed on or incurred by
SESI's Indemnified Persons, directly or indirectly, relating to,
resulting from or arising out of: (a) any inaccuracy in any
representation or warranty of Seller in this Agreement or any
certificate, document or other instrument delivered or to be
delivered pursuant hereto in any respect whether or not SESI's
Indemnified Persons relied thereon or had knowledge thereof or
(b) any breach or nonperformance of any covenant, agreement or
other obligation of Baytron or the Shareholders under this
Agreement or any certificate, document or other instrument
delivered or to be delivered pursuant hereto; provided, however,
that, except for a knowing and intentional breach of any
representation or warranty of Baytron and the Shareholders in
this Agreement (as to which there shall be no Minimum Amount),
Shareholders shall have no liability under Section 10.1(a) unless
and until the aggregate of all Losses resulting therefrom exceeds
$25,000 (the "Shareholder's Minimum Amount"), in which event
Seller shall be liable for all Losses in excess of Seller's
Minimum Amount.
Section 10.2 Indemnification by SESI. Except as otherwise
expressly provided in this Article 10, SESI shall defend,
indemnify and hold harmless to Shareholders and each of the
Shareholders' successors and assigns (Shareholder and such
persons, collectively, "Shareholders' Indemnified Persons"), and
shall reimburse Shareholders' Indemnified Persons for, from and
against all Losses imposed on or incurred by Shareholders's
Indemnified Persons, directly or indirectly, relating to,
resulting from or arising out of: (a) any inaccuracy in any
representation or warranty in any respect, whether or not
Shareholders' Indemnified Persons relied thereon or had knowledge
thereof, or (b) any breach or nonperformance of any covenant,
agreement or other obligation of SESI under this Agreement or any
certificate, document or other instrument delivered or to be
delivered pursuant hereto; provided, however, that SESI shall
have no liability under this Article 10 unless and until the
aggregate of all Losses exceeds $25,000 ("SESI Minimum Amount"),
in which event SESI shall be liable for all Losses in excess of
the SESI's Minimum Amount.
Section 10.3 Notice and Defense of Third Party Claims. If
any third party demand, claim, action or proceeding shall be
brought or asserted under this Article 10 against an indemnified
party or any successor thereto (the "Indemnified Person") in
respect of which indemnity may be sought under this Article 10
from an indemnifying person or any successor thereto (the
"Indemnifying Person"), the Indemnified Person shall give prompt
written notice thereof to the Indemnifying Person who shall have
the right to assume its defense, including the hiring of counsel
reasonably satisfactory to the Indemnified Person and the payment
of all expenses; except that any delay or failure to so notify
the Indemnifying Person shall relieve the Indemnifying Person of
its obligations under this Article 10 only to the extent, if at
all, that it is prejudiced by reason of such delay or failure.
The Indemnified Person shall have the right to employ separate
counsel in any of the foregoing actions, claims or proceedings
and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the
Indemnified Person unless both the Indemnified Person and the
Indemnifying Person are named as parties and the Indemnified
Person shall in good faith determine that representation by the
same counsel is inappropriate. In the event that the
Indemnifying Person, within ten days after notice of any such
action or claim, does not assume the defense thereof, the
Indemnified Personal shall have the right to undertake the
defense, compromise or settlement of such action, claim or
proceeding for the account of the Indemnifying Person, subject to
the right of the Indemnifying Person to assume the defense of
such action, claim or proceeding with counsel reasonably
satisfactory to the Indemnified Person at any time prior to the
settlement, compromise or final determination thereof. Anything
in this Article 10 to the contrary notwithstanding, the
Indemnifying Person shall not, without the Indemnified Person's
prior consent, settle or compromise any action or claim or
consent to the entry of any judgment with respect to any action,
claim or proceeding for anything other than money damages paid by
the Indemnifying Person. The Indemnifying Person may, without
the Indemnified Person's prior consent, settle or compromise any
such action, claim or proceeding or consent to entry of any
judgment with respect to any such action or claim that requires
solely the payment of money damages by the Indemnifying Person
and that includes as an unconditional term thereof the release by
the claimant or the plaintiff of the Indemnified Person from all
liability in respect of such action, claim or proceeding.
ARTICLE 11
MISCELLANEOUS
Section 11.1 Confidentiality. Until the Effective Time and
subsequent to the termination of this Agreement pursuant to
Section 9.1, each of SESI and Baytron Acquisition will keep
confidential and will not disclose to any third party any
information obtained by it from Baytron or Baytron's
representatives in connection with this Agreement except (a) that
information may be disclosed by SESI and Baytron Acquisition to
their advisors in connection with the negotiation of and the
activities conducted pursuant to this Agreement, or (b) to the
extent that such information is or becomes generally available to
the public through no act or omission of SESI or Baytron
Acquisition in violation of this Agreement.
Section 11.2 Survival of Representations, Warranties and
Agreements. The representations, warranties, covenants and
agreements in this Agreement (or in any Exhibit hereto) or in any
instrument delivered pursuant to this Agreement shall survive the
Closing and shall not be limited or affected by any investigation
by or on behalf of any party hereto.
Section 11.3 Notices. All notices hereunder must be in
writing and shall be deemed to have given upon receipt of
delivery by: (a) personal delivery to the designated individual,
(b) certified or registered mail, postage prepaid, return receipt
requested, (c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) facsimile transmission with
confirmation of receipt. All such notices must be addressed as
follows or such other address as to which any party hereto may
have notified the other in writing:
If to SESI or Baytron Acquisition, to:
1503 Engineers Road
Belle Chase, LA 70037
Attention: Terence Hall
Facsimile transmission No.: 504-393-0003
if to Baytron, to:
47 Fairfield Avenue
Gretna, LA 70056
Attention: Jim Edwards
Facsimile transmission No.
or if to the Shareholders, to:
47 Fairfield Avenue
Gretna, LA 70056
Attention: Jim Edwards
Facsimile transmission No.
Section 11.4 Headings; Gender. When a reference is made in
this Agreement to a section, exhibit or schedule, such reference
shall be to a section, exhibit or schedule of this Agreement
unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. All personal pronouns used in this Agreement shall
include the other genders, whether used in the masculine,
feminine or neuter gender, and the singular shall include the
plural and vice versa, whenever and as often as may be
appropriate.
Section 11.5 Entire Agreement; No Third Party Beneficiaries.
This Agreement (including the documents, exhibits and instruments
referred to herein) (a) constitutes the entire agreement and
supersedes all prior agreements, and understandings and
communications, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to
confer upon any person other than the parties hereto any rights
or remedies hereunder.
Section 11.6 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of
Louisiana without regard to any applicable principles of
conflicts of law.
Section 11.7 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other
parties, except that Baytron Acquisition may assign any or all of
Baytron Acquisition's rights, interests and obligations hereunder
to SESI or to any wholly owned subsidiary of SESI. Subject to
the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
Section 11.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by reason of any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected
in any adverse manner to either party. Upon such determination
that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible, and in any case such term or
provision shall be deemed amended to the extent necessary to make
it no longer invalid, illegal or unenforceable.
Section 11.9 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original
and all of which taken together shall constitute one and the same
document.
IN WITNESS WHEREOF, SESI, Baytron and the Shareholders have
caused this Agreement to be signed themselves or by their
respective duly authorized officers as of the date first written
above.
SUPERIOR ENERGY SERVICES, INC.
By: /s/ Terence Hall
Terence Hall
President
BAYTRON ACQUISITION, INC.
By: /s/ Terence Hall
Terence Hall
President
BAYTRON, INC.
By: /s/ James Edwards
James Edwards
President
/s/ James Edwards
James Edwards
/s/ Judy Edwards
Judy Edwards
Exhibit 21
SUBSIDIARIES
The following is a list of all subsidiaries of Superior Energy Services, Inc.
Company State of Incorporation
Oil Stop, Inc. Louisiana
Connection Technology, Inc. Louisiana
Superior Tubular Services, Inc. Louisiana
Superior Fishing and Rental, Inc. Texas
Ace Rental Tool, Inc. Louisiana
Dimensional Oil Field Services, Inc. Louisiana
Baytron, Inc. Louisiana
Exhibit 23.1
The Board of Directors and Shareholders
Superior Energy Services, Inc.:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus. Our report refers
to the adoption in 1995 of the methods of accounting for the impairment of
long-lived assets and for long-lived assets to be disposed of prescribed
by Statement of Financial Accounting Standards No. 121.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New Orleans, Louisiana
November 11, 1996
Exhibit 23.2
To Board of directors and Shareholders
Dimensional Oilfield Services, Inc.:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New Orleans, Louisiana
November 11, 1996
