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): July 31, 1997
GLOBAL INDUSTRIES, LTD.
(Exact name of registrant as specified in its charter)
LOUISIANA 2-56600 72-1212563
(State of Incorporation)(Commission File Number)(I.R.S. Employer
Identification Number)
107 GLOBAL CIRCLE
LAFAYETTE, LOUISIANA
(Address of principal executive offices)
70503
(Zip Code)
Registrant's telephone number, including area code:
(318) 989-0000
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 31, 1997, Global Industries, Ltd. ("Global")
announced that it had completed the previously announced
acquisition of certain business operations and assets of Sub Sea
International, Inc. and certain of its subsidiaries in a
transaction accounted for as a purchase. The purchase price of
$102 million was paid in cash and was funded from available cash
and borrowings under Global's existing credit line. The major
assets acquired in the transaction include three construction
barges, four liftboats and one dive support vessel based in the
United States, four support vessels based in the Middle East, and
support vessels and ROV's based in the Far East and Asia Pacific.
A copy of Global's press release announcing completion of the
acquisition is attached hereto as exhibit 99.1 and incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
At this time it is impracticable to provide the
audited historical financial statements of the business
acquired. The required information will be filed no
later than 60 days after the date that this Current
Report on Form 8-K must be filed.
(b) Pro Forma Financial Information.
At this time it is impracticable to provide the
required pro forma financial information for the
acquisition. The required information will be filed no
later than 60 days after the date that this Current
Report on Form 8-K must be filed.
(c) Exhibits.
2.1 Acquisition Agreement by and among
Global Industries, Ltd., as Purchaser, Sub Sea
International, Inc., as Seller and Dresser
Industries, Inc., as Guarantor of Seller, dated as
of June 24, 1997 (the exhibits and schedules to
Exhibit 2.1 have been omitted but Global will
furnish supplementally a copy of any omitted
exhibit or schedule to the Commission upon
request).
99.1 Press Release of Global Industries, Ltd.
Dated July 31, 1997, announcing completion of the
acquisition of assets from Sub Sea International,
Inc.
SIGNATURE
Pursuant to the requirements of Section 12 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.
Dated: August 8, 1997
GLOBAL INDUSTRIES, LTD.
By: /S/ MICHAEL J. POLLOCK
Michael J. Pollock
Vice President, Chief
Financial Officer
ACQUISITION AGREEMENT
BY AND AMONG
GLOBAL INDUSTRIES, LTD.
AS PURCHASER,
SUBSEA INTERNATIONAL, INC.
AS SELLER,
AND
DRESSER INDUSTRIES, INC.
AS GUARANTOR OF SELLER
DATED AS OF JUNE 24, 1997
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
1.1 Definitions 1
ARTICLE II PURCHASE AND SALE
2.1 Assets to be Conveyed 8
2.2 Excluded Assets 8
2.3 Purchase Price and Payment 9
2.4 Assumption of Liabilities - Completion
of Certain Contracts. 9
2.5 Instruments of Conveyance and Transfer 9
ARTICLE III CLOSING
3.1 The Closing 10
3.2 Documents to be Delivered to Purchaser 10
3.3 Documents to be Delivered to Seller 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization and Good Standing,
Ownership and Operation of the Business 11
4.2 Consents, Authorizations and Binding Effect 12
4.3 Financial Statements 12
4.4 Capitalization 13
4.5 Tax Matters. 14
4.6 Books and Records 15
4.7 Title to Assets 15
4.8 Intellectual Property 16
4.9 Contracts and Commitments 17
4.10 Licenses and Permits 18
4.11 Compliance with Law 18
4.12 Litigation 18
4.13 Employee Matters. 19
4.14 Customers and Suppliers 20
4.15 No Change in Condition 20
4.16 Potential Conflicts of Interest 22
4.17 [Intentionally Omitted] 23
4.18 Powers of Attorney and Suretyships 23
4.19 [Intentionally Omitted] 23
4.20 Solvency 23
4.21 [Intentionally Omitted 23
4.22 Brokers. 23
5.1 Organization and Good Standing of
Purchaser and Purchaser's Affiliates 23
5.2 Consents, Authorizations and Binding Effect 23
5.3 Litigation 24
5.6 Brokers. 24
ARTICLE VI COVENANTS
6.1 Conduct of the Business 24
6.2 Actions of the Parties 26
6.3 Certain Employee Matters 26
6.4 Litigation 27
6.5 Limited License 27
6.6 Acquisition Proposals 27
6.7 Protection of Value of Purchased Assets 28
6.8 Assignment of Contracts; Transfer of Purchased
Assets; Assistance in Contract Compliance 29
6.9 Taxes and Expenses 30
6.10 Access to Records After Closing Date. 30
6.11 Allocation of Purchase Price. 31
6.12 Agreement to Defend. 31
6.13 Release. 31
6.14 Dispute Assistance 31
6.15 Closing Balance Sheet 32
6.16 Payment of Liabilities 32
6.17 Delivery of Habitat 32
6.18 Indebtedness of Acquired Companies 32
6.19 Section 338(h)(10) Elections 32
6.20 Preparation and Filing of Tax Returns 32
6.21 Further Assurances 33
ARTICLE VII CONDITIONS
7.1 Conditions Precedent to Guarantors' and
Seller's Obligations 33
7.2 Conditions Precedent to Purchaser's Obligations 34
ARTICLE VIII SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
8.1 Survival of Representations 35
8.2 Indemnity 36
8.3 Notice and Participation 37
8.4 Indemnification of Negligence of Indemnitee 38
8.5 Indemnification Threshold; Maximum Losses;
Exclusive Remedy 38
8.6 Payment 38
ARTICLE IX TERMINATION
9.1 Termination 39
9.2 Effect of Termination 40
ARTICLE X MISCELLANEOUS
10.1 Waivers and Amendments 40
10.2 Notices 40
10.3 Headings 41
10.4 [Intentionally Deleted] 41
10.5 Entire Agreement 41
10.6 Severability 41
10.7 Public Announcements 41
10.8 Governing Law 41
10.9 Successors and Assigns 42
10.10 Counterparts. 42
10.11 Risk of Loss 42
10.12 Transfer of Certain Assets 42
10.13 Guarantee 42
Appendix I - List of Seller's Affiliates and Acquired Companies
Appendix II - Form of Supplemental Asset Acquisition Agreement
Appendix III - Form of Purchaser's Counsel Opinion
Appendix IV - Form of Seller's Counsel Opinion
ACQUISITION AGREEMENT
THIS AGREEMENT ("Agreement") dated as of June 24, 1997, is
made and entered into by and among GLOBAL INDUSTRIES, LTD., a
Louisiana corporation ("Purchaser"), SUBSEA INTERNATIONAL, INC. a
Delaware corporation ("Seller") and DRESSER INDUSTRIES, INC., a
Delaware corporation that beneficially owns all of the
outstanding voting stock of Seller ("Guarantor").
R E C I T A L S:
Seller and Seller's Affiliates are, among other things,
engaged in the business of providing underwater construction,
pipelay, pipebury, diving and related services in the Gulf of
Mexico (including United States' and Mexican waters), Middle East
Southeast Asia, Australia, New Zealand and Singapore excluding
ROV and engineering services and related contracts in the Gulf of
Mexico (hereinafter the "Business").
Seller desires to sell and to cause its Affiliates to sell
and Purchaser desires to purchase together with cause certain of
Purchaser's Affiliates all of the assets, tangible and intangible
(except as set forth in this Agreement) of the Business and the
Business as a going concern (including the outstanding shares of
capital stock of Subtec Middle East), upon the terms and
conditions hereinafter set forth.
It is the intention of Seller to cause each of Seller's
Affiliates listed on Appendix I to enter into a Supplemental
Asset Acquisition Agreement with Purchaser, and it is the
intention of Purchaser to enter into a Supplemental Asset
Acquisition Agreement with each such Seller's Affiliate, for the
purpose of having each such Seller's Affiliate convey any and all
of the Purchased Assets owned by such Seller's Affiliate to
Purchaser, or, at Purchaser's direction, to certain of
Purchaser's Affiliates.
NOW, THEREFORE, in consideration of the premises, the mutual
benefits to be derived from this Agreement and the
representations, warranties, covenants and conditions herein
contained, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless otherwise defined herein or unless
the context otherwise requires, capitalized terms used in this
Agreement shall have the following meanings:
"Accounts Receivable" shall mean all accounts, notes,
accounts receivable, contract rights, drafts, and other forms of
claims, demands, instruments, receivables and rights to the
payment of money or other forms of consideration, whether for
goods sold or leased, services performed or to be performed, or
otherwise, directly or indirectly owned by the Seller or Seller's
Affiliate or in which the Seller or Seller's Affiliate have any
direct or indirect interest, together with all guarantees,
security agreements and rights and interests securing the same.
"Acquired Companies" shall mean Subtec Middle East and each
of the subsidiaries of Subtec Middle East set forth in Appendix
I.
"Acquired Companies Stock" shall have the meaning ascribed
thereto in the definition of Purchased Assets.
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Entity.
"Affiliate" shall mean with respect to any Person (a)
Persons directly or indirectly controlling, controlled by, or
under common control with such Person; (b) a Person owning or
controlling 10% or more of the outstanding voting securities or
interests of such Person; or (c) an officer, director or partner
of such Person. For these purposes, control means the
possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
"Agreement List" shall have the meaning ascribed thereto in
Section 4.8 herein.
"Assumed Contracts" shall have the meaning ascribed thereto
in the definition of Purchased Assets.
"Assumed Liabilities" shall have the meaning ascribed
thereto in section 2.4 herein.
"Balance Sheet Date" shall mean February 28, 1997.
"Business" shall have the meaning ascribed thereto in the
Recitals to this Agreement.
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday other than days on which banking institutions
in the State of Texas are authorized or obligated by law or
executive order to close.
"Closing" shall mean the consummation of the transactions
between Purchaser, Guarantor and Seller contemplated hereby.
"Closing Date" shall mean the date on which the transactions
between Purchaser, Guarantor and Seller contemplated by this
Agreement shall be consummated, which shall be the third business
day following the day on which the last of the conditions to the
obligations of the parties contained in Article VII hereto is
fulfilled or waived or such other date as agreed to by the
parties hereto.
"Common Stock" shall mean the common stock, par value $.01
per share, of Purchaser.
"Effective Time" shall mean 12:01 a.m., Houston time, on the
Closing Date.
"Environmental Laws" shall mean any and all Laws, orders or
determinations of any Governmental Entity (including common law
duties established by courts or other Governmental Entities)
pertaining to pollution or the protection of human health and
safety, employee health and safety or the environment including
Laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface
water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes, in
effect on the date of this Agreement in any jurisdiction,
federal, state, local or foreign, in which the Business is
operated.
"ERISA" shall have the meaning ascribed thereto in Section
4.13(a) herein.
"Excluded Assets" shall mean (i) any assets or properties of
Seller or Seller's Affiliates not used or held for use in the
Business, (ii) capital stock or other interest in Seller's
Affiliates other than the shares of capital stock of the Acquired
Companies, (iii) the corporate charter, qualification to conduct
business, taxpayer and other identification numbers, minute books
and other corporate records and documents relating to the
organization, maintenance and existences of Seller as a
corporation, (iv) any Intellectual Property related to the name
"SubSea" and (v) any assets or properties of Seller and Seller's
Affiliates used or held for use in the Business and described in
Schedule 2.2 to Seller's Disclosure Letter.
"Expenses" shall have the meaning ascribed thereto in
Section 2.6 herein.
"Financial Statements" shall have the meaning ascribed
thereto in Section 4.3 herein.
"Finished Goods Inventories" shall have the meaning ascribed
thereto in the definition of the Purchased Assets.
"GAAP" shall mean United States generally accepted
accounting principles consistently applied by the Person to whose
accounts such principles are then to be applied.
"Governmental Entity" shall mean any court or any federal,
state, local or foreign legislative body or governmental
department, commission, board, bureau, agency or authority.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"Improvements" shall have the meaning ascribed thereto in
the definition of Purchased Assets.
"Indemnitee" shall have the meaning ascribed thereto in
Section 8.2 herein.
"Indemnitor" shall have the meaning ascribed thereto in
Section 8.2 herein.
"Intangible Assets" shall have the meaning ascribed thereto
in the definition of Purchased Assets.
"Intellectual Property" shall have the meaning ascribed
thereto in the definition of Purchased Assets.
"Interim Balance Sheet" shall mean the unaudited balance
sheet at February 28, 1997 included in the Interim Financial
Statements.
"Interim Financial Statements" shall have the meaning
ascribed thereto in Section 4.3 herein.
"Inventories" shall have the meaning ascribed thereto in the
definition of Purchased Assets.
"Known" or "Knowledge" shall mean, when used in a statement
regarding the existence or absence of facts in this Agreement
that is qualified by a phrase such as "to such Person's
knowledge" or "known to such Person," (i) information actually
known to (a) the Person in a case of an individual, or (b) in the
case of a corporation or other entity an officer or director of
such corporation or entity that controls such corporation or
entity, and (ii) information that such Persons should reasonably
be expected to have obtained as a result of their position as an
officer, director or shareholder.
"Labor Agreements" shall mean, collectively, (i) all
employment agreements, collective bargaining agreements or other
labor agreements to which Seller or Seller's Affiliates is a
party or by which Seller or Seller's Affiliates is bound; (ii)
all pension, profit sharing, deferred compensation, bonus, stock
option, stock purchase, savings, retainer, consulting,
retirement, severance, welfare or inventive plans or contracts
(including benefit plans) whether written or oral to which Seller
or Seller's Affiliates is a party or by which Seller or Seller's
Affiliates or its properties is bound; and (iii) all plans or
agreements under which "fringe benefits" (including, but not
limited to, hospitalization plans or programs, medical insurance,
vacation plans or programs, sick plans or programs and related
benefits) are afforded to any employees of the Business.
"Law" shall mean any law, statute, rule, regulation,
ordinance, requirement, announcement or other binding action or
requirement of a Governmental Entity.
"Liens" shall mean all mortgages, deeds of trust, liens,
security interests, pledges, conditional sale contracts, claims,
rights of first refusal, options, charges, liabilities,
obligations, easements, rights-of-way, limitations, reservations,
restrictions and other encumbrances of any kind.
"Losses" shall mean all damages, awards, judgments,
payments, debts, liabilities, obligations, and other losses
however suffered or characterized, all interest thereon, all
costs and expenses, including without limitation the cost of
investigation, causes of action, proceedings or arbitration
judgments, assessments and any appeal therefrom, all reasonable
attorneys' fees incurred in connection therewith, whether or not
such claim, lawsuit or arbitration is ultimately defeated and,
all amounts paid incident to any compromise or settlement of any
such claim, lawsuit or arbitration.
"Material Adverse Effect" shall mean (a) with respect to
Purchaser, Seller or the Business, any change in the business,
results of operations, financial condition or liabilities
(whether or not the result thereof would be covered by insurance)
thereof that (individually or in the aggregate) is material and
adverse to the Purchaser and its subsidiaries, taken as a whole,
Seller and Seller's Affiliates, taken as a whole, or the
Business, taken as a whole, as the case may be, or (b) with
respect to the Purchased Assets, a change in the condition or
permissible use thereof that (individually or in the aggregate)
is material and adverse to the Purchased Assets, taken as a
whole.
"Material Contract" shall mean (i) any service contract that
is reasonably expected to involve receipts of US$100,000 or more;
(ii) any supply contract that cannot be canceled at any time
without penalty other than additional expenditures thereunder not
exceeding $100,000; (iii) any Intellectual Property agreement
that is reasonably expected to involve receipts of US$100,000 or
more or that cannot be canceled at any time without penalty other
than additional expenditures thereunder not exceeding US$100,000;
(iv) any lease of Personalty that is reasonably expected to
involve payments or receipts of $100,000 or more or that cannot
be canceled at any time without penalty other than additional
expenditures thereunder not exceeding $100,000; (v) any sales
representative, foreign agent's agency or distribution agreement;
and (vi) all master service contracts.
"Material Real Property Leases" shall mean all leases of
real property to which Seller or any of Seller's Affiliates is a
party, whether as lessor or lessee.
"Other Assumed Contracts" shall mean the Assumed Contracts
to which any Seller's Affiliate is a party or by which its assets
may be bound.
"Other Purchased Assets" shall mean the Purchased Assets
owned by any of Seller's Affiliates.
"Permits" shall mean all permits, licenses, registrations,
franchises, concessions, orders, certificates, consents,
authorizations and approvals of any Governmental Entity.
"Permitted Encumbrances" shall mean (a) Liens for current
taxes and assessments not yet due and payable, including without
limitation Liens for nondelinquent ad valorem taxes, and
nondelinquent statutory Liens arising other than by reason of any
default on the part of Seller or Seller's Affiliates and (b) such
Liens on the Purchased Assets that do not in any material respect
detract from the value thereof and do not materially interfere
with the present use of the property subject thereto.
"Person" shall mean an individual, partnership, joint
venture, corporation, bank, trust, unincorporated organization or
a Governmental Entity.
"Personalty" shall have the meaning ascribed thereto in the
definition of Purchased Assets.
"Purchased Assets" shall mean all right, title and interest
in and to the assets and rights, tangible and intangible,
franchises and properties relating to or used or held for use in
connection with the Business by Seller or Seller's Affiliates,
including without limitation the following except to the extent
specifically included in Excluded Assets:
(a) The parcels of real property described on Schedule
1.1(a) to Seller's Disclosure Letter (the "Real Property")
and the outstanding capital stock of the Acquired Companies
described on Schedule 1.1(a) of Seller's Disclosure Letter
(the "Acquired Companies' Stock");
(b) All factories, warehouses, storage facilities,
laboratories, buildings, works, structures, fixtures,
landings, construction in progress, improvements,
betterments, installations and additions constructed,
erected or located on or attached or affixed to the Real
Property, together with such additions, deletions and
changes thereto as may be permitted by this Agreement prior
to the Closing Date (the "Improvements");
(c) All equipment (including without limitation all
computer equipment and hardware), machinery, tools, vessels,
vehicles and other transportation equipment, furniture,
spare and replacement parts, supplies and all other tangible
personal property of every kind and description (other than
the Improvements and Inventories), located either on the
Real Property or elsewhere, insofar as any of the foregoing
relates to the Business, including without limitation that
certain hyperberic dry-welding habitat [Whale No. 6]
currently located in Aberdeen, Scotland and those listed or
described on Schedule 1.1(c) to Seller's Disclosure Letter,
together with such additions, deletions and changes thereto
as may be permitted by this Agreement prior to the Closing
Date (the "Personalty");
(d) (i) All finished goods inventories of the
Business in existence on the Balance Sheet Date and all the
finished goods inventories which are produced in the
ordinary course of the Business between Balance Sheet Date
and the Closing Date, less all the finished goods
inventories which are sold in the ordinary course of the
Business between the Balance Sheet Date and the Closing Date
(the "Finished Goods Inventories"); and
(ii) All raw materials and work-in-process
inventories of the Business which were in existence on the
Balance Sheet Date, plus all raw materials and work-in-
process acquired or initiated in the ordinary course of the
Business during the period between the Balance Sheet Date
and the Closing Date, less all raw materials and work-in-
process used or completed during said period (the "Materials
and Work-in-Process Inventories" and, together with the
Finished Goods Inventories, the "Inventories");
(e) All (i) domestic or foreign patents, patent
applications, inventions, disclosures, trademarks, service
marks and registrations therefor, trade names, copyrights,
copyright registrations, trade secrets, knowhow, processes,
logos, proprietary computer software, proprietary
technology, slogans, research and development projects and
all other proprietary rights of any kind or character,
wherever located, which are used or being developed in
connection with the Business and the confidential
information owned by or licensed to and used by Seller or
any of Seller's Affiliates in connection with the knowhow,
processes or Purchased Assets or in the conduct of the
Business, including without limitation all that is listed
(together with the name or names of the owner or owners
thereof) on Schedule 1.1(e) to Seller's Disclosure Letter
("Intellectual Property"), and (ii) engineering, tooling
patterns, manuals, catalogs, brochures, sales literature,
promotional and other selling materials, nonproprietary
computer software, microfilm records, drawings,
specifications, nonproprietary technology, and all other
nonproprietary rights of any kind or character and wherever
located which are used or being developed in connection with
the Business (the "Intangible Assets"), together with such
additions, deletions and changes to the Intellectual
Property or Intangible Assets as may be permitted by this
Agreement prior to the Closing Date;
(f) All the (i) Material Contracts of Seller or
Seller's Affiliates related to the Business, (ii) the
Material Real Property Leases of Seller or Seller's
Affiliates related to the Business, (iii) the Intellectual
Property agreements listed in the Agreement List, (iv) the
other contracts, agreements, and arrangements related to the
Business that are listed on Schedule 1.1(f) to Seller's
Disclosure Letter, and (v) those purchase orders, personal
property leases, service and supply agreements (under which
services or supplies are provided to Seller and Seller's
Affiliates in connection with the Business) that in each
case require aggregate expenditures of less than $50,000 and
that are, except in the case of purchase orders in the
ordinary course of business, terminable at the option of
Seller or Seller's Affiliates without penalty on thirty
days' notice or less, the obligations under all of which are
to be assumed by Purchaser hereunder, together with such
additions, deletions and changes thereto as may be permitted
by this Agreement prior to the Closing Date (the "Assumed
Contracts");
(g) All books, records, accounts, correspondence,
production records, customer lists, employment records and
any other information pertaining to the Business, including
without limitation computer programs and files relating
thereto, plus copies (at Purchaser's expense) of any
applicable portions of the books and records of Seller and
Seller's Affiliates that are necessary or desirable in order
for Purchaser or Purchaser's Affiliates to conduct the
Business from and after the Closing Date in the manner in
which it is presently being conducted, all as the same may
exist on the Closing Date;
(h) All Permits relating to the Business, to the
extent transferable, including without limitation those
listed in Schedule 1.1(h) to Seller's Disclosure Letter and
characterized therein as transferable, all as the same may
exist on the Closing Date;
(i) All Accounts Receivable, prepaid rentals, other
prepaid expenses, bonds, deposits, refunds and financial
assurance requirements, and other current assets relating to
the Business, including without limitation all prepaid
expenses of the nature reflected on the Interim Balance
Sheet, all as the same may exist on the Closing Date except
prepaid insurance, insurance recoveries receivables and
Accounts Receivable from Guarantor, Seller or any of their
Affiliates;
(j) All insurance proceeds or claims therefor arising
out of any loss, damage or injury to any Purchased Assets,
all as the same may exist on the Closing Date; and
(k) The goodwill and going concern value of the
Business;
provided, however, that the Purchased Assets shall not include
the Excluded Assets or any real property or real property leases
not listed on Schedules 1.1(a) or 1.1(f) to Seller's Disclosure
Letter.
"Purchaser Documents" shall mean this Agreement and all
other agreements, instruments and certificates to be executed and
delivered by Purchaser in connection with this Agreement, all of
which shall be considered a part of this Agreement.
"Purchaser Indemnitees" shall have the meaning ascribed
thereto in Section 8.1(a) herein.
"Purchaser's Affiliates" shall mean those wholly owned
subsidiaries of Purchaser to which the Purchased Assets shall be
conveyed at the direction of Purchaser given pursuant to
Section 10.13 herein or the provisions of any Supplemental Asset
Acquisition Agreement.
"Purchaser's Disclosure Letter" shall mean a letter of even
date with this Agreement addressed by Purchaser to Seller and
setting forth information relating to Purchase's representations
and warranties contained in Article V of this Agreement.
"Real Property" shall have the meaning ascribed thereto in
the definition of Purchased Assets.
"Restricted Period" shall mean the period of 24 calendar
months following the Closing Date.
"ROV" shall mean remotely operated vehicles.
"Seller" shall mean SubSea International, Inc. a Delaware
corporation.
"Seller Documents" shall mean this Agreement and all other
agreements, instruments and certificates to be executed by the
Seller or Seller's Affiliates in connection with this Agreement,
all of which shall be considered a part of this Agreement.
"Seller Indemnitees" shall have the meaning ascribed thereto
in Section 8.1(b) herein.
"Seller's Affiliates" shall mean those Affiliates of Seller
that own any Other Purchased Assets or that conduct any part of
the Business, each of which is listed on Appendix I hereto.
"Seller's Assumed Contracts" shall mean any and all Assumed
Contracts to which Seller is a party or by which its assets are
bound.
"Seller's Disclosure Letter" shall mean a letter of even
date with this Agreement addressed by Seller to Purchaser setting
forth information regarding Seller's representations and
warranties contained in Article IV of this Agreement.
"Seller's Purchased Assets" shall mean all the Purchased
Assets owned by Seller.
"Subtec Balance Sheet" shall have the meaning ascribed
thereto in Section 4.3 herein.
"Subtec Balance Sheet Date" shall mean February 28, 1997.
"Subtec Middle East" shall mean Subtec Middle East Limited ,
a Delaware corporation and a wholly-owned subsidiary of Seller.
"Supplemental Asset Acquisition Agreement" shall mean a
Supplemental Asset Acquisition Agreement between each of Seller's
Affiliates and the Purchaser, such Supplemental Asset Acquisition
Agreement to be in form and substance substantially similar to
the form thereof attached hereto as Appendix II.
"Taxes" shall mean any federal, state, local or foreign
income, profit, franchise (including without limitation those
that are based on net worth, capitalization, income or total
assets), sales, use, transfer, real property transfer, recording,
value added, superannuation guarantee levy, fringe benefits tax,
real or personal property or other taxes, assessments, fees,
levies, duties (including without limitation customs duties and
similar charges), deductions or other charges of any nature
whatsoever (including without limitation interest and penalties)
imposed by any law, rule or regulation.
"Tax Returns" shall mean all returns and reports (including
without limitation information and withholding returns and
reports) of or relating to any Taxes.
"Third Party Claim" shall have the meaning ascribed thereto
in Section 8.2 herein.
"Trademark/Copyright List" shall have the meaning ascribed
thereto in Section 4.8(b) herein.
"Transfer Taxes" shall mean all sales, use, transfer, real
property transfer, recording, value added, customs duties and
similar taxes or charges that become due and payable prior to, on
or after the Closing Date as the result of (a) the conveyance of
the Purchased Assets by Seller or any of Seller's Affiliates to
Purchaser or Purchaser's Affiliates or (b) the expiration of any
time period on or prior to the Closing Date which results in
customs duties or similar charges, or an increase in customs
duties or similar charges, on or with respect to any of the
Purchased Assets.
ARTICLE II
PURCHASE AND SALE
2.1 Assets to be Conveyed.
(a) Subject to the terms and conditions of this
Agreement, at the Closing, Seller and Guarantor shall sell,
convey, transfer, assign and deliver to Purchaser, free and
clear of all Liens other than Permitted Encumbrances, and
Purchaser will purchase (i) all Seller's Purchased Assets
and (ii) all of the Acquired Companies indebtedness and
liabilities to, and all claims against the Acquired
Companies by, Guarantor and Seller as of the Closing Date.
(b) Guarantor and Seller agree to (i) cause each
Seller's Affiliate to execute and deliver to Purchaser, and
Purchaser agrees to execute and deliver to each such
Seller's Affiliate, not less than 10 Business Days prior to
the Closing Date, a Supplemental Asset Acquisition Agreement
providing for the sale and purchase of the Other Purchased
Assets owned by such Seller's Affiliate and (ii) cause each
of Seller's Affiliates and each Person controlled by or
under common control with Guarantor or Seller to transfer
and assign all of the Acquired Companies indebtedness and
liabilities to, and all claims by, such Persons as the same
shall exist on the Closing Date. If any such Supplemental
Asset Acquisition Agreement referenced in this paragraph has
not been so executed and delivered on or prior to such time,
this Agreement may be terminated by Purchaser in accordance
with the provisions of Section 9.1 herein.
2.2 Excluded Assets. Seller shall be obligated hereunder
to sell only the Seller's Purchased Assets and the Seller's
Affiliates shall be obligated under the Supplemental Asset
Acquisition Agreements to sell only the Other Purchased Assets
and Purchaser shall be obligated hereunder and thereunder to
purchase only the Purchased Assets. Notwithstanding anything to
the contrary contained herein, Purchaser shall not be obligated
to purchase, and Seller shall not be obligated hereunder to sell,
and none of Seller's Affiliates shall be obligated under any
Supplemental Asset Acquisition Agreement to sell, any other
assets or properties of Seller or any of Seller's Affiliates
including without limitation the Excluded Assets.
2.3 Purchase Price and Payment.
(a) The entire consideration for the Purchased Assets
(the "Purchase Price") shall be (i) One Hundred and Two
Million United States Dollars (US $102,000,000) (such sum
being herein referred to as the "Cash Portion of the
Purchase Price") and (ii) assumption of the Assumed
Liabilities by Purchaser or Purchaser's Affiliates as
provided in Section 2.4 hereof. The Purchase Price shall be
allocated in accordance with Section 6.11 herein.
(b) Subject to the terms and subject to the conditions
of this Agreement, the Cash Portion of the Purchase Price
shall be paid to Seller (i) for Seller's account and (ii)
for the accounts of Seller's Affiliates, all in accordance
with the allocation thereof determined in accordance with
the first sentence of Section 6.11 herein on the Closing
Date by wire transfer of immediately available funds to the
bank account designated in writing by the Seller on or
before the fifth Business Day prior to the Closing Date.
2.4 Assumption of Liabilities - Completion of Certain
Contracts.
(a) Subject to Section 2.4(b) below, Purchaser is not
assuming and will not assume, either hereunder or under any
Supplemental Asset Acquisition Agreement, any liabilities or
obligations whatsoever of Seller or Seller's Affiliates
whether or not relating to the Business or the Purchased
Assets. Specifically and without limiting the generality of
the foregoing, Purchaser is not assuming and will not assume
any liabilities or obligations of Seller or Seller's
Affiliates for any Taxes imposed in connection with the
transactions contemplated by this Agreement or any
Supplemental Asset Acquisition Agreement.
(b) Subject to the terms and conditions contained
herein and in each Supplemental Asset Acquisition Agreement,
Purchaser agrees to assume (i) the Assumed Contracts on the
Closing Date and, thereafter, to pay, perform and discharge
when due, or to cause an Affiliate of Purchaser to pay,
perform and discharge when due, to the extent they are
accrued for on the Interim Balance Sheet or accrued
thereafter, the obligations of Seller or any Seller's
Affiliate under the Assumed Contracts to the extent they are
listed or described on Schedule 1.1(e) to Seller's
Disclosure Letter, (ii) the accounts payable of the Business
set forth in the Interim Balance Sheet or incurred since the
date thereof in the ordinary course of business consistent
with past practice other than any amounts payable to
Guarantor, Seller or any of their Affiliates, (iii) accrued
liabilities of Subtec Middle East to the extent reflected or
reserved against on the Subtec Balance Sheet or incurred
since the date thereof in the ordinary course of business
consistent with past practice other than any amounts payable
to Guarantor, Seller or any of their Affiliates, (iv) the
accrued liabilities of the Business included on the Accrued
Expenses line of the Interim Balance Sheet other than
amounts related to third party claims for injury or damages
and amounts payable to Guarantor, Seller or any of their
Affiliates and (v) the liabilities for income Taxes of the
Business to the extent accrued on the Interim Balance Sheet
or related to periods subsequent to the Interim Balance
Sheet Date and incurred in the ordinary course of business
consistent with past practice (together (i), (ii), (iii),
(iv) and (v) shall constitute the "Assumed Liabilities") and
none other.
2.5 Instruments of Conveyance and Transfer. Seller agrees
that it will execute, acknowledge and deliver, and will cause
Seller's Affiliates to execute, acknowledge and deliver, to the
Purchaser or Purchaser's Affiliates, at the Closing, such good
and sufficient instruments of sale, conveyance, transfer and
assignment as shall be effective to vest in Purchaser or
Purchaser's Affiliates all right, title and interest of Seller
and the Seller's Affiliates in and to the Purchased Assets, all
as provided in this Agreement, and, simultaneously with such
delivery, Seller will take, and will cause Seller's Affiliates to
take, such steps as may be requisite to put the Purchaser's
Affiliates in actual possession and operating control of the
Purchased Assets. Guarantor and Seller agree that and from time
to time after the Closing, they will, at the request of the
Purchaser and without further consideration, execute and deliver,
and will cause each Seller's Affiliate to execute and deliver,
such supplemental and additional instruments of sale, conveyance,
transfer and assignment and take, and cause each Seller's
Affiliate to take, such other action as the Purchaser reasonably
may require more effectively to sell, convey, transfer and assign
to Purchaser or Purchaser's Affiliates, and to put it in
possession of, the Purchased Assets.
ARTICLE III
CLOSING
3.1 The Closing. Subject to the provisions of Article IX
hereof as to termination of this Agreement, the Closing shall
take place at the offices of Vinson & Elkins L.L.P. at 9:00 a.m.
local time on the Closing Date to be effective as of the
Effective Time.
3.2 Documents to be Delivered to Purchaser. Subject to the
terms and conditions of this Agreement, at the Closing to effect
the sale, assignment, transfer, conveyance and delivery to
Purchaser of Seller's Purchased Assets and Seller will deliver,
or cause to be delivered, to Purchaser:
(a) general indentures of conveyance, transfer and
assignment with respect to all Seller's Purchased Assets and
the indebtedness and liabilities of the Acquired Companies
to Guarantor, Seller, Seller's Affiliates or any person
controlled by or under common control with such Persons and
the claims of such Persons against the Acquired Companies;
(b) general warranty deeds, in recordable form, with
respect to all Real Property and Improvements included in
Seller's Purchased Assets;
(c) bills of sale conveying good title to all
Personalty included in Seller's Purchased Assets;
(d) certificates of title or other title documents in
recordable form conveying good title to all vehicles and
other transportation equipment included in Seller's
Purchased Assets;
(e) assignments, in recordable form where appropriate,
conveying all right, title and interest of Seller or
Seller's Affiliates in Seller's Assumed Contracts (subject
to the assumption thereof by Purchaser);
(f) assignments, in recordable form where appropriate,
conveying good title to all Intellectual Property and
Intangible Property included in Seller's Purchased Assets;
(g) stock certificates, together with stock transfer
powers, either separate from or constituting a part of such
certificates, evidencing the Acquired Companies Stock; and
(h) other documents of conveyance, sale, assignment
and transfer;
all as Purchaser may reasonably request.
In addition, Seller will, at the Closing, deliver or cause
to be delivered, to Purchaser:
(i) such releases by Guarantor, Seller and Seller's
Affiliates of all claims which they may have against or with
respect to the Business, the Purchased Assets or the
Acquired Companies as Purchaser may reasonably request;
(j) a certified copy of the resolutions of the Board
of Directors of Seller and Guarantor properly authorizing
and approving this Agreement and the transactions
contemplated hereby;
(k) all documents required pursuant to Section 7.2
herein;
(l) such other documents and instruments as are
customary under such circumstances or as may be reasonably
requested by Purchaser;
(m) possession of Seller's Purchased Assets; and
(n) resignations of each officer and director of the
Acquired Companies to the extent requested by Purchaser at
least 5 days before the Closing Date.
The assignments referenced in clause (f) above shall
include, if and to the extent applicable, all rights to claims
for damages for past infringement of any Intellectual Property,
or for any misappropriation of proprietary information relating
to the Business, with the right to sue for and collect said
damages for the benefit of Purchaser, and individual assignments
in a form and state of completed execution, including
legalization where necessary, suitable for acceptance by
individual jurisdictions other than the United States for
recording transfer of title to Purchaser shall be provided as
soon after the Closing as is reasonably possible.
3.3 Documents to be Delivered to Seller. Subject to the
terms and conditions of this Agreement, and against delivery to
Purchaser of the documents as provided herein, Purchaser shall
deliver to Seller at the Closing on the Closing Date:
(a) instruments evidencing Purchaser's agreement to
assume and perform the obligations accruing after the
Closing Date with respect to the Assumed Contracts as Seller
may reasonably request;
(b) [intentionally deleted];
(c) a certified copy of the Board of Directors
resolutions of Purchaser properly authorizing and approving
this Agreement and the transactions contemplated hereby;
(d) all documents required pursuant to Section 7.1
herein; and
(e) such other documents and instruments as are
customary under such circumstances or as may be reasonably
requested by Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to Purchaser as follows:
4.1 Organization and Good Standing, Ownership and Operation
of the Business. Guarantor, Seller and each of Seller's
Affiliates is a corporation duly incorporated, validly existing
and in good standing under the Laws of the jurisdiction of its
incorporation and is qualified to transact business and is in
good standing as a foreign corporation in the jurisdictions where
it is required to qualify or register in order to conduct the
Business as presently conducted, except where the failure to be
so qualified would not have a Material Adverse Effect on the
Business or the Purchased Assets. Seller and each of Seller's
Affiliates has the corporate power and authority to own, lease or
operate all properties and assets now owned, leased or operated
by it in connection with the Business and to carry on the
Business as now conducted by such Person. Schedule 4.1 to
Seller's Disclosure Letter sets forth the name of each Seller's
Affiliate and the ownership of each, the jurisdiction of its
incorporation, the jurisdictions in which it conducts any part of
the Business or owns any of the Other Purchased Assets and an
unaudited statement of assets thereof as of the Balance Sheet
Date. The Guarantor and Seller have conducted the Business only
through the Seller and Seller's Affiliates and no part of the
Business is operated through any entity other than Seller and
Seller's Affiliates. All of the outstanding shares of stock of
Seller are owned by Guarantor and all of outstanding shares of
stock of Seller's Affiliates are owned as set forth in
Schedule 4.1 and in each case except for such outstanding shares
there are no outstanding equity interests.
4.2 Consents, Authorizations and Binding Effect. The
Guarantor and Seller have full corporate power and authority to
execute and deliver this Agreement and carry out and perform its
undertakings and obligations as provided herein. Each of
Seller's Affiliates has full corporate power and authority to
execute and deliver the Supplemental Asset Acquisition Agreement
to which it is a party and carry out and perform its undertakings
and obligations as provided in the Supplemental Asset Acquisition
Agreement to which it is a party. This Agreement has been, and
each Supplemental Asset Acquisition Agreement when executed will
be, duly executed and delivered by each of the Guarantor and
Seller and, where applicable, Seller's Affiliate a party thereto,
and constitutes, or in the case of each Supplemental Asset
Acquisition Agreement will constitute, the legal, valid and
binding obligation of each of the Guarantor and Seller and, where
applicable, Seller's Affiliate a party thereto, enforceable
against each of the Guarantor and Seller and, where applicable,
Seller's Affiliate a party thereto, in accordance with its terms
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws affecting creditor's
rights and remedies generally and general principles of equity
(regardless of whether enforcement is sought in a proceeding at
law or equity). Except as set forth on Schedule 4.2 to Seller's
Disclosure Letter, the execution, delivery and performance of
this Agreement and when executed each Supplemental Asset
Acquisition Agreement by each of the Guarantor and Seller and,
where applicable, the Seller's Affiliate a party thereto and
consummation of the transactions contemplated hereby and thereby,
(a) have been, or in the case of each Supplemental Asset
Acquisition Agreement will be, duly and validly authorized by all
proper and requisite corporate actions; (b) will not conflict
with or breach any provision of the certificate of incorporation,
charter or bylaws or similar organizational documents of Seller
or any Seller's Affiliate; (c) will not conflict with or breach
or constitute any default under any contract, agreement or
arrangement to which the Guarantor, Seller or any Seller's
Affiliate is a party or by which the Guarantor, Seller or any
Seller's Affiliate is bound or otherwise confer upon any party a
right to terminate any such contract, agreement or arrangement;
(d) will not require any filing with, notification of or consent,
approval or authorization of any Governmental Entity or any third
Person or constitute a violation of any judgment, order or decree
of any Governmental Entity except for the filing under the HSR
Act; or (e) will not violate any Law, federal, state, foreign or
local applicable to the Guarantor, Seller or any of Seller's
Affiliates or any of their respective assets.
4.3 Financial Statements.
(a) Schedule 4.3 to Seller's Disclosure Letter sets
forth true and complete copies of (i) the unaudited
consolidated balance sheets of the Business as of October
31, 1994, 1995 and 1996, the related consolidated statements
of income and statements of cash flows for the fiscal years
then ended (including the notes thereto) (the "Annual
Financial Statements"), (ii) the unaudited consolidated
balance sheet of the Business as of February 28, 1997, the
related consolidated statements of income and cash flows for
the four months then ended (including the notes thereto) and
the consolidating statements related thereto (the "Interim
Financial Statements") and (iii) the unaudited balance sheet
of Subtec Middle East as of February 28, 1997 (the "Subtec
Balance Sheet," and together with the Annual Financial
Statements and the Interim Financial Statements, the
"Financial Statements"). The Financial Statements (i) were
prepared in accordance with the books and records of the
Seller and Seller's Affiliates (ii) were prepared in
accordance with GAAP (subject, in the case of the Interim
Financial Statements and the Subtec Balance Sheet to normal
non-recurring year-end audit adjustments on a basis
comparable with past periods the effect of which will not in
the aggregate be material) except that such financial
statements do not include the footnotes required by GAAP;
and (iii) fairly present the consolidated financial
condition and the results of its operations as of the
relevant dates thereof and for the periods covered thereby
for the Business or in the case of the Subtec Balance Sheet,
the consolidated position of Subtec Middle East.
(b) All Accounts Receivable are reflected properly on
the books and records, are valid receivables subject to no
setoffs or counterclaims, are current and collectible, and
will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts
set forth on the face of the Interim Financial Statements as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the
Business.
(c) Except for (i) those liabilities specifically
reflected or reserved against on the Subtec Balance Sheet
Date, and (ii) those current liabilities for trade or
business obligations incurred since the Subtec Balance Sheet
Date in connection with the purchase of goods or services in
the ordinary course of the Business and consistent with past
practices (none of which is, individually or in the
aggregate, material and none of which is for breach of
contract, breach of warranty, tort or infringement) the
Acquired Companies do not have, as of the date hereof, any
direct or indirect indebtedness, liabilities, claims,
losses, damages, deficiencies, obligations or
responsibilities, liquidated or unliquidated, accrued,
absolute, contingent or otherwise, and whether or not of a
kind required by GAAP to be set forth on a financial
statement. The Seller has no Knowledge of any
circumstances, conditions, events or arrangements which may
hereafter give rise to any liabilities or obligations of the
Acquired Companies not fully reflected or accrued for in the
Subtec Balance Sheet.
(d) Schedule 4.3(d) to Seller's Disclosure Letter sets
forth a complete and accurate schedule of the Accounts
Receivable as of the Interim Balance Sheet Date, as
reflected in the Interim Balance Sheet, together with an
accurate aging of the same. Schedule 4.3(d) to Seller's
Disclosure Letter sets forth a true and correct aged list of
all accounts payable as of the Interim Balance Sheet Date in
excess of US$10,000.00 in the aggregate to any one payee.
4.4 Capitalization. The authorized, issued and outstanding
shares of capital stock of each of the Acquired Companies is as
set forth in Schedule 4.4 to Seller's Disclosure Letter and the
shares are owned of record, legally and beneficially by the
Persons as set forth in such schedule. All such shares of the
Acquired Companies are duly authorized, validly issued and
outstanding, fully paid and nonassessable, were not issued in
violation of any preemptive rights and, except for such
outstanding shares, there are no shares or other securities or
other equity interests outstanding. Except as indicated in
Schedule 4.4 to Seller's Disclosure Letter:
(a) there are no outstanding subscriptions, warrants,
options, rights, calls or commitments of any
character relating to or entitling any person to
purchase or otherwise acquire any capital stock
(including the Stock) or other securities or other
equity interests of the Acquired Companies;
(b) there are no outstanding obligations or securities
convertible into or exchangeable for shares of any
capital stock (including the Stock) or other
securities or other equity interests of the
Acquired Companies or any commitments of any
character relating to or entitling any person to
purchase or otherwise acquire any such obligations
or securities;
(c) there are no other commitments of any kind or type
for the issuance of any capital stock (including
the Stock) or other securities or other equity
interests of the Acquired Companies;
(d) there is no outstanding agreement to register (i)
any outstanding capital stock (including the
Stock) or other securities or other equity
interests of the Acquired Companies or (ii) any of
the Acquired Companies for public trading or sale
under the securities Laws of any jurisdiction; and
(e) there are no agreements or understandings between
or among any Persons which affect or relate to the
voting or giving of written consents with respect
to any outstanding capital stock (including the
Stock) or other securities or other equity
interests of the Acquired Companies.
4.5 Tax Matters.
Except as set forth in Schedule 4.5(a) to Seller's
Disclosure Letter and except for matters which, in the aggregate
would not have a Material Adverse Effect on the Business or the
Purchased Assets:
(a) all returns and reports of or with respect to any
Tax that are required to be filed by or with respect to the
Seller and Seller's Affiliates (including each of the
Acquired Companies) ("Tax Returns") on or before the Closing
Date have been or will be timely filed, (i) all items of
income, gain, loss, deduction or credit ("Tax Items")
required to be included in such Tax Returns have been or
will be properly included, (ii) all Taxes required to be
paid with respect to the periods covered by such Tax Returns
have been or will be timely paid in full, (iii) all
withholding Tax requirements imposed on or with respect to
the Seller and Seller's Affiliates for the periods through
the Closing Date have been or will be satisfied in full in
all respects and (iv) no penalty, interest or other charge
is or will become due with respect to the late filing of any
such Tax Return or late payment of any such Tax.
(b) all income, gross receipts, ad valorem,
production, severance, excise, sales, use and similar Taxes
and assessments based upon, measured by, or arising by
reason of the ownership of the Business or the Purchased
Assets or sales resulting from the productive use of such
Business or Purchased Assets which have become due and
payable have ben duly and timely paid, all applicable Tax
Returns relating to the Business or Purchased Assets have
been duly and timely filed, and there is no claim pending or
threatened by any applicable taxing authority in connection
with any such Taxes. There are no liens for Taxes upon the
Business or Purchased Assets except for any liens relating
to current Taxes not yet due.
(c) There is no claim against any of the Acquired
Companies, the Business or the Purchased Assets for any
Taxes, and no assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or
with respect to any of the Acquired Companies, the Business
or the Purchased Assets.
(d) There is not in force any extension of time with
respect to the due date for the filing of any Tax Return of
or with respect to any of the Acquired Companies, the
Business or the Purchased Assets or any waiver or agreement
for any extension of time for the assessment or payment of
any Tax of or with respect to any of the Acquired Companies,
the Business or the Purchased Assets.
(e) None of the Acquired Companies is a party to any
Tax allocation or sharing agreement or arrangement and no
payments are due or will become due by any of the Acquired
Companies pursuant to any such agreement or arrangement.
(f) None of the property of any of the Acquired
Companies is subject to a safe-harbor lease (pursuant to
section 168(f)(8) of the Internal Revenue Code of 1954 as in
effect after the Economic Recovery Tax Act of 1981 and
before the Tax Reform Act of 1986) or is "tax-exempt use
property" (within the meaning of section 168(h) of the Code)
or "tax-exempt bond financed property" (within the meaning
of section 168(g)(5) of the Code).
(g) None of the Acquired Companies will be required to
include any amount in income for any taxable period
beginning after December 31, 1996 as a result of a change of
accounting method for any taxable period ending on or before
the Closing Date or pursuant to any agreement with any Tax
authority with respect to any such taxable period.
(h) None of the Acquired Companies has consented to
have the provisions of section 341(f)(2) of the Code apply
with respect to a sale of its stock.
4.6 Books and Records. The books, records and accounts of
Seller and Seller's Affiliates with respect to the Business and
the Purchased Assets are complete and correct in all material
respects, and accurately and fairly reflect the transactions
relating to the Business as set forth therein.
4.7 Title to Assets.
(a) Quality of Title. (i) Seller or Seller's
Affiliates have good and indefeasible title to all the Real
Property, the Improvements, and the leasehold estates
created under the Material Real Property Leases and hold
good and marketable title to the Acquired Companies Stock
and the Personalty and all other personal property, tangible
and intangible, constituting the Purchased Assets, in each
case free and clear of all Liens other than Permitted
Encumbrances. All of the Purchased Assets are owned legally
and beneficially by Seller or Seller's Affiliates. There
are no material condemnation or rezoning proceedings
pending, or to the Knowledge of the Guarantors or Seller,
threatened, against or relating to any of the Real Property,
no material limited term zoning variances relating thereto
and there are no tenants or occupants of any thereof having
any rights of occupancy as against the Seller or Seller's
Affiliates.
(b) IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT SELLER
HAS NOT MADE AND WILL NOT BE DEEMED TO HAVE MADE HEREIN ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, REGARDING
THE FITNESS, FITNESS FOR A PARTICULAR PURPOSE, OR THE
MERCHANTABILITY OF THE PURCHASED ASSETS, AND THAT PURCHASER
IS BUYING THE PURCHASED ASSETS "AS-IS" AND "WHERE-IS" EXCEPT
TO THE EXTENT EXPRESSLY SET FORTH HEREIN AND IN THE
SUPPLEMENTAL ASSET ACQUISITION AGREEMENTS. PURCHASER
ACKNOWLEDGES THAT NO WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE ARE MADE OR IMPLIED IN
THE TRANSACTIONS CONTEMPLATED HEREIN OR IN THE SUPPLEMENTAL
ASSET ACQUISITION AGREEMENTS.
(c) Inventories. All Inventories in existence as of
the Balance Sheet Date (and with respect to the Inventories
of Subtec Middle East in existence on the Subtec Balance
Sheet Date), including costs thereof determined in
accordance with GAAP, are described on Schedule 1.1(c) to
Seller's Disclosure Letter. The Finished Goods Inventories
(less any financial statement reserves established with
respect to obsolete or defective Inventories) consist of
items that are saleable or usable in the ordinary course of
the Business, are not obsolete or defective and are valued
and carried on the books and records of Seller and Seller's
Affiliates in accordance with GAAP, and the Materials and
Work-in-Process Inventories (less any financial statement
reserves established with respect to obsolete or defective
Inventories) are not obsolete or defective and are carried
on the books and records of Seller and Seller's Affiliates
in accordance with GAAP. Since the Balance Sheet Date (and
with respect to the Inventories of Subtec Middle East in
existence on the Subtec Balance Sheet Date), there has been
no material change in the Inventories, except for changes in
the ordinary course of the Business.
(d) Assets Complete. Except for the vessel named
"Mayo" and the DMAC tool, the Purchased Assets, taken
together with the Excluded Assets and assets disposed of in
the ordinary course of business consistent with past
practice constitute all the assets, rights and properties
that were used for the conduct of the Business as conducted
during the twelve months prior to the date hereof and as now
conducted by Seller and Seller's Affiliates.
4.8 Intellectual Property. Schedule 1.1(e) to Seller's
Disclosure Letter contains:
(a) A listing and identification of all unexpired U.S.
and foreign patents, pending patent applications and
currently active identified inventions which are owned by
Seller or Seller's Affiliates and which are applicable to,
or otherwise used in connection with, the Business or the
Purchased Assets (the "Patent List");
(b) A listing of all trademarks, service marks,
registrations and pending applications for registrations of
marks, trade names and registered copyrights which are owned
by Guarantor, Seller or any Affiliate of Seller and which
are applicable to or otherwise used in connection with the
Business or the Purchased Assets (the "Trademark/Copyright
List");
(c) A listing of all agreements relating in any way to
the Business or the Purchased Assets or the Intellectual
Property to which Seller or any Affiliate of Seller is a
party (i) under which royalties presently are payable or may
in the future become payable by or to Seller or any
Affiliate of Seller, (ii) which concern rights to patents,
technology, processes or proprietary information of any
Person relating to the Business or the Purchased Assets or
(iii) which in any other way affect ownership, use or
disclosure of intellectual property or technology material
in any way to the Business or the Purchased Assets (the
"Agreement List");
(d) Except as disclosed on Schedule 4.8 to Seller's
Disclosure Letter:
(i) Seller or one of Seller's Affiliates is the
record and beneficial owner of, and has good title,
free of any Liens other than Permitted Encumbrances, to
all of the items on the Patent List and the
Trademark/Copyright List;
(ii) To the Knowledge of Seller, no Person has
asserted that either Seller or any Affiliate of Seller
is infringing or has infringed within the three (3)
years prior to the date hereof, any foreign or domestic
patent, trademark, service mark, tradename, or
copyright, or has misappropriated or improperly used or
disclosed any trade secret, confidential information or
knowhow in connection with the Business or the
Purchased Assets;
(iii) To the Knowledge of Seller, no Person is
infringing or has infringed, within the three (3) years
prior to the date hereof, any item on the Patent List
and the Trademark/Copyright List, or has
misappropriated or improperly disclosed any trade
secret, confidential information or knowhow related to
the Business, the Purchased Assets;
(iv) To the Knowledge of Seller, no operations of
Seller or Seller's Affiliates relating to the Business
or the Purchased Assets is infringing, or has infringed
within the three (3) years prior to the date hereof,
any foreign or domestic patent, trademark, service
mark, tradename or copyright of any Person, or was
involved in any misappropriation or improper use or
disclosure of any trade secret, confidential
information or knowhow of any Person;
(v) All necessary working requirements, all
proofs of use, renewals and all fees, annuities and
other payments which are due on or before the date of
this Agreement for all items in the Patent List and the
Trademark/Copyright List have been met or paid; and
(vi) None of the items in the Patent List and the
Trademark/Copyright List is the subject of any pending
interference, re-examination, opposition, cancellation
or other protest proceeding.
4.9 Contracts and Commitments. All Material Contracts and
all Material Real Property Leases are set forth on Schedules
1.1(e) and 1.1(f) to Seller's Disclosure Letter and true and
correct copies thereof have been provided to Purchaser. All the
Assumed Contracts are valid, binding and in full force and
effect, have not been amended or supplemented in any material
manner or respect except as disclosed on Schedule 4.9 to Seller's
Disclosure Letter, and upon assignment and assumption, with
applicable consents if necessary, will be enforceable by
Purchaser in accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws affecting creditor's
rights and remedies generally and general principles of equity
(regardless of whether enforcement is sought in a proceeding at
law or equity). There are no defaults by Seller or any Seller's
Affiliate under any Material Contract or Material Real Property
Lease, and there are no defaults by Seller or any Seller's
Affiliate, under any Other Assumed Contract, and, to Seller's
Knowledge, (a) there are no defaults under any Assumed Contract
by any other party thereto and (b) no events have occurred that
with the lapse of time or action or inaction by any party thereto
would result in any violations thereof or any defaults
thereunder. Except as disclosed in Schedule 4.9 to Seller's
Disclosure Letter, the Assumed Contracts may be assigned to
Purchaser without any authorization, consent, approval,
permission or license of, or filing with, any other Person. The
Business and the Purchased Assets are managed and operated by the
management and employees of Seller and Seller's Affiliates and
are not subject to any contract, agreement or arrangement,
written or oral, that (i) purports to transfer all right or
obligation to manage or operate the Business and the Purchased
Assets to any third Person or (ii) restricts the management or
operations of the Business geographically or territorially.
Except as contemplated with the Purchaser under the terms of this
Agreement, neither the Guarantor, the Seller nor any of the
Seller's Affiliates are bound under or a party to any contract or
other agreement (I) regarding the consolidation or merger of any
of the Seller or Seller's Affiliates with or into any such Person
or Persons, (II) regarding the sale, conveyance or disposition of
all or substantially all or a large portion of the assets of any
of the Seller or Seller's Affiliates or a transaction or series
of related transactions in which any voting securities of any of
the Seller or Seller's Affiliates would be issued, transferred or
disposed of, or (III) regarding any other form of acquisition,
liquidation, dissolution or winding up of any of the Seller or
Seller's Affiliates. Seller and Seller's Affiliates enjoy
peaceful and undisturbed possession under all real property
leases included in the Assumed Contracts. Schedule 1.1(f) to
Seller' Disclosure Letter lists, as of the date hereof, all bid
bonds and performance bonds relating to the Business.
4.10 Licenses and Permits. The Permits listed in
Schedule 4.10 to Seller's Disclosure Letter constitute all the
Permits held by Seller and Seller's Affiliates and except as set
forth in Schedule 4.10 to Seller's Disclosure Letter constitute
all material Permits necessary under Law, including Environmental
Laws or otherwise for Seller and Seller's Affiliates to conduct
the Business as now being conducted and to own, operate, maintain
and use the Purchased Assets in the manner in which they are now,
and during the preceding twelve months have been, operated,
maintained and used. Each of such Permits and the rights of
Seller or Seller's Affiliates with respect thereto are valid and
subsisting, in full force and effect and enforceable by Seller or
Seller's Affiliates. Seller or Seller's Affiliates (depending on
the holder thereof) is now and has at all times in the past three
years been in compliance in all material respects with the terms
of such Permits. None of such Permits has been or, to the
Knowledge of Guarantor or Seller, is threatened to be revoked,
canceled, suspended or modified.
4.11 Compliance with Law.
(a) Seller and Seller's Affiliates have in all
material respects complied with, and are now in compliance
with, all Laws, federal, state, local or foreign, and any
rules or regulations or any orders, writs, injunctions and
decrees of any Governmental Entity to which it may be
subject which violation might have a Material Adverse Effect
on the Business or the Purchased Assets, including without
limitation, Environmental Laws, the Foreign Corrupt
Practices Act and the Export Administration Act and the
rules and regulations promulgated thereunder. To the
Knowledge of the Seller, neither Seller nor any of Seller's
Affiliates, nor any officer, employee or agent thereof has
any agreement, arrangement or understanding (whether written
or oral) to make any payment, contribution or gift to a
Governmental Entity or third Person that would, if
applicable to such Person, constitute a violation of the
Foreign Corrupt Practices Act or any applicable Law nor is
any Material Contract or Permit or the revenues of the
Business dependent on any such payment, contribution or
gift. Neither the Seller, Seller's Affiliates, nor
Guarantor is a "national" of a "designated foreign country'`
(or a Person defined as a "designated foreign country")
within the definitions in the Foreign, Cuban or Iranian
Assets Control Regulations of the United States Treasury
Department, 31 CFR, Subtitle B, Chapter V, as amended, or
any regulation or ruling issued thereunder.
(b) Except as disclosed on Schedule 4.11 to Seller's
Disclosure Letter (i) there is no physical condition
existing on any property now or previously owned or operated
by Seller or any of the Seller's Affiliates in connection
with the Business (nor are there any physical conditions
existing on any other property that may have been impacted
by the operations of Seller or any of the Seller's
Affiliates in connection with the Business) and (ii) Seller
and Seller's Affiliates have not handled or disposed of any
substance, arranged for disposal of any substance, exposed
any employee or other person to any substance or condition
or operated any facility in any manner in the case of clause
(i) or (ii) which could give rise to any remedial obligation
under Environmental Laws or which could result in any
liability to any third Person claiming damage to Persons,
property or natural resources as a result of the
consequences of said physical conditions.
4.12 Litigation. (a) Except as described in Schedule 4.12
to Seller's Disclosure Letter, there is no Action pending or, to
the Knowledge of Seller, threatened by or against Seller or any
of Seller's Affiliates which relates to the Business or the
Purchased Assets and, (b) no such Action if determined adversely
to the interest of Seller or any Seller's Affiliate, would have a
Material Adverse Effect on the Business or the Purchased Assets.
Neither Seller nor any of Seller's Affiliates is subject to any
outstanding order, writ, injunction or decree that would have a
Material Adverse Effect on the Business or the Purchased Assets
or would prevent or delay in any material respect the
consummation of the transactions contemplated hereby.
4.13 Employee Matters.
(a) Employee Benefit Plans. With respect to any Labor
Agreement or other employee benefit plan or program within
the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which is
subject to ERISA and which is or has been sponsored,
maintained or contributed to within two years prior to the
Closing Date, by Seller, Seller's Affiliates or any
corporation, trade, business or entity under common control
with Seller and Seller's Affiliates within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001
of ERISA ("Commonly Controlled Entity") (i) no withdrawal
liability, within the meaning of Section 4201 of ERISA, has
been incurred, which withdrawal liability has not been
satisfied, (ii) no liability to the Pension Benefit Guaranty
Corporation has been incurred by Seller or any Commonly
Controlled Entity, which liability has not been satisfied,
(iii) no accumulated funding deficiency, whether or not
waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code has been incurred and (iv) all
contributions (including installments) to such plan required
by Section 302 of ERISA and Section 412 of the Code have
been timely made. With respect to any employee benefit plan
or program which is maintained for the benefit of the
current or former employees of the Business, (1) such plan
or program has been funded, operated and maintained in
compliance with all Laws applicable thereto and the
requirements of such plan or program's governing documents
and (2) no liability exists with respect to such plan or
program which has given rise to, or could give rise to, a
Lien on any Purchased Asset. Schedule 4.13(a) to Seller's
Disclosure Letter provides a description of each of the
following which is sponsored, maintained or contributed to
by any of the Seller, Seller's Affiliates or any Commonly
Controlled Entity for the benefit of the current or former
employees of the Business or which has been so sponsored,
maintained or contributed to within two years prior to the
Closing Date:
(A) each "employee benefit plan," as such term is
defined in Section 3(3) of ERISA (including, but not
limited to, employee benefit plans, such as foreign
plans, which are not subject to the provisions of
ERISA) ("Plan");
(B) each personnel policy, stock option plan,
collective bargaining agreement, bonus plan or
arrangement, incentive award plan or arrangement,
vacation policy, severance pay plan, policy or
agreement, deferred compensation agreement or
arrangement, executive compensation or supplemental
income arrangement, consulting agreement, employment
agreement and each other employee benefit plan,
agreement, arrangement, program, practice or
understanding which is not described in Section 4.13(a)
("Benefit Program or Agreement").
True, correct and complete copies of each of the Plans and
Benefits Programs or Agreements, and related trusts, if
applicable, including all amendments thereto, have been furnished
to Purchaser.
(b) Employee Relations.
(i) Except as set forth in Schedule 4.13(b) to
Seller's Disclosure Letter, there exists no Labor
Agreement or other labor union contract or industrial
award or determination applicable to any employee of
the Business. Since January 1, 1994, no such agreement
or contract has been requested by any employee or group
of employees of the Business, and there has not been
any discussion with respect thereto by management of
Seller or any of Seller's Affiliates with any employees
of the Business. Since January 1, 1994, there has not
been any strike, work stoppage, organizational
campaign, recognition, demand or labor trouble relating
to the employees of the Business.
(ii) Schedule 4.13(b) to Seller's Disclosure
Letter also sets forth a true and complete schedule
listing the names, total annual compensation, total
accrued vacation and other benefits of each person
employed by any of the Seller or Seller's Affiliates in
the Business presently receiving compensation
aggregating in excess of US$25,000 per year.
(iii) Except as disclosed in Schedule
4.13(b) to Seller's Disclosure Letter: (x) the
employment of each employee of the Seller and Seller's
Affiliates in the Business may be terminated at any
time by the Seller or Seller's Affiliate, and (y) to
the knowledge of the Seller, no key employee of the
Seller or Seller's Affiliates and no group of employees
of the Seller or Seller's Affiliates in the Business
has plans to terminate his, her or its employment at,
prior or subsequent to the Closing, whether or not as a
result of the transactions contemplated herein.
(iv) Except as disclosed in Schedule 4.13(b)
to Seller's Disclosure Letter, each of the Seller and
Seller's Affiliates has complied in all material
respects with all Labor Agreements and all applicable
Laws relating to the employment of labor, including
those related to wages, hours, collective bargaining,
payment of Superannuation and the payment and
withholding of Taxes and other sums as required by
appropriate Governmental Entities and has withheld and
paid to the appropriate Governmental Entity or is
holding for payment not yet due to such Governmental
Entity, all amounts required to be withheld from such
employees of the Business and is not liable for any
arrears of wages, Taxes, penalties or other sums for
failure to comply with any of the foregoing. No
present or former employee, officer or director has, or
will have at the Effective Time, any claim against the
Seller or Seller's Affiliates for any matter, including
but not limited to (a) overtime pay for work done
through the Effective Time; (B) wages or salary for the
work done through the Effective Time; (C) vacation time
off or pay in lieu of vacation time off for the period
through the Effective Time; (D) any violation of any
statute, ordinance or regulation relating to minimum
wages or maximum hours, workplace conditions, or any
other matter; or (E) injuries or other damages which
are not fully covered by insurance policies.
4.14 Customers and Suppliers. Except to the extent set
forth in Schedule 4.14 to Seller's Disclosure Letter, Seller and
the Seller's Affiliates have not had any customer that accounted
for more than ten percent (10%) of their combined sales relating
to the Business during any calendar year since January 1, 1994,
or any supplier from which they purchased more than fifty percent
(50%) of their combined requirements for that category of goods
or services relating to the Business during such period.
Schedule 4.14 to Seller's Disclosure Letter includes a correct
and current list of all customers of the Businesses who purchased
more than US$100,000 of products or services from the Company
during the year ended December 31, 1996. Since January 1, 1996,
there has not been any material adverse change in the
relationship or course of dealing between Seller (or any of the
Seller's Affiliates) and any of their ten largest suppliers by
dollar amount of orders placed during the period and ten largest
customers by dollar amount of revenues received that supply goods
or services to Seller (or the Seller's Affiliates) or purchase
goods or services from Seller (or the Seller's Affiliates) during
such period, in each case in connection with the Business.
4.15 No Change in Condition. Since the Balance Sheet Date,
there has not been any Material Adverse Effect on the Business
and except as listed on Schedule 4.15 to Sellers' Disclosure
Letter or as otherwise provided for or disclosed in this
Agreement, Seller and Seller's Affiliates have conducted the
Business only in the ordinary course consistent with past
practice and Seller and Seller's Affiliates have not directly or
indirectly with respect to the Business:
(a) made any material additions or deletions to the
assets or properties reflected on the Interim Balance Sheet,
including without limitation any deletions consisting of the
establishment of reserves for obsolete or defective
inventories;
(b) entered into any Material Real Property Lease or
Material Contract, or amended or (except through
performance) terminated any Material Real Property Lease,
Material Contract, License or Permit or received any notice
of termination of any of the same;
(c) incurred any obligation or liability or taken
property subject to any liability, whether absolute,
accrued, contingent or otherwise and whether due or to
become due, except current liabilities for trade or business
obligations incurred since the Balance Sheet Date in
connection with the purchase of goods or services in the
ordinary course of the Business and consistent with prior
practices, none of which liabilities, in any event, involved
a potential liability in excess of US$100,000 individually,
or US$500,000 in the aggregate;
(d) discharged or satisfied any Lien other than those
then required to be discharged or satisfied, or paid any
obligation or liability, whether absolute, accrued,
contingent or otherwise, and whether due or to become due,
other than current liabilities shown on the Interim Balance
Sheet and current liabilities incurred since the Balance
Sheet Date in connection with the purchase of goods or
services in the ordinary course of the Business and
consistent with prior practices;
(e) mortgaged, pledged or subjected to any Lien any of
its property or assets, tangible or intangible;
(f) sold, transferred, leased to others or otherwise
disposed of any of its assets, tangible or intangible,
except assets of the kind and nature included in the
Excluded Assets;
(g) made any capital expenditures or capital additions
or betterments in excess of an aggregate of US$100,000 or
entered into any lease of capital equipment or property
under which the annual lease charges exceed US$100,000 in
the aggregate or the term exceeds two years;
(h) except out of the Excluded Assets after the date
hereof, declared or made any payment of dividends or other
distribution to its shareholders or upon or in respect of
any shares of its capital stock, or purchased, retired or
redeemed, or obligated themselves to purchase, retire or
redeem, any of their shares of capital stock or other
securities;
(i) issued or sold any shares of capital stock or
other securities of any of the Acquired Companies or issued,
granted or sold any options, rights or warrants with respect
thereto, or acquired any capital stock or other securities
of any Person or any interest in any business enterprise, or
otherwise made any loan or advance to or investment in any
Person;
(j) encountered any labor union organizing activity,
suffered any actual or threatened employee strikes, work
stoppages, slow-downs or lock-outs, or any material change
in its relations with its employees, agents, customers or
suppliers or suffered any actual or threatened wrongful
discharge or other unlawful labor practice action or
proceeding;
(k) made any change in the rate of compensation,
commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay,
conditionally or otherwise, any bonus, extra compensation,
pension or severance or vacation pay, to any shareholders,
director, officer, employee, salesman, distributor or agent,
except ordinary merit increases to nonofficer personnel in
accordance with past practices;
(l) instituted, settled or agreed to settle any Action
before any Governmental Entity relating to Seller or
Seller's Affiliates or their property or suffered any actual
or threatened Action before any Governmental Entity relating
to the Seller or Seller's Affiliates or their property;
(m) transferred or granted any rights under, or
entered into any settlement regarding the breach or
infringement of, any United States or foreign license,
patent, copyright, trademark trade name, invention or
similar rights, or modified any existing rights with respect
thereto;
(n) loaned any monies to any Person or guaranteed any
obligations of any Person;
(o) made any change in its selling, pricing,
advertising or personnel practices inconsistent with prior
practices and prudent business practices prevailing in the
industry;
(p) changed its accounting methods or practices
(including, without limitation, any change in depreciation
or amortization policies or rates) or revalued any of its
assets;
(q) entered into any transaction, contract or
commitment other than in the ordinary course of the Business
and consistent with prior practices or paid or agreed to pay
any legal, accounting, brokerage, finder's fee, taxes or
other expenses in connection with, or incurred any severance
pay obligations by reason of, this Agreement or the
transactions contemplated herein;
(r) incurred any material damage, destruction or loss
(whether or not covered by insurance) affecting the
Purchased Assets, or the Business or Seller's or Seller's
Affiliates' ability to consummate the transactions
contemplated herein;
(s) waived any material rights, claims or chooses in
action of or relating to the Business or the Purchased
Assets;
(t) suffered any change, event or condition which, in
any case or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect on the Business,
the Purchased Assets or the Seller's or Seller's Affiliates
ability to consummate the transactions contemplated herein;
or
(u) entered into any agreement or made any commitment
to take any of the types of actions described in paragraphs
(a) through (t) above.
4.16 Potential Conflicts of Interest. Except as disclosed
in Schedule 4.16 to Seller's Disclosure Letter, no officer,
director or shareholder (other than Guarantor, Seller or Seller's
Affiliates), or key employee of the Seller or Seller's Affiliates
(a) owns, directly or indirectly, any interest in (excepting not
more than a one percent (1%) share holding for investment
purposes in securities of publicly held and traded Persons) or is
an officer, director, employee or consultant of, any Person which
is a competitor, lessor, lessee, customer or supplier of the
Seller or Seller's Affiliates; (b) holds a direct, indirect or
beneficial interest in any contract or other agreement of the
Seller or Seller's Affiliates (other than stock options and other
contracts, commitments or agreements between the Seller or
Seller's Affiliates and such persons in their capacities as
employees, officers or directors of the Seller or Seller's
Affiliates); (c) owns, directly or indirectly, in whole or in
part, any tangible or intangible property (including, without
limitation any patent, trademark, trade name, service mark,
franchise, invention, permit, license, trade secret or
confidential information) which the Seller or Seller's Affiliates
is using or the use of which is necessary for the Business; or
(d) has any cause of action or other claim whatsoever against the
Seller or Seller's Affiliates, except for claims in the ordinary
course of the Business for salaries, reimbursement of expenses
and employee benefits which are not unusual in amount and not
past due.
4.17 [Intentionally Omitted]
4.18 Powers of Attorney and Suretyships. Except as
disclosed in Schedule 4.18 to Seller's Disclosure Letter, Seller
or Seller's Affiliates have no general or special powers of
attorney outstanding (whether as grantor or grantee thereof) or
any obligation or liability (whether actual, accrued, accruing,
contingent or otherwise) as guarantor, surety, co-signer,
endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any Person.
4.19 [Intentionally Omitted]
4.20 Solvency.
After giving effect to the transactions contemplated by
this Agreement, (i) the fair saleable value of the assets of
the Seller and of each of Seller's Affiliates, will exceed
its existing liabilities, including known contingent
liabilities, (ii) the assets of the Seller and of the
Seller's Affiliates will not be unreasonably small to
conduct the business of the Seller and of the Seller's
Affiliates or to liquidate and wind up their affairs, and
(iii) the Seller and each of the Seller's Affiliates has not
and does not intend to incur debts beyond their ability to
pay such debts as they mature. For purposes of this
Section 4.20, "debt" means any liability on a claim, and
"claim" means (i) right to payment, whether or not such
right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, mature, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (ii) right to an
equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right
to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
4.21 [Intentionally Omitted]
4.22 Brokers. Neither the Guarantor, Seller, Seller's
Affiliates, nor any of their respective officers, directors or
employees has employed any financial advisor, broker or lender or
incurred any liability for any financial advisory, brokerage or
finder's fee or commission in connection with the transactions
contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Guarantor and
Seller as follows:
5.1 Organization and Good Standing of Purchaser and
Purchaser's Affiliates. Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws
of the State of Louisiana. Each of Purchaser's Affiliates to
which any of the Purchased Assets are transferred or conveyed is
a corporation duly organized, validly existing and in good
standing under the Law of its jurisdiction of incorporation.
5.2 Consents, Authorizations and Binding Effect. Purchaser
has full power and authority to execute and deliver this
Agreement and each Supplemental Asset Acquisition Agreement and
carry out and perform its undertakings and obligations as
provided herein and therein. This Agreement has been, and each
Supplemental Asset Acquisition Agreement when executed will be,
duly executed and delivered by Purchaser and any Purchaser's
Affiliate a party thereto and constitutes, or in the case of each
Supplemental Asset Acquisition Agreement will constitute, the
legal, valid and binding obligation of Purchaser and any
Purchaser's Affiliate a party thereto, enforceable against
Purchaser and any Purchaser's Affiliate a party thereto in
accordance with its terms except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization and similar
laws affecting creditor's rights and remedies generally and
general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or equity). Except as set forth
in Section 5.2 of Purchaser's Disclosure Letter the execution,
delivery and performance by Purchaser of this Agreement and, when
executed, each Supplemental Asset Acquisition Agreement and
consummation of the transaction contemplated hereby and thereby
(a) have been, or in the case of each Supplemental Asset
Acquisition Agreement will be, duly and validly authorized by all
proper and requisite corporate actions of Purchaser and, to the
extent necessary, any of Purchaser's Affiliates, (b) will not
conflict with or breach any provision of the charter or bylaws of
Purchaser or any Purchaser's Affiliate, (c) will not conflict
with or breach or constitute any default under any contract,
agreement or arrangement to which it is a party or by which it is
bound other than any such conflict, breach or default that would
not prevent or delay in any material respect the consummation of
the transactions contemplated hereby or thereby, (d) will not
require any filing with, notification of or consent, approval or
authorization of any Governmental Entity or any third Person or
constitute a violation or breach of any judgment, order or decree
of any Governmental Entity except for the filing under the HSR
Act, and (e) will not violate any Law, federal, state, foreign or
local, or any rule or regulation of any Governmental Entity
applicable to Purchaser or any Purchaser's Affiliate or any of
their assets, except for any violation which would not prevent or
delay in any material respect the consummation of the
transactions contemplated hereby or thereby.
5.3 Litigation. There is no Action pending or, to the
knowledge of Purchaser, threatened against or relating to
Purchaser or any of Purchaser's Affiliates by or before any
Governmental Entity which, if determined adversely to the
interest of Purchaser or Purchaser's Affiliates would prevent or
delay in any material respect the consummation of the
transactions contemplated hereby. Neither Purchaser nor any of
Purchaser's Affiliates is subject to any outstanding order, writ,
injunction or decree that would prevent or delay in any material
respect the consummation of the transactions contemplated hereby.
5.6 Brokers. Except for Simmons & Company International
neither Purchaser nor any of its officers, directors or employees
has employed any financial advisor, broker or finder or incurred
any liability for any financial advisory, brokerage or finder's
fee or commission in connection with the transactions
contemplated hereby.
ARTICLE VI
COVENANTS
6.1 Conduct of the Business. With respect to the Business
and the Purchased Assets, or in the case of the Supplemental
Asset Acquisition Agreement, the relevant portions thereof Seller
agrees that, from and after the date of this Agreement until the
Closing Date:
(a) Seller will conduct, and will cause Seller's
Affiliates to conduct, the Business (i) in a manner so that
the representations and warranties contained in Article IV
shall continue to be true and correct as of the Closing as
if made at and as of the Closing and (ii) only in the
ordinary course of business, consistent with past practice,
and will use reasonable commercial efforts to (x) maintain
and preserve the Business and the Purchased Assets, (y) keep
available for Purchaser the present officers, employees and
agents of the Business, and (z) preserve for the benefit of
Purchaser the goodwill of and relationships with customers,
suppliers, employees and others having business relations
with the Business;
(b) Seller will comply, and will cause Seller's
Affiliates to comply, with all applicable Laws of
Governmental Entities with which compliance is required in
connection with the conduct of the Business, the ownership,
use or operation of the Purchased Assets or the consummation
of the transactions contemplated by this Agreement and the
Supplemental Asset Acquisition Agreements and which if not
complied with could have a Material Adverse Effect on the
Business or the Purchased Assets;
(c) Without the prior written consent of Purchaser,
Seller will not, and will not permit any of Seller's
Affiliates to:
(i) sell, transfer or otherwise dispose of any of
the Purchased Assets other than consumption of supplies
constituting Inventories or Personalty in the ordinary
course of the Business at levels not exceeding past
practice;
(ii) remove any Improvements from the Real
Property on which they are located or alter any
Improvements other than in the process of maintenance
and repair in the ordinary course of the Business;
(iii) enter into, amend or (except through
performance) terminate any Material Contract or any
Material Real Property Lease that constitutes an
Assumed Contract;
(iv) waive any substantial right, claim or chose
in action constituting a portion of the Purchased
Assets;
(v) engage in any act or transaction which, if
engaged in after the Balance Sheet Date and prior to
the date hereof, would constitute a breach of the
representations and warranties contained in Section
4.15; or
(vi) subject any of the Purchased Assets to any
Liens other than Permitted Encumbrances.
(d) Seller will maintain and keep, and will cause
Seller's Affiliates to maintain and keep, all the tangible
Purchased Assets in their present condition, subject to
ordinary wear and tear, and maintain in full force and
effect all Permits listed on Schedule 4.10 to Seller's
Disclosure Letter;
(e) Seller will perform, and will cause Seller's
Affiliates to perform, all of their obligations under all
Assumed Contracts in accordance with the provisions thereof;
(f) Seller will maintain, and will cause Seller's
Affiliates to maintain, in full force and effect insurance
coverage with respect to the Business and the Purchased
Assets to the extent currently maintained as disclosed in
Schedule 6.1(f) to Seller's Disclosure Letter;
(g) Seller will use all amounts received from payment
of Accounts Receivable to pay accounts payable that are due
or other ordinary operating expenses of the Business that
are due other than accounts payables to Guarantors, Seller
or any of their Affiliates;
(h) Seller will, and will cause Seller's Affiliates
to, (i) give Purchaser's representatives full access at all
reasonable times to all of the assets, properties, books,
records, agreements and commitments of Seller and Seller's
Affiliates concerning the Business, the Purchased Assets and
to Seller's and Seller's Affiliates' employees, independent
auditors (and the audit work papers of such auditors) and
representatives to answer inquiries of Purchaser regarding
the Business, the Purchased Assets, (ii) permit Purchaser or
its agents to inspect and conduct nondestructive testing of
any of the Purchased Assets, and (iii) furnish to
Purchaser's representatives all information concerning the
Business and the Purchased Assets as Purchaser may
reasonably request; provided, however, that the furnishing
of information to Purchaser and any investigation by
Purchaser shall not affect Purchaser's right to rely on the
representations and warranties of Seller in this Agreement.
In the event this Agreement is terminated for any reason all
information obtained by Purchaser pursuant to this paragraph
shall be subject to the terms and provisions of that certain
Confidentiality Agreement dated February 5, 1997; and
(i) Promptly after any action taken in accordance with
the provisions of this Agreement that results in an
addition, deletion or change in any Schedule furnished by
Seller to Purchaser herewith, Seller will notify Purchaser
of such addition, deletion or change in accordance with
Section 10.2 herein. Seller shall promptly notify Purchaser
in accordance with Section 10.2 herein of the occurrence of
any matter, event, circumstance or condition that is
material to the Business, the Purchased Assets or that would
render inaccurate any of the representations or warranties
of Guarantor and Seller contained in Article IV or
constitute a violation or breach of this Agreement.
6.2 Actions of the Parties. Guarantor, Seller and
Purchaser will use reasonable commercial efforts to take all
action and do all things that may be reasonably necessary, proper
or advisable in order to consummate and to make effective as
promptly as practicable the transactions contemplated by this
Agreement and will not undertake or fail to undertake any action
if such action or failure would render any of the representations
and warranties under this Agreement untrue as of the Closing
Date. Seller will give and will cause each of Seller's
Affiliates to give any notices to third parties, and will use its
reasonable commercial efforts (and will cause each of Seller's
Affiliates to use its reasonable commercial efforts) to obtain
any third party consents, that Global reasonably may request. In
addition, Guarantor, Seller and Purchaser agree to cooperate
fully and take all reasonable commercial actions necessary to
obtain all Permits from Governmental Entities, to obtain all
consents, approvals and authorizations from other Persons and to
effect all filings, applications, registrations and notifications
that the parties hereto deem necessary or desirable in order to
fulfill all conditions precedent contained herein or to
consummation of the transactions contemplated hereby. Without
limiting the generality of the foregoing, each of the parties
will file any Notification and Report Forms and related material
that it may be required to file under the HSR Act, and will make
any further filings pursuant thereto that may be necessary,
proper, or advisable in connection therewith.
6.3 Certain Employee Matters.
(a) From the date hereof until the Effective Time, the
Seller shall permit Purchaser to approach and negotiate with
any or all employees and agents of the Business including,
but not limited to, managerial staff, in an effort to
persuade them to continue in the employ or agency of the
Business pending the Closing and thereafter accept
employment or agency with the Purchaser or its Affiliates,
and the Guarantor and the Seller shall use reasonable
efforts to assist Purchaser in such negotiations.
(b) Purchaser agrees that it or its Affiliates will
offer employment to each of persons listed on Schedule 6.3
of Purchaser's Disclosure Letter, effective on the Closing
Date, with employment benefits, substantially equivalent to
those provided by Purchaser to its employees of equivalent
rank and having like responsibilities and duties provided,
however, that Seller agrees to provide severance benefits in
accordance with its policies for each employee identified on
Schedule 6.3 as an administrative employee who accepts
employment with Purchaser or its Affiliates and whose
employment is terminated within 60 days after the Closing
Date. Purchaser shall notify Seller in the event of
termination of any of such employees within the 60 day
period. Each such person who accepts such employment offer
from Purchaser or its Affiliates shall be referred to herein
as a "Continuing Employee." On or before, but effective as
of, the Closing Date, Guarantor and Seller shall take such
actions as may be necessary to (i) cause each Continuing
Employee to have a fully vested and nonforfeitable interest
in such Continuing Employee's accrued benefits under each
Plan that is an "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) and under each other
deferred compensation or supplemental benefit arrangement
maintained by Seller, Seller's Affiliates or any Commonly
Controlled Entity and (ii) cause each Plan to continue to
accept, during the period of a Continuing Employee's
employment by Purchaser and its Affiliates and without
giving rise to any default, loan payments from such
Continuing Employee with respect to any loan such Continuing
Employee received from such Plan prior to the Closing Date.
(c) Purchaser shall have no liability for, and Seller
agrees to indemnify Purchaser in accordance with Section 8.1
against, any liabilities or obligations of Seller or
Seller's Affiliates, or claims brought by former employees
of Seller or Seller's Affiliates relating to Seller's
termination of their employment with it or Seller's
Affiliates. Without limiting the scope of the preceding
sentence, Seller shall take any and all actions necessary to
ensure that Purchaser and its Affiliates shall not be
required to provide benefit coverage with respect to any
such former employee under the continuation of coverage
provisions contained in Section 4980B of the Code, Sections
601 through 608 of ERISA or applicable state laws.
6.4 Litigation. From the date hereof through the Effective
Time, Guarantor and Seller shall promptly notify Purchaser of any
Actions which after the date hereof are threatened or commenced
against the Seller, Seller's Affiliates, any Affiliate, officer,
director, employee, consultant or agent or shareholder thereof,
in their capacities as such, the Business or the Purchased Assets
which, (a) challenges the consummation of the transaction
contemplated by this Agreement, or (b) if decided adversely,
could reasonably be expected to have a Material Adverse Effect
upon the Business, the Purchased Assets, or the ability of the
parties to consummate the transactions contemplated herein.
6.5 Limited License. Purchaser hereby grants to Seller a
non-transferable (except in connection with a sale of all or
substantially all of the assets of Seller or its Affiliates as a
business unit) perpetual world-wide, irrevocable paid up license
to make and use the Intellectual Property included in U.S. Patent
No. 5,507,596 - Underwater Work Platform Support System in the
business of Seller, subject to the limitations set forth in
Section 6.7 hereto.
6.6 Acquisition Proposals. Seller and Guarantor agree that
until this Agreement is terminated in accordance with Section
9.1, they shall not, and shall not authorize or permit any of
their Affiliates or officers, directors, employees,
representatives or agents or the officers, directors, Affiliates,
employees, representatives or agents of their Affiliates to,
directly or indirectly, solicit, initiate, encourage or
participate in any way in discussions or negotiations with, or
provide any information or assistance to, or enter into any
agreement with, any person or group of persons (other than
Purchaser, its Affiliates or representatives) concerning (a) any
acquisition, directly or indirectly, of Seller or Seller's
Affiliates, or any interest therein or any part of the Purchased
Assets (except for the assets sold in the ordinary course of
their business consistent with past practice), (b) any sale,
directly or indirectly, of any outstanding or newly issued
capital stock or interest in or security convertible into capital
stock of or interest in, Seller or Seller's Affiliates, or (c)
any merger, consolidation, liquidation, dissolution, or similar
transaction involving, directly or indirectly, Seller or Seller's
Affiliates (each a "Prohibited Transaction"), or assist or
participate in, facilitate or encourage any effort or attempt by
any other person to do or seek to do any of the foregoing.
Seller and Guarantor hereby represent and warrant to Purchaser
that all discussions and negotiations with any person or group
other than Purchaser occurring prior to the date of this
Agreement have been terminated. From and after the date of this
Agreement, Seller and Guarantor will immediately inform Purchaser
in writing of receipt, directly or indirectly, of any written
proposals relating to a Prohibited Transaction (including the
specific terms thereof and the identity of the other party or
parties thereto).
6.7 Protection of Value of Purchased Assets. Because of
Guarantor's or Seller's access to the Business' confidential
information and trade secrets, each of the Guarantor and Seller
would be in a unique position to divert business from the
Business and to commit irreparable damage to the Business were
Guarantor and Seller to be allowed to compete with the Business
or to commit any of the other acts prohibited below; the
enforcement of said restrictive covenants against each of
Guarantor and Seller will not impose any undue burden upon such
Guarantor or Seller; none of said restrictive covenants is
unreasonable as to period or geographic area; and the ability to
enforce said restrictive covenants against each of the Guarantor
and Seller is a material inducement to the decision of Purchaser
to consummate the transactions contemplated in this Agreement.
The Guarantor and Seller acknowledge that Purchaser would not
purchase the Purchased Assets but for the agreements and
covenants of Guarantor and Seller contained in this Section 6.7.
Accordingly, Guarantor and Seller covenant and agree as follows:
(a) Covenant . Guarantor and Seller shall not at any time
within the Restricted Period, directly or indirectly, use
any assets owned by Guarantor, Seller or any of their
Affiliates to perform pipelay, pipebury, cablelay or
cablebury services in the geographic areas and surrounding
waters (excluding Brazil and its waters) serviced by the
assets of the Business or in which the Purchased Assets were
offered for work to customers within 24 months prior to the
Closing Date (the "Geographic Area") provided, however, that
specifically excluded from this covenant are the activities
performed by ROV's (remote operated vessels) and ROV support
vessels; installation of flexible pipe and related
activities; all activities of Seller or Guarantor conducted
anywhere in the world outside of the Geographic Area; and
any activities of any alliance or joint venture of Guarantor
or Seller that subcontracts pipelay or pipebury services
from a third party or a member or affiliate of a member of
the alliance or joint venture.
(b) Solicitation of Business. During the Restricted
Period, each of Guarantor and Seller shall not, directly or
indirectly, solicit or assist any other Person to solicit
any business in competition with the pipelay, pipebury,
cablelay and cablebury services of the Business in the
Geographic Area (other than for the Purchaser) from any
present, past or future customer of the Business except to
the extent of the exception set forth in clause (a) above;
or request or advise any present or future customer of the
Business to withdraw, curtail or cancel its business
dealings with the Purchaser or any of its Affiliates.
(c) Confidential Information. From and after the Closing
Date, Guarantor and Seller shall keep secret and retain in
strictest confidence, and shall not, directly or indirectly,
use for the benefit of such Guarantor, Seller or any Person
other than the Purchaser and its Affiliates all confidential
matters and trade secrets known relating to the pipelay,
pipebury, cablelay and cablebury services of the Business,
including, without limitation, customer lists, pricing
policies, operational methods, marketing plans or
strategies, product development techniques or plans,
business acquisition plans, new personnel acquisition plans,
methods of manufacture, technical processes, designs and
design projects, invention and research projects and other
business affairs relating to the pipelay, pipebury, cablelay
and cablebury services of the Business learned by Guarantor
or Seller heretofore or hereafter, and shall not divulge,
disclose or make assessable to any Person outside of the
Purchaser and its Affiliates any such information except
upon the Purchaser's express prior written consent.
(d) Rights and Remedies upon Breach. If Guarantor or
Seller breaches, or threatens to commit a breach of, any of
the provisions of this Section 6.7, the Purchaser shall have
the following rights and remedies:
(i) The right and remedy to have the restrictive
covenants in this Section 6.7 specifically enforced by
any court having equity jurisdiction and the Guarantor
and Seller acknowledge and agree that any such breach
or threatened breach will cause irreparable injury to
the Purchaser and that monetary damages will not
provide an adequate remedy to the Purchaser; and
(ii) The right and remedy to require the Guarantor
or Seller to indemnify the Purchaser against any other
losses, damages, costs and expenses, including
reasonable attorneys fees and court costs, which may be
incurred by it and which result from or arise out of or
relate to any such breach or threatened breach of the
restrictive covenants in this Section 6.7.
(e) Severability of Covenants. If any court of competent
jurisdiction determines that any of the restrictive
covenants in this Section 6.7, or any part thereof, is
invalid or unenforceable with respect to Guarantor or
Seller, the remainder of the restrictive covenants in this
Section 6.7 shall not thereby be affected and shall be given
full effect, without regard to the invalid portions. If any
court of competent jurisdiction determines that any of the
restrictive covenants in this Section 6.7, or any part
thereof, is unenforceable because of the duration of such
provision or the area covered thereby, such court shall have
the power to reduce the duration or area of such provision
and, in its reduced form, such provision shall then be
enforceable and shall be enforced. Guarantor and Seller
hereby waive any and all right to attack the validity of the
restrictive covenants in this Section 6.7 on the grounds of
the breadth of their geographic scope or the length of their
term.
(f) Enforceability in Jurisdictions. Each of Guarantor,
Seller and the Purchaser intend to and do hereby confer
jurisdiction to enforce the restrictive covenants in this
Section 6.7 upon the courts of any jurisdiction within the
geographical scope of such covenants. If the courts of any
one or more of such jurisdictions hold the restrictive
covenants in this Section 6.7 wholly unenforceable by reason
of the breadth of such scope or otherwise, it is the
intention of the Purchaser, Guarantor and Seller that such
determination not bar or in any way affect the right of the
Purchaser to the relief provided above in the courts of any
other jurisdiction within the geographical scope of such
covenants, as to breaches of such covenants in such other
respective jurisdictions, such covenants as they relate to
each jurisdiction being, for this purpose, severable into
diverse and independent covenants.
6.8 Assignment of Contracts; Transfer of Purchased Assets;
Assistance in Contract Compliance. To the extent that the
assignment of any Assumed Contract shall require the consent of
any other Person, this Agreement shall not constitute an
agreement to assign the same if the attempted assignment would
constitute a breach thereof. Guarantors, Seller and Purchaser
agree each to use reasonable efforts in each case to obtain
consent to the assignment to Purchaser. If any required consent
to assign to Purchaser any of the Purchased Assets or the
benefits under any Assumed Contract is not obtained, the parties
will cooperate in any reasonable arrangement designed to provide
for Purchaser the benefit of such Purchased Assets or such
Assumed Contract which Purchaser is denied or deprived as a
result of the failure to obtain such consent or approval;
provided that neither Guarantor nor Seller shall have any
obligation to compensate Purchaser for the value, if any, of the
benefit it fails to receive as a result of such consent not being
obtained. Such "reasonable arrangement" will include Purchaser
or its Affiliates subcontracting with Seller or its Affiliates to
perform their obligations under the Assumed Contract on terms
substantially similar to the Assumed Contract. Guarantor and
Seller shall and shall cause their Affiliates upon the request of
Purchaser to provide all equipment and operators not included in
the Purchased Assets and owned or leased by Guarantor, Seller or
their Affiliates, including but not limited to the "DMAC" tool,
to Purchaser or its Affiliates as required to complete any
contract for which such equipment or operators were included in
the bid relating to such contract and Purchaser agrees to pay the
amounts included in the contract bid for such equipment and
operators for the provision of such equipment and operators out
of amounts paid under the Contract.
6.9 Taxes and Expenses.
(a) Seller shall pay or cause Seller's Affiliates to
pay all Taxes arising out of or in connection with the
transactions effected pursuant to this Agreement and all
Transfer Taxes. Seller and Purchaser shall cooperate, and
Seller shall cause Seller's Affiliates to cooperate, in
filing all necessary documentation and returns with respect
to such Taxes. If any Transfer Taxes in the form of value
added taxes paid or reimbursed by Seller under this
Agreement become a direct credit or prepayment against
Purchaser's unrelated value added tax liability in a
particular country or jurisdiction, Purchaser shall promptly
reimburse Seller to the extent such credit or prepayment is
used by Purchaser (adjusted for any adverse consequences to
Purchaser resulting from such credit or prepayment or the
reimbursement thereof).
(b) Seller shall pay or cause Seller's Affiliates to
pay all Taxes with respect to the Business and the Purchased
Assets that are payable or become payable after the date
hereof with respect to periods ending on or prior to the
transfer thereof on the Closing Date provided that Purchaser
shall reimburse Seller for all such Taxes paid to the extent
such Taxes constitute Assumed Liabilities. Purchaser shall
pay all Taxes with respect to the Business and Purchased
Assets that are payable or become payable with respect to
periods commencing after the transfer thereof on the Closing
Date. The amount of Seller's or Seller's Affiliates
(excluding the Acquired Companies) liability for Taxes for
periods up to and including the Closing Date shall be
determined in accordance with Seller's or Seller's
Affiliates methods prior to the Closing Date.
(c) Except as may otherwise be specifically provided
herein, each party shall be responsible for its own
expenses, including without limitation the fees of
accountants and attorneys, which are incurred in connection
with the negotiation and execution of this Agreement and the
consummation of the transactions herein contemplated.
6.10 Access to Records After Closing Date.
(a) Guarantor, Seller and Purchaser agree that, so
long as the books and records retained by Guarantor, Seller
and any Seller's Affiliate relating to the Business or the
Purchased Assets or the books and records delivered to
Purchaser hereunder remain in existence and available, each
party shall have the right to inspect and, at its expense,
to make copies of the same at any time during business hours
for any proper purpose. For a period of seven (7) years
following the Closing Date, the parties hereto will not,
without first having offered to deliver the same to the
other party, destroy or permit the destruction of any of
such books and records or any schedules, workpapers and any
other documents relating to any Tax Returns in its or its
Affiliates' possession. Each party agrees that it will make
available, and it will cause its Affiliates to make
available, to the other and to any accountants or attorneys
or tax agents authorized by such other party, at the expense
of the party requesting the same, any such records or
information needed in connection with any Tax matters,
litigation or similar matters.
(b) Seller and each member of the Seller Group shall
grant to Purchaser (or its designees) access at all
reasonable times to all of the information, books and
records relating to the Purchased Companies within the
possession of Seller or any member of the Seller Group
(including workpapers and correspondence with taxing
authorities), and shall afford Purchaser (or its designees)
the right (at Purchaser's expense) to take extracts
therefrom and to make copies thereof, to the extent
reasonably necessary to permit Purchaser (or its designees)
to prepare Tax Returns, to conduct negotiations with Tax
authorities, and to implement the provisions of, or to
investigate or defend any claims between the parties arising
under, this Agreement.
(c) Purchaser shall grant or cause the Purchased
Companies to grant to Seller (or its designees) access at
all reasonable times to all of the information, books and
records relating to the Purchased Companies within the
possession of Purchaser, the Purchased Companies (including
workpapers and correspondence with taxing authorities), and
shall afford Seller (or its designees) the right (at
Seller's expense) to take extracts therefrom and to make
copies thereof, to the extent reasonably necessary to permit
Seller (or its designees) to prepare Tax Returns, to conduct
negotiations with Tax authorities, and to implement the
provisions of, or to investigate or defend any claims
between the parties arising under, this Agreement.
6.11 Allocation of Purchase Price. Purchaser, Guarantor and
Seller agree to allocate the Purchase Price and all other
capitalized costs among the Purchased Assets prior to the Closing
Date. Purchaser shall prepare a further allocation of the
Purchase Price among the Purchased Assets in accordance with
section 1060 of the Internal Revenue Code of 1986 (the "Code")
and applicable Treasury Regulations (the "Purchase Price
Allocation") and shall submit such allocation to Seller no later
than ten days prior to the Closing Date. Purchaser, Seller and
Guarantor shall not take any position on any federal or state Tax
Return or other filing that is inconsistent with the Purchase
Price Allocation. Purchaser and Seller shall duly prepare and
timely file such reports and information returns as may be
required under section 1060 of the Code and any applicable
Treasury Regulations and any corresponding provisions of
applicable state income tax laws to report the allocation of the
Purchase Price among the Purchased Assets in accordance with the
Purchase Price Allocation.
6.12 Agreement to Defend. In the event any claim or Action
or other proceeding by any Governmental Authority or other Person
or other legal or administrative proceeding is commenced that
questions the validity or legality of the transactions
contemplated hereby or seeks damages in connection therewith,
whether before or after the Effective Time, Guarantor, Seller and
Purchaser agree to cooperate and use reasonable efforts to defend
against and respond thereto. The parties hereto each severally
agree and covenant not to institute, commence, assist or
participate in any Action or other proceeding seeking to
challenge or restrain the transactions contemplated herein.
6.13 Release. Except for the indebtedness of and
liabilities of and claims against the Acquired Companies which
are assigned to Purchaser or its Affiliates in accordance with
Section 6.18 hereof, effective as of the Closing Date, Guarantor,
Seller and Seller's Affiliates, without the necessity of
executing any other document, jointly and severally, release and
discharge the Business and the Acquired Companies, and their
officers, directors, employees, agents and attorneys in such
capacities, from any and all claims, contentions, demands, causes
of action at law or in equity, debts, liens, agreements, notes,
obligations or liabilities of any nature, character or
description whatsoever, whether known or unknown, which they or
any of them may now or hereafter have against any such Persons by
reason of any matter, event, thing or state of facts occurring,
arising, done, omitted or suffered to be done at or prior to the
Effective Time provided that this release shall not release or
discharge any employee, officer, director, agent or attorney for
any willful acts of theft, conversion or other criminal act of
which Seller has no knowledge as of the date hereof.
6.14 Dispute Assistance. Guarantor and Seller agree that in
the event of any dispute with respect to the Business arising out
of or relating to events which occurred at or prior to the
Closing, they shall cooperate with Purchaser, at no cost to
Purchaser, in the resolution of such dispute, including, without
limitation, making appearances in any litigation which may result
therefrom; provided, however, that Guarantor's or Seller's
agreement so to cooperate shall not be deemed an acceptance by
Guarantor or Seller of any liability arising from such dispute,
as to which the other provisions of this Agreement shall control.
6.15 Closing Balance Sheet. On or before a date that is 45
days following the Closing (or the next Business Day if such day
is not a Business Day), Purchaser will prepare and deliver to
Seller a balance sheet for the Business (the "Closing Balance
Sheet") as of the close of business on the Closing Date. The
Closing Balance Sheet shall be prepared by Purchaser in
accordance with GAAP.
6.16 Payment of Liabilities. Seller and Seller's Affiliates
shall pay or otherwise satisfy in the ordinary course all claims
and liabilities relating to the Purchased Assets or the Business
incurred through the Closing Date other than Assumed Liabilities;
provided, however, that Seller and Seller's Affiliates shall have
the right to dispute any such claims or liabilities in good
faith.
6.17 Delivery of Habitat. Seller agrees, at its own cost
and expenses, to deliver that certain hyperberic dry-welding
habitat (Whale No. 6), together with all related parts and
equipment, to Purchaser's facility in Perth, Australia within 60
days after the Closing Date.
6.18 Indebtedness of Acquired Companies. Guarantor and
Seller shall, and shall cause each of Seller's Affiliates and
each Person controlled by or under common control with them to,
assign and transfer to Purchaser or its Affiliates (i) all
indebtedness or other liabilities of the Acquired Companies owed
to Guarantor, Seller, Seller's Affiliates and each Person
controlled by or under common control with such Persons existing
as of the Closing Date and (ii) all claims of Guarantor, Seller,
Seller's Affiliates and each Person controlled by or under common
control with such Persons existing as of the Closing Date.
6.19 Section 338(h)(10) Elections. Guarantor, as the common
parent of the affiliated group of corporations filing a
consolidated federal income Tax Return which includes the Seller
and its subsidiaries (the "Seller Group"), agrees that it will
join Purchaser in making a timely, irrevocable and effective
election under section 338(h)(10) of the Code and a similar
election under any applicable state income tax law (collectively
the "Section 338(h)(10) Elections") with respect to Purchaser's
purchase of the Acquired Companies Stock. To facilitate such an
election, at the Closing Seller shall deliver to Purchaser an
Internal Revenue Service Form 8023 and any similar forms under
applicable state income tax law (the "Forms") with respect to
Purchaser's purchase of the shares, which Forms shall have been
duly executed by an authorized person for Seller. Purchaser
shall cause the Forms to be duly executed by an authorized person
for Purchaser, shall complete the schedules required to be
attached thereto, shall provide a copy of the executed Form and
schedules to Seller, and shall duly and timely file the Forms as
prescribed by Treasury Regulation 1.338(h)(10)-1 or the
corresponding provisions of applicable state income Tax law.
6.20 Preparation and Filing of Tax Returns.
(a) With respect to each Tax Return covering a taxable
period ending on or before the Closing Date that is required
to be filed after the Closing Date for, by or with respect
to the Acquired Companies (other than the Tax Returns
described in paragraph (c)), Seller shall cause such Tax
Return to be prepared, shall cause to be included in such
Tax Return all items of income, gain, loss deduction and
credit or other items (collectively "Tax Items") required to
be included therein, and shall deliver the original of such
Tax Return to Purchaser at least 30 days prior to the due
date (including extensions) of such Tax Return. Seller
shall pay to Purchaser the amount of any Taxes due with
respect to the period covered by such Tax Return to the
extent such amount exceeds the Assumed Liabilities for Taxes
not less than 5 days prior to the due date of such Tax
Return. Purchaser shall cause the Acquired Companies to
file timely such Tax Return with the appropriate taxing
authority and to pay the amount of Taxes shown to be due on
such Tax Return.
(b) With respect to each Tax Return covering (i) a
taxable period beginning on or before the Closing Date and
ending after the Closing Date or, (ii) a taxable period
beginning after the Closing Date, that is required to be
filed after the Closing Date for, by or with respect to an
Acquired Company (other than the Tax Returns described in
paragraph (c)), Purchaser shall cause such Tax Return to be
prepared, shall cause to be included in such Tax Return all
Tax Items required to be included therein. Purchaser shall
determine (by an interim closing of the books as of the
Closing Date except for ad valorem Taxes and franchise Taxes
based on capital which shall be pro rated on a daily basis)
the portion, if any, of the Tax due with respect to the
period covered by such Tax Return which is attributable to
an Acquired Company, the Business or the Purchased Assets
for a Pre-Closing Taxable Period. At least 30 days prior to
the due date (including extensions) of such Tax Return,
Purchaser shall deliver to Seller a copy of such Tax Return
and of its determinations. Seller shall pay to Purchaser
the amount attributable to the Pre-Closing Taxable Period to
the extent such amount exceeds the Assumed Liabilities for
Taxes not less than 5 days prior to the due date of such Tax
Return. Purchaser shall cause the Acquired Companies to
file timely such Tax Return with the appropriate taxing
authority and to pay timely the amount of Taxes shown to be
due on such Tax Return.
(c) Seller shall cause to be included in the
consolidated federal income Tax Returns (and the state
income Tax Returns of any state that permits consolidated,
combined or unitary income Tax Returns, if any) of the
Seller Group for all periods ending on or before or which
include the Closing Date, all Tax Items of the Acquired
Companies which are required to be included therein, shall
file timely all such Tax Returns with the appropriate taxing
authorities and shall pay timely all Taxes due with respect
to the periods covered by such Tax Returns.
(d) Any Tax Return to be prepared pursuant to the
provisions of this Section 6.20 shall be prepared in a
manner consistent with practices followed in prior years
with respect to similar Tax Returns, except for changes
required by changes in law.
6.21 Further Assurances. After the Closing on the Closing
Date, and for no further consideration, Guarantor and Seller
shall, and shall cause each of Seller's Affiliates to, perform
all acts and execute, acknowledge and deliver such assignments,
transfers, consents and other documents and instruments as
Purchaser or its counsel may reasonably request, in each case, to
vest in Purchaser's Affiliates and protect Purchaser's
Affiliates' right, title and interest in, and enjoyment of, the
Purchased Assets conveyed at such closing.
ARTICLE VII
CONDITIONS
7.1 Conditions Precedent to Guarantors' and Seller's
Obligations. The obligation of Seller to consummate the
transactions provided for in this Agreement is, at the option of
Seller, subject to satisfaction of the following conditions at or
before the Closing Date:
(a) The representations and warranties made by
Purchaser in this Agreement and in each of the Purchaser
Documents delivered pursuant hereto on or before the Closing
Date shall be true and correct with the same force and
effect as though such representations and warranties had
been made at and as of the Closing Date. All of the
covenants, terms and conditions of this Agreement to be
complied with or performed by Purchaser at or before the
Closing Date shall have been complied with and performed in
all material respects. Purchaser shall have delivered to
Seller a certificate to the foregoing effect dated the
Closing Date and signed by the President or a Vice President
or other authorized officer of Purchaser;
(b) All material consents and approvals, if any, which
are required from any Government Entity in order to permit
Seller and Seller's Affiliates to consummate the
transactions contemplated by this Agreement shall have been
duly given;
(c) On the Closing Date, there shall be in effect no
injunction, order or decree of any nature issued, ordered or
granted by any Governmental Entity of competent jurisdiction
that restrains or prohibits in any material respect, or
would award substantial damages in connection with, the
consummation of the transactions contemplated hereby;
(d) Purchaser shall have executed (where appropriate)
and delivered to Seller the documents referred to in
Section 3.3 herein;
(e) The waiting period (and any statutory extension
thereof) applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or
been terminated and no action, suit or proceeding shall have
been instituted by the Justice Department or the Federal
Trade Commission to challenge the transactions contemplated
hereby under the Clayton Act or the Sherman Act;
(f) Seller shall have received an opinion dated the
Closing Date of Vinson & Elkins L.L.P., counsel to Purchaser
in form and substance substantially similar to the form
thereof attached as Appendix III; and
(g) Guarantor, Seller and Purchaser shall have agreed
to the allocation of the Purchase Price as contemplated by
the first sentence of Section 6.11.
7.2 Conditions Precedent to Purchaser's Obligations. The
obligation of Purchaser to consummate the transactions provided
for in this Agreement is, at the option of Purchaser, subject to
satisfaction of the following conditions at or before the Closing
Date:
(a) The representations and warranties made by Seller
in this Agreement shall be true and correct with the same
force and effect as though said representations and
warranties had been made at and as of the Closing Date. All
of the covenants, terms and conditions of this Agreement to
be complied with and performed by Guarantor and Seller or
Seller's Affiliates at or before the Closing Date shall have
been complied with and performed in all material respects.
Seller shall have delivered to Purchaser a certificate to
the foregoing effect dated the Closing Date and signed by
the President, Vice President or other authorized officer of
Seller;
(b) From the date of this Agreement to the Closing
Date, there shall not have occurred any change in the
Business or the Purchased Assets which has had or is
reasonably expected to have a Material Adverse Effect;
(c) [Intentionally Omitted]
(d) On the Closing Date, there shall be in effect no
injunction, order or decree of any nature issued, ordered or
granted by any Governmental Entity of competent jurisdiction
that restrains or prohibits in any material respect or would
award substantial damages in connection with, the
consummation of the transactions contemplated hereby;
(e) All material consents and approvals, if any, which
are required from any Government Entity in order to permit
Purchaser to consummate the transactions contemplated by
this Agreement to occur on the Closing Date shall have been
duly given;
(f) Seller shall have executed (where appropriate) and
delivered to Purchaser the documents referred to in
Section 3.2 herein;
(g) The waiting period (and any statutory extension
thereof) applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or
been terminated and no action, suit or proceeding shall have
been instituted by the Justice Department or the Federal
Trade Commission to challenge the transactions contemplated
hereby under the Clayton Act or the Sherman Act;
(h) Purchaser shall have received an opinion of
counsel for Guarantor and Seller (which can be from in-house
counsel) substantially in form and of the substance set
forth in Appendix IV hereto;
(i) Seller shall have delivered to Purchaser releases
of all Liens set forth on Schedule 4.7(a) to Seller's
Disclosure Letter; and
(j) Guarantor, Seller and Purchaser shall have agreed
to the allocation of the Purchase Price as contemplated by
the first sentence of Section 6.11.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
8.1 Survival of Representations. The representations and
warranties set forth in Sections 4.1, 4.2, 4.7(a) and 5.2 shall
survive the Closing, and any investigations by the parties and
shall survive indefinitely. The representations and warranties
set forth in Sections 4.5 and 4.11 shall survive the Closing, and
any investigations by the parties and with respect to the
representations and warranties set forth in Section 4.11 shall
survive until midnight Houston time on the third anniversary of
the Closing Date and shall then expire and with respect to the
representations and warranties set forth in Section 4.5 shall
survive until expiration of the statute of limitations or other
limitations or the time within which claims relating to the
underlying matters covered by such representation and warranties
shall have expired and shall then expire, unless the period
covered by such statute of limitations or similar limitation
shall exceed five years or shall be of indefinite duration, in
which event such representations and warranties shall survive
until midnight Houston time on the fifth anniversary of the
Closing Date and shall then expire. All other representations
and warranties of the parties or any authorized representative
thereof contained in this Agreement, or in any Seller Document,
Guarantor Document or Purchaser Document shall survive the
Closing, and any investigations by the parties, and shall survive
until midnight Houston time on the second anniversary of the
Closing Date, and shall then expire. Upon the expiration of any
representation and warranty pursuant to this Section 8.1, unless
written notice of a claim based on such representation and
warranty shall have been delivered to the Indemnitee prior to the
such expiration, no claim may be brought based on the breach of
such representation and warranty.
8.2 Indemnity.
(a) Subject to the provisions of this Article VIII,
Seller shall indemnify and hold Purchaser and its wholly-
owned Affiliates, the Acquired Companies and Purchaser's
permitted assigns and successors in interest to the
Purchased Assets ("Purchaser Indemnitees") harmless from and
against any Losses of any kind or nature whatsoever, which
may be incurred or suffered by any of the Purchaser
Indemnitees and which may arise out of, result from, or be
based upon:
(i) any breach of or inaccuracy in any
representation or warranty of Seller made in this
Agreement or any Seller Documents;
(ii) the ownership, management, operation or use
by Seller or Seller's Affiliates of the Purchased
Assets or the conduct of the Business by Seller or
Seller's Affiliates on or prior to the Closing Date
other than the Assumed Liabilities;
(iii) any debts, liabilities or
obligations of, or claims against Guarantor, Seller or
any of Seller's Affiliates (other than the Acquired
Companies), direct or indirect, fixed, contingent or
otherwise, known or unknown, existing as of or prior to
the Closing Date or arising out of facts or
circumstances existing at or prior to the Closing Date
other than the Assumed Liabilities;
(iv) any debts, liabilities or obligations
of, or claims against any of the Acquired Companies,
direct or indirect, fixed, contingent or otherwise,
known or unknown, existing as of or prior to the
Closing Date or arising out of facts or circumstances
existing at or prior to the Closing Date other than
those liabilities which are reflected or reserved
against on the Subtec Balance Sheet; and
(v) the failure of Guarantor, Seller or Seller's
Affiliates to perform the covenants and obligations
imposed on it by this Agreement or the Seller Documents
or to discharge liabilities to third Persons (other
than the obligations listed or described on Schedule
1.1(e) to Seller's Disclosure Letter relating to
Assumed Contracts or otherwise expressly assumed by
Purchaser herein);
provided, however, that Seller shall have no obligation to
indemnify and hold Purchaser Indemnitees harmless (A) with
respect to claims or Losses arising out of, resulting from or
based upon any breach or inaccuracy in any representation or
warranty of Seller unless Seller receives notice of such claims
or Losses in accordance with Section 8.3 prior to the expiration
of such representation or warranty as provided in Section 8.1
hereof (or, if the applicable survival period is the statute of
limitations or similar period, within 20 Business Days after the
end of the applicable period) or (B) with respect to claims or
Losses arising out of, resulting from or based upon the
ownership, management, operation or use by Seller or Seller's
Affiliates of the Purchased Assets or the conduct of the Business
by Seller or Seller's Affiliates on or prior to the Closing Date
unless Seller receives notice of such claims or Losses in
accordance with Section 8.3 prior to the fifth anniversary of the
Effective Time.
(b) Subject to the provisions of this Article VIII,
Purchaser shall indemnify and hold Guarantor, Seller and its
wholly-owned Affiliates ("Seller Indemnitees") harmless from
and against, any Losses of any kind or nature whatsoever,
which may be incurred or suffered by any of the Seller
Indemnitees and which may arise out of, result from, or be
based upon:
(i) any breach of or inaccuracy in any
representation or warranty of Purchaser made in this
Agreement or in any Purchaser Documents;
(ii) the ownership, management, operation or use
by Purchaser or its Affiliates of the Purchased Assets
or the conduct of the Business following the Closing
Date;
(iii) the failure of Purchaser or its
Affiliates to pay, perform or discharge when due
obligations arising under the Assumed Contracts after
the Closing Date; and
(iv) the failure of Purchaser to perform the
covenants and obligations imposed on it by this
Agreement or any of the Purchaser Documents, including
the payment of all Transfer Taxes as provided in this
Agreement;
provided, however, that Purchaser shall have no obligation to
indemnify and hold Seller Indemnitees harmless (A) with respect
to Claims or Losses arising out of, resulting from or based upon
any breach or inaccuracy in any representation or warranty of
Purchaser unless Purchaser receives notice of such Claims or
Losses in accordance with Section 8.3 prior to the expiration of
such representation or warranty as provided in Section 8.1 hereof
or (B) with respect to Claims or Losses arising out of, resulting
from or based upon the ownership, management, operation or use by
Purchaser of the Purchased Assets or the conduct of the Business
by Purchaser after the Closing Date unless Purchaser receives
notice of such Claims or Losses in accordance with Section 8.3
prior to the fifth anniversary of the Effective Time.
8.3 Notice and Participation
(a) If a claim, demand or Action is asserted by a
third Person against a Person indemnified pursuant to this
Article VIII ("Indemnitee"), and if such Indemnitee intends
to seek indemnity with respect thereto under this Article
VIII (which claim, demand or Action is herein called an
"Third Party Claim"), the Indemnitee shall promptly, and in
any event within 30 days of the assertion of such Third
Party Claim, notify the Person from whom indemnification is
sought ("Indemnitor") of such Third Party Claim which notice
shall state with reasonable particularity the circumstances
giving rise to such notice. Failure to notify the
Indemnitor timely shall not relieve the Indemnitor of any
liability which the Indemnitor might have to the Indemnitee
except to the extent (and only to the extent) such failure
materially prejudices the Indemnitor's position. In the
event of the assertion of any Third Party Claim, Indemnitor,
at its option, may assume (with legal counsel reasonably
acceptable to the Indemnitee) at its sole cost and expense
the defense of any Third Party Claim if it acknowledges to
the Indemnitees in writing its obligations to indemnify the
Indemnitee with respect to all elements of such Third Party
Claim, and may assert any defense of Indemnitee or
Indemnitor; provided that Indemnitee shall have the right at
its own expense to participate jointly with Indemnitor in
the defense of any such Third Party Claim; provided,
however, that if the Indemnitee, in its sole discretion,
determines that there exists a conflict of interest between
the Indemnitor (or any constituent party thereof) and the
Indemnitee or that different defenses may be available, the
Indemnitee (or any constituent party thereof) shall have the
right to engage separate counsel, the reasonable costs and
expenses of which shall be paid by the Indemnitor, but in no
event shall the Indemnitee be liable for the costs and
expenses of more than one such separate counsel. Counsel
representing both the Indemnitor and the Indemnitee must
acknowledge in writing its obligation to act as counsel for
all parties being represented and must acknowledge and
respect separate attorney client privileges with respect to
each party represented. If Indemnitor elects to undertake
the defense of any Third Party Claim hereunder, Indemnitee
shall cooperate with Indemnitor in the defense or settlement
of the Third Party Claim. The Indemnitor shall not be
entitled to settle any Third Party Claim without the prior
written consent of the Indemnitee, which consent shall not
be unreasonably withheld.
(b) If the Indemnitor, by the thirtieth day after
receipt of notice of any Third Party Claim (or, if earlier,
by the tenth day preceding the day on which an answer or
other pleading must be served in order to prevent judgment
by default in favor of the person asserting the Third Party
Claim) does not assume actively and in good faith the
defense of any such Third Party Claim or Action resulting
therefrom, the Indemnitee may defend against such claim or
litigation, after giving notice of the same to the
Indemnitor, on such terms as the Indemnitee may deem
appropriate, and the Indemnitor shall be entitled to
participate in (but not control) the defense of such action,
with its counsel and at its own expense. The Indemnitee
shall not settle or compromise any Third Party Claim for
which it is entitled to indemnification hereunder, without
the prior written consent of the Indemnitor (which shall not
be unreasonably withheld or delayed) unless suit shall have
been instituted against it and the Indemnitor shall not have
taken control of such suit. Notwithstanding anything in
this Article XIII to the contrary (a) Purchaser shall in all
cases be entitled to control of the defense of any action if
it (I) may adversely effect the Purchaser or its Affiliates
other than as a result of money damages; or (II) may have an
adverse impact on the Business or the financial condition of
Purchaser or its Affiliates (including an effect on the Tax
liabilities, earnings or ongoing business relationships of
Purchaser or its Affiliates) even if the Indemnitors pay all
indemnification amounts in full, and (b) the Indemnitor
shall not, without the written consent of the Indemnitee
(which shall not be unreasonably withheld or delayed),
settle or compromise any Third Party Claim or consent to the
entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnitee of an unconditional release from
all liability in respect of such Third Party Claim.
(c) If any Indemnitee believes there exists any claim
(other than Third Party Claims) with respect to which any
Indemnitor is obligated to provide indemnification pursuant
to Sections 8.1(a) or 8.1(b), or pursuant to any other
specific indemnification covenant contained in this
Agreement, the Indemnitee shall give the Indemnitor written
notice thereof which notice shall state with reasonable
particularity the circumstances giving rise to such Claim
and shall specify, if known, the amount of the Losses for
which indemnification is sought.
8.4 Indemnification of Negligence of Indemnitee. The
indemnification provided in this Article VIII shall be applicable
whether or not the Losses are contributed to by the negligence or
fault of the Indemnitee, provided that in the event of such
contributory negligence or fault of Indemnitee, then Indemnitee
shall not be indemnified hereunder in the proportion that the
Indemnitee's negligence or fault caused any such Losses.
8.5 Indemnification Threshold; Maximum Losses; Exclusive
Remedy. Except in cases of fraud, knowing or willing
misrepresentation, neither the Purchaser Indemnitees on the one
hand, nor the Sellers Indemnitees on the other hand shall be
entitled to make any claim for indemnification under Section
8.2(a)(i) or 8.2(b)(i), respectively, (a) unless and until the
aggregate of all Losses suffered by them and for which
indemnification under such provision is sought shall exceed
$900,000, but in such event, such Person shall be entitled to
indemnification for the full amount of such Losses without regard
to the $900,000 threshold and (b) except for Losses resulting
from breaches of Sections 4.1, 4.2 and 4.7, neither Seller nor
Guarantor shall have any obligation under Section 8.2(b)(i) in
respect of Losses in excess of $51,000,000. Except as provided
in Section 6.7(d) in the event the Closing Date occurs, the
remedies provided in this Article 8 shall be the exclusive remedy
for damages (whether at law or in equity) as a result of or
relating to Losses.
8.6 Payment. Any claim, other than a Third Party Claim,
shall be conclusive against the Indemnitor in all respects 90
days after receipt by the Indemnitor of notice thereof in
accordance with Section 8.3(c), unless within such period the
Indemnitor sends the Indemnitee a notice disputing the propriety
of the claim. Such notice of dispute shall described the basis
for such objection and the amount of the claim as to which the
Indemnifying Party does not believe should be subject to
indemnification. If it is finally determined that all or a
portion of such claim amount is owed to the Indemnitee, the
Indemnitor shall, within 5 Business Days of such determination,
pay the Indemnitee such amount owed in cash, together with
interest from the date that the Indemnitee initially requested
such payment until the date of actual payment, at an annual rate
equal to the prime interest rate then generally in effect on the
date of payment as set forth in The Wall Street Journal.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated by:
(a) the mutual consent of Purchaser, Guarantor and
Seller;
(b) the Purchaser at any time prior to the Closing (i)
in the event the Seller or Guarantor has breached any
representation, warranty, or covenant contained in this
Agreement in any material respect and the Purchaser has
notified the Seller of the breach, and (x) if such breach is
curable by Seller or Guarantor and such breach has continued
without cure for a period of 10 days after the notice of
breach or (y) Seller and Guarantor have not provided
indemnification and agreed to hold Purchaser and its
Affiliates harmless from all Losses resulting from or
arising out of such breach in a manner reasonably
satisfactory to Purchaser or (ii) if the Closing shall not
have occurred on or before the later of July 31, 1997 and
the eleventh day after any notice given by Purchaser
pursuant to clause (i) above by reason of the failure of any
condition precedent under Section 7.2 hereof (unless the
failure results primarily from the Purchaser itself
breaching any representation, warranty, or covenant
contained in this Agreement);
(c) the Seller may terminate this Agreement at any
time prior to the Closing (i) in the event the Purchaser has
breached any representation, warranty, or covenant contained
in this Agreement in any material respect, the Seller has
notified the Purchaser of the breach and (x) if such breach
is curable by Purchaser and such breach has continued
without cure for a period of 10 days after the notice of
breach or (y) Purchaser has not provided indemnification and
agreed to hold Seller, Guarantor and their Affiliates
harmless from all Losses resulting from or arising out of
such breach in a manner reasonably satisfactory to Seller,
or (ii) if the Closing shall not have occurred on or before
the later of July 31, 1997 and the eleventh day after any
notice given by Seller pursuant to clause (i) above, by
reason of the failure of any condition precedent under
Section 7.1 hereof (unless the failure results primarily
from the Seller itself breaching any representation,
warranty, or covenant contained in this Agreement);
(d) either Guarantor and Seller or Purchaser if there
shall be in effect at any time a final unappealable
injunction, order or decree of any nature issued, ordered or
granted by any Governmental Entity of competent jurisdiction
that restrains or prohibits in any material respect, or
would award substantial damages in connection with,
consummation of the transactions contemplated hereby;
(e) Purchaser pursuant to the second sentence of
Section 2.1(b) herein; or
(f) either Guarantor and Seller or Purchaser pursuant
to the proviso to Section 10.11 herein.
9.2 Effect of Termination.
(a) In the event of termination pursuant to
Section 9.1 herein, written notice shall forthwith be given
to the other parties. In the event of termination of this
Agreement, neither Purchaser, Guarantor nor Seller nor any
of their respective stockholders, directors, officers or
employees shall have any liability to the other party or any
of the foregoing for costs, expenses, loss of anticipated
profit or otherwise, provided, however, that if such
termination was caused by or resulted from an intentional
breach (or a breach resulting from gross negligence) of any
covenant of this Agreement, then the party breaching this
Agreement shall indemnify and hold harmless the other
parties for all of their out-of-pocket costs, fees and
expenses, including those of their legal counsel,
accountants, financial advisors and other experts and
advisors, incident to the negotiation, due diligence,
pursuit, preparation and execution of this Agreement and the
transactions contemplated hereby.
(b) Notwithstanding the termination of this Agreement
pursuant to Section 9.1 herein, the obligations of the
parties hereto under the following sections shall survive
such termination: Sections 6.9(c), 9.2, 10.7 and 10.8.
ARTICLE X
MISCELLANEOUS
10.1 Waivers and Amendments. Any waiver of any term or
condition of this Agreement, or any amendment or modification of
this Agreement, shall be effective only if set forth in a written
document executed by a duly authorized officer of each of the
parties. A waiver of any breach or failure to enforce any of the
terms or conditions of this Agreement shall not in any way
affect, limit or waive a party's other rights hereunder at any
time to enforce strict compliance thereafter with every term or
condition of this Agreement.
10.2 Notices. Any notice, request, instruction, demand or
other communication to be given hereunder by either party hereto
to the other shall be given in writing and shall be delivered
either by hand, by telegram, telex, telecopy or similar facsimile
means, or by registered or certified mail, postage prepaid,
return receipt requested, as follows:
(a) If to Purchaser, addressed to:
Global Industries, Ltd.
900 Haliburton Centre
5151 San Felipe
Houston, Texas 77056
Attention: William J. Dore
Telecopy No: 713/624-2299
With copies to:
Jeffery B. Floyd
Vinson & Elkins L.L.P.
2500 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Telecopy No: 713/758-2346
(b) If to Guarantor or Seller, addressed to:
SubSea International, Inc.
Greenwell Base
Greenwell Road
Aberdeen AB12 3AX Scotland
U. K.
Attention: Brent Ford
Telecopy No: 011-44-1224-292-270
With a copy to:
C.E. Ables
Vice President and General Counsel
Dresser Industries, Inc.
2001 Ross Avenue
Dallas, Texas 75201
Telecopy No: 214-740-6009
or to such other address or number as either party shall have
previously designated by written notice given to the other party
in the manner hereinabove set forth. Notices shall be deemed
given when received, if sent by telegram, telex, telecopy or
similar facsimile means, and when delivered and receipted for, if
mailed or hand delivered.
10.3 Headings. The Article and Section headings herein are
for convenience only and shall not affect the construction
hereof.
10.4 [Intentionally Deleted].
10.5 Entire Agreement. This Agreement, Seller's Disclosure
Letter, any Supplemental Asset Acquisition Agreements, the
Appendices hereto, Seller Documents and the Purchaser Documents
constitute the entire agreement between the parties pertaining to
the subject matter hereof and supersede all other prior and
contemporaneous agreements and understandings, both oral and
written, of the parties in connection therewith. No covenant or
condition not expressed in this Agreement shall affect or be
effective to interpret, change or restrict this Agreement.
10.6 Severability. If any term, provision, covenant or
condition of this Agreement is held by any court of competent
jurisdiction to be invalid, void or unenforceable in any respect,
the remainder of such term, provision, covenant or condition in
every other respect and the remainder of the terms, provisions,
covenants or conditions of this Agreement shall continue in full
force and effect and shall in no way be affected, impaired or
invalidated.
10.7 Public Announcements. Neither of the parties hereto,
except as required by any law, Governmental Entity or stock
exchange rule, shall release to the public any information
concerning this Agreement or the transactions contemplated
hereby, without having first obtained the approval of the other
parties hereto, which approval may not be unreasonably withheld.
10.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
10.9 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. This
Agreement shall not be assigned without the express prior written
consent of the parties hereto except that the rights and
obligations of Purchaser may be assigned and delegated to any
wholly-owned Affiliate of Purchaser without the consent of the
other parties hereto, provided, however, that no such assignment
or delegation shall relieve Purchaser of liability therefor.
10.10 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
10.11 Risk of Loss. The risk of any loss, damage,
impairment, confiscation or condemnation of the Purchased Assets,
or any part thereof, shall be upon the Seller and its Affiliates
at all times prior to the Closing Date. In any such event, the
proceeds of, or any claim for any loss payable under any
insurance policy, judgment or award with respect thereto shall be
payable to Seller. In such event, Seller shall either: (i)
repair, replace or restore any such property as soon as possible
after its loss, impairment, confiscation or condemnation; or (ii)
if insurance proceeds are sufficient to repair, replace or
restore the property, pay such proceeds to Purchaser on the
Closing Date; provided that in the event of damage that would
have a Material Adverse Effect on the Business or the Purchased
Assets, either party may terminate this Agreement.
10.12 Transfer of Certain Assets. Purchaser may cause
Seller to transfer to one or more of Purchaser's Affiliates on
the Closing Date all of the Purchased Assets to be sold,
conveyed, transferred, assigned and delivered to Purchaser
hereunder. Any such transfers shall be to Purchaser's Affiliates
designated by Purchaser, and such designation shall not relieve
Purchaser from any of its obligations under this Agreement and
shall be made on or prior to the fifth business day preceding the
Closing Date, and provided that such designation does not
increase any Transfer Taxes otherwise payable by Seller.
10.13 Guarantee. The Guarantor hereby unconditionally
and irrevocably guarantees to Purchaser and its permitted assigns
the full and punctual performance or payment when due of all the
obligations of the Seller, including pursuant to the provisions
of Articles Eight hereof, now or hereafter existing under this
Agreement or any of the Sellers Documents (the "Obligations").
The liability of the Guarantor under this Guarantee shall be
absolute, direct and unconditional, irrespective of any change in
the existence, structure or ownership of the Seller or any
insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Seller or its assets. This guarantee
shall continue to be effective or be reinstated, as the case may
be, if at any time any performance or payment of any of the
Obligations is annulled, set aside, invalidated, declared to be
fraudulent or preferential, or rescinded or is otherwise
returned, refunded or repaid by Purchaser. This guarantee shall
(a) remain in full force and effect until performance or payment
in full of all of the Obligations; (b) be binding upon the
Guarantor, its successors and assigns; provided, however, that
the Guarantor's obligations hereunder may not be assigned without
the consent of Purchaser; and (c) inure to the benefit of and be
enforceable by Purchaser and its successors, transferees and
permitted assigns. The Guarantor hereby waives presentment,
demand, protest, diligence, notice of acceptance and, except as
set forth herein, and to the fullest extent permitted by
applicable law, any other notice with respect to any of the
Obligations and this guarantee; and any requirement that
Purchaser exhaust any right or take any action first against the
Seller or any other Person or entity (it being the intention of
the parties hereto that this guarantee is to be a guarantee of
performance or payment and not of collection) or that the Seller
or any other Person be joined in any action hereunder. Should
Purchaser seek to enforce the obligations of the Guarantor
hereunder by action in any court having jurisdiction over the
Guarantor and the subject matter hereof, the Guarantor waives any
necessity, substantive or procedural, that a judgement previously
be rendered against the Seller or any other Person, or that any
action be brought against the Seller or any other Person, or any
other Person should be joined in such cause. Such waiver shall
be without prejudice to Purchaser at its option to proceed
against the Seller or any other Person, whether by separate
action or by joinder. The Obligations of the Guarantor hereunder
are several from the obligations of the Company or any other
Person, and are primary obligations concerning which the
Guarantor is the principal obligor. The Guarantor agrees that
this guarantee shall not be discharged except by the complete and
irrevocable performance of all Obligations and the obligations of
the Guarantor hereunder. No failure on the part of Purchaser to
exercise, and no delay in exercising, any right, power or
privilege hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
PURCHASER: SELLER:
GLOBAL INDUSTRIES, LTD. SUBSEA INTERNATIONAL, INC.
By: /S/ WILLIAM J. DORE By: /S/ STEVE R. PIERCE
William J. Dore Steve R. Pierce, Sr.
Chairman of the Board and Senior Vice President-Finance
Chief Executive Officer
GUARANTOR:
DRESSER INDUSTRIES, INC.
By: /S/ A.J. STANLEY
A.J. Stanley
Vice President _ Operations
APPENDIX I
Sellers Affiliates
Sub Sea Australia Inc. (Delaware)
Sub Sea International New Zealand Inc. (Delaware)
SubSeaKat (Malaysia) Sdn Bhd. (Malaysia)
Sub Sea Offshore Inc. (Delaware)
Sub Sea Overseas Inc. (Panama)
Sub Sea Offshore (Pte) Limited (Singapore)
P.T. Sub Sea Tritek (Indonesia)
Each of the acquired Companies listed below
SubSea Offshore Limited
Acquired Companies
Subtec Middle East Limited (Delaware)
Subtec Asia Limited (Isle of Man)
Subtec Middle East Company (Private) Limited (United Arab
Emirates)
Subtec Marine Service Limited (Cyprus)
Subtec National Company L.L.C. Limited (United Arab
Emirates)
Subtec Laut Sdn. Bhd. (Brunei)
Subtec Offshore Support Limited (Cyprus)
Subtec Saudi Arabic Limited (Saudi Arabia)
Subtec (M) Sdn. Bhd. (Malaysia)
Subtec Offshore (Sabah) Sdn Bhd. (Malaysia)
Yamado Enterprise Sdn. Bhd. (Brunei)
PRESS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: Michael J. Pollock
(318-989-0000)
073197.41
Global Industries Completes Acquisition of Assets From Sub Sea
International, Inc.
Lafayette, Louisiana, (July 31, 1997). Global Industries, Ltd.
(Nasdaq: GLBL) announced today that it has completed the
previously announced acquisition of certain business operations
and assets of Sub Sea International, Inc. and certain of its
subsidiaries. The purchase price of $102 million was paid in
cash and was funded from available cash and borrowings under
Global's existing credit line. The major assets acquired in the
transaction include three construction barges, four liftboats and
one dive support vessel based in the United States, four support
vessels based in the Middle East, and support vessels and ROV's
based in the Far East and Asia Pacific.
Global's Chairman and CEO, William J. Dore stated, "The
acquisition of these business operations and assets continues our
plan of growing the Company through strategic acquisitions and
provides Global additional assets in the Gulf of Mexico and
Southeast Asia." Mr. Dore continued, "This acquisition should
also provide additional opportunities for Global to utilize some
of its existing construction vessels and services, such as diving
and pipebury, in Southeast Asia. The Sub Sea assets will
complement our December 1996 acquisition of Divcon's assets
located in that area and will permit Global to become a major
provider of offshore construction services in Southeast Asia."
Global Industries, Ltd., whose shares are traded on the Nasdaq
National Market System under the symbol "GLBL," provides
construction services, including pipeline construction, platform
installation and removal, and diving services to the offshore oil
and gas industry.
-End-
