SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 31, 1997
SUPERIOR ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20310 75-2379388
(State or other (Commission File Number) (IRS Employer
jurisdiction Identification No.)
of incorporation)
1503 Engineers Road, Belle Chasse, Louisiana 70037
(Address of principal executive offices) (Zip Code)
(504) 393-7774
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Item 2: Acquisition or Disposition of Assets
Pursuant to an Agreement and Plan of Merger dated as of May
31, 1997, by and among Superior Energy Services, Inc.
("Superior"), Tong Rentals and Supply Acquisition, Inc.
("Tong Acquisition"), Tong Rentals and Supply Company, Inc.
("Tong") and Rufus L. Patin, the sole shareholder of Tong,
Superior acquired Tong effective as of May 31, 1997. The
acquisition was accomplished by the merger of Tong with and
into Tong Acquisition, a wholly-owned subsidiary of
Superior, formed for this purpose, (the "Merger") with the
effect that Tong has become a wholly-owned subsidiary of
Superior. Upon consummation of the Merger, the outstanding
shares of common stock of Tong were converted into
rights to receive an aggregate of (i) 1,100,000 restricted
shares of Superior's authorized and unissued common stock,
and (ii) $5,500,000 cash.
Superior is not aware of any material relationships between
itself, its affiliates, directors or officers or any
associates of its directors or officers with Mr. Patin.
Tong is and following the Merger will continue to be
engaged in the business of renting power swivels, power
tongs, and related oilfield rental tools.
Item 7. Financial Statements and Exhibits
(a)Financial Statements of Businesses Acquired
It is impracticable to provide the financial statements of
Tong Rentals and Supply Company, Inc. required by this item
at the time this Current Report on Form 8-K is filed. The
required financial statements will be filed as soon as
practicable, but not later than 60 days after the date this
Current Report on Form 8-K must be filed.
(b) Pro Forma Financial Information.
It is impracticable to provide the pro forma financial
information of Tong Rentals and Supply Company, Inc.
required by this item at the time this Current Report on
Form 8-K is filed. The required pro forma financial
information will be filed as soon as practicable, but not
later than 60 days after the date this Current Report on
Form 8-K must be filed.
(c) Exhibits.
2.1.Agreement and Plan of Merger dated as of May 31, 1997,
by and among Superior Energy Services, Inc., Tong
Rentals and Supply Acquisition, Inc., Tong Rentals and
Supply Company, Inc. and Rufus L. Patin. The following
attachments are omitted from herein and will be
provided to the Commission upon request: Form of
Certificate of Merger, Form of Employment Agreement,
and Form of Disclosure Schedule.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
SUPERIOR ENERGY SERVICES, INC.
By: /s/ Robert S. Taylor
-------------------------------
Robert S. Taylor
Chief Financial Officer
and duly authorized officer
Dated: June 13, 1997
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Among
SUPERIOR ENERGY SERVICES, INC.,
TONG RENTALS AND SUPPLY ACQUISITION, INC.,
TONG RENTALS AND SUPPLY COMPANY, INC.
and
RUFUS L. PATIN
Dated as of May 31, 1997
TABLE OF CONTENTS
ARTICLE 1 THE MERGER 1
Section 1.1 Merger................................................ 1
Section 1.2 The Closing ...........................................1
Section 1.3 Filing of Certificate of Merger. ......................2
Section 1.4 The Effective Time; Effect of Merger. .................2
Section 1.5 Directors and Officers; Articles of
Incorporation.................................................2
ARTICLE 2 CONVERSION OF STOCK; PAYMENT ................................2
Section 2.1 Conversion of Shares of Tong; Payment .................2
Section 2.2 Delivery and Exchange of Certificates. ................3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF TONG AND
SHAREHOLDER........................................................3
Section 3.1 Ownership. ............................................3
Section 3.2 Authority .............................................3
Section 3.3 Noncontravention ......................................3
Section 3.4 Legal Proceedings. ....................................4
Section 3.5 Investment Representation. ............................4
Section 3.6 Organization; Qualification; Subsidiaries............. 5
Section 3.7 Capital Stock. ........................................5
Section 3.8 Corporate Authorization; Enforceability ...............5
Section 3.9 Consent . .............................................6
Section 3.10 No Conflict.......................................... 6
Section 3.11 Charter ..............................................6
Section 3.12 Tong's Financial Statements ..........................6
Section 3.13 Accounts Receivable ..................................7
Section 3.14 Absence of Certain Changes ...........................7
Section 3.15 Suppliers and Customers ..............................8
Section 3.16 Properties ...........................................9
Section 3.17 Permits; Compliance with Laws. .......................9
Section 3.18 Material Contracts. ..................................9
Section 3.19 Litigation. ..........................................9
Section 3.20 Environmental Matters ................................9
Section 3.21 ERISA and Related Matters. ..........................10
Section 3.22 Taxes. ..............................................11
Section 3.23 Transactions with Certain Persons ...................14
Section 3.24 Intellectual Property. ..............................15
Section 3.25 Insurance........................................... 15
Section 3.26 Safety and Health................................... 15
Section 3.27 Bank Accounts; Powers of Attorney ...................15
Section 3.28 Compensation Agreements .............................15
Section 3.29 Director and Officer Indemnification................ 15
Section 3.30 Documents and Written Materials..................... 16
Section 3.31 Effectiveness of Representations and Warranties......16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
OF SESI AND TONG ACQUISITION......................................16
Section 4.1 Organization......................................... 16
Section 4.2 Capitalization....................................... 16
Section 4.3 Authority; Enforceability............................ 16
Section 4.4 Consents and Approvals; Conflicts.................... 16
Section 4.5 SESI Common Stock.................................... 17
Section 4.6 SESI Disclosure...................................... 17
Section 4.7 Effectiveness of Representations and Warranties.......17
ARTICLE 5 PRE-CLOSING COVENANTS ......................................17
Section 5.1 Legal Requirements ...................................17
Section 5.2 Access to Properties and Records......................18
Section 5.3 Conduct of Business.................................. 18
Section 5.4 Public Statements.................................... 18
Section 5.5 No Solicitation...................................... 18
Section 5.6 Update Information................................... 18
ARTICLE 6 CLOSING CONDITIONS......................................... 19
Section 6.1 Conditions Applicable to all Parties................. 19
Section 6.2 Conditions to Obligations of SESI and Tong
Acquisition..................................................19
Section 6.3 Conditions to Obligations of Tong and
Shareholder..................................................20
ARTICLE 7 POST-CLOSING COVENANTS..................................... 20
Section 7.1 Registration Rights.................................. 20
ARTICLE 8 TERMINATION AND AMENDMENT.................................. 22
Section 8.1 Termination.......................................... 22
Section 8.2 Effect of Termination................................ 23
Section 8.3 Amendment............................................ 23
Section 8.4 Extension; Waiver.................................... 23
ARTICLE 9 INDEMNIFICATION; REMEDIES.................................. 23
Section 9.1 Indemnification by Shareholder....................... 23
Section 9.2 Indemnification by SESI.............................. 24
Section 9.3 Notice and Defense of Third Party Claims............. 24
Section 9.4 Survival of Representations and Warranties........... 25
ARTICLE 10 DEFINED TERMS............................................. 26
Section 10.1 Definitions......................................... 26
ARTICLE 11 MISCELLANEOUS............................................. 29
Section 11.1 Confidentiality..................................... 29
Section 11.2 Notices............................................. 29
Section 11.3 Headings; Gender.................................... 29
Section 11.4 Entire Agreement; No Third Party
Beneficiaries............................................... 29
Section 11.5 Governing Law....................................... 30
Section 11.6 Assignment.......................................... 30
Section 11.7 Severability........................................ 30
Section 11.8 Counterparts........................................ 30
Exhibits
A -Form of Certificate of Merger
B - Form of Employment Agreement
C - Form of Disclosure Schedule
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of May 31,
1997 (this "Agreement"), is by and among Superior Energy
Services, Inc., a Delaware corporation ("SESI" or "Superior"),
its wholly-owned subsidiary, Tong Rentals and Supply
Acquisition, Inc., a Louisiana corporation ("Tong
Acquisition"), Tong Rentals and Supply Company, Inc., a
Louisiana corporation ("Tong"), and Rufus L. Patin, the sole
shareholder of Tong ("Shareholder").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Tong and the Boards of
Directors of SESI and Tong Acquisition have determined it to be
desirable and mutually advantageous to enter into a business
combination to be effected by the merger of Tong with and into
Tong 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
THE MERGER
Section 1.1 Merger. At the Effective Time, in
accordance with the terms and subject to conditions of this
Agreement and the Louisiana Business Corporation Law, Tong
shall merge with and into Tong Acquisition, the separate
existence of Tong shall cease, and Tong Acquisition shall
continue as the surviving corporation.
Section 1.2 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 6 hereof, the Closing shall take place at the
offices of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P. in New Orleans, Louisiana, or such place as the
parties may agree upon, commencing at 10:00 a.m., local time,
on or before June 15, 1997. If all conditions set forth in
Section 6 hereof are satisfied or duly waived, at the Closing
(a) the certificates, agreements and instruments specified in
Section 6 shall be delivered, (b) the appropriate officer of
Tong Acquisition shall execute, deliver and acknowledge the
Certificate of Merger and the appropriate officers of Tong and
Tong 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 1.3 Filing of Certificate of Merger.
Immediately following its execution and acknowledgment, the
Certificate of Merger shall be delivered 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 1.4 The Effective Time; Effect of Merger. The
Merger shall be effective at such time and date as is provided
in the Certificate of Merger pursuant to the mutual agreement
of Tong and SESI (the "Effective Time"). Upon the Effective
Time and by virtue of the Merger, Tong Acquisition shall
possess all the rights, privileges and franchises possessed by
Tong and Tong Acquisition shall be responsible for all of the
liabilities and obligations of Tong in the same manner as if
Tong Acquisition 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 1.5 Directors and Officers; Articles of
Incorporation.
(a) After the Effective Time and until their
successors shall have been duly elected or appointed, the
directors of Tong Acquisition will be the directors of the
surviving corporation and the officers of Tong Acquisition will
be the officers of Tong.
(b) The Articles of Incorporation of Tong
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 "Tong Rentals and Supply Company, Inc."
(c) The Bylaws of Tong Acquisition as in effect
immediately prior to the Effective Time shall be the Bylaws of
the surviving corporation after the Effective Time until
thereafter duly amended.
ARTICLE 2
CONVERSION OF STOCK; PAYMENT
Section 2.1 Conversion of Shares of Tong; Payment.
(a) At the Effective Time, by reason of the Merger,
each of the issued and outstanding shares of Tong Common Stock
immediately prior to the Effective Time shall, by virtue of the
Merger, be converted into the right to receive (i) 152.46279
shares of SESI Common Stock (i.e., that number of full shares,
rounded to the nearest whole share, as shall be determined by
dividing $5,500,000 by the closing price of the SESI Common
Stock on the Nasdaq National Market on the day prior to the
Closing Date), and (ii) $762.31397 cash (i.e., $5,500,000 in
the aggregate). Each share of Tong Common Stock held in
treasury shall be canceled.
(b) At the Effective Time, by reason of the Merger,
each share of Tong Common Stock outstanding immediately prior
to the Merger shall be canceled.
Section 2.2 Delivery and Exchange of Certificates.
Following the Effective Time, Shareholder shall deliver to Tong
Acquisition all certificates formerly representing shares of
Tong Common Stock. Upon such delivery, SESI shall deliver to
Shareholder a certificate or certificates representing the
shares of SESI Common Stock into which such shares of Tong
Common Stock have been converted together with the cash payment
specified in Section 2.1(a). Until so delivered, each
certificate which, before the Effective Time, represented
shares of Tong Common Stock, shall be deemed for all purposes
to represent the number of whole shares of SESI Common Stock
into which the shares of Tong Common Stock theretofore
represented thereby shall have been converted.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF TONG AND SHAREHOLDER
Except as set forth in the Disclosure Schedule, (a)
Shareholder, with respect to matters relating to himself,
represents and warrants to and agrees with SESI as set forth as
follows in Sections 3.1 through 3.5 and (b) Tong and
Shareholder, jointly, severally and in solido, represent and
warrant to and agree with SESI as follows with respect to the
matters set forth in Sections 3.6 through 3.31:
Section 3.1 Ownership. Shareholder is, and at the Closing
Date will be, the record and beneficial owner of the number of
shares of Tong Common Stock, which are represented by the
certificates bearing the numbers, shown opposite his name in
the Disclosure Schedule. Shareholder has and at the Closing
Date 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 3.2 Authority. 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
Shareholder and constitutes, and each other agreement,
instrument or documents executed or to be executed by
Shareholder in connection with the transactions contemplated
hereby has been, or when executed will be, duly executed and
delivered by Shareholder and constitutes, or when executed and
delivered will constitute, a valid and legally binding
obligation of Shareholder, enforceable against 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 3.3 Noncontravention. The execution, delivery and
performance by Shareholder of this Agreement and the
consummation by Shareholder of the transactions contemplated
hereby do not and will not (a) result in the creation or
imposition of any Lien upon the Tong Common Stock held by
Shareholder or (b) violate any Applicable Law binding upon
Shareholder.
Section 3.4 Legal Proceedings. There are no Proceedings
pending or, to the knowledge of Shareholder threatened seeking
to restrain, prohibit or obtain damages or other relief in
connection with this Agreement or the transactions contemplated
hereby.
Section 3.5 Investment Representation.
(a) Shareholder is acquiring SESI Common Stock for
investment for his 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 SESI Common Stock
acquired by Shareholder or (ii) pursuant to an applicable
exemption under the Securities Act. In receiving SESI Common
Stock, Shareholder is not offering or selling, and will not
offer and sell, for SESI in connection with any distribution of
such SESI Common Stock, and Shareholder does not have any
contract, undertaking, agreement or arrangement with any person
for the distribution of 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) Shareholder represents that he is an "accredited
investor" as that term is defined in Regulation D under the
Securities Act and that he is able to fend for himself and can
bear the economic risk of his investment in the SESI Common
Stock.
(c) Shareholder has such knowledge and experience in
financial and business matters that he is capable of evaluating
the merits and risks of an investment in SESI Common Stock.
(d) Shareholder has received from SESI and has
reviewed with his representatives a copy of each of the SESI
Disclosure Documents. 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 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) Shareholder understands that the SESI Common
Stock acquired pursuant hereto has 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 Shareholder's representations set forth herein.
(f) Shareholder understands that the shares of SESI
Common Stock 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
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. 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. 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 one year) and other
requirements of Rule 144 have been satisfied.
(g) 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 3.6 Organization; Qualification; Subsidiaries.
Tong 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 Tong are pending. Tong 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. Tong has no
subsidiaries or equity interests in any other Person.
Section 3.7 Capital Stock. The authorized capital stock
of Tong consists of 10,000 shares of Tong Common Stock, of
which 7,214.875 shares are issued and outstanding and 430.125
are held in its treasury. Following the consummation of the
transactions contemplated by this Agreement, SESI will own all
of the issued and outstanding capital stock of Tong. All
issued and outstanding shares of Tong 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 Tong or
any security convertible into Tong Common Stock and Tong 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 Tong Common Stock have been issued in compliance with all
legal requirements and without violation of any pre-emptive or
similar rights.
Section 3.8 Corporate Authorization; Enforceability. The
execution, delivery and performance of this Agreement has been
duly authorized by the Board of Directors of Tong. Shareholder
is the sole holder of all of the outstanding shares of Tong
Common Stock. The execution of this Agreement by Shareholder
constitutes his written unanimous consent as the sole
shareholder of Tong to the Merger and to the execution,
delivery and performance by Tong of this Agreement. No further
vote or consent of shareholders or directors of Tong and no
further corporate acts or other corporate proceedings are
required of Tong for the due and valid authorization,
execution, delivery and performance of this Agreement or the
consummation of the Merger. Subject to such filings as are
required by Applicable Law, this Agreement is the legal, valid
and binding obligation of Tong and is enforceable against Tong
in accordance with its terms, except that enforcement may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and equitable principles which may limit the
availability of certain equitable remedies in certain
instances.
Section 3.9 Consent. Except for the filing of the
Certificate of Merger with the Louisiana Secretary of State, 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 Tong in connection
with the execution, delivery or performance by Tong of this
Agreement or the consummation by it of the transactions
contemplated hereby.
Section 3.10 No Conflict. Neither the execution and the
delivery of this Agreement by Tong or Shareholder, 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 Tong's properties or assets under any of the
terms, conditions or provisions of its Articles of
Incorporation 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 3.11 Charter. Shareholder has made available to
SESI accurate and complete copies of (a) the Articles of
Incorporation of Tong, (b) the stock records of Tong and (c)
the minutes of all meetings of the Board of Directors of Tong,
any committees of such board and the stockholders of Tong (and
all consents in lieu of such meetings). Such records, minutes
and consents accurately reflect the stock ownership of Tong and
all actions taken by the Board of Directors, committees and
stockholders. Tong is not in violation of any provision of its
Articles of Incorporation.
Section 3.12 Tong's Financial Statements. The Disclosure
Schedule contains true and complete copies of the Tong
Financial Statements. The Tong Financial Statements (a) have
been prepared from the books and records of Tong and are
complete, correct and in accordance with the books of account
and records of Tong and (b) accurately and fairly present
Tong's financial position as of the respective dates thereof
and results of operations and cash flows for the periods then
ended. Tong has not since the date of the Tong Interim
Financial Statements incurred any liability or obligation
(whether accrued, absolute, contingent, unliquidated or
otherwise), except (i) liabilities reflected in the Tong
Interim Financial Statements, (ii) liabilities described in the
notes accompanying the Tong Annual Financial Statements, (iii)
current liabilities which have arisen since the date of the
Tong 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 3.13 Accounts Receivable. All of the accounts
receivable reflected on the Tong Interim Financial Statements
or created thereafter have arisen only from bona fide
transactions in the ordinary course of business, represent
valid obligations owing to Tong 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 Tong Interim Financial Statements.
Section 3.14 Absence of Certain Changes. Since April 30,
1997 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 Tong. Tong has
not since April 30, 1997:
(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 Liens;
(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) except for the execution and delivery of this
Agreement, 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 $25,000 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 Tong 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;
(u) received notice or had knowledge or reason to
believe that any substantial customer of Tong has terminated or
intends to terminate its relationship with Tong;
(v) waived any right in connection with any aspect
of its business that could have a material effect on the
business of Tong; or
(w) made any agreement or commitment to do any of
the foregoing.
Section 3.15 Suppliers and Customers. To the knowledge of
Shareholder, (a) no supplier providing products, materials or
services to Tong intends to cease selling such products,
materials or services to Tong or to limit or reduce such sales
to Tong or materially alter the terms or conditions of such
sales and (b) no customer of Tong intends to terminate, limit
or reduce its or their business relations with Tong.
Section 3.16 Properties.
(a) Tong does not own, and has never owned, any real
property other than as described in the Disclosure Schedule.
Tong has good title to all material properties and assets
reflected in the Disclosure Schedule, free and clear of any
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 made available to SESI. Tong is
in full compliance with and has not received a notice of
default under any Lease and Tong 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 Tong.
(c) Except as described in the Disclosure Schedule,
there are no developments affecting any of Tong's owned or
leased properties or assets pending or threatened which could
materially detract from the value of such property or assets,
materially interfere with any present or intended use of any
such property or assets or materially adversely affect the
marketability of such properties or assets.
Section 3.17 Permits; Compliance with Laws. Tong (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 3.18 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. Tong and each other party to each Material
Contract are in compliance in all material respects with the
provisions of such Material Contract.
Section 3.19 Litigation. There are no Proceedings pending
or threatened against Tong and, to the knowledge of
Shareholder, there have been no events and there are no facts
or circumstances that could result in any Proceedings.
Section 3.20 Environmental Matters. Tong is not in
violation of any Applicable Law relating to the environment and
Tong is not a party to any proposed removal, response, remedy
or remedial action. Tong 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 Tong's leased or owned properties. The properties
currently and previously leased or owned by Tong 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. Tong has made available to SESI all internal
and external environmental audits and studies in Tong's
possession relating to the leased or owned properties of Tong
and all correspondence on substantial environmental matters
relating to the leased or owned properties of Tong.
Section 3.21 ERISA and Related Matters.
(a) The Disclosure Schedule lists each Employee Plan
that Tong maintains, administers, contributes to, or has any
contingent liability with respect thereto. Tong 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) Tong does not maintain or administer and has
never maintained or administered an Employee Plan which is or
was (i) a plan subject to Title IV of ERISA or (ii) a
Multiemployer Plan.
(c) The Disclosure Schedule identifies each Benefit
Arrangement that Tong maintains, or administers. Except as set
forth in the Disclosure Schedule, Tong has made all
contributions to and has no contingent liability with respect
to any of its Benefit Arrangements. Tong has furnished to SESI
copies or descriptions of each Benefit Arrangement. To the
knowledge of Shareholder, 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.
(d) 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. Tong 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.
(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 knowledge of Shareholder, 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 knowledge of
Shareholder, 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 knowledge of Shareholder, full payment
has been made of all amounts which Tong 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 knowledge of Shareholder, neither Tong
nor any of its shareholders, directors, officers or employers
has engaged in any transaction with respect to an Employee Plan
that could subject Tong 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 knowledge of Shareholder, Tong 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 Tong 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 Tong,
any employees or directors of Tong, or any fiduciary (as
defined in ERISA Section 3(21)) of such Employee Plan or
Benefit Arrangement.
(j) No employee or former employee of Tong 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) Tong 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 3.22 Taxes.
(a) All Returns required to be filed by or on behalf
of Tong have been duly filed on a timely basis and such Returns
(including all attached statements and schedules) are true,
complete and correct. All Taxes have been paid in full on a
timely basis, and no other Taxes are payable by Tong 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) Tong 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 Tong
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) Tong has furnished or made available to SESI
true and complete copies of: (i) all federal and state income
and franchise tax returns of Tong for all periods beginning on
or after January 1, 1994, and (ii) all tax audit reports, work
papers statements of deficiencies, closing or other agreements
received by Tong 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 Tong 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 Tong, and no notice (either formally
or informally) has been received by Tong that it has not filed
a Return or paid Taxes required to be filed or paid by it.
(iii) Tong 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 Tong.
(v) There are no requests for rulings,
subpoenas or requests for information pending with respect to
Tong.
(vi) No power of attorney has been granted by
Tong, with respect to any matter relating to Taxes.
(vii) The amount of liability for unpaid Taxes
of Tong for all periods ending on or before the Effective Time
will not, in the aggregate, exceed the amount of the current
liability accruals for Taxes (excluding reserves for deferred
Taxes), as such accruals are reflected on the balance sheet of
Tong 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) Tong 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) Tong has not issued or assumed any
indebtedness that is subject to section 279(b) of the Code.
(iii) Tong 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 Tong and no action has been taken
that would result in any income tax liability to Tong 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 Tong.
(vi) Tong 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) Tong has not disposed of any property that
has been accounted for under the installment method.
(viii) Tong is not a party to any interest rate
swap, currency swap or similar transaction.
(ix) Tong 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 Tong.
(x) Tong has not participated in any
international boycott as defined in Code Section 999.
(xi) Tong 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) Tong 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) Tong 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, 1994:
(i) All material tax elections in effect with
respect to Tong;
(ii) The net operating losses of Tong by taxable
year;
(iii)The net capital losses of Tong; and
(iv) The tax credit carry overs of Tong.
(h) (i) Neither Shareholder nor Tong has taken or
agreed to take any action that would prevent the Merger from
constituting a reorganization qualifying under the provisions
of section 368(a) of the Code.
(ii) There is no plan or intention by
Shareholder to sell, exchange or otherwise dispose of a number
of shares of SESI Common Stock to be received in the Merger
that would reduce the Shareholder's ownership of SESI Common
Stock to a number of shares having a value, as of the Effective
Time, of less than 50 percent of the value of all of the Tong
Common Stock outstanding immediately prior to the Effective
Time.
(iii) Immediately following the Effective Time,
Tong Acquisition will hold at least 90 percent of the fair
market value of the net assets of Tong and at least 70 percent
of the fair market value of the gross assets of Tong held
immediately prior thereto. For purposes of this
representation, amounts used by Tong to pay Merger expenses and
all redemptions and distributions made by Tong will be included
as assets of Tong immediately prior to the Merger.
(iv) Shareholder and Tong will each pay their
respective expenses, if any, incurred in connection with the
Merger.
(v) There is no intercorporate indebtedness
existing between Tong and SESI or between Tong and Tong
Acquisition that was issued, acquired or will be settled at a
discount.
(vi) Tong is not an investment company as
defined in Section 368(a)(3)(A) of the Code.
Section 3.23 Transactions with Certain Persons. Except
for employment relationships in the ordinary course of
business, no employee of Tong or any of their Affiliates is
presently a party to any transaction with Tong, 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 3.24 Intellectual Property. Tong either owns 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 Tong. There are no limitations contained in any
such agreements which will alter any such rights, breach any
such agreement or any third-party vendor, or require payments
of additional sums thereunder. Tong is in compliance with all
such licenses and agreements and there are no pending or, to
the knowledge of Shareholder, threatened Proceedings
challenging or questioning the validity or effectiveness of any
license or agreement relating to such property or the right of
Tong to use, copy, modify or distribute the same.
Section 3.25 Insurance. SESI has been provided access to
all insurance policies or binders which relate to Tong's
business. All premiums due under such policies and binders
have been paid or accrued for on the Tong 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 Tong and no notice of
disallowance of any claim under any insurance policy or binder,
whether or not currently in effect, has been received by Tong.
Tong has no liability for or exposure to any premium expense
for expired policies and there are no current claims by Tong
under any such policy or binder nor are there any insured
losses for which claims have not been made.
Section 3.26 Safety and Health. The property and assets
of Tong 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.
Tong 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
knowledge of Shareholder, no such investigation or inquiry is
planned or threatened.
Section 3.27 Bank Accounts; Powers of Attorney. The
Disclosure Schedule sets forth with respect to each bank
account or cash account maintained by Tong 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 3.28 Compensation Agreements. The Disclosure
Schedule lists all written employment, commission, bonus or
other compensation and consulting agreements to which Tong is a
party. Except as set forth on the Disclosure Schedule, Tong is
not a party to any written or oral employment, commission,
bonus or other compensation or consulting agreement which Tong
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 3.29 Director and Officer Indemnification. The
directors and officers of Tong are not entitled to
indemnification by Tong, 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 Tong.
Section 3.30 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 3.31 Effectiveness of Representations and
Warranties. All of the representations and warranties of Tong
and Shareholder in this Agreement shall be true in all material
respects on the Closing Date and shall be deemed to have been
made again by Tong and Shareholder on and as of the Closing
Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SESI
AND TONG ACQUISITION
SESI and Tong Acquisition represent and warrant to and
agree with Tong and Shareholder as follows:
Section 4.1 Organization. SESI and Tong Acquisition are
corporations duly organized, validly existing and in good
standing under the laws of Delaware and Louisiana,
respectively, and have all requisite corporate power and
authority to own their properties and carry on their businesses
as now being conducted.
Section 4.2 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,
19,027,867 of which are validly issued and outstanding, and
5,000,000 of preferred stock, $.01 par value, none of which are
outstanding. SESI owns all of the issued and outstanding
shares of Tong Acquisition's capital stock.
Section 4.3 Authority; Enforceability. Each of SESI and
Tong 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
transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of each of SESI and
Tong Acquisition and no other corporate proceedings on the part
of either SESI or Tong 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 Tong Acquisition and constitutes
a valid and binding obligation of each of SESI and Tong
Acquisition, enforceable against each of 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 4.4 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 either SESI or Tong Acquisition of
this Agreement or the consummation by either SESI or Tong
Acquisition of the transactions contemplated hereby. Neither
the execution and delivery of this Agreement by either SESI or
Tong 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 Tong
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 Tong Acquisition
or to which either SESI or Tong 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 either SESI or
Tong 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 either SESI or Tong Acquisition or (b)
either SESI's or Tong Acquisition's ability to consummate any
of the transactions contemplated hereby.
Section 4.5 SESI Common 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 4.6 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 4.7 Effectiveness of Representations and
Warranties. All of the representations and warranties of SESI
and Tong Acquisition 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 and Tong Acquisition on and as of
the Closing Date.
ARTICLE 5
PRE-CLOSING COVENANTS
Section 5.1 Legal Requirements. Subject to the conditions
set forth in Section 6 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 transactions contemplated by this Agreement
and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed
upon any of them. Each of SESI, Tong Acquisition, Tong and
Shareholder 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 or the taking or any
action contemplated by this Agreement.
Section 5.2 Access to Properties and Records. Until the
Closing Date, Tong and Shareholder shall allow SESI and its
authorized representatives full access, during normal business
hours and on reasonable notice, to all of Tong'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
it desires of Tong's business and assets. Tong and Shareholder
shall further use their best efforts to cause the employees,
counsel and regular independent certified public accountants of
Tong to be available upon reasonable notice to answer questions
of SESI's representatives concerning the business and affairs
of Tong, 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 Tong.
Section 5.3 Conduct of Business. From and after the date
of this Agreement and until the Closing Date, SESI and Tong
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 or disclosed
in the Disclosure Schedule, 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 5.4 Public Statements. Prior to the Closing Date,
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 5.5 No Solicitation. Shareholder and Tong will
not to prior to the Closing Date or the termination of this
Agreement pursuant to Section 8.1, (nor will they permit any of
their affiliates or any of Tong'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
Tong's business and properties or any Tong Common Stock whether
by merger, purchase of assets, purchase of stock or otherwise.
Shareholder and Tong will notify SESI promptly upon receipt of
any inquiry, offer or other communication from any third party
regarding any such activities.
Section 5.6 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 to modify, amend, or supplement the representations
and warranties of such party, unless the other party consents
to such modification, amendment, or supplement in writing.
ARTICLE 6
CLOSING CONDITIONS
Section 6.1 Conditions Applicable to all Parties. The
respective obligations of each party to consummate the
transactions contemplated by this Agreement shall be subject to
the satisfaction or, where permissible, waiver by such party of
the following conditions at or prior to the Closing Date:
(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
transactions contemplated by this Agreement, 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 transactions contemplated by
this Agreement.
(b) SESI and Tong 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 Shareholder will recognize no gain or loss for
federal income tax purposes with respect to SESI Common Stock
received by him in connection with the Merger, and that no gain
or loss for federal income tax purposes will be recognized by
SESI, Tong Acquisition or Tong as a result of the Merger.
(c) Shareholder shall have entered into the
Employment Agreement.
Section 6.2 Conditions to Obligations of SESI and Tong
Acquisition. The obligations of SESI and Tong Acquisition to
consummate the transactions contemplated by this Agreement are
subject to the satisfaction of the following conditions unless
waived by SESI and Tong Acquisition:
(a) The representations and warranties of Tong and
Shareholder 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 Tong and Shareholder 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 transactions contemplated by
this Agreement shall have been obtained. Tong and Shareholder
shall have used their best efforts to obtain all necessary
permits, authorizations, consents and approvals required by
such Governmental Entities prior to the Closing Date.
(c) SESI shall have had a full opportunity to
conduct inspections of the operating assets and books and
records of Tong. Tong shall have provided SESI certified
copies of its Articles of Incorporation 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.
(d) SESI shall have received a certificate of a duly
authorized officer of Tong, 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.
(e) Any and all changes made to the Disclosure
Schedule or to the representations and warranties of Tong and
Shareholder shall be satisfactory in all respects to SESI.
Section 6.3 Conditions to Obligations of Tong and
Shareholder. The obligations of Tong and Shareholder to
consummate the transactions contemplated by this Agreement are
subject to the satisfaction for the following conditions,
unless waived by Shareholder:
(a) The representations and warranties of SESI and
Tong 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 Tong 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) Tong and Shareholder shall have received a
certificate of a duly authorized officer of SESI and Tong
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 Tong and
Shareholder shall reasonably request.
ARTICLE 7
POST-CLOSING COVENANTS
Section 7.1 Registration Rights.
(a) Shareholder may request in writing that SESI
effect the registration under the Securities Act of all or any
part of the Registrable Shares owned by Shareholder.
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 7.1(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 Shareholder to resell
Registrable Shares pursuant to such registration statement if
SESI reasonably concludes, after consultation with Shareholder,
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) Whenever SESI proposes to file a registration
statement (other than pursuant to Section 7.1(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, give
written notice to Shareholder of its intention to do so and,
upon the written request of Shareholder 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 Shareholder 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
Shareholder; provided that SESI shall have the right to
postpone or withdraw any registration effected pursuant to this
Section 7.1(b) without obligation to Shareholder. In
connection with any offering under this Section 7.1(b)
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 Shareholder has
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.
(c) SESI will pay all the expenses incurred by SESI
in complying with this Section 7.1, 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 Shareholder's
own counsel.
(d) 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 Shareholder receives 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 7.1(a) or any registration effected
pursuant to Section 7.1(b) in which Registrable Shares are
included (except as part of such underwritten registration),
that may be requested by the underwriters managing the public
offering.
(e) 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.
(f) 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 7.1.
(g) 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 8
TERMINATION AND AMENDMENT
Section 8.1 Termination. This Agreement may be terminated
and may be abandoned at any time prior to the Closing Date:
(a) by mutual consent of SESI and Tong;
(b) by SESI or Tong, as the case may be, if (a)
there shall have been a material breach of any representation,
warranty, covenant or agreement on the part of Tong or
Shareholder or on the part of SESI or Tong Acquisition, as the
case may be, 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 transactions contemplated by this agreement
shall have become final and nonappealable; or
(c) by SESI or Tong if the transactions contemplated
by this Agreement shall not have been consummated on or before
June 15, 1997; provided, that the right to terminate this
Agreement under this Section 8.1(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 transactions contemplated by this agreement to occur on
or before such date.
Section 8.2 Effect of Termination. In the event of a
termination of this Agreement as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no
liability or obligation under any provisions hereof on the part
of SESI or Tong or their respective officers, directors or
stockholders, except (a) pursuant to the covenants and
agreements contained in Section 11.1 and this Section 8.2 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 8.3 Amendment. This Agreement may not be amended
except by an instrument in writing signed by each of the
parties hereto.
Section 8.4 Extension; Waiver. At any time prior to the
Closing Date, 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 9
INDEMNIFICATION; REMEDIES
Section 9.1 Indemnification by Shareholder. Except as
otherwise expressly provided in this Article 9, Shareholder
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 Shareholder 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 Shareholder 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 Shareholder in this Agreement
(as to which there shall be no Minimum Amount), Shareholder
shall have no liability under Section 9.1(a) unless and until
the aggregate of all Losses resulting therefrom exceeds $25,000
(the "Shareholder's Minimum Amount"), in which event
Shareholder shall be liable for all Losses in excess of
Shareholder's Minimum Amount.
Section 9.2 Indemnification by SESI. Except as otherwise
expressly provided in this Article 9, SESI shall defend,
indemnify and hold harmless to Shareholder and each of the
Shareholder's successors and assigns (Shareholder and such
persons, collectively, "Shareholder's Indemnified Persons"),
and shall reimburse Shareholder's Indemnified Persons for, from
and against all Losses imposed on or incurred by Shareholder's
Indemnified Persons, directly or indirectly, relating to,
resulting from or arising out of: (a) any inaccuracy in any
representation or warranty of SESI in this Agreement or any
certificate, document or other instrument delivered or to be
delivered pursuant hereto in any respect, whether or not
Shareholder's 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 except for a knowing and intentional breach of
any representation or warranty of SESI in this Agreement (as to
which there shall be no Minimum Amount), SESI shall have no
liability under this Section 9.2(b) 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 SESI's Minimum Amount.
Section 9.3 Notice and Defense of Third Party Claims. If
any third party demand, claim, action or proceeding shall be
brought or asserted under this Article 9 against an indemnified
party or any successor thereto (the "Indemnified Person") in
respect of which indemnity may be sought under this Article 9
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 9
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 9 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.
Section 9.4 Survival of Representations and Warranties.
(a) The obligation of Shareholder to indemnify
SESI's Indemnified Persons pursuant to Section 9.1 shall
survive the consummation of the transactions contemplated by
this Agreement, as follows:
(i) with respect to the representations and
warranties in Sections 3.1 and 3.7, indefinitely;
(ii) with respect to the representations and
warranties in Sections 3.20 and 3.22, until the expiration of
the applicable statute of limitations period; and
(iii) with respect to all other representations
and warranties of Tong and the Shareholder and any other
matters covered by Section 9.1, until the second anniversary of
the Closing Date.
(b) The obligation of SESI to indemnify
Shareholder's Indemnified Persons pursuant to Section 9.2 shall
survive the consummation of the transactions contemplated by
this Agreement, as follows:
(i) with respect to the representations and
warranties in Section 4.2, indefinitely; and
(ii) with respect to all other representations
and warranties of SESI and any other matters covered by Section
9.2, until the second anniversary of the Closing Date.
(c) The obligations of the parties for
indemnification under this Article 9 shall terminate after the
expiration of the periods indicated in subsections (a) and (b)
of this Section 9.4, except with respect to any Loss which has
been the subject of written notice to the party against whom
such claim of Loss is asserted prior to the expiration of such
period, which notice will preserve such claim until it is
liquidated or otherwise finally resolved pursuant to the
procedures set forth in Sections 9.3 and 9.4 of this Agreement.
(d) The provisions of this Article 9 shall apply to
any claim of Loss resulting or arising from any untruth or
inaccuracy of any representation or warranty of any party to
this Agreement which gives rise to an indemnity to one party
from another party or parties, with the intent that all such
claims shall be subject to the procedures, limitations and
other provisions contained in this Article 9. The
indemnification provided by Sections 9.1 and Section 9.2 shall
be the sole and exclusive remedy available to the parties
hereto for any breach or inaccuracy of any of the
representations or warranties by a party set forth in this
Agreement. Notwithstanding the foregoing, the provisions of
this Article 9 shall not be deemed to preclude an action by any
party for, or a recovery pursuant to a final decision of a
court of competent jurisdiction against any party for, actual,
and not negligent or unintentional, fraud.
ARTICLE 10
DEFINED TERMS
Section 10.1 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.
"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
Tong and Shareholder in accordance with the applicable
provisions of this Agreement.
"Effective Time" shall have the meaning ascribed to it in
Section 1.4 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.
"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 Tong is
subject having future rental payments of more than $25,000 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 Tong or its property is subject, which
provides for future payments by Tong of more than $25,000 in
the aggregate.
"Merger" means the merger of Tong with and into Tong
Acquisition pursuant to this Agreement and the Certificate of
Merger.
"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 Closing Date and, with respect to any Tax period
that includes but does not end at the Closing Date, the portion
of such period that ends at and includes the Closing Date.
"Proceedings" means any suit, action, proceeding, dispute
or claim before or investigation by any Governmental Entity.
"Registrable Shares" means SESI Common Stock issued to
Shareholder pursuant to this Agreement that cannot be sold
without restriction under Rule 145(d) under the Securities Act.
"Returns" means 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.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"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, 1996, as
amended by a Form 10-KSB/A, SESI's Quarterly Report on Form 10-
QSB for the quarter ended March 31, 1997 and any other document
filed by SESI with the Securities and Exchange Commission in
accordance with the Exchange Act prior to the Closing Date.
"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).
"Tong 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 Tong as of and for the fiscal year ended June
30, 1996.
"Tong Common Stock" shall mean the issued and outstanding
common stock, par value $5.00 per share, of Tong and owned by
Shareholder.
"Tong Financial Statements" shall mean the Tong Annual
Financial Statements and the Tong Interim Financial Statements,
collectively.
"Tong Interim Financial Statements" shall mean the
unaudited balance sheet and the related unaudited statements of
income and cash flows of Tong as of and for the ten-month
period ended April 30, 1997.
1
ARTICLE 11
MISCELLANEOUS
Section 11.1 Confidentiality. Until the Closing Date and
subsequent to the termination of this Agreement pursuant to
Section 8.1, SESI will keep confidential and will not disclose
to any third party any information obtained by it from Tong or
Shareholder's representatives in connection with this Agreement
except (a) that information may be disclosed by SESI to its
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 in violation
of this Agreement.
Section 11.2 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 Tong Acquisition, to:
1503 Engineers Road
Belle Chasse, LA 70037
Attention: Terence Hall
Facsimile transmission No.: 504-393-0003
if to Tong or Shareholder:
101 W. Saul Drive
Scott, LA 70583
Facsimile transmission No.: 318-232-3835
Section 11.3 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 11.4 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 11.5 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 11.6 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.
Section 11.7 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 11.8 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, the parties hereto 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
TONG RENTALS AND SUPPLY ACQUISITION, INC.
By: /s/ Terence Hall
--------------------------------
Terence Hall, President
TONG RENTALS AND SUPPLY COMPANY, INC.
By: /s/ Rufus L. Patin
--------------------------------
Rufus L. Patin, President
SHAREHOLDER:
/s/ Rufus L. Patin
------------------------------------
Rufus L. Patin
