<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - For the Quarterly Period Ended SEPTEMBER 30, 1994
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - For the Transition Period From
___________________________ to ____________________________
Commission file number 1-6311
TIDEWATER INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 72-0487776
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1440 Canal Street, Suite 2100, New Orleans, Louisiana 70112
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 568-1010
NOT APPLICABLE
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or of such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--------- ---------
53,095,815 shares of Tidewater Inc. common stock $.10 par value per share were
outstanding on October 21, 1994. Registrant has no other class of common stock
outstanding.
-1-
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
September 30, March 31,
ASSETS 1994 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash, including temporary cash investments $ 64,955 106,788
Trade and other receivables 140,015 140,627
Inventories 39,952 34,561
Other current assets 9,430 4,440
- ----------------------------------------------------------------------------------------------------------------------------
Total current assets 254,352 286,416
- ----------------------------------------------------------------------------------------------------------------------------
Investments in, at equity, and advances to
unconsolidated companies 21,033 21,843
Properties and equipment 1,325,890 1,286,245
Less accumulated depreciation 866,160 838,067
- ----------------------------------------------------------------------------------------------------------------------------
Net properties and equipment 459,730 448,178
Other assets 48,979 53,449
- ----------------------------------------------------------------------------------------------------------------------------
$ 784,094 809,886
============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Convertible subordinated debentures redeemed
on April 18, 1994 --- 47,526
Current maturities of other long-term debt 2,391 2,730
Accounts payable and accrued expenses 74,062 69,804
Income taxes 10,288 10,230
- ----------------------------------------------------------------------------------------------------------------------------
Total current liabilities 86,741 130,290
- ----------------------------------------------------------------------------------------------------------------------------
Deferred income taxes 47,358 45,099
Long-term debt 1,053 1,952
Accrued property and liability losses 33,335 36,163
Other liabilities and deferred credits 42,108 39,421
Stockholders' equity:
Common stock of $.10 par value;
issued 53,095,353 shares at
September and 53,022,955 shares
at March 5,310 5,302
Additional paid-in capital 332,751 331,690
Retained earnings 246,153 231,001
- ----------------------------------------------------------------------------------------------------------------------------
584,214 567,993
Less:
Cumulative foreign currency
translation adjustment 10,715 11,032
- ----------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 573,499 556,961
Commitments and other matters (Note 3)
- ----------------------------------------------------------------------------------------------------------------------------
$ 784,094 809,886
============================================================================================================================
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
-2-
<PAGE> 3
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
September 30, September 30,
1994 1993 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Marine operations $ 115,648 119,750 234,066 235,975
Compression operations 15,599 14,419 30,512 27,351
- ---------------------------------------------------------------------------------
131,247 134,169 264,578 263,326
- ---------------------------------------------------------------------------------
Costs and expenses:
Marine operations 71,967 74,078 144,376 146,715
Compression operations 8,882 8,094 17,509 15,428
Depreciation 20,210 20,940 40,775 41,690
General and administrative 14,711 15,330 29,982 30,363
- ---------------------------------------------------------------------------------
115,770 118,442 232,642 234,196
- ---------------------------------------------------------------------------------
15,477 15,727 31,936 29,130
Other income (expenses):
Foreign exchange gain (loss) 116 (52) (516) (265)
Gains on sales of assets 2,147 2,283 4,471 2,717
Equity in net earnings of
unconsolidated companies 1,008 478 1,944 1,153
Minority interests (127) (464) (692) (1,270)
Interest and miscellaneous income 1,114 1,573 4,253 3,302
Other expense --- (300) --- (300)
Interest expense (241) (2,483) (648) (5,260)
- ---------------------------------------------------------------------------------
4,017 1,035 8,812 77
- ---------------------------------------------------------------------------------
Earnings before income taxes 19,494 16,762 40,748 29,207
Income taxes 7,167 7,620 14,980 11,851
- ---------------------------------------------------------------------------------
Earnings before extraordinary item 12,327 9,142 25,768 17,356
Extraordinary loss on early
extinguishment of debt
(net of income taxes) --- (4,450) --- (4,450)
- ---------------------------------------------------------------------------------
Net earnings $ 12,327 4,692 25,768 12,906
=================================================================================
Primary and fully-diluted
earnings per common share:
Earnings before extraordinary item $ .23 .17 .48 .32
Extraordinary item -- (.08) -- (.08)
- ---------------------------------------------------------------------------------
Net Earnings $ .23 .09 .48 .24
=================================================================================
Weighted average common
shares and equivalents 53,421,828 53,320,685 53,404,653 53,326,160
=================================================================================
Cash dividends declared
per common share $ .10 .10 .20 .10
=================================================================================
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
-3-
<PAGE> 4
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
September 30, September 30,
--------------------- ---------------------
1994 1993 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net cash provided by operating activities $ 30,816 27,842 62,048 55,424
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of assets 4,281 5,530 8,518 7,254
Additions to properties and equipment (43,184) (14,871) (55,300) (26,934)
Investments in unconsolidated companies,
net of dividends received 551 132 2,868 (1,814)
Investment from minority interests,
net of dividends paid (26) (1,078) (1,655) (1,540)
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing
activities (38,378) (10,287) (45,569) (23,034)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on long-term debt (830) (51,565) (47,904) (54,094)
Prepayment penalty on early
extinguishment of debt --- (6,473) --- (6,473)
Cash dividends paid (5,309) (5,294) (10,616) (10,583)
Other 203 268 208 558
- -------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (5,936) (63,064) (58,312) (70,592)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash,
including temporary cash investments (13,498) (45,509) (41,833) (38,202)
- -------------------------------------------------------------------------------------------------------------------
Cash, including temporary cash investments
at beginning of period 78,453 116,276 106,788 108,969
- -------------------------------------------------------------------------------------------------------------------
Cash, including temporary cash investments
at end of period $ 64,955 70,767 64,955 70,767
===================================================================================================================
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest $ 318 1,917 1,658 5,479
Income taxes $ 11,961 6,686 12,773 8,688
===================================================================================================================
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
-4-
<PAGE> 5
TIDEWATER INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Interim Financial Statements
The consolidated financial information for the interim periods
presented herein has not been audited by independent accountants, but
in the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the
condensed consolidated balance sheets and the condensed consolidated
statements of earnings and cash flows at the dates and for the periods
indicated have been made. Results of operations for interim periods
are not necessarily indicative of results of operations for the
respective full years.
(2) Earnings Per Share
Primary and fully diluted earnings per share are computed on the
weighted average number of shares and dilutive equivalent shares of
common stock (stock options and restricted stock grants) outstanding
during each period using the treasury stock method.
(3) Commitments and Other Matters
An employment and consulting agreement exists with the company's
chairman of the board and chief executive officer whereby he will
continue as an employee until the 1994 annual stockholders meeting
(October 20, 1994) and thereafter for a period of three years will
serve as a consultant to the company. The terms of the employment
agreement provide, among other things, for an annual salary/consulting
fee. An employment agreement exists with the company's president and
chief operating officer whereby he will serve in such capacity until
the 1994 annual stockholders meeting, and thereafter serve as chairman
of the board, president and chief executive officer for three years.
The terms of the employment agreement provide for an annual base
salary and certain other benefits, including 70,000 shares of
restricted common stock of the company. These restricted shares vest
at varying intervals when the average sales price of the common stock
reaches certain predetermined levels. Compensation continuation
agreements exist with all other officers of Tidewater Inc., whereby
each receives compensation and benefits in the event that their
employment is terminated following certain events relating to a change
in control of the company. The maximum compensation amount that could
be paid under the compensation continuation agreements, based on
present salary levels, is approximately $6,100,000. The amount that
could be paid for certain benefits is not presently determinable.
(4) Income Taxes
Income tax expense for interim periods is based on estimates of the
effective tax rate for the entire fiscal year. The effective tax rate
was 37% for the quarter and six-month period ended September 30, 1994.
For the quarter ended September 30, 1993 additional income tax expense
of approximately $1.9 million was recorded for the revaluation of
deferred tax assets and liabilities at the higher statutory income tax
rates contained in the Omnibus Budget Reconciliation Act passed by
Congress in August 1993. The effective tax rate for the quarter and
six-month period ended September 30, 1993,
-5-
<PAGE> 6
exclusive of the $1.9 million of additional income tax expense, was
34%.
(5) Segment Information
Revenues and operating profits for the company's business segments are
as follows:
<TABLE>
<CAPTION>
(In thousands)
- -------------------------------------------------------------------------------------------------------------
Quarter Ended Six Months Ended
September 30, September 30,
----------------------------- ---------------------------
1994 1993 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Marine $ 115,648 119,750 234,066 235,975
Compression 15,599 14,419 30,512 27,351
- -------------------------------------------------------------------------------------------------------------
$ 131,247 134,169 264,578 263,326
=============================================================================================================
Operating profit:
Marine:
From operations $ 16,544 17,132 33,754 32,065
Gain on sales of
assets 1,517 1,586 3,794 1,987
Unusual item --- --- 1,700 ---
- -------------------------------------------------------------------------------------------------------------
Total Marine
operating profit $ 18,061 18,718 39,248 34,052
=============================================================================================================
Compression:
From operations 2,027 1,669 3,762 2,768
Gain on sales of
assets 630 697 677 730
------------------------------------------------------------------------------------------------------------
Total Compression
operating profit $ 2,657 2,366 4,439 3,498
=============================================================================================================
</TABLE>
The $ 1.7 million unusual item is related to refunds received from the
settlement of property tax disputes related to prior years. The
settlement amount is included in interest and miscellaneous income in
the Condensed Consolidated Statement of Earnings for the six-month
period ended September 30, 1994.
(6) Proposed Acquisition
On October 18, 1994, the company entered into an agreement to purchase
the natural gas compression assets of Halliburton Company for $205
million in cash. The proposed acquisition will be accounted for as a
purchase and is subject to certain regulatory approvals. It is
anticipated that the acquisition, if approved, will be consummated by
December 31, 1994.
-6-
<PAGE> 7
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Tidewater Inc.:
We have reviewed the condensed consolidated balance sheet of Tidewater Inc. and
subsidiaries as of September 30, 1994 and the related condensed consolidated
statements of earnings and cash flows for the three-month and six-month periods
ended September 30, 1994 and 1993. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Tidewater Inc. as of March 31,
1994, and the related consolidated statements of earnings, stockholders'
equity, and cash flows for the year then ended (not presented herein); and in
our report dated May 5, 1994 we expressed an unqualified opinion on those
consolidated financial statements. In our opinion the information set forth in
the accompanying condensed consolidated balance sheet as of March 31, 1994 is
fairly presented, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
October 18, 1994
-7-
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
This discussion and analysis of financial position and results of operations
should be read in conjunction with the unaudited condensed consolidated
financial statements and the related disclosures.
Fiscal 1995 second quarter operating performance was consistent with the second
quarter of fiscal 1994. Domestically, market conditions are good, although not
as good as a year ago. Internationally, market conditions overall remain
relatively stable.
LIQUIDITY AND CAPITAL RESOURCES
Fiscal 1995 six-month operating activities generated cash in excess of amounts
generated for the corresponding period of fiscal 1994. The amount of cash
generated from operations is primarily determined by the overall level of
Marine operating margins (defined as Marine revenues less Marine operating
expenses, excluding depreciation). Fiscal 1995 six-month Marine operating
margins were greater than the respective fiscal 1994 six-month amount primarily
because of higher day rates for the domestic-based vessel fleet. Operating
activities have generated and continue to generate cash in excess of amounts
required to satisfy current obligations. Utilization levels and day/rental
rates expected for the remainder of fiscal 1995 for the Marine vessel fleet and
Compression rental equipment should maintain this condition.
Investing activities for the three-month and six-month periods ended September
30, 1994 rose significantly above corresponding amounts consumed during the
three-month and six-month periods ended September 30, 1993. The principal
components that determine the amount of cash used in investing activities are
additions to properties and equipment and proceeds from sales of assets.
-8-
<PAGE> 9
The following tables compare these two items, by business segment, for the
quarters and six-month periods ended September 30:
<TABLE>
<CAPTION>
(In thousands)
- -----------------------------------------------------------------------------
Quarter Ended Six Months Ended
September 30, September 30,
------------- ----------------
1994 1993 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Additions to Properties
and Equipment:
- ------------------
Marine:
Additional equipment $ 4,185 -- 9,870 2,359
Modifications to
existing equipment 2,715 1,843 6,678 7,877
Other 424 241 1,106 708
- -----------------------------------------------------------------------------
7,324 2,084 17,654 10,944
- -----------------------------------------------------------------------------
Compression:
- --------------
Additional equipment 32,646 11,510 32,646 13,281
Modifications to
existing equipment 1,938 880 3,307 1,934
Other 1,198 291 1,475 544
- -----------------------------------------------------------------------------
35,782 12,681 37,428 15,759
General Corporate 78 106 218 231
- -----------------------------------------------------------------------------
$ 43,184 14,871 55,300 26,934
=============================================================================
Proceeds from sales of assets:
- --------------------------------
Marine equipment 3,072 4,107 7,212 5,511
Compression equipment 1,209 1,423 1,306 1,743
- -----------------------------------------------------------------------------
$ 4,281 5,530 8,518 7,254
=============================================================================
</TABLE>
For the quarter ended September 30, 1994 the Marine segment purchased two
offshore tugs. The Marine segment also acquired a supply vessel and a crewboat
previously leased by the company. Compression's equipment additions for the
quarters ended September 30, 1994 and 1993 are for the purchase of
approximately 375 and 120 gas compressors, respectively. Because current
economic conditions generally do not produce an adequate return on investment
relative to the costs of new construction, expansion of the Marine vessel fleet
and Compression rental fleet, for the most part, will continue to come from
existing excess industry supplies.
Fiscal 1995 second quarter financing activities consumed significantly less
cash than the amount for the corresponding period of the prior fiscal year due
to a significant reduction in principal payments on long-term debt. Fiscal
1994 second quarter financing activities included $57.6 million for the early
extinguishment and associated prepayment penalties of notes due in quarterly
installments through 1999. Principal payments in the current quarter consist
of normal scheduled debt repayments on the remaining capitalized lease
obligations.
Continued dividend payments are subject to declaration by the Board of
Directors and are subject to limitation by the Company's revolving credit and
term loan agreement.
On October 18, 1994, the company entered into an agreement to purchase the
natural gas compression assets of Halliburton Company for $205 million in cash.
The proposed acquisition will be accounted for as a purchase and is subject to
certain regulatory approvals. It is anticipated that the acquisition, if
approved, will be consummated by December 31, 1994.
-9-
<PAGE> 10
RESULTS OF OPERATIONS
Revenues and operating profits by business segment and by geographic location
for the quarters and six-month periods ended September 30 and for the quarter
ended June 30, 1994 are:
<TABLE>
<CAPTION>
(In thousands)
- ------------------------------------------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June
------------- ---------------- -------
1994 1993 1994 1993 1994
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Marine:
United States $ 53,363 49,895 107,033 93,435 53,670
Foreign 62,285 69,855 127,033 142,540 64,748
- ------------------------------------------------------------------------------
115,648 119,750 234,066 235,975 118,418
Compression - United States 15,599 14,419 30,512 27,351 14,913
- ------------------------------------------------------------------------------
$ 131,247 134,169 264,578 263,326 133,331
==============================================================================
Operating profit (loss):
Marine:
United States 9,610 8,464 22,145 15,221 12,535
Foreign 8,451 10,254 17,103 18,831 8,652
- ------------------------------------------------------------------------------
18,061 18,718 39,248 34,052 21,187
- ------------------------------------------------------------------------------
Compression 2,657 2,366 4,439 3,498 1,782
Equity in net earnings of
unconsolidated companies 1,008 478 1,944 1,153 936
Other income 629 518 690 1,333 61
General corporate expenses (2,620) (2,835) (4,925) (5,569) (2,305)
Interest expense (241) (2,483) (648) (5,260) (407)
- ------------------------------------------------------------------------------
Earnings before income taxes 19,494 16,762 40,748 29,207 21,254
Income taxes (7,167) (7,620) (14,980) (11,851) (7,813)
- ------------------------------------------------------------------------------
Earnings before
extraordinary item 12,327 9,142 25,768 17,356 13,441
Extraordinary item --- (4,450) --- (4,450) ---
- ------------------------------------------------------------------------------
Net earnings $ 12,327 4,692 25,768 12,906 13,441
==============================================================================
</TABLE>
Compared with the same quarter of fiscal 1994 and the first quarter of fiscal
1995, fiscal 1995 second quarter consolidated revenues declined approximately
2.2% and 1.6%, respectively. Earnings before income taxes for the three-month
period ended September 30, 1994 rose 16.3% above the fiscal 1994 second quarter
amount but dropped 8.3% below the prior quarter amount. The increase in
current quarter pre-tax earnings over the corresponding amount for the same
quarter a year ago is primarily attributable to considerably lower interest
expense and higher Compression operating profits. Lower interest expense is a
direct result of the retirement of long-term debt during fiscal 1994 and the
early redemption of the convertible subordinated debentures in April 1994.
Higher Compression operating profits in the current quarter compared to the
year ago period resulted primarily from higher utilization of gas compressors.
Overall, fiscal 1995 second quarter Marine operating profit did not materially
change from the year ago level because the increase in operating profit for the
domestic-based vessel fleet due to higher vessel day rates, was entirely offset
by lower foreign operating profit as a result of a significant drop in the size
of the foreign-based vessel fleet.
-10-
<PAGE> 11
The decline in fiscal 1995 second quarter pre-tax earnings compared with the
prior quarter's amount is principally due to lower Marine operating profits.
Marine operating profits for the quarter ended June 30, 1994 included
approximately $1.7 million of refunds resulting from the settlement of prior
years' property tax disputes and $.8 million of higher gains on sales of
assets.
Fiscal 1995 six-month consolidated revenues were generally flat compared with
the same period of fiscal 1994. However, fiscal 1995 six-month pre-tax
earnings rose approximately 39.5% above the fiscal 1994 six-month pre-tax
amount. Fiscal 1995 six-month earnings includes approximately $1.7 million of
property tax refunds, $1.8 million of higher gains on sales of assets,
considerably lower interest expense, as explained above, and higher Compression
operating profits. Higher Compression operating profits for the six-month
period ended September 30, 1994 compared with the year ago period is due to
higher utilization of a larger fleet of gas compressors.
Net earnings for the quarter and six-month period ended September 30, 1993
included approximately $1.9 million of additional income tax expense for the
cumulative effect of revaluing deferred tax assets and liabilities at the
higher statutory income tax rates contained in the Omnibus Budget
Reconciliation Act passed in August 1993.
Net earnings for the current quarter and six-month period were also adversely
affected by a higher effective tax rate of 37% as compared with 34% for the
corresponding periods of fiscal 1994, excluding the cumulative effect of the
new tax law passed by Congress in August 1993. The higher effective tax rate
is primarily due to the exhaustion of book-based net operating loss
carryforwards.
The extraordinary item for the quarter ended September 30, 1993 resulted from
the early extinguishment of $51.1 million of long-term debt. The extraordinary
item consists of a $4.2 million after-tax prepayment penalty and the write-off
of associated deferred finance costs of $.3 million.
-11-
<PAGE> 12
General and administrative expenses for the quarters and six-month periods
ended September 30 and for the quarter ended June 30, 1994 consist of the
following:
<TABLE>
<CAPTION>
(In thousands)
- -----------------------------------------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June
-------------- ---------------- -------
1994 1993 1994 1993 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Type:
Personnel $ 9,446 9,525 18,493 19,163 9,047
Office and property 2,217 2,327 4,579 4,695 2,362
Sales and marketing 885 1,027 1,938 2,030 1,053
Professional services 733 887 1,559 2,210 826
Taxes other than income taxes 198 593 788 1,144 590
Other 1,232 971 2,625 1,121 1,393
- -----------------------------------------------------------------------------
$ 14,711 15,330 29,982 30,363 15,271
=============================================================================
</TABLE>
Professional services for the six-month period ended September 30, 1993
includes approximately $350,000 of costs associated with a secondary stock
offering. The increase in current quarter and six-month other general and
administrative expense above the respective prior year levels is primarily due
to higher reserves for uncollectible accounts.
MARINE SEGMENT
The marine segment provides a diverse range of services and equipment to the
offshore oil and gas industry. Because operating costs and depreciation do not
change proportionally with changes in revenues, the amount of operating profit
for the Marine segment is primarily determined by vessel fleet utilization and
day rates. Operating margins from brokered vessels and shipyard activity
generally contribute nominally to Marine operating profit.
Revenues for the Marine segment for the quarters and six-month periods ended
September 30 and for the quarter ended June 30, 1994 consist of the following:
<TABLE>
<CAPTION>
(In thousands)
- -----------------------------------------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June
-------------- ---------------- -------
1994 1993 1994 1993 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Owned or chartered vessels:
Domestic $ 45,205 44,642 90,741 85,048 45,536
Foreign 62,224 69,855 126,514 142,540 64,290
- -----------------------------------------------------------------------------
107,429 114,497 217,255 227,588 109,826
Brokered vessels 3,271 2,772 6,140 5,200 2,869
Shipyard sales 4,948 2,481 10,671 3,187 5,723
- -----------------------------------------------------------------------------
$ 115,648 119,750 234,066 235,975 118,418
=============================================================================
</TABLE>
-12-
<PAGE> 13
Marine fleet utilization is affected primarily by market conditions. It is
also influenced to a lesser degree by drydockings to satisfy safety and
inspection requirements. Marine vessels must undergo periodic inspections to
remain properly classified and certified. These inspections, whenever possible,
are done during seasonally slow periods to minimize the impact on vessel
operations and are only done if the vessel is considered to have continuing
economic viability. The following table compares day-based Marine fleet
utilization percentages by vessel class and in total for the quarters and
six-month periods ended September 30 and for the quarter ended June 30, 1994:
<TABLE>
<CAPTION>
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June
-------------- ---------------- -------
1994 1993 1994 1993 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
UTILIZATION:
- ------------
Domestic-based fleet:
- ----------------------
Towing Supply/Supply 86.3% 93.6% 85.5% 92.8% 84.6%
Crew/Utility 92.9% 95.0% 92.0% 92.7% 91.0%
Offshore Tugs 63.9% 66.7% 64.9% 65.8% 66.0%
Other 50.9% 69.0% 51.2% 72.8% 51.6%
Total 80.0% 84.8% 79.9% 84.2% 79.8%
Foreign-based fleet:
- ---------------------
Towing Supply/Supply 81.7% 77.4% 81.9% 79.1% 82.2%
Crew/Utility 74.5% 67.9% 74.0% 72.7% 73.5%
Offshore Tugs 71.3% 79.0% 76.0% 80.3% 80.4%
Other 42.0% 75.1% 49.0% 73.0% 55.7%
Total 72.2% 76.0% 74.0% 77.4% 75.9%
Worldwide fleet:
- ----------------
Towing Supply/Supply 83.3% 82.3% 83.1% 83.1% 83.0%
Crew/Utility 84.8% 81.5% 83.8% 82.7% 82.7%
Offshore Tugs 67.5% 72.9% 70.5% 73.3% 73.5%
Other 43.8% 73.4% 49.4% 72.9% 55.0%
Total 75.2% 79.2% 76.3% 79.8% 77.3%
=============================================================================
</TABLE>
The domestic fleet consist of vessels operating in U.S. waters while the
foreign fleet consist of vessels operating outside U.S. waters.
Current quarter and six-month utilization of the domestic-based vessel fleet
fell below the respective year ago levels because of decreased demand for
offshore marine services in the U.S. Gulf of Mexico. Utilization of the
domestic-based vessel fleet for the three-month period ended September 30, 1994
was unchanged from the prior quarter level due to a continued favorable level
of demand for offshore marine services in the U.S. Gulf of Mexico despite lower
U.S. natural gas prices. Demand for offshore marine services was consistent
with the prior quarter because of the long-term outlook for higher U.S. natural
gas prices. Lower utilization of a smaller foreign-based vessel fleet for the
current quarter and six-month period compared with the year ago quarter and
six-month period is primarily attributable to significantly lower activity for
the inland towing fleet in Nigeria. The remainder of the foreign-based vessel
fleet for the current quarter and six-month period has operated at utilization
levels consistent with the levels experienced for the respective year ago
periods.
-13-
<PAGE> 14
Marine vessel day rates are primarily determined by the demand created through
the level of offshore exploration, development and production spending by
energy exploration and production companies. Suitability of equipment, the
degree of service provided and the overall supply of marine service vessels
also influence vessel day rates. The following table provides a comparison of
average vessel day rates by class and in total for the quarters and six-month
periods ended September 30 and for the quarter ended June 30, 1994:
<TABLE>
<CAPTION>
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June
-------------- ---------------- -------
1994 1993 1994 1993 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE VESSEL DAY RATES:
- -------------------------
Domestic-based fleet:
- ----------------------
Towing Supply/Supply $ 3,458 3,430 3,599 3,337 3,738
Crew/Utility 1,250 1,227 1,261 1,205 1,272
Offshore Tugs 4,486 4,146 4,310 4,257 4,126
Other 2,971 1,697 2,946 1,709 2,918
Total $ 3,014 2,839 3,062 2,797 3,111
Foreign-based fleet:
- ---------------------
Towing Supply/Supply $ 3,616 3,714 3,611 3,667 3,606
Crew/Utility 1,752 1,677 1,752 1,739 1,752
Offshore Tugs 2,416 3,122 2,606 3,055 2,766
Other 789 551 738 551 701
Total $ 2,917 2,839 2,879 2,828 2,843
Worldwide fleet:
- -----------------
Towing Supply/Supply $ 3,560 3,616 3,607 3,558 3,653
Crew/Utility 1,445 1,415 1,459 1,440 1,473
Offshore Tugs 3,421 3,585 3,385 3,573 3,353
Other 1,313 843 1,178 859 1,071
Total $ 2,957 2,839 2,953 2,816 2,949
==============================================================================
</TABLE>
The domestic fleet consist of vessels operating in U.S. waters while the
foreign fleet consist of vessels operating outside U.S. waters.
Although average vessel day rates for the domestic-based vessel fleet for the
current quarter and six-month period are higher than they were for the
corresponding periods of fiscal 1994, they continued to decline from the fiscal
1995 first quarter level. This is primarily due to the continued over supply
of vessels in the U. S. Gulf of Mexico which began in the fourth quarter of
fiscal 1994 and has continued for most of fiscal 1995. Day rates for the
foreign-based vessel fleet have remained relatively stable over the past twelve
months. Near-term improvement in average vessel day rates for the
domestic-based vessel fleet may occur if demand for offshore marine services
increases in the U. S. Gulf of Mexico. Average day rates for the foreign-based
vessel fleet are not expected to change materially due to present market
conditions. Long-term improvement in average vessel day rates for the
worldwide fleet may result if oil and gas industry analysts' predictions of
higher oil and gas prices materialize.
-14-
<PAGE> 15
The following tables compare the average number of vessels by class and by
geographic location during the quarters and six-month periods ended September
30 and for the quarter ended June 30, 1994 and the actual September 30, 1994
vessel count:
<TABLE>
<CAPTION>
Average number of vessels during
Actual --------------------------------
vessel Quarter Six Months Quarter
count at Ended Ended Ended
September 30, September 30, September 30, June
- -----------------------------------------------------------------------------
Domestic-based fleet: 1994 1994 1993 1994 1993 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Towing Supply/Supply 91 91 85 94 83 95
Crew/Utility 50 49 46 48 46 48
Offshore Tugs 49 49 47 47 46 46
Other 15 15 23 14 23 13
- -----------------------------------------------------------------------------
Total 205 204 201 203 198 202
- -----------------------------------------------------------------------------
Foreign-based fleet:
- ---------------------
Towing Supply/Supply 178 179 195 176 198 175
Crew/Utility 38 39 46 41 46 42
Offshore Tugs 47 46 49 48 50 49
Other 57 57 62 59 63 61
- -----------------------------------------------------------------------------
Total 320 321 352 324 357 327
- -----------------------------------------------------------------------------
Owned or chartered
vessels included in
marine revenues 525 525 553 527 555 529
Vessels withdrawn
from active service 15 17 13 18 13 18
Joint venture owned
vessels 43 43 43 43 43 43
- -----------------------------------------------------------------------------
Total 583 585 609 588 611 590
=============================================================================
Worldwide fleet:
- -----------------
Towing Supply/Supply 307 309 314 309 315 309
Crew/Utility 93 93 99 94 99 97
Offshore Tugs 98 97 98 99 98 97
Other 85 86 98 86 99 87
- -----------------------------------------------------------------------------
Total 583 585 609 588 611 590
=============================================================================
</TABLE>
The drop in the average size of the foreign-based vessel fleet from 352 a year
ago to the current 321 is primarily due to several vessels being withdrawn from
active service due to age and anticipated high repair and maintenance costs,
the transfer of vessels to the domestic-based vessel fleet and the return of
vessels to their owners which could not be operated profitably. As the Marine
vessel fleet ages additional vessels may be withdrawn from active service.
-15-
<PAGE> 16
The following table compares major components of Marine operating costs and
compares selected statistics for owned and chartered vessels for the quarters
and six-month periods ended September 30 and for the quarter ended June 30,
1994:
<TABLE>
<CAPTION>
(In thousands)
- ------------------------------------------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June
------------- ---------------- -------
1994 1993 1994 1993 1994
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Crew costs $ 32,576 34,213 64,557 68,197 31,981
Repair and maintenance 15,200 17,510 30,892 36,386 15,692
Vessel insurance 7,300 6,362 14,954 12,508 7,654
Fuel, lube, and supplies 5,188 5,463 9,966 11,205 4,778
Charter fees,
mobilization/demobilization 1,884 2,045 3,713 3,903 1,829
Other 2,580 3,379 4,964 6,477 2,384
- ------------------------------------------------------------------------------
Total operating costs
of owned and chartered
vessels 64,728 68,972 129,046 138,676 64,318
Brokered vessels costs 3,075 2,610 5,612 4,838 2,537
Shipyard costs 4,164 2,496 9,718 3,201 5,554
- ------------------------------------------------------------------------------
$ 71,967 74,078 144,376 146,715 72,409
==============================================================================
For owned and chartered
vessels:
Overall percentage
increase (decrease) in
operating costs from
same period of prior
fiscal year (6.2%) 13.1% (6.9%) 15.4% (7.7%)
==============================================================================
Operating costs as a
percentage of
related revenues 60.3% 60.2% 59.4% 60.9% 58.6%
==============================================================================
</TABLE>
Changes in fleet size and utilization are the principal factors which cause
fluctuations in the amount of crew costs. Lower crew costs for the quarter and
six-month period ended September 30, 1994 compared with the corresponding year
ago periods is primarily the result of a decrease in average fleet size
combined with the lower activity level of the domestic-based vessel fleet. The
absence of significant new vessel construction within the energy services
industry over the past 10 to 12 years has caused the average age of the
Company's Marine vessel fleet to rise. Currently the average age of the
Company's Marine vessel fleet is approximately 16 years. Though primarily
dictated by regulatory agencies, the scheduling of vessel drydockings together
with the age of the vessels affects the amount of repair and maintenance
expense in any period. Vessel drydockings, whenever possible, are scheduled to
minimize any impact on revenues. Higher vessel insurance costs for the current
quarter and six-month period are, in part, the result of a much tougher
insurance market which is unwilling to provide past levels of coverage at the
rates experienced in prior periods.
Gains from sales of assets contributed $1.5 million and $3.8 million for the
quarter and six-month period ended September 30, 1994, respectively. For the
quarter and six-month period ended September 30, 1993, gains from asset sales
contributed $ 1.6 million and $2.0 million, respectively.
-16-
<PAGE> 17
COMPRESSION SEGMENT
The Compression segment provides natural gas and air compression services and
equipment for a variety of applications primarily in the oil and gas and
petrochemical industries. It also designs, fabricates and installs engineered
compressor systems. Compression operating profit is significantly affected by
the mix of sales and rental revenues because gross profits on sales are
generally less than operating margins for rental revenues.
Compression segment revenues are compared in the following table on a dollar
basis and as a percentage of total Compression revenues for the quarters and
six-month periods ended September 30 and for the quarter ended June 30, 1994:
<TABLE>
<CAPTION>
(In thousands)
- -----------------------------------------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June
-------------- ---------------- -------
1994 1993 1994 1993 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rentals:
Gas compressors $ 8,150 7,668 16,176 14,652 8,026
Air compressors 1,081 1,114 1,852 1,980 771
- -----------------------------------------------------------------------------
Total rental revenues 9,231 8,782 18,028 16,632 8,797
Equipment and parts sales 5,871 5,126 11,495 9,797 5,624
Repair and service 497 511 989 922 492
- -----------------------------------------------------------------------------
$ 15,599 14,419 30,512 27,351 14,913
=============================================================================
As a percentage of total
Compression revenues:
Rentals 59% 61% 59% 61% 59%
Equipment and parts sales 38% 36% 38% 36% 38%
Repair and service 3% 3% 3% 3% 3%
- -----------------------------------------------------------------------------
100% 100% 100% 100% 100%
=============================================================================
</TABLE>
Gas compressor utilization is affected primarily by natural gas storage levels
and by the number and age of producing oil and gas wells which, in turn, are
dependent upon the price levels of oil and natural gas. Air compressor
utilization is heavily dependent upon short-term customer needs. Suitability,
availability and rental rates for equipment are also major factors which affect
utilization of both gas and air compression equipment. Gas compressor rentals
are generally for a longer term than are air compressor rentals.
-17-
<PAGE> 18
The following table compares utilization, average rental rates and average
fleet size for gas and air compressors for the quarters and six-month periods
ended September 30 and for the quarter ended June 30, 1994:
<TABLE>
<CAPTION>
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June
-------------- ---------------- -------
1994 1993 1994 1993 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gas Compressors
(HP based statistics):
Utilization 87.0% 85.5% 86.4% 82.4% 85.8%
Average monthly rental rate $ 16.70 16.58 16.73 16.71 16.77
Average fleet size 187,105 180,307 186,464 177,352 185,951
==============================================================================
Air Compressors
(CFM based statistics):
Utilization 32.0% 39.6% 28.3% 34.6% 24.7%
Average daily rental rate $ .22 .20 .22 .20 0.20
Average fleet size 166,750 155,350 166,000 153,400 165,250
==============================================================================
</TABLE>
Fiscal 1995 second quarter and six-month gas compressor utilization climbed
above the corresponding levels of fiscal 1994 because of higher demand for
natural gas compression services. Despite a decline in the price of U.S.
natural gas, demand for natural gas compression services remained firm during
the current quarter because of the long-term favorable outlook for U.S. natural
gas prices. Six-month gas compressor rental revenues also grew as a result of
a larger gas compressor fleet.
Fiscal 1995 second quarter and six-month air compressor utilization fell below
year ago levels due to continued weak demand for air compression services.
Operating costs of the Compression segment consist of the following for the
quarters and six-month periods ended September 30 and for the quarter ended
June 30, 1994:
<TABLE>
<CAPTION>
(In thousands)
- ---------------------------------------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June
-------------- ---------------- -------
1994 1993 1994 1993 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Field operating expenses:
Wages and benefits $ 1,641 1,572 3,202 3,112 1,561
Repairs and maintenance 1,422 1,523 3,116 2,940 1,694
Other 964 706 1,790 1,390 826
- ---------------------------------------------------------------------------
4,027 3,801 8,108 7,442 4,081
Cost of sales 4,855 4,293 9,401 7,986 4,546
- ---------------------------------------------------------------------------
$ 8,882 8,094 17,509 15,428 8,627
===========================================================================
Field operating costs as a
percentage of rental, repair
and service revenues 41.4% 40.9% 42.6% 42.4% 43.9%
===========================================================================
Costs of sales as a percentage
of related revenues 82.7% 83.7% 81.8% 81.5% 80.8%
===========================================================================
</TABLE>
-18-
<PAGE> 19
Field operating expenses relate to gas and air compressor rental operations.
Field operating expenses are generally consistent from period-to-period and
usually vary in the short-term due to fluctuations in the level of repairs and
maintenance expense. Long-term growth in field operating expenses will occur
primarily as a result of increased fleet size and general inflationary factors.
Costs of sales consist primarily of wages and benefits and material costs
associated with the design, fabrication and installation of packaged compressor
systems.
Gains from sales of assets have contributed $.6 million and $.7 million for
the quarter and six-month period ended September 30, 1994. For the quarter and
six-month period ended September 30, 1993 gains from sales of assets
contributed $.7 million to segment operating profits.
On September 30, 1994 the Compression segment purchased, for $35 million in
cash, all of the assets of Brazos Gas Compressing Company, a subsidiary of
Mitchell Energy & Development Corporation. The purchase includes 370 gas
compressors aggregating more than 58,000 horsepower and increases the gas
compressor fleet to approximately 1,400 units and 245,000 horsepower. The
purchase had no effect on current quarter segment revenues or operating
profits.
INFLATION AND CURRENCY FLUCTUATIONS
Because of its significant foreign operations, the company is exposed to
currency fluctuations and exchange risks. To minimize the financial impact of
these items the company attempts to contract a majority of its services in
United States dollars.
Day-to-day operating costs are generally affected by inflation. However,
because the energy services industry requires specialized goods and services,
general economic inflationary trends may not affect the company's operating
costs. The major impact on operating costs is the level of offshore
exploration and development spending by energy exploration and production
companies. As this spending increases, prices of goods and services used by
the oil and gas industry and the energy services industry will increase.
Future improvements in vessel day rates and compressor rental rates may buffer
the company from the inflationary effects on operating costs.
ENVIRONMENTAL MATTERS
During the ordinary course of business the company's operations are subject to
a wide variety of environmental laws and regulations. The company attempts to
comply with these laws and regulations in order to avoid costly accidents and
related environmental damage. The company is currently involved in litigation
with the Environmental Protection Agency concerning the disposal of oilfield
wastes. In the opinion of management, the ultimate liability with respect to
the litigation will not have a material adverse effect on the company's
financial position.
-19-
<PAGE> 20
PART II. OTHER INFORMATION
Item 5. Other Information
A. On October 18, 1994 the Company announced that it had entered into an
agreement to purchase the natural gas compression assets of
Halliburton Company for $205 million in cash. The transaction, which
is subject to regulatory approval, is expected to be closed by
December 31, 1994.
B. On October 20, 1994 the company announced that William C. O'Malley
was elected a director. Mr. O'Malley was also appointed Chairman
and Chief Executive Officer of the company effective with the
retirement of John P. Laborde on October 20, 1994. The Company
previously reported that Mr. O'Malley was appointed President and
Chief Operating Officer on June 13, 1994.
C. On October 20, 1994 Austin M. Seay was elected a Vice President of
the Company. Mr. Cseay is Area Manager, Singapore, for Tidewater
Marine International, Inc. Mr. Seay joined the Company in 1978.
Item 6. Exhibits and Reports on Form 8-K
A. At page 22 of this report is the index for those exhibits required
to be filed as a part of this report.
B. No reports on Form 8-K have been filed for the quarter ended
September 30, 1994.
-20-
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TIDEWATER INC.
(Registrant)
Date: October 21, 1994
/s/ Ken C. Tamblyn
Executive Vice President and Chief
Financial Officer
Date: October 21, 1994
/s/ Victor I. Koock
Senior Vice President, Secretary,
and Co-General Counsel
-21-
<PAGE> 22
EXHIBIT INDEX
Exhibit
Number
10 Purchase and Sale Agreement dated October 18, 1994 by and between
Tidewater Inc. and Halliburton Company and Halliburton Canada Inc.
11 Statement - Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
TIDEWATER INC.
A DELAWARE CORPORATION
AS PURCHASER
AND
HALLIBURTON COMPANY,
A DELAWARE CORPORATION
AND
HALLIBURTON CANADA INC.
AN ALBERTA, CANADA CORPORATION
AS SELLING ENTITIES
DATED AS OF THE 18TH DAY OF OCTOBER, 1994.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
PURCHASE AND SALE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
R E C I T A L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.01 SALE AND PURCHASE OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------------------------
(a) ASSETS TRANSFERRED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------
(1) TANGIBLE PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------
(2) INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------
(3) ASSIGNED CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . 5
------------------
(4) OWNED REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . 5
-------------------
(5) INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 5
---------------------
(6) BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------
(7) MOTOR VEHICLES. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------
(8) PERMITS AND LICENSES. . . . . . . . . . . . . . . . . . . . . . . . 6
--------------------
(10) COMPUTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------
(11) OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
------------
(b) ASSETS NOT TRANSFERRED. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------------------
(1) CASH, CASH EQUIVALENTS AND EMPLOYEE ACCOUNTS RECEIVABLE. . . . . . 6
-------------------------------------------------------
(2) REFUND CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------
(3) THIRD PARTY CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . 6
------------------
(4) INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------
(5) UNRELATED CONFIDENTIAL INFORMATION AND CERTAIN PROCESSES. . . . . . 7
--------------------------------------------------------
(6) SELLING ENTITIES' MARKS AND PROPRIETARY SYSTEMS AND PROCEDURES. . . 7
--------------------------------------------------------------
(7) UNRELATED ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------------
(8) EXCLUDED PERSONAL PROPERTY. . . . . . . . . . . . . . . . . . . . . 7
--------------------------
(9) CONTRACTS NOT ASSIGNED. . . . . . . . . . . . . . . . . . . . . . . 7
----------------------
(10) RETAINED PATENT. . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------
(11) WRITTEN OFF RECEIVABLES. . . . . . . . . . . . . . . . . . . . . . 7
-----------------------
(12) AFFILIATE ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------
(13) SELLING ENTITIES' EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . 7
----------------------------------------
2.02 INSTRUMENTS OF CONVEYANCE AND TRANSFER. . . . . . . . . . . . . . . . . . . . . . . 8
--------------------------------------
2.03 NONASSIGNABLE CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-----------------------
ARTICLE III
CLOSING, PURCHASE PRICE,
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.01 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------
3.02 CONSIDERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------------
3.03 PURCHASE PRICE AND PAYMENT THEREOF. . . . . . . . . . . . . . . . . . . . . . . . . 9
----------------------------------
(a) PURCHASE PRICE AND PAYMENT OF ESTIMATED PURCHASE PRICE. . . . . . . . . . . 9
------------------------------------------------------
(b) DETERMINATION OF PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . 9
-------------------------------
(c) ADJUSTMENT AND SETTLEMENT OF PURCHASE PRICE. . . . . . . . . . . . . . . . 10
-------------------------------------------
(d) ALLOCATION OF PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . 11
----------------------------
(e) ACCOUNTING OBJECTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------
3.04 ASSUMPTION OF LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------
(a) ASSIGNED CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------------------
(b) TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----
(c) OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------
(d) FINAL CLOSING BALANCE SHEET LIABILITIES . . . . . . . . . . . . . . . . . . 12
---------------------------------------
(e) POST CLOSING DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------------------
(f) UNASSIGNED CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------------------
3.05 EXCLUDED LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------------------
3.06 SHARED LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------------
ARTICLE IV
PURCHASER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.01 ORGANIZATION AND GOOD STANDING. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------------------
4.02 AUTHORIZATION AND VALIDITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------
4.03 NO VIOLATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------
4.04 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------
4.05 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------
4.06 BANKER'S/FINDER'S FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------------------
ARTICLE V
SELLING ENTITIES' REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.01 ORGANIZATION AND GOOD STANDING. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------------------
5.02 AUTHORIZATION AND VALIDITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------------------
5.03 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------------
5.04 ABSENCE OF CERTAIN CHANGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------------------
5.05 TITLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-----
5.06 COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-----------
5.07 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
---------------------
5.08 NO VIOLATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------
5.09 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------
5.10 APPROVALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------
5.11 LABOR RELATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------------
5.12 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------------------
5.13 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------
5.14 EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------
5.15 ASSIGNED CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------
5.16 ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------------------
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
5.17 CUSTOMERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------
5.18 BANKER'S/FINDER'S FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------------------
5.19 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------
5.20 NO OTHER ASSETS NECESSARY TO THE BUSINESS. . . . . . . . . . . . . . . . . . . . . 19
------------------------------------------
5.21 ADEQUACY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------
5.22 WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------
5.23 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------------------
ARTICLE VI
PURCHASER'S COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.01 RETENTION OF RECORDS, COOPERATION AND ACCESS. . . . . . . . . . . . . . . . . . . . 20
--------------------------------------------
(a) RETENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------
(b) COOPERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------
(c) CONTACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------
6.02 SELLING ENTITIES' NAMES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------------------
6.03 WARRANTY WORK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------------
6.04 EMPLOYEES OF THE BUSINESS AND SEVERANCE COSTS . . . . . . . . . . . . . . . . . . . 21
---------------------------------------------
6.05 NOTICE OF CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------------
6.06 HSR FILING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------
ARTICLE VII
SELLING ENTITIES' COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.01 BUSINESS OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
-------------------
7.02 ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------
7.03 APPROVALS OF THIRD PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------------------------
7.04 EMPLOYEE COMPENSATION AND BENEFIT MATTERS. . . . . . . . . . . . . . . . . . . . . . 23
-----------------------------------------
7.05 CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------
7.06 CHANGES IN PROPERTY AND EQUIPMENT; PAYMENTS OF LIABILITIES . . . . . . . . . . . . . 24
----------------------------------------------------------
7.07 MORTGAGES, LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------
7.08 NOTICE OF CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------
7.09 HSR FILING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------
7.10 EXCLUSIVITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----------
7.11 PERMITS AND COOPERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----------------------
ARTICLE VIII
OTHER REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.01 COLLECTION AND REPURCHASE OF ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . 25
------------------------------------------------
(a) COLLECTION OF THE SELLING ENTITIES' ACCOUNTS RECEIVABLE. . . . . . . . . . 25
-------------------------------------------------------
(b) REPURCHASE OF ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . 26
---------------------------------
(c) COLLECTION COOPERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
----------------------
(d) ALLOCATION OF PAYMENTS RECEIVED AFTER CLOSING . . . . . . . . . . . . . . . 27
---------------------------------------------
(e) REMEDY FOR UNCOLLECTED RECEIVABLES. . . . . . . . . . . . . . . . . . . . . 27
----------------------------------
8.02 CONDITION OF ASSETS; INTENDED USE. . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------------------------
8.03 TITLE REVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------------
8.04 TITLE POLICIES AND SURVEYS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
--------------------------
8.05 TRANSITION SERVICES AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------------------------
</TABLE>
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<TABLE>
<S> <C>
ARTICLE IX
PURCHASER'S CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.01 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------------------------------
9.02 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
---------
9.03 PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------
9.04 NO MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------------------------
9.05 BILL OF SALE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------
9.06 DELIVERY OF DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------------
9.07 CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----------
9.08 OPINION OF COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------------
ARTICLE X
SELLING ENTITIES' CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.01 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------------------------
10.02 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
---------
10.03 PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------
10.04 PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------------
10.05 BILL OF SALE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------
10.06 DELIVERY OF OTHER DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
---------------------------
10.07 CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------
10.08 OPINION OF COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-------------------
ARTICLE XI
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.01 SELLING ENTITIES' INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
---------------------------
11.02 PURCHASER'S INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------------------
11.03 BASKET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
------
11.04 NON-BASKET ITEMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------------
11.05 CAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
---
11.06 CONDITIONS OF INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------------------------
11.07 REMEDIES EXCLUSIVE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------------------
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.01 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
---------
12.02 ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
----------
12.03 NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
------
12.04 PRE-CLOSING CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------------------------
12.05 POST-CLOSING CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
----------------------------
12.06 NO COMPETITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
---------------
12.07 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
----------------
12.08 COSTS, EXPENSES AND LEGAL FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
------------------------------
12.09 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------------
12.10 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------
12.11 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-------------
12.12 CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
12.13 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------------
12.14 COOPERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-----------
12.15 BULK SALES COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------------------
12.16 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS. . . . . . . . . . 37
-----------------------------------------------------------------
12.17 RISK OF LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------
ARTICLE XIII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.01 TERMINATION RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------------
13.02 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------------------
13.03 CONTINUING OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------------------
</TABLE>
<PAGE> 7
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, dated as of the 18th day of October,
1994, ("AGREEMENT") is by and between Halliburton Company, a Delaware
corporation ("SELLER"), Halliburton Canada Inc., an Alberta, Canada corporation
("SELLER'S AFFILIATE"), and Tidewater Inc., a Delaware corporation
("PURCHASER").
R E C I T A L
WHEREAS, Seller and Seller's Affiliate (referred to collectively as
the "SELLING ENTITIES") desire to sell, and Purchaser desires to purchase,
assets and assume certain liabilities of the business conducted by the Seller
in the United States as Halliburton Compression Services Division and in Canada
as a division of Seller's Affiliate, both of which businesses are reflected in
the Financial Statements as hereinafter defined (the "Business");
NOW, THEREFORE, in consideration of the agreements, mutual
representations, warranties and covenants herein contained, and on the terms
and subject to the conditions herein set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
As used herein, the following definitions apply:
"AA" shall mean Arthur Andersen LLP.
"ACCOUNTING OBJECTIONS" shall have the meaning set forth in Section
3.03(e).
"ADJUSTED JUNE BALANCE SHEET" shall have the meaning set forth in
Section 3.03(b) (i)(2).
"ADJUSTMENT" shall have the meaning set forth in Section 3.03(c).
"AFFILIATE" shall mean a person or entity controlled by Seller.
"AFFILIATE ACCOUNTS" shall have the meaning set forth in Section
2.01(b)(12).
"AGREEMENT" shall have the meaning set forth in the first paragraph of
this document.
"ASSETS" shall have the meaning set forth in Section 2.01(a).
"ASSIGNED CONTRACTS" shall have the meaning set forth in Section
2.01(a)(3).
<PAGE> 8
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 3.04.
"BASKET" shall have the meaning set forth in Section 11.03.
"BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENTS" shall mean the
Bill of Sale, Assignment and Assumption Agreements in substantially
the form of Exhibit A hereto.
"BUSINESS" shall have the meaning set forth in the Recital above.
"BUSINESS EMPLOYEES" shall have the meaning set forth in Section 6.04.
"CLOSING" and "CLOSING DATE" shall have the meanings set forth in
Section 3.01.
"CLOSING DATE RECEIVABLES" shall have the meaning set forth in Section
8.01(a).
"CLOSING NET ASSETS" shall have the meaning set forth in Section
3.03(b)(i)(3).
"COBRA" shall have the meaning set forth in Section 5.03.
"CODE" shall have the meaning set forth in Section 3.03(d).
"COLLECTION PERIOD" shall have the meaning set forth in Section
8.01(a).
"CONFIDENTIALITY AGREEMENT" shall mean the Confidentiality Agreement
referred to in Section 12.04 and attached hereto as Exhibit C.
"CUSTOMER" shall have the meaning set forth in Section 8.01(a).
"DAMAGES" shall have the meaning set forth in Section 11.01.
"ESTIMATED PURCHASE PRICE" shall have the meaning set forth in Section
3.03 (a).
"EXCLUDED ASSETS" shall have the meaning set forth in Section 2.01(b).
"EXCLUDED LIABILITIES" shall have the meaning set forth in Section
3.05.
"FILING DATE" shall mean the date of filing the notification required
under the HSR Act.
"FINAL CLOSING BALANCE SHEET" shall have the meaning set forth in
Section 3.03 (b)(i)(1).
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
5.19.
"FIXED ASSETS" shall have the meaning set forth in Section 2.01(a)(1).
2
<PAGE> 9
"GAAP" shall have the meaning set forth in Section 3.03 (b) (i).
"HSR ACT" shall have the meaning set forth in Section 6.06.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 11.06.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 11.06.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
2.01(a)(5).
"INVENTORY" shall have the meaning set forth in Section 2.01(a)(2).
"JUNE 30 NET ASSETS" shall have the meaning set forth in Section
3.03(b)(i)(4).
"LAWS" shall mean all laws, and the rules and regulations promulgated
thereunder, of any jurisdiction applicable to the Business.
"LEASED REAL PROPERTY" shall mean the real property leased by the
Selling Entities, as described in Schedule 2.01(a)(3) hereto, to be
assigned to the Purchaser.
"MANUFACTURERS' WARRANTIES" shall have the meaning set forth in
Section 5.22.
"OWNED REAL PROPERTY" shall mean the real property owned by Seller
that is described in Schedule 2.01(a)(4) hereto.
"PERMITS" shall have the meaning set forth in Section 7.11.
"PERMITTED LIENS" shall mean (i) liens for taxes not yet due and
payable, (ii) contractual and statutory liens of landlord, warehouse,
mechanics and materialmen and other like liens which secure bills for
services or materials not yet due and payable and which arose in the
ordinary course of business and (iii) other encumbrances, easements,
and defects or irregularities in title which do not, individually or
in the aggregate, materially detract from the value or interfere with
the use of the properties affected thereby, as currently used.
"PRELIMINARY CLOSING BALANCE SHEET" shall have the meaning set forth
in Section 3.03(b)(ii).
"PURCHASER" shall mean Tidewater Inc., a Delaware corporation.
"PURCHASER'S NEW EMPLOYEES" shall have the meaning set forth in
Section 6.04.
"PURCHASE PRICE" shall have the meaning set forth in Section 3.03(a).
"REPRESENTATIVE" shall have the meaning set forth in Section 7.10.
3
<PAGE> 10
"REVIEW PERIOD" shall have the meaning set forth in Section
3.03(b)(ii).
"SELLER" shall mean Halliburton Company, a Delaware corporation.
"SELLER'S AFFILIATE" shall mean Halliburton Canada Inc., an Alberta,
Canada corporation.
"SELLING ENTITIES" shall mean Halliburton Company and Halliburton
Canada Inc.
"SELLING ENTITIES' EMPLOYEE BENEFIT PLANS" shall have the meaning set
forth in Section 2.01(b)(13).
"SELLING ENTITIES' MARKS" shall have the meaning set forth in Section
2.01(b)(6).
"TERMINATING BUSINESS EMPLOYEE" shall have the meaning set forth in
Section 6.04.
"TRANSITION SERVICES AGREEMENT" shall mean the Transition Services
Agreement substantially in the form of Exhibit F.
"UNCOLLECTED RECEIVABLES" shall have the meaning set forth in Section
8.01(b).
"WAITING PERIOD" shall mean the applicable waiting period under the
HSR Act.
"WARRANTIES" shall have the meaning set forth in Section 5.22.
"WARRANTY WORK" shall have the meaning set forth in Section 6.03.
ARTICLE II
PURCHASE AND SALE
2.01 SALE AND PURCHASE OF ASSETS.
(a) ASSETS TRANSFERRED. Subject to and upon the terms
and conditions contained herein, at the Closing, the Selling Entities shall
sell, transfer, assign, convey and deliver to Purchaser, and Purchaser shall
purchase, accept and acquire from the Selling Entities, all of the Selling
Entities' right, title and interest in and to the properties, assets and rights
of every kind and description and wherever located, whether tangible
intangible, real, personal or mixed, whether accrued, contingent or otherwise
(other than Excluded Assets), exclusively related to or exclusively used or
held for use in connection with the Business, with such additions, deletions or
changes between the date hereof and the Closing Date as are permitted under
this Agreement (collectively and individually, the "ASSETS"). The Assets shall
include, without limitation, all of those items in the following categories
used exclusively in connection with the Business (except the Excluded Assets):
4
<PAGE> 11
(1) TANGIBLE PROPERTY. All buildings,
structures, improvements, fixtures and appurtenances erected
upon, attached to, or located on any of the premises conveyed
to Purchaser as Owned Real Property together with all tangible
personal property of the Business, including, without
limitation, all machinery, equipment, tools and supplies and
furniture, in each case listed on Schedule 2.01(a)(1) (the
"FIXED ASSETS").
(2) INVENTORY. All inventory of the Business,
including, without limitation, inventory items purchased but
not received for which accounts payable invoice amounts are
included in Assumed Liabilities on the Final Closing Balance
Sheet, the latest available lists of which are summarized on
Schedule 2.01(a)(2) (the "INVENTORY").
(3) ASSIGNED CONTRACTS. All rights under the
contracts, agreements, leases, sales orders, purchase orders,
and other arrangements and commitments of the Business,
including, without limitation, those listed in Schedule
2.01(a)(3), (collectively, the"ASSIGNED CONTRACTS"), subject
to Section 2.03 and except for those contracts, agreements and
commitments which are listed in Schedule 2.01(b)(9) as
Excluded Assets.
(4) OWNED REAL PROPERTY. The real property of
the Business as described in Schedule 2.01(a)(4) (the "OWNED
REAL PROPERTY").
(5) INTELLECTUAL PROPERTY. All of Selling
Entities' rights, title and interest in and to proprietary and
technical information, trade secrets, processes, know-how,
engineering drawings, laboratory books, notebooks, journals
and quality control manuals and licenses therefor, owned, used
or licensed in the conduct of the Business, including, without
limitation, the items listed on Schedule 2.01(a)(5)
(collectively, "INTELLECTUAL PROPERTY").
(6) BOOKS AND RECORDS. Originals or copies of
all books and records (other than personnel records) and all
files, including without limitation, documents, papers,
agreements, drawings, designs, plans, methods, engineering and
manufacturing specifications, formulas, procedures, computer
programs and customer lists which relate exclusively to the
Assets or are used exclusively in connection with the Assets
or the Business, but excluding those related to the Excluded
Assets.
(7) MOTOR VEHICLES. All trucks, automobiles and
other motor vehicles owned by the Selling Entities, listed on
Schedule 2.01(a)(7)(i) and all rights of Selling Entities to
any such motor vehicles as are leased by the Selling Entities,
listed on Schedule 2.01(a)(7)(ii).
5
<PAGE> 12
(8) PERMITS AND LICENSES. All transferable
business licenses, permits, and equivalent documents, which
relate exclusively to the operations of the Business, listed
on Schedule 2.01(a)(8).
(9) ACCOUNTS RECEIVABLE. All accounts receivable
(excluding employee accounts receivable described in Section
2.01(b)(1) and accounts receivable which have been written off
the books of the Selling Entities) and all sums due for
services performed or equipment provided by the Selling
Entities prior to the Closing including, if any, unbilled
receivables as of the Closing Date.
(10) COMPUTERS. All computers and related
equipment owned by the Selling Entities as well as the rights
of the Selling Entities to any computers under lease.
(11) OTHER ASSETS. Any other asset, financial or
otherwise, that is reflected in the Final Closing Balance
Sheet or any other assets or rights expressly provided for
elsewhere herein.
(b) ASSETS NOT TRANSFERRED. Notwithstanding anything to
the contrary contained herein, the following assets and properties of the
Selling Entities, none of which are reflected on the Adjusted June Balance
Sheet, or will be reflected on the Final Closing Balance Sheet, are
specifically excluded from the Assets and shall be retained by the Selling
Entities ("EXCLUDED ASSETS"):
(1) CASH, CASH EQUIVALENTS AND EMPLOYEE ACCOUNTS
RECEIVABLE. All cash on hand and cash equivalents, including,
without limitation, bank accounts and temporary cash
investments, and all accounts receivable due from any
employees of the Selling Entities.
(2) REFUND CLAIMS. All claims of the Selling
Entities for refunds of taxes and other governmental charges
for periods ending on or prior to the Closing Date and the
benefit, if any, of net operating loss carry-forwards or
carry-backs of the Selling Entities.
(3) THIRD PARTY CLAIMS. Except as provided in
Section 12.17 hereof, all claims or rights of the Selling
Entities, if any, against third parties based on facts or
events occurring prior to the Closing Date and which are not
reflected on the Final Closing Balance Sheet.
(4) INSURANCE. Except as provided in Section
12.17 hereof, all insurance policies and rights thereunder,
including rights to any cancellation value on the Closing
Date.
6
<PAGE> 13
(5) UNRELATED CONFIDENTIAL INFORMATION AND
CERTAIN PROCESSES. All proprietary or confidential business
or technical information, intellectual property, records and
policies which relate to the Selling Entities or their other
lines of business and are not used exclusively in the
Business.
(6) SELLING ENTITIES' MARKS AND PROPRIETARY
SYSTEMS AND PROCEDURES. All marks of the Selling Entities or
the Selling Entities' Affiliates, including, without
limitation, any and all trademarks or service marks, trade
names, slogans or other like property relating to or including
the names Halliburton, Halliburton Compression Services,
Halliburton Resource Management or Halliburton Energy
Services; the marks Halliburton, Halliburton Compression
Services, Halliburton Resource Management, Halliburton Energy
Services, HRM, HCS or HES, or any derivatives or variations
thereof; the Halliburton Company, Halliburton Resource
Management and Halliburton Energy Services logos, or any
derivatives thereof ("SELLING ENTITIES' MARKS"), and the
Selling Entities' proprietary computer programs or other
software not used exclusively in the Business.
(7) UNRELATED ASSETS. All assets of the Selling
Entities not exclusively used in connection with the Business,
including, without limitation, assets used by the Selling
Entities primarily in their other businesses, whether or not
used for the benefit of the Business and those assets listed
on Schedule 2.01(b)(7).
(8) EXCLUDED PERSONAL PROPERTY. The tangible
personal property, equipment, vehicles and inventory listed on
Schedule 2.01(b)(8).
(9) CONTRACTS NOT ASSIGNED. Those agreements,
commitments and other contracts and non-transferable permits
and licenses listed on Schedule 2.01(b)(9).
(10) RETAINED PATENT. The Patent described on
Schedule 2.01(b)(10).
(11) WRITTEN OFF RECEIVABLES. Accounts or notes
receivable which have been written off the books of the
Selling Entities, but only to the extent such receivables have
been written off, and any mortgages, deeds of trust, mechanics
and materialmen liens, oil and gas liens, security interests,
pledges, and any other lien or charge of any type in favor of
the Selling Entities and securing the payment of such written
off accounts or notes receivable.
(12) AFFILIATE ACCOUNTS. All intercompany
accounts between Seller, Seller's Affiliate and Affiliates
("AFFILIATE ACCOUNTS").
(13) SELLING ENTITIES' EMPLOYEE BENEFIT PLANS.
All assets related to any pension, profit sharing, stock
bonus, stock option, thrift or other retirement
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plan, medical, hospitalization, dental, life, disability,
vacation or other insurance or benefit plan, employee stock
ownership plan, deferred compensation, stock ownership, stock
purchase, bonus, benefit or other incentive plan, severance
plan or other similar plan relating to the Selling Entities or
their employees (the "SELLING ENTITIES' EMPLOYEE BENEFIT
PLANS").
2.02 INSTRUMENTS OF CONVEYANCE AND TRANSFER. At the Closing, the
Selling Entities shall execute and deliver to Purchaser as appropriate (a) one
or more Bill of Sale, Assignment and Assumption Agreements transferring to
Purchaser the properties and assets to be acquired by it under the terms of
this Agreement in substantially the form of Exhibit A annexed hereto, (b) a
Warranty Deed and Cash Sale Deed transferring to Purchaser the Owned Real
Property in substantially the form of Exhibit B annexed hereto, and (c) such
other bills of sale, instruments of assignment, certificates of title,
registrations, licenses and other documents as may be reasonably necessary or
appropriate to vest in Purchaser good title to the Assets or to carry out the
transactions contemplated by this Agreement. The Selling Entities shall assist
Purchaser as reasonably required after the Closing to register and record with
appropriate governmental authorities the conveyance and transfer documents.
2.03 NONASSIGNABLE CONTRACTS. Subject to the Selling Entities'
covenants specified in Section 7.03, nothing in this Agreement shall be
construed as an attempt or agreement to assign any contract or claim as to
which a required third party consent to assignment cannot be obtained. If,
however, following the Closing, there is any contract, agreement, license,
lease, sales order, purchase order or other commitment which would have
constituted an Assigned Contract had the required consent been obtained, or any
claim for which consent to the assignment thereof cannot be obtained, the
Selling Entities and Purchaser agree to take such reasonable action, to the
extent permitted by applicable law, as may be necessary in order for Purchaser
to obtain the benefit and/or assume the obligations thereunder. Such actions
may include (a) the Selling Entities designating the Purchaser as the Selling
Entities' subcontractor, agent or representative for purposes of performing
such contracts and the Selling Entities collecting monies due under such
contracts and paying the same promptly over to Purchaser, and (b) enforcing for
the benefit of the Purchaser any and all rights of the Selling Entities under
any such contracts against the other parties thereto.
ARTICLE III
CLOSING, PURCHASE PRICE,
ASSUMPTION OF LIABILITIES
3.01 CLOSING. The closing of the transactions contemplated hereby
(the "CLOSING") shall take place on the later of November 30, 1994 or the
second business day (excluding holidays for national banks) next following the
day the last of the conditions precedent contained in Articles IX and X shall
have been satisfied or waived (the "CLOSING DATE"); provided, however, that if
the last of such conditions precedent shall be satisfied on or after December
28, 1994 but before December 31, 1994, the Closing shall take place on December
30, 1994, and shall be effective
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as of the close of business on December 31, 1994. The Closing shall take place
in the offices of Seller, 3600 Lincoln Plaza, 500 North Akard Street, Dallas,
Texas, and shall be deemed to be effective at the close of business on the
Closing Date.
3.02 CONSIDERATION. Upon the terms and subject to the conditions
set forth in this Agreement and in exchange and consideration for the Assets
and other consideration set forth in this Agreement, Purchaser shall:
(a) On and as of the date indicated in Section 3.01, pay
to Seller the Estimated Purchase Price in accordance with and to the extent
provided in Section 3.03; and
(b) Assume as of the Closing Date the Assumed Liabilities
in accordance with and to the extent provided in Section 3.04.
3.03 PURCHASE PRICE AND PAYMENT THEREOF.
(a) PURCHASE PRICE AND PAYMENT OF ESTIMATED PURCHASE
PRICE. Purchaser shall on the Closing Date, pay to Seller, for Seller and on
behalf of Seller's Affiliate, by wire transfer of immediately available United
States funds, to Seller's bank account at NationsBank of Texas, N.A., 901 Main
Street, Dallas, Texas 75283, Account No. 1252167824, ABA Routing No. 111000025,
$205,000,000.00 (the "ESTIMATED PURCHASE PRICE") which amount represents the
parties' current estimate of the Purchase Price.
The purchase price for the Assets and the Business shall be
the Estimated Purchase Price, subject to adjustment, dollar for dollar, to the
extent that the Closing Net Assets are greater or less than the June 30 Net
Assets ("PURCHASE PRICE").
(b) DETERMINATION OF PURCHASE PRICE.
(i) For purposes of this Agreement, (1) the
"FINAL CLOSING BALANCE SHEET" shall mean a statement of Assets
and Assumed Liabilities as of the Closing Date prepared in
accordance with Section 3.03(b)(i) and in the format set forth
on Exhibit D, (2) the "ADJUSTED JUNE BALANCE SHEET" shall mean
a statement of Assets and Assumed Liabilities as of June 30,
1994, which is attached as Exhibit E, (3) the "CLOSING NET
ASSETS" shall mean the total of Assets less Assumed
Liabilities as of the Closing Date, as set forth on the Final
Closing Balance Sheet, and (4) the "JUNE 30 NET ASSETS" shall
mean the total of Assets less Assumed Liabilities, as of June
30, 1994, as set forth on the Adjusted June Balance Sheet.
The Adjusted June Balance Sheet has been, and the
Final Closing Balance Sheet shall be, prepared from the books
and records of the Selling Entities in accordance with United
States generally accepted accounting principles ("GAAP"). In
addition, the Final Closing Balance Sheet, and the financial
information from
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which it is derived, shall be prepared on a basis consistent
with that used in the preparation of the Financial Statements
and the Adjusted June Balance Sheet.
(ii) Within thirty (30) days following the Closing
Date, Seller, with the assistance and cooperation of
Purchaser, shall prepare and deliver to Purchaser a statement
of Assets and Assumed Liabilities as of the Closing Date (the
"PRELIMINARY CLOSING BALANCE SHEET"), prepared as provided in
paragraph (i) above. Purchaser shall have ten (10) business
days following its receipt of the Preliminary Closing Balance
Sheet (the "REVIEW PERIOD"), to review the same for compliance
with paragraph (i) above. During such review period, the
Selling Entities shall, upon request of the Purchaser, grant
reasonable access to their books and records for the purpose
of permitting Purchaser to verify the information disclosed in
the Preliminary Closing Balance Sheet. On or before the
expiration of the Review Period, Purchaser shall deliver to
Seller a written statement accepting or objecting to the
Preliminary Closing Balance Sheet. In the event that
Purchaser shall object to the Preliminary Closing Balance
Sheet, such statement shall include a detailed itemization of
Purchaser's objections and its reasons therefor. Objections,
if any, shall be limited to transactions occurring subsequent
to June 30, 1994. If no such statement is delivered by
Purchaser to Seller within the Review Period, Purchaser shall
be deemed to have accepted the Preliminary Closing Balance
Sheet for purposes of determining any adjustments to the
Estimated Purchase Price.
(iii) In the event that Purchaser shall accept or
shall be deemed to have accepted the Preliminary Closing
Balance sheet as prepared and delivered by Seller, the
Preliminary Closing Balance Sheet shall constitute the Final
Closing Balance Sheet for purposes of determining any
adjustment to the Estimated Purchase Price. In the event,
however, that Purchaser shall object to the Preliminary
Closing Balance Sheet within the Review Period, Purchaser and
Seller shall promptly meet and in good faith attempt to
resolve such objection(s). Any such objection(s) which cannot
be resolved between Purchaser and Seller within thirty (30)
days following Seller's receipt of Purchaser's statement of
objection(s) shall be resolved in accordance with the
procedures set forth in Section 3.03(e). The Preliminary
Closing Balance Sheet, as adjusted to reflect the adjustments
agreed upon by the Parties or determined in accordance with
Section 3.03(e), shall constitute the Final Closing Balance
Sheet for purposes of determining any adjustment to the
Estimated Purchase Price.
(c) ADJUSTMENT AND SETTLEMENT OF PURCHASE PRICE. In the
event that the amount of the Closing Net Assets as finally determined is
greater or less than the amount of the June 30 Net Assets, such excess or
deficiency shall be referred to as the "ADJUSTMENT." On the third business day
following the date upon which the Final Closing Balance Sheet as provided for
in Section 3.03(b)(iii) is determined, Purchaser shall pay to Seller (if the
Closing Net Assets are greater than the June 30 Net Assets), or Seller shall
pay to Purchaser (if the June 30 Net
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Assets are greater than the Closing Net Assets), the amount of the Adjustment.
Any cash payment of the Adjustment shall be made by wire transfer of
immediately available United States funds. Any such payment required to be
made to Seller shall be transferred to the bank account set forth in Section
3.03(a). Any such payment required to be made to Purchaser shall be
transferred to the Purchaser's bank account identified in a written notice to
Seller.
(d) ALLOCATION OF PURCHASE PRICE. The consideration
given by Purchaser under this Agreement (including, without limitation, the
payment of the Purchase Price and the assumption of the Assumed Liabilities)
shall be allocated first between Seller and Seller's Affiliate and thereafter,
as to that portion of the Assets which are owned by the Seller at the Closing,
in accordance with section 1060 of the Internal Revenue Code of 1986, as
amended (the "CODE") and the regulations under the Code. Schedules setting
forth such proposed allocations shall be prepared by Purchaser and delivered to
the Selling Entities within one hundred twenty (120) days following the Closing
Date. The determination of the amount of consideration paid by Purchaser,
including the Assumed Liabilities, and its allocation as set forth on such
schedules shall be reasonably determined by Purchaser and shall be reasonably
satisfactory to the Selling Entities. Purchaser and the Selling Entities agree
to make such allocations in filing their respective tax returns or declarations
for applicable United States and Canadian income tax purposes.
(e) ACCOUNTING OBJECTIONS. Should the Selling Entities
and Purchaser not be able to resolve such objections as may be raised with
respect to the Preliminary Closing Balance Sheet, the Final Closing Balance
Sheet or adjustments to the Estimated Purchase Price (collectively, the
"ACCOUNTING OBJECTIONS"), the objections shall be submitted to a binding
arbitration to be conducted by the independent public accounting firm of AA
which shall represent Seller and the independent public accounting firm of KPMG
Peat Marwick LLP which shall represent Purchaser. Should AA and KPMG Peat
Marwick LLP be unable to agree on the resolution of the Accounting Objections,
after negotiating in good faith for a period of thirty (30) days, the same
shall be submitted to Deloitte & Touche for a binding resolution.
3.04 ASSUMPTION OF LIABILITIES. Purchaser shall assume at the
Closing and agrees to pay, honor and discharge in accordance with the terms
thereof all of the Assumed Liabilities. The term "ASSUMED LIABILITIES" shall
mean only the following liabilities and obligations relating to the Business
or the Assets:
(a) ASSIGNED CONTRACTS. Any and all liabilities,
obligations and commitments of the Business that arise out of or relate to the
Assigned Contracts listed on Schedule 2.01(a)(3), but in any case, not
including any liability for any breach thereof occurring prior to the Closing;
(b) TAXES. Any and all taxes which may be applicable to
the Business or Assets with respect to periods beginning with the Closing, or
arising from events or occurrences on or after the Closing, including without
limitation, income, ad valorem, personal property, sales, value added, goods
and services, use or transfer taxes resulting from the sale of the Assets to
Purchaser and/or Purchaser's ownership of the Assets. The burden of ad valorem
taxes, real property taxes,
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personal property taxes and other similar taxes for any tax year based on the
ownership of the Assets shall be prorated based on the Selling Entities' and
Purchaser's respective ownership of the Assets during such tax year. Any sum
required to be paid by one party to the other as a result of such proration
shall be paid by wire transfer of immediately available funds to the account
set forth in Section 3.03;
(c) OTHER LIABILITIES. Any and all liabilities,
obligations and commitments specifically undertaken by Purchaser pursuant to
the other terms of this Agreement;
(d) FINAL CLOSING BALANCE SHEET LIABILITIES. Any and all
liabilities included on the Final Closing Balance Sheet, including, without
limitation, all accounts payable. Pending determination of the Final Closing
Balance Sheet, Selling Entities shall furnish to Purchaser at Closing the
latest available listing of liabilities of the Business which constitute
Assumed Liabilities;
(e) POST CLOSING DAMAGES. Subject to the Selling
Entities' reimbursement obligations under Section 6.03, all risks associated
with the use following the Closing Date of any equipment purchased hereunder as
part of the Assets, including liability to any third party for any injury or
damage to persons or property and any damage to the equipment itself, due to
any condition of, defect in or design of the equipment, latent or otherwise,
whether such condition, defect or design now exists or hereafter occurs; and
(f) UNASSIGNED CONTRACTS. Any and all costs and
obligations, whether direct or indirect including, without limitation,
administrative costs, related to any unassigned contract or claim of which the
Purchaser obtains the benefit pursuant to Section 2.03.
3.05 EXCLUDED LIABILITIES. Purchaser shall not assume and shall
not be responsible for any liabilities, obligations or commitments of the
Selling Entities other than the Assumed Liabilities (the "EXCLUDED
LIABILITIES"). In addition, subject to Section 3.04(e), to the extent that,
after the Closing, the Purchaser incurs a liability or is otherwise responsible
for personal injury or property damage, fines, penalties, remediation costs or
other damages, including any liability or responsibility under any
environmental laws, then to the extent such liability is based upon a condition
or defect of the Assets that existed on or before the Closing Date or relates
to actions taken by the Selling Entities in operating the Business prior to the
Closing Date, such liability shall constitute an Excluded Liability.
3.06 SHARED LIABILITIES. Liabilities relating to the Business for
utility charges or with respect to rentals payable on leased property included
as part of the Assets, which in either case are for periods beginning before
and ending after the Closing Date, shall be shared by the Selling Entities and
Purchaser on the basis of the proportionate number of calendar days in such
period.
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ARTICLE IV
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants that the following are true and
correct as of the date of this Agreement and, except as otherwise provided
herein, as of the Closing Date:
4.01 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Purchaser has all requisite power and authority to execute
and deliver this Agreement and perform its obligations hereunder.
4.02 AUTHORIZATION AND VALIDITY. The execution, delivery and
performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditor's rights generally.
4.03 NO VIOLATION. Neither the execution and performance of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
result in a violation or breach of the Charter or Bylaws of Purchaser or any
agreement or other instrument under which Purchaser is bound or to which any
assets of Purchaser are subject, or (b) violate any applicable law or
regulation or any judgment or order of any court or governmental agency or any
indenture, agreement or other instrument to which Purchaser is a party or by
which Purchaser or its properties or assets are bound, or conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under, or result in the creation or imposition of any lien, charge or
incumbrance pursuant to, any such indenture, agreement or other instrument.
Purchaser has complied in all material respects with all applicable laws,
regulations and licensing requirements, and has filed with the proper
authorities all necessary statements and reports.
4.04 LITIGATION. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in process, pending or in effect, or, to the
knowledge of Purchaser, threatened against the Purchaser in connection with or
relating to the transactions contemplated by this Agreement.
4.05 CONSENTS. Except as otherwise provided herein, no
authorization, consent, approval, permit or license of, or filing with, any
governmental or public body or authority, any lender or lessor or any other
person or entity is required to authorize the execution, delivery and
performance of this Agreement on the part of Purchaser.
4.06 BANKER'S/FINDER'S FEE. Purchaser has made no agreement with
any person or entity nor taken any action which would cause any person or
entity to become entitled to an
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agent's, broker's, investment banking or finder's fee in connection with the
transactions contemplated hereby.
ARTICLE V
SELLING ENTITIES' REPRESENTATIONS AND WARRANTIES
.
The Selling Entities represent and warrant that the following are true
and correct as of the date of this Agreement and, except as otherwise provided
herein, as of the Closing Date:
5.01 ORGANIZATION AND GOOD STANDING. Each of the Selling Entities
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with all requisite power and
authority to carry on the Business as it is now conducted and to own and
operate the Assets and the Business as and in the places where the Business is
now conducted and such Assets are now owned, located or operated. Each of the
Selling Entities is duly qualified and licensed to do business and is in good
standing in each jurisdiction where the nature of the Business makes such
qualification necessary. Each such jurisdiction is listed on Schedule 5.01.
The Selling Entities have all necessary licenses, franchises and permits to own
and operate the Assets and to carry on the Business as presently conducted.
5.02 AUTHORIZATION AND VALIDITY. The execution, delivery and
performance of this Agreement by the Selling Entities, and the consummation of
the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of the Selling Entities. This Agreement
has been duly executed and delivered by the Selling Entities and constitutes
the legal, valid and binding obligation of the Selling Entities, enforceable
against them in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditor's rights generally.
5.03 EMPLOYEE BENEFIT PLANS. Purchaser will not incur any
liability or other obligation to, or with respect to, the Selling Entities'
Employee Benefit Plans now or at any time in the future. None of the Assets
are subject to a lien in favor of the Pension Benefit Guaranty Corporation.
All group health plans of the Selling Entities to which the Consolidated
Omnibus Budget Reconciliation Act ("COBRA") applies and that cover employees of
the Business have at all times complied with the notification and continued
coverage requirements of COBRA.
5.04 ABSENCE OF CERTAIN CHANGES. Schedule 5.04 sets forth (i) a
summary of each acquisition of compressors since June 30, 1994 and each
commitment to purchase compressors currently in effect and (ii) a summary of
each disposition since June 30, 1994 of compressors or any other property and
equipment (as used in the Financial Statements) with a book value in excess of
$10,000, and each commitment to dispose of any property and equipment (as used
in the Financial Statements) currently in effect. Except as set forth in
Schedule 5.04, between June 30, 1994 and the date of this Agreement, (i) there
has been no material adverse change in the financial condition, Assets, results
of operations, or the Business, taken as a whole, (ii) there have been no
dispositions or acquisitions of property and equipment (as used on the
Financial
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Statements), other than compressors, except in the ordinary course of the
Business consistent with past practice, (iii) the Selling Entities have not
mortgaged, pledged or suffered to exist any lien or encumbrance with respect to
any of the Assets, other than Permitted Liens, (iv) the Selling Entities have
not amended or terminated any material contracts or agreements that are listed
on Schedule 2.01(a)(3), in a manner that would have a material adverse effect
on the Business, and (v) the Selling Entities have not sold or committed to
sell any compressors which were property and equipment (as used on the
Financial Statements) of the Business at June 30, 1994.
5.05 TITLE.
(a) Except as set forth on Schedule 5.05 and except for
Permitted Liens, the Selling Entities own good and indefeasible title to, or
have a valid leasehold interest in or hold a valid right under contract or
agreement to use all Assets and such property is owned, leased or so held free
and clear of any and all liens, mortgages, pledges, charges, claims and
encumbrances of any kind. The Selling Entities warranty of title with respect
to Owned Real Property will be set forth in the deeds referred to in Section
2.02.
(b) Except as set forth in the Disclosure Letter referred
to in Section 5.23, to Selling Entities' knowledge or belief, the Owned Real
Property and the operations conducted thereon are in all material respects in
conformity with all applicable ordinances, regulations and building, zoning and
other applicable laws.
(c) Except for the Excluded Assets, the Assets constitute
all of the assets and properties used exclusively by Selling Entities in the
Business as conducted on the date of this Agreement.
5.06 COMMITMENTS.
(a) The Selling Entities have not entered into, nor are
the Assets or Business bound by, whether or not in writing, any commitment
which may, in any material respect, prevent or interfere with the Selling
Entities' transfer of the Assets and Business in accordance with this
Agreement.
(b) Except as contemplated herein, (i) the Selling
Entities do not currently contemplate, nor do they have any reason to believe
any other person or entity currently contemplates, any amendment or change to
any Assigned Contract which would have a material adverse effect on the
Business taken as a whole; and (ii) since June 30, 1994, none of the major
suppliers of the Business has refused, or communicated that it will or may
refuse, to supply goods or services, as the case may be, or has communicated
that it will or may substantially reduce the amounts of goods or services that
it is willing to sell to the Selling Entities.
5.07 INTELLECTUAL PROPERTY. The Selling Entities own, subject to
the licenses granted to third parties listed on Schedule 2.01(a)(5), all the
Intellectual Property, or possess licenses or
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other rights, if any, therefor without conflict with the rights of others and
there is no challenge, claim or action pending or, to Selling Entities'
knowledge, threatened with respect thereto. The Intellectual Property
constitutes all of the intellectual property the Selling Entities have used
exclusively in the conduct of the operations of the Business as conducted on
the date of this Agreement. Set forth in Schedule 2.01(a)(5) hereto is a true
and correct list of all licenses, assignments and other agreements relating to
the Intellectual Property to which the Selling Entities are a party (including
expiration dates if applicable). Except as set forth on such Schedule, there
are no material patents, trade secrets, copyrights, royalty rights, design
rights or inventions used exclusively now or within the past three years by the
Selling Entities in the operation of the Business.
5.08 NO VIOLATION. Neither the execution and performance of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
result in a violation or breach of the Certificate of Incorporation, Articles
of Incorporation or Bylaws of the Selling Entities, as applicable, or any
agreement or other instrument under which the Selling Entities are bound or to
which any of the assets of the Selling Entities are subject, or result in the
creation or imposition of any lien, charge or encumbrance upon any of such
assets, or (b) violate any applicable law or regulation or any judgment or
order of any court or governmental agency or any indenture, agreement or other
instrument to which either of the Selling Entities is a party or by which the
Selling Entities or their properties or assets are bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both)
a default under, or result in the creation or imposition of any lien, charge or
incumbrance pursuant to, any such indenture, agreement or instrument.
5.09 TAXES. Except where the failure to do so would not have a
material adverse effect on the Assets and the Business, the Selling Entities
have taken, or will take, all required actions relative to taxes of every type,
including, but not limited to, income, excise, corporate, franchise, property,
sales, payroll and withholding taxes, as they relate to such Assets and
Business for the periods prior to the Closing.
5.10 APPROVALS. Except as set forth in Schedule 5.10, no
authorization, consent, approval, permit or license of, or filing with, any
governmental or public body or authority is required to be obtained by the
Selling Entities for the execution and delivery of this Agreement or the
consummation by the Selling Entities of the transactions contemplated hereby.
To the best of Selling Entities' knowledge and belief, there are no consents of
third parties required in connection with the execution, delivery and
performance of this Agreement, except for those the failure to obtain of which
would not have a material adverse effect on the Business.
5.11 LABOR RELATIONS. Except as set forth in Schedule 5.11, the
Selling Entities have not experienced within the last two years and are not
experiencing as of the date of this Agreement, nor do the Selling Entities know
of any reason to expect, any labor disputes, including strikes, work stoppages,
slow-downs or other material interference with or impairment of the Business by
labor, nor have the Selling Entities received in the year prior to the date of
this Agreement any EEOC, discrimination or civil rights complaints or any
complaints of any
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unfair labor practice with regard to the employees of the Business. The
Selling Entities are not experiencing, nor do the Selling Entities know of, any
current or contemplated union organization efforts or negotiations, or requests
for negotiations, representation or any labor contract relating to the
employees of the Business.
5.12 COMPLIANCE WITH LAWS. Except as described in Schedule 5.12,
there are no existing violations by the Selling Entities of any applicable
federal, state, provincial or local law or regulation that would have a
materially adverse effect on the Assets or the Business, taken as a whole.
5.13 LITIGATION. The Selling Entities have not had any legal
action or administrative proceeding or investigation instituted or, to the
knowledge of the Selling Entities' management, threatened which will have a
material adverse effect on the Assets or the Business. The Selling Entities
are not (a) subject to any continuing court or administrative order, writ,
injunction or decree applicable specifically to the Business, Assets or
employees of the Business or (b) in default with respect to any such order,
writ, injunction or decree. Schedule 5.13 sets forth all litigation with
regard to the Business claiming damages or losses in excess of $10,000 which is
pending as of the date of this Agreement, as well as any outstanding unresolved
warranty or product liability claims.
5.14 EMPLOYEES. Set forth on Schedule 5.14 is a list of all
employees of the Business as of October 17, 1994 showing such employees'
positions, base compensation rate, employment date, service date, and weeks of
eligible vacation. Since June 30, 1994, the Selling Entities have not granted
or become obligated to grant any increases in the wages or salary of, or paid
or become obligated to pay any bonus or made or become obligated to make any
similar payment to, or grant any benefit to or on behalf of, any officer,
employee or agent (except in the ordinary course of business consistent with
past practices or pursuant to any plan, arrangement or policy in effect on the
date hereof or as set forth in the next sentence). None of the Employees of
the Business is a party to any employment agreement other than bonus agreements
relating to continuation of employment pending consummation of the sale of the
Business.
5.15 ASSIGNED CONTRACTS. Set forth on Schedule 2.01(a)(3) is a
list of the Assigned Contracts, (a) by which any of the Assets are bound or (b)
to which either of the Selling Entities is a party or by which either is bound
and which relate exclusively to the Business or the Assets. The Selling
Entities will make available to Purchaser complete and correct copies of all
Assigned Contracts listed on or required to be listed on Schedule 2.01(a)(3)
together with all amendments thereto. Except as set forth on Schedule 5.15,
each Assigned Contract is in full force and effect; the Selling Entities have
not been advised in writing of any threatened cancellations thereof nor
outstanding disputes thereunder, and, assuming all required consents are
received, the Selling Entities have not and will not have breached any
provision of, nor does there exist any default under, or event (including the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby) that is, or with the giving of notice or the
passage of time or both would become a breach or default in any respect under
the terms of any such arrangement.
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5.16 ACCOUNTS RECEIVABLE. Set forth on Schedule 5.16(a) is a list
and description as of June 30, 1994, including an aging, of all outstanding
notes, drafts and accounts receivable, including without limitation unbilled
receivables (which unbilled receivables are identified by customer), of the
Selling Entities in respect of the Business. All receivables which constitute
Closing Date Receivables will be valid and legally binding obligations of the
persons obligated to pay such accounts receivable and will be subject to no
material counterclaim or set-off, and all such receivables will be good and
collectible in the ordinary course of business, except (i) for unbilled
receivables, which will be collectible within ninety (90) days from the date
billed, and (ii) as otherwise disclosed on Schedule 5.16(b). The
representations and warranties contained in this Section 5.16 shall terminate
on the date that the Uncollected Receivables are repurchased by the Selling
Entities pursuant to Section 8.01(b).
5.17 CUSTOMERS. Set forth in Schedule 5.17 hereto is a complete
and accurate list of the top 20 customers of the Business, in terms of sales,
for the 1993 and 1992 calendar years.
5.18 BANKER'S/FINDER'S FEE. Except as set forth on Schedule 5.18,
the Selling Entities have made no agreement with any person or entity nor taken
any action which would cause any person or entity to become entitled to an
agent's, broker's, investment banking or finder's fee in connection with the
transactions contemplated hereby.
5.19 FINANCIAL STATEMENTS. The following financial statements
relate to the Business and are attached as Exhibit G hereto:
(a) Statements of Assets, Liabilities and Parent Company
Investment as of June 30, 1994, December 31, 1993 and December 31, 1992;
(b) Statements of Income and Expense for the six month
periods ended June 30, 1994 and June 30, 1993 (unaudited) and for the years
ended December 31, 1993, December 31, 1992 and December 31, 1991;
(c) Statements of Changes in Parent Company Investment at
June 30, 1994, December 31, 1993, December 31, 1992 and December 31, 1991; and
(d) Statements of Cash Flows for the six month periods
ended June 30, 1994 and June 30, 1993 (unaudited) and for the years ended
December 31, 1993, December 31, 1992 and December 31, 1991;
together with the Notes thereto and the Report of Independent Public
Accountants dated August 31, 1994.
Such financial statements are herein sometimes referred to
collectively as the "FINANCIAL STATEMENTS".
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The Financial Statements have been prepared from the books and records
of Seller and Seller's Affiliate, have been audited by AA (except as noted
above) and fairly present, in all material respects, the financial position and
results of operations and cash flows of the Business at the dates and for the
periods indicated in conformity with GAAP.
5.20 NO OTHER ASSETS NECESSARY TO THE BUSINESS. Except for the
Excluded Assets, Purchaser is acquiring hereunder all of the assets used by
Selling Entities exclusively in the Business as it is conducted by the Selling
Entities as of the date of this Agreement.
5.21 ADEQUACY. Except for ordinary wear and tear, the Assets,
taken as a whole, are adequate for the uses that they are currently being
employed and for the conduct of the Business as it is being conducted on the
date of this Agreement. Immediately after the Closing Date Purchaser will be
able to operate the Business, without material difficulty or interruption other
than as contemplated by the Transition Services Agreement, with the Assets
acquired from the Selling Entities without the necessity of acquiring any
additional material assets or properties, except (i) cash for working capital,
(ii) replacements for the shared facilities referred to in the Transition
Services Agreement, (iii) certain accounting and management software, hardware
and computing and communications facilities that the Business shares with other
activities of the Selling Entities (which shall be covered by the Transition
Services Agreement), (iv) assets and property used by employees of the Selling
Entities who are not employed in the Business to provide general and
administrative services for the Business (but not primarily for the Business),
and (v) insurance to the extent required or deemed advisable by Purchaser.
5.22 WARRANTIES. Selling Entities do not provide product
warranties with respect to equipment and products sold or leased to customers
by the Business, except to the extent that warranties from manufacturers are
passed on to customers ("MANUFACTURERS' WARRANTIES"). Selling Entities' only
service warranties relate to their respective guarantees to the customer that
(i) compressors will be mechanically available to compress gas ninety-five
percent (95%) of a calendar month and (ii) compressors will compress gas within
three percent (3%) of the capacity quoted to the customer under design
conditions set forth in the equipment rental quotation applicable to the
specified equipment, herein "WARRANTIES". Fulfillment of such Warranties is
related to, and dependent upon, service provided by the Selling Entities.
5.23 ENVIRONMENTAL MATTERS. Seller has delivered to Purchaser a
letter dated October 17, 1994 from Susan M. Ponce, environmental counsel for
Seller, which sets forth a summary of Seller's knowledge concerning material
environmental matters relating to the Owned Real Property as of such date.
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ARTICLE VI
PURCHASER'S COVENANTS
Purchaser covenants and agrees as follows:
6.01 RETENTION OF RECORDS, COOPERATION AND ACCESS.
(a) RETENTION. Purchaser shall retain for a period of
five (5) years all original books and records of the Business which Purchaser
receives from the Selling Entities. After the Closing, the Selling Entities
and their representatives will be granted, on reasonable advance notice,
reasonable access to all such books and records during normal business hours.
In addition, the Selling Entities shall have the right to make abstracts or
copies of any such books or records at their expense. If Purchaser intends to
dispose of any such original documents after the expiration of such five year
period, it shall give the Selling Entities notice of such intention. The
Selling Entities shall have ninety (90) days from receipt of notice either to
advise Purchaser that they do not desire to have such original documents or to
collect such documents from Purchaser at the Selling Entities' sole cost and
expense.
(b) COOPERATION. Purchaser shall cooperate to the best
of its ability with the Selling Entities' representatives and agents (i) in
collecting the Uncollected Receivables repurchased from Purchaser by Selling
Entities pursuant to Section 8.01(b) hereof, or (ii) in prosecuting or
defending any legal or administrative proceeding relating to the Assets,
Assumed Liabilities or the Business (other than a dispute between the parties).
Cooperation, as it relates to matters covered under (i) through (ii) above,
shall include, but not be limited to, causing Purchaser's employees to furnish
documents in Purchaser's possession as requested and using its best efforts to
encourage its employees to testify as witnesses, appear for depositions and
take other similar actions as the Selling Entities may reasonably request. The
Selling Entities shall reimburse Purchaser for Purchaser's out-of-pocket costs
and expenses incurred with respect to the foregoing.
(c) CONTACT. Prior to Closing, Purchaser agrees that it
shall not contact customers and suppliers of the Business without the
permission of Selling Entities.
6.02 SELLING ENTITIES' NAMES. Purchaser acknowledges that the
transactions contemplated hereby do not encompass any rights with respect to
the Selling Entities' Marks. Purchaser covenants and agrees not to publish or
distribute to third parties printed matter depicting, the Selling Entities'
names or the Selling Entities' Marks, or any variations thereof, except with
the prior express written consent executed by duly authorized officers of the
Selling Entities. Within sixty (60) days after Closing, Purchaser agrees to
delete permanently the Selling Entities' names and the Selling Entities' Marks
from all Assets, including, without limitation, drawings and signage.
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6.03 WARRANTY WORK. Purchaser agrees to perform at its cost all
service and repair work ("WARRANTY WORK") required after the Closing with
respect to compression equipment included in the Assets which fails to meet the
requirements of the Warranties and to perform such similar work as may be
required by the Manufacturers' Warranties. Seller will reimburse Purchaser (to
the extent that Purchaser is not fully reimbursed by a manufacturer of the
goods subject to Manufacturer's Warranties) for the cost (determined as
provided herein below) incurred by Purchaser to perform Warranty Work which is
required as a result of either (i) a failure by the Selling Entities prior to
the Closing to perform adequate service and repair work on compression
equipment included in the Assets, or (ii) a failure by the Selling Entities
prior to the Closing to properly equip a job to satisfy the requirements of
such job as requested by the customer. The cost to be reimbursed by Seller to
Purchaser for service and repair work as provided herein above shall be the sum
of (i) Purchaser's actual cost of parts and other materials and (ii)
Purchaser's labor cost, which shall be reimbursed at a rate of $40.00 per hour.
6.04 EMPLOYEES OF THE BUSINESS AND SEVERANCE COSTS. The employees
of the Selling Entities who are working for the Business on the Closing Date
are herein referred to as the "BUSINESS EMPLOYEES".
Not later than the second business day following the Closing Date
Purchaser shall make a written offer of employment to such of the Business
Employees as Purchaser selects. Such offer of employment shall be held open by
Purchaser for five days and shall state the salary and other compensation to be
paid, the title and duties and the location of employment for the position so
offered.
As used herein, the term "TERMINATING BUSINESS EMPLOYEE" shall mean
Business Employees (i) who do not receive from Purchaser a comparable offer of
employment within a 50-mile radius of such person's place of employment
immediately prior to the Closing Date and (ii) whose employment is terminated
by the Selling Entities within 30 days after the Closing Date; provided,
however, that a Business Employee shall not be considered to be a Terminating
Business Employee if (A) he or she is employed by any Affiliate of the Selling
Entities or (B) under the circumstances described in the first sentence of the
following paragraph; provided further, however, that any person who would be a
Terminating Business Employee but for the fact that the Selling Entities
continued to employ such person after the Closing Date in order to fulfill
their obligations under the Transition Services Agreement and who is promptly
terminated thereafter, shall be considered to be a Terminating Business
Employee.
If a Business Employee receives from Purchaser a comparable offer of
employment at a location within a 50 mile radius of such person's place of
employment immediately prior to the Closing Date as he or she was employed by
the Selling Entities and such Business Employee rejects such offer or allows it
to lapse after five days, then thereafter such person shall not be considered a
Terminating Business Employee. For purposes of this Section 6.04, an offer of
employment shall not be considered to be comparable unless it provides not less
than the same level of base compensation to the employee as he or she was
receiving from the Selling Entities immediately prior to the Closing Date and
similar type duties and responsibilities.
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Purchaser shall reimburse the Selling Entities for the cost of all
severance benefits the Selling Entities pay to or provided for Terminating
Business Employees (pursuant to the Special Severance Program set forth in
Schedule 6.04 (other than payments with respect to unvested restricted stock of
Seller) or the Selling Entities' severance benefit program for their Canadian
employees and/or pursuant to applicable Canadian law), but not to exceed
$2,000,000.00 in the aggregate.
Within 60 days following the Closing Date the Selling Entities will
invoice Purchaser for such cost with reasonable detail showing each Terminating
Business Employee with respect to whom such costs have been incurred.
Purchaser shall pay the amount of such invoice or invoices to the Selling
Entities within 10 business days of receipt in the same manner as an Adjustment
is payable to the Selling Entities pursuant to Section 3.03(c).
Business Employees who receive and accept an offer of employment from
Purchaser are herein referred to as "PURCHASER'S NEW EMPLOYEES". Purchaser
agrees that each of Purchaser's New Employees shall be entitled to such
employee benefits as are generally available to Purchaser's other employees in
its line of business similar to the Business. For welfare benefit purposes
(other than vacation policies), Purchaser shall give each of Purchaser's New
Employees credit for his or her prior service with the Selling Entities and/or
their Affiliates and shall waive any waiting period for participation or
coverage in any welfare benefit plans or policies thereunder, except that
Purchaser shall not be required to waive any pre-existing medical condition
provision of such plan or policy. In addition, Purchaser shall waive any
waiting period for participation and coverage in Purchaser's qualified
retirement plans by employees to the extent permissible under applicable law;
provided, however, that no credit shall be given for benefit accrual or vesting
purposes. In connection with the transactions contemplated under this Section,
the parties agree to make all notifications required under the WARN Act.
Notwithstanding anything to the contrary contained in this Section
6.04, in the event that any of Purchaser's New Employees are terminated by
Purchaser or any affiliate of Purchaser within a period of six (6) months from
the Closing Date, other than for cause, Purchaser shall pay, or cause to be
paid, to any such employee the equivalent of any amounts to which such
Purchaser's New Employee would have been entitled from Selling Entities
pursuant to the programs and laws described in this Section 6.04 had such
employee been a Terminating Business Employee (other than payments with respect
to unvested restricted stock of Seller). Promptly following the expiration of
such six (6) month period, Purchaser will furnish to Seller a list of
Purchaser's New Employees who were terminated during such period and the
amounts of any severance benefits, if any, that were provided to such persons.
6.05 NOTICE OF CHANGE. To the extent of Purchaser's knowledge,
Purchaser shall give the Selling Entities prompt written notice of any material
changes in any of the information contained in the representation and
warranties made in Article IV or elsewhere in this Agreement or the Schedules
or Exhibits referred to herein which occur prior to Closing.
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6.06 HSR FILING. Within five (5) business days after the execution
of this Agreement, Purchaser shall file the notification and report form with
the Federal Trade Commission and the Antitrust Division of the United States
Department of Justice required under the Hart Scott Rodino Antitrust
Improvements Act of 1976 as amended and the rules and regulations promulgated
thereunder ("HSR ACT").
ARTICLE VII
SELLING ENTITIES' COVENANTS
The Selling Entities covenant and agree that from the date of this Agreement
until the Closing:
7.01 BUSINESS OPERATIONS. The Selling Entities shall conduct the
Business only in the ordinary course consistent with past practices, and the
Selling Entities shall use commercially reasonable efforts to preserve intact
the Business and the goodwill of their customers and suppliers. The Selling
Entities shall not take any action that will materially impair the Business or
Assets without the prior written consent of Purchaser, or take or fail to take
any action that would cause or permit the representations made in Article V
hereof to be inaccurate at the time of Closing or preclude the Selling Entities
from making such representations and warranties at the Closing, except to the
extent such action is necessary to protect the business or assets of the
Selling Entities and notice thereof is promptly provided to Purchaser.
7.02 ACCESS. The Selling Entities shall permit Purchaser and/or
its authorized representatives, during normal business hours, full access to,
and make available for inspection, all of the Assets and the documents, records
and information (including, but not limited to, documents, records and
information concerning the Business' customers and suppliers) which pertain to
such Assets and to the Business, all for the sole purpose of permitting
Purchaser to become familiar with the Assets and the Business. In that
connection, the Selling Entities shall cause their officers and employees and
the management personnel of the Business to cooperate fully with Purchaser's
reasonable requests.
7.03 APPROVALS OF THIRD PARTIES. As soon as practicable after the
execution of this Agreement, through the Closing and to the extent reasonably
required for the ninety (90) day period following Closing, the Selling Entities
will use all reasonable efforts to identify and secure all necessary approvals,
consents, permits and authorizations of third parties to the consummation of
the transactions contemplated by this Agreement, including consents necessary
to assign to Purchaser and have Purchaser assume all Assigned Contracts. Such
efforts shall include, to the extent necessary, providing such third parties
with information about Purchaser.
7.04 EMPLOYEE COMPENSATION AND BENEFIT MATTERS. Except with
Purchaser's prior written consent or pursuant to contracts or plans in
existence as of the date of this Agreement, and except for normal annual salary
increases consistent with past practices, prior to the Closing, no increase
will be made in the compensation or rate of compensation payable or to become
payable to the employees of the Business, no bonus, profit sharing, retirement,
insurance, death benefits, fringe benefit or other extraordinary or indirect
compensation shall accrue, be set aside
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or be paid to, for or on behalf of any of such officers or employees other than
pursuant to the terms of the Selling Entities' Employee Benefit Plans as
presently constituted, and no agreement or plan other than those now in effect
shall be adopted or committed for.
7.05 CONTRACTS. Except with Purchaser's prior written consent, the
Selling Entities shall not waive any material right or cancel any material
contract or claim related to the Business.
7.06 CHANGES IN PROPERTY AND EQUIPMENT; PAYMENTS OF LIABILITIES.
Except with Purchaser's prior written consent, the Selling Entities will not
(i) dispose of or commit to dispose of any compressors, except for dispositions
pursuant to a lease/purchase option contract listed in Schedule 5.04, (ii)
acquire or commit to acquire any compressors, except for acquisitions
consistent with commitments disclosed in Schedule 5.04, and (iii) acquire or
dispose of or commit to acquire or commit to dispose of any property and
equipment, other than compressors, except in the ordinary course of business
consistent with past practices. The Selling Entities shall pay all liabilities
of the Selling Entities which relate to the Business as they become due.
7.07 MORTGAGES, LIENS. Except with Purchaser's prior written
consent, the Selling Entities will not enter into or assume any mortgage,
pledge, conditional sale or other title retention agreement relating to the
Assets, or voluntarily permit any lien, encumbrance or claim of any kind, other
than a Permitted Lien, to attach to any of the Assets, whether now owned or
hereafter acquired.
7.08 NOTICE OF CHANGE. The Selling Entities shall give Purchaser
prompt written notice of any material changes in any of the information
contained in the representations and warranties made in Article V or elsewhere
in this Agreement or the Schedules or Exhibits referred to herein which occur
prior to Closing. In addition, Seller shall give Purchaser prompt written
notice of any discovery of any facts, conditions or information that would have
been included in the letter referred to in Section 5.23 had Seller been aware
of such facts, conditions or information as of the date of such letter.
7.09 HSR FILING. Within five (5) business days after the execution
of this Agreement, Seller shall file the notification and report form with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice required under the HSR Act.
7.10 EXCLUSIVITY. The Selling Entities shall not, and shall
instruct its Affiliates, directors, officers, key employees, financial advisors
and other representatives ("REPRESENTATIVES") not to, solicit, initiate,
encourage, discuss or respond to any proposal or offer, whether solicited or
unsolicited, from any person or entity other than Purchaser relating to any
disposition of the Business or the Assets. The Selling Entities shall, and
shall cause its Representatives to, promptly inform Purchaser if any such
proposals or offers are received by it or them. Without limiting the
generality of the foregoing, the Selling Entities shall, and shall cause its
Representatives to, cease all further discussions concerning a disposition of
the Business or Assets with all parties other than Purchaser that has
previously submitted a bid therefor.
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7.11 PERMITS AND COOPERATION. On or before the Closing, the
Selling Entities shall use their commercially reasonable efforts to cooperate
with Purchaser to arrange for an orderly transfer of all transferable
environmental, operating or other permits or licenses issued by governmental
authorities that relate to the Business (collectively, "PERMITS") and to make
any notifications of change in ownership required under such Permits or the
laws under which they were issued. With respect to each nontransferable
permit, the Selling Entities shall cooperate fully with Purchaser in the
preparation and filing of an application with the appropriate governmental
authority for issuance of a replacement Permit in Purchaser's name. Prior to
the Closing, the Selling Entities shall cooperate with Purchaser to arrange for
an orderly transition of the operation of the Business from the Selling
Entities to Purchaser, including taking such actions that minimize as much as
possible the length of time during which Purchaser will require services under
the Transition Services Agreement.
ARTICLE VIII
OTHER REQUIREMENTS
8.01 COLLECTION AND REPURCHASE OF ACCOUNTS RECEIVABLE.
(a) COLLECTION OF THE SELLING ENTITIES' ACCOUNTS
RECEIVABLE. On the Closing Date, Selling Entities shall deliver to Purchaser
the most recent listings available of invoices and the unpaid amount of each,
unbilled receivable amounts by customer (showing the contract, type of charge
and period covered), the invoices and amounts which comprise unearned revenue,
and other items making up the total accounts receivable of the Business.
Contemporaneously with the delivery of the Preliminary Closing Balance Sheet,
Selling Entities shall deliver updated listings of such items to Purchaser and
any such other information as Purchaser reasonably requests. During the ninety
(90) day period following the Closing or until 30 days after the expiration of
the payment period for receivables with payment terms in excess of ninety (90)
days (the "COLLECTION PERIOD") and subject to the provisions of Section 8.01(c)
hereof, Purchaser shall use its commercially reasonable efforts (but in no
event shall Purchaser be obligated to file or perfect any liens or file or
prosecute any suit as part of its collection effort) to collect all invoice
amounts, notes and drafts receivable, and unbilled receivable amounts and other
receivable items in respect of the Business as of the Closing Date which are
included in the Final Closing Balance Sheet (the "CLOSING DATE RECEIVABLES")
(subject to the requirements of Section 8.01(c), such efforts to be
commercially reasonable if Purchaser has pursued the collection of such
receivables with the same degree of diligence as it pursues its other
receivables in the ordinary course of Purchaser's business). Purchaser shall
prepare and send invoices to the customers relating to the unbilled receivables
as soon as practicable after the Closing. Any payments received by Purchaser
from any person who is the account debtor on any of the Closing Date
Receivables (a "CUSTOMER") shall be applied as provided in Section 8.01(d).
Each of the Selling Entities shall promptly remit to Purchaser any payments
which it may receive in respect of any of the Closing Date Receivables. Each
of the Selling Entities grants to Purchaser the authority, coupled with an
interest, to receive, endorse, cash, deposit, and receipt for any checks,
drafts, documents and instruments evidencing Closing Date Receivables which are
in the name of any of the Selling Entities. Purchaser shall make and keep
detailed records of amounts collected in respect of the
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Closing Date Receivables until such time as any Uncollected Receivables are
assigned to the Selling Entities pursuant to paragraph (b) below, and shall
make such records available for review by the Selling Entities when a statement
of Uncollected Receivables is delivered to Seller.
(b) REPURCHASE OF ACCOUNTS RECEIVABLE. Promptly
following the expiration of the Collection Period (but not earlier than ten
(10) days following determination of the Final Closing Balance Sheet),
Purchaser shall deliver to Seller one or more statements setting forth a list
of Closing Date Receivables (which has clearly identified thereon the names of
the customers, invoice numbers and uncollected amounts by invoice, together
with copies of all invoices and, if required, supporting documentation) that
were not collected during the Collection Period and the total of such
uncollected amounts. Such statement shall not include the amount of any
balances owed on notes or accounts receivable that have been paid down in
accordance with their terms but the statement shall reflect as a deduction from
total uncollected amounts shown thereon (i) the total amount of any credit
balances included in the Closing Date Receivables not applied against invoices
for the same customer included in Closing Date Receivables, (ii) the amount of
the reserve for bad debts included in the Closing Date Balance Sheet and (iii)
the amount of unearned revenue included in the Closing Date Balance Sheet. The
net amount set forth on the statement remaining, after giving effect to the
exclusions, if any, and deductions set forth in the preceding sentence, shall
be the net amount of receivables to be repurchased by the Seller (the
"UNCOLLECTED RECEIVABLES"). Within ten (10) business days following Seller's
receipt of such statement, the Selling Entities shall pay to Purchaser, by wire
transfer of immediately available funds, to the account specified in Section
3.03(c) hereof, the amount of the Uncollected Receivables plus interest on such
amount at the rate of five percent (5%) per annum from the expiration of the
Collection Period to the date of payment by Purchaser. Upon receipt of such
payment, Purchaser shall assign to Selling Entities, without recourse to the
Purchaser, the claims included in the Uncollected Receivables, including any
lien or other rights related thereto.
For purposes of this Section a separate statement of
Uncollected Receivables, prepared in accordance with the preceding paragraph of
this Section 8.01(b), except as set forth in this paragraph, shall be submitted
for accounts receivable originally billed to the Customer in Canadian dollars.
The uncollected amount of each accounts receivable invoice listed on this
statement will be the original Canadian dollar invoice amount less the amount
of Canadian dollar collections received and the Canadian dollar equivalent at
the date of receipt of any U.S. dollar collections received on such invoice. A
separate payment shall be made by the Selling Entities to Purchaser for such
Uncollected Receivables in Canadian dollars. The total amount of the reserve
for bad debts shall be deducted from the total amount of the uncollected U.S.
dollar accounts receivable invoices.
(c) COLLECTION COOPERATION. Purchaser shall keep the
Selling Entities' credit personnel reasonably informed with respect to
Purchaser's efforts to collect the Closing Date Receivables during the
Collection Period. Selling Entities shall make available their credit
personnel to work with Purchaser during the Collection Period to assist in
resolving any disputes or questions concerning the Closing Date Receivables.
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(d) ALLOCATION OF PAYMENTS RECEIVED AFTER CLOSING.
Notwithstanding any contrary directions received from a Customer, any payments
received by the Selling Entities or the Purchaser after the Closing Date from a
Customer that owed money to the Selling Entities for Closing Date Receivables
shall be promptly paid to the Selling Entities or the Purchaser, whichever of
them then owns such Closing Date Receivable (as provided in this Section 8.01)
until such Closing Date Receivable is satisfied in full; provided, however,
that if such Customer has a bona fide claim with respect to such Closing Date
Receivable that it does not owe the full amount thereof because of an act or
failure to act on the part of the Selling Entities prior to the Closing Date,
then, to the extent of the amount of such claim, Purchaser need not pay over to
the Selling Entities any such payment Purchaser receives from such Customer
after the Closing Date as payment for services provided by Purchaser to such
Customer. Any funds to be paid over to the Selling Entities or Purchaser
pursuant to this Section 8.01(d) shall be paid in the same manner as specified
in Section 3.03(c). The Selling Entities and Purchaser shall provide each
other with complete information concerning such payments in the same manner as
provided herein above in this Section 8.01.
(e) REMEDY FOR UNCOLLECTED RECEIVABLES. The provisions
of Article XI notwithstanding, the Selling Entities' indemnity obligation for
such Uncollected Receivables shall be satisfied by making the payment provided
for in Section 8.01(b) above, and no other remedy shall be available with
respect to such Uncollected Receivables or the representations set forth in
Section 5.16.
8.02 CONDITION OF ASSETS; INTENDED USE. AT THE CLOSING, PURCHASER
WILL HAVE CAREFULLY INSPECTED THE ASSETS AND KNOWINGLY AND VOLUNTARILY ACCEPTS
THE SAME "AS IS", AND "WHERE IS". EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES GIVEN IN ARTICLE V, NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, HAS BEEN MADE BY OR ON BEHALF OF THE SELLING ENTITIES WITH RESPECT TO
THE PRESENT CONDITION OF THE ASSETS OR THE PRESENT OR FUTURE SUITABILITY
THEREOF FOR ANY INTENDED USE BY PURCHASER OTHER THAN AS SET FORTH IN SECTION
5.21 HEREOF. Purchaser represents that it had an opportunity prior to
execution hereof to undertake such investigations of the Assets as it deemed
necessary or appropriate and to examine and review such records, documents,
reports and other information of the Selling Entities as it deemed relevant to
the consummation of this Agreement, except that no such investigation or
examination shall constitute a waiver by Purchaser of its right to rely on the
terms and conditions of this Agreement.
The Selling Entities make no warranty, express or implied, regarding
the commercial suitability of the Owned Real Property or the Leased Real
Property for Purchaser's intended use. Purchaser acknowledges that Purchaser's
knowledge of its intended commercial activity is superior to that of the
Selling Entities and consequently the Selling Entities cannot offer, and have
not offered, any warranty, express or implied, with regard to Purchaser's
intended commercial use of the Owned Real Property or the Leased Real Property.
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<PAGE> 34
8.03 TITLE REVIEW. Seller shall furnish Purchaser surveys of the
Owned Real Property and standard form commitments for an owner's policy of
title insurance relating to the Owned Real Property in the amounts set forth in
Schedule 8.03 hereto. The Title Commitments and legible copies of documents
creating exceptions contained in the Title Commitments and surveys supporting
the same as well as a Mortgage Certificate, Conveyance Certificate and Tax
Research Certificate relating to the Owned Real Property in the State of
Louisiana, shall be delivered to Purchaser no later than ten (10) business days
after execution of this Agreement. Purchaser shall have ten (10) business days
from the date of delivery in which to raise title objections. If title
objections are raised by Purchaser then Seller shall have fifteen (15) days
from the date such objections are raised to cure the same. If objections are
not satisfied by the Closing Date, unless Purchaser elects to waive the
unsatisfied objections, the Purchase Price shall be reduced by the book value
of such Owned Real Property and such Owned Real Property shall become an
Excluded Asset. At Closing, Seller shall furnish General Warranty Deeds in the
case of the Owned Real Property in the State of Texas and an Act of Sale in the
case of the Owned Real Property in the State of Louisiana, duly executed in
recordable form as per Exhibit B hereto.
8.04 TITLE POLICIES AND SURVEYS. The cost of the owner's policies
of title insurance and surveys relating to the Owned Real Property shall be
paid by Seller, provided that any premiums for insured values in excess of
$500,000 and $100,000, respectively, for the Mineral Wells, Texas property and
Lafayette, Louisiana property shall be for the account of Purchaser.
8.05 TRANSITION SERVICES AGREEMENT. Selling Entities and Purchaser
shall execute and deliver to each other the Transition Services Agreement
substantially in the form of Exhibit F.
ARTICLE IX
PURCHASER'S CONDITIONS PRECEDENT TO CLOSING
Except as may be waived in writing by Purchaser, the Purchaser's
obligation to close the transactions contemplated under this Agreement is
subject to the fulfillment at or prior to the Closing of each of the following
conditions:
9.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Selling Entities contained herein shall be true and correct
in all material respects as of the Closing (except where such representation
and warranty is made as of a date specifically set forth therein), subject to
any changes contemplated by this Agreement, and Purchaser shall not have
discovered any material error, misstatement or omission therein.
9.02 COVENANTS. The Selling Entities shall have performed and
complied in all material respects with all covenants or conditions required by
this Agreement to be performed and complied with by them prior to the Closing.
9.03 PROCEEDINGS. The Waiting Period shall have expired or been
terminated and, if any injunction, order or decree of any court or governmental
entity of competent jurisdiction shall
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<PAGE> 35
have been issued that restrains or enjoins in any material respect the
consummation of the transaction contemplated hereby pursuant to the HSR Act,
any other federal or state antitrust laws or otherwise, such injunction, order
or decree shall have been reversed, withdrawn or otherwise terminated.
9.04 NO MATERIAL ADVERSE CHANGE. Other than as contemplated by
Section 12.17, no material adverse change in the Assets or the Business taken
as a whole shall have occurred after the date of this Agreement and prior to
the Closing.
9.05 BILL OF SALE. The Selling Entities shall have executed and
delivered the Bill of Sale, Assignment and Assumption Agreements.
9.06 DELIVERY OF DOCUMENTS. The Selling Entities shall have
executed and delivered all other documents required under the terms of this
Agreement to be executed and delivered by the Selling Entities to Purchaser at
or prior to the Closing.
9.07 CERTIFICATE. The Selling Entities shall have delivered to
Purchaser a certificate dated as of Closing and signed by any executive officer
to the effect that the representations and warranties of the Selling Entities
are true and correct in all material respects and all of the covenants, terms
and conditions of this Agreement to be complied with and performed by the
Selling Entities at or before the Closing have been complied with and performed
in all material respects.
9.08 OPINION OF COUNSEL. The Selling Entities shall have delivered
to Purchaser an opinion of Lester L. Coleman, Executive Vice President and
General Counsel of Seller, in form and substance as set forth in Exhibit H
attached hereto, addressed to Purchaser and dated the Closing Date.
ARTICLE X
SELLING ENTITIES' CONDITIONS PRECEDENT TO CLOSING
Except as may be waived in writing by the Selling Entities, Selling
Entities' obligation to close the transactions contemplated under this
Agreement is subject to fulfillment at or prior to the Closing of each of the
following conditions:
10.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained herein shall be true and correct in all
material respects as of the Closing (except where such representation and
warranty is made as of a date specifically set forth therein), subject to any
changes contemplated by this Agreement, and the Selling Entities shall not have
discovered any material error, misstatement or omission therein.
29
<PAGE> 36
10.02 COVENANTS. Purchaser shall have performed and complied in all
material respects with all covenants or conditions required by this Agreement
to be performed and complied with by it prior to the Closing.
10.03 PROCEEDINGS. The Waiting Period shall have expired or been
terminated and, if any injunction, order or decree of any court or governmental
entity of competent jurisdiction shall have been issued that restrains or
enjoins in any material respect the consummation of the transaction
contemplated hereby pursuant to the HSR Act, any other federal or state
antitrust laws or otherwise, such injunction, order or decree shall have been
reversed, withdrawn or otherwise terminated.
10.04 PURCHASE PRICE. Purchaser shall have paid the Estimated
Purchase Price in accordance with Section 3.03(a).
10.05 BILL OF SALE. Purchaser shall have executed and delivered the
Bill of Sale, Assignment and Assumption Agreements.
10.06 DELIVERY OF OTHER DOCUMENTS. Purchaser shall have executed
and delivered all other documents required under the terms of this Agreement to
be executed and delivered by Purchaser to the Selling Entities at or prior to
the Closing.
10.07 CERTIFICATE. Purchaser shall have delivered to the Selling
Entities a certificate dated as of Closing and signed by the Chief Financial
Officer of Purchaser to the effect that the representations and warranties of
the Selling Entities are true and correct in all material respects and all of
the covenants, terms and conditions of this Agreement to be complied with and
performed by Purchaser at or before the Closing have been complied with and
performed in all material respects.
10.08 OPINION OF COUNSEL. The Purchaser shall have delivered to
Selling Entities an opinion of Victor I. Koock, Senior Vice President,
Co-General Counsel and Secretary of Purchaser, in form and substance as set
forth in Exhibit I attached hereto, addressed to Selling Entities and dated the
Closing Date.
ARTICLE XI
INDEMNIFICATION
11.01 SELLING ENTITIES' INDEMNITY. Subject to the terms and
conditions of this Article XI and Section 8.01(e) of this Agreement, the Seller
hereby agrees to indemnify, defend and hold Purchaser and its officers,
directors, agents, attorneys, employees, subsidiaries, successors and assigns
and affiliates harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses
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<PAGE> 37
(collectively, "DAMAGES") asserted against or incurred by any or all of them by
reason of or resulting from:
(a) Any claim relating to an Excluded Liability; and
(b) A breach by the Selling Entities of any
representation, warranty or covenant contained in this Agreement or in any
agreement executed pursuant to this Agreement and not waived in writing by
Purchaser.
11.02 PURCHASER'S INDEMNITY. Subject to the terms and conditions of
this Article XI, Purchaser hereby agrees to indemnify, defend and hold the
Selling Entities and their officers, directors, agents, attorneys and
Affiliates harmless from and against all Damages asserted against or incurred
by any or all of them by reason of or resulting from:
(a) Any claim relating to an Assumed Liability;
(b) A breach by Purchaser of any representation, warranty
or covenant contained in this Agreement or in any agreement executed pursuant
to this Agreement and not waived in writing by the Selling Entities; and
(c) Any and all liabilities, obligations and commitments
relating to the Business which arise out of, or relate to, events or
occurrences after the Closing or to any state of facts existing after the
Closing which had its inception after the Closing, including, without
limitation, any violation of any applicable federal, state, provincial or local
environmental laws or regulations. In addition, the Purchaser agrees that to
the extent that, after the Closing, any of the Selling Entities incurs a
liability or is otherwise responsible for personal injury or property damage,
fines, penalties, remediation costs or other damages, including any liability
or responsibility under any environmental laws, then to the extent such loss is
based upon a condition or defect of the Assets that existed after the Closing
Date or relates to actions taken by the Purchaser in operating the Business
after the Closing Date, then Purchaser shall indemnify Selling Entities from
any such liability.
11.03 BASKET. Subject to the provisions of this Section 11.03, the
Seller shall not be required to indemnify Purchaser pursuant to Section 11.01
unless and until the aggregate amount of the Damages suffered or incurred by
Purchaser, other than those Damages described in Section 11.04 below, exceeds
$250,000 (the "BASKET"). In the event that the aggregate amount of such
Damages exceeds the Basket, the Seller shall indemnify Purchaser with respect
to the amount of such Damages but only to the extent that they are in excess of
the Basket.
11.04 NON-BASKET ITEMS. The following Damages shall not be
included in the calculation of the Basket.
(a) Banker's/finder's fees for which the Selling Entities
are liable pursuant to Section 5.18; and
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<PAGE> 38
(b) Any and all claims related to Excluded Liabilities.
11.05 CAP. The Selling Entities' liability for Damages shall not
exceed the Purchase Price; provided, however, that those Damages described in
Section 11.04 above shall not be subject to this Section 11.05.
11.06 CONDITIONS OF INDEMNIFICATION. The respective obligations and
liabilities of the Seller and Purchaser (the "INDEMNIFYING PARTY") to the other
(the "INDEMNIFIED PARTY") under Sections 11.01 and 11.02 hereof with respect to
claims resulting from the assertion of liability by third parties shall be
subject to the following terms and conditions:
(a) Within twenty (20) days (or such earlier time as
might be required to avoid prejudicing the Indemnifying Party's position) after
receipt of notice of commencement of any action evidenced by service of process
or other legal pleading, or with reasonable promptness after the assertion in
writing of any claim by a third party, the Indemnified Party shall give the
Indemnifying Party written notice thereof together with a copy of such claim,
process or other legal pleading, and the Indemnifying Party shall have the
right to undertake the defense thereof by representatives of its own choosing
and at its own expense; provided, however, that the Indemnified Party may
participate in the defense with counsel of its own choice and at its own
expense.
(b) In the event that the Indemnifying Party, by the
thirtieth (30th) day after receipt of notice of any such claim (or, if earlier,
by the tenth (10th) 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 such claim), does not elect to defend against such claim, the
Indemnified Party will (upon further notice to the Indemnifying Party) have the
right to undertake the defense, compromise or settlement of such claim on
behalf of and for the account and risk of the Indemnifying Party and at the
Indemnifying Party's expense, subject to the right of the Indemnifying Party to
assume the defense of such claim at any time prior to settlement, compromise or
final determination thereof upon reimbursement to the Indemnified Party of all
costs and expenses incurred by the Indemnified Party in conjunction with such
defense to that date.
(c) Anything in this Section 11.06 to the contrary
notwithstanding, the Indemnifying Party shall not settle any claim without the
consent of the Indemnified Party unless such settlement involves only the
payment of money and the claimant provides to the Indemnified Party a release
from all liability in respect of such claim. If the settlement of the claim
involves more than the payment of money, the Indemnifying Party shall not
settle the claim without the prior consent of the Indemnified Party, which
consent shall not be unreasonably withheld.
(d) The Indemnified Party and the Indemnifying Party will
each cooperate with all reasonable requests of the other.
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<PAGE> 39
11.07 REMEDIES EXCLUSIVE. In the event of breach of this Agreement
or default hereunder, the remedies of the parties shall be limited to
indemnification as set forth in this Article XI and no right to rescission or
other common law right of action shall exist with respect to any breach of this
Agreement or default hereunder; provided, however, that Purchaser shall be
entitled to bring an action seeking an injunction if Purchaser has reason to
believe that the Selling Entities have violated or are about to violate the
provisions of Section 12.06.
ARTICLE XII
MISCELLANEOUS
12.01 AMENDMENT. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by a duly authorized
officer of each party to this Agreement.
12.02 ASSIGNMENT. The Selling Entities may not assign their rights
and obligations hereunder without the prior written consent of Purchaser, and
Purchaser may not assign its rights or obligations hereunder to any person
other than a direct or indirect wholly-owned subsidiary without the prior
written consent of the Selling Entities, which consent may be withheld for any
reason whatsoever, and provided further that any such assignment to a direct or
indirect wholly-owned subsidiary of Purchaser shall be conditioned upon
Purchaser executing and delivering to Selling Entities an unconditional
guarantee of the performance by such assignee of the obligations and duties
undertaken by Purchaser herein, all in such form and substance as may be
satisfactory to Selling Entities.
12.03 NOTICE. Any notice or communication must be in writing and
given by depositing the same in the United States mail, addressed to the party
to be notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person or by courier or by sending such
notice or communication by facsimile transmission. Such notice shall be deemed
received on the earlier of the date on which it is hand-delivered or otherwise
actually received or on the third business day following the date on which it
is so mailed. For purposes of notice, the addresses of the parties shall be:
If to Selling Entities: Halliburton Energy Services,
a division of Halliburton Company
5151 San Felipe
Houston, TX 77056
Attention: Vice President-Legal
Fax No.: (713) 840-2707
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<PAGE> 40
with a copy to: Halliburton Company
3600 Lincoln Plaza
500 North Akard Street
Dallas, TX 75201-3391
Attention: Vice President and Secretary
Fax No.: (214) 978-2783
If to Purchaser: Tidewater Inc.
1440 Canal Street
New Orleans, LA 70112
Attention: Sr. Vice President - Compression
Fax No.: (504)566-4580
with a copy to: Tidewater Inc.
1440 Canal Street
New Orleans, LA 70112
Attention: Sr. Vice President; Co-General
Counsel and Secretary
Fax No.: (504)566-4559
Any party may change its address for notice by written notice given to the
other party.
12.04 PRE-CLOSING CONFIDENTIALITY. Except for disclosures contained
in any filings made with the Securities and Exchange Commission or which are
otherwise required by law or the rules and regulations of any applicable stock
exchange, each party shall keep this Agreement and its terms confidential until
the Closing. In the event that the transactions contemplated by this Agreement
are not consummated for any reason whatsoever, Purchaser and the Selling
Entities hereby (i) acknowledge and agree to be bound by all the terms and
conditions set forth in the Confidentiality Agreement and (ii) agree that,
notwithstanding the execution and delivery of the Agreement, the
Confidentiality Agreement will remain in full force and effect.
Should the transactions contemplated hereby not be consummated,
nothing contained in this Section shall be construed to prohibit the parties
hereto from operating a business in competition with each other, provided they
do so without, in accordance with the Confidentiality Agreement, disclosing or
using confidential information of the other.
12.05 POST-CLOSING CONFIDENTIALITY. Each party shall not disclose
or use to compete with the other any confidential information pertaining to
such party which is obtained from such other party pursuant to this Agreement
or any document delivered in connection herewith or with the transactions
contemplated hereby, except as such use or disclosure may be required in the
course of performance hereof and such disclosure as may, in the opinion of such
party's counsel, be required by law. After Closing, the Selling Entities shall
not (except at the request of
34
<PAGE> 41
Purchaser) use or disclose to any third party any of the technical, financial,
operational or marketing information pertaining to the Business except after
and to the extent such information is or becomes generally available to the
public through no fault of the Selling Entities or as may be necessary in
connection with the Selling Entities' remaining or future business(es) or as
may, in the opinion of the Selling Entities' counsel, be required by law. The
parties shall take all reasonable efforts to cause their respective directors,
officers, employees and agents to observe the provisions of this Section 12.05.
12.06 NO COMPETITION. For a period of three years after the Closing
Date, neither the Seller nor any of its Affiliates shall engage directly or
indirectly in the business of renting natural gas compressors to third parties
in the United States or Canada; provided, however, that the foregoing
provisions of this Section 12.06 shall not prohibit the Seller or its
Affiliates from:
(i) providing natural gas compression equipment or services to third
parties by means other than rental or lease,
(ii) providing natural gas compression equipment or services as part
of a larger business undertaking for a third party or parties to provide them
with other oil field services and products or engineering and construction
services pursuant to which natural gas compression is an integral part,
(iii) entering into any business combination, consolidation, merger or
other type of business combination or acquisition transaction with any other
party or parties who owns and/or operates a business that rents compressors,
and thereafter continuing to own and/or operate such business, provided that at
the time of such transaction less than forty-five percent (45%) of the
consolidated revenues of such other party or parties are generated by such
compressor rental business, or
(iv) making an investment in the securities of another company which
conducts such a compressor rental business provided such investment constitutes
less than 10% of the total equity of such other company and thereafter
continuing to hold such investment.
12.07 ENTIRE AGREEMENT. This Agreement, the Schedules and the
Exhibits hereto and that certain environmental disclosure letter to Purchaser
dated October 17, 1994 supersede all prior agreements and understandings
relating to the subject matter hereof, except that the obligations of any party
under any agreement executed pursuant to this Agreement shall not be affected
by this Section.
12.08 COSTS, EXPENSES AND LEGAL FEES. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
its own costs and expenses (including, without limitation, attorneys',
broker's, agent's, investment banking and finder's fees), except that each
party hereto agrees to pay the costs and expenses, including reasonable
attorneys' fees, incurred by the other party in successfully (a) enforcing any
of the terms of this Agreement, or
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<PAGE> 42
(b) proving that the other party breached any of the terms of this Agreement in
any material respect.
12.09 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable, such provision shall be fully severable
and this Agreement shall be construed and enforced as if such illegal, invalid
or unenforceable provision never comprised a part hereof, and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom.
12.10 WAIVER. All of the original rights and powers of either party
hereunder shall remain in force notwithstanding any neglect, forbearance or
delay in enforcement thereof and neither party shall be deemed to have waived
any of its rights or any provision of this Agreement or any notice given
hereunder unless such waiver is in a writing signed by an officer of the
waiving party. No such waiver by either party of any breach by the other party
of this Agreement shall be deemed a waiver of any continuing, future or
recurring breach.
12.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CHOICE OF LAW
PROVISIONS THEREOF OR SUCH PROVISIONS OF ANY OTHER JURISDICTION.
12.12 CAPTIONS. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
12.13 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
12.14 COOPERATION. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or to cause to be done, all
things necessary, proper or advisable to consummate and to make effective as
promptly as practicable the transactions contemplated by this Agreement,
including without limitation using all reasonable efforts to obtain all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings. Further, the Parties agree to cooperate with each
other in the preparation and filing of any and all tax returns relating to the
Business or the sale thereof and will take such other and further actions
following the Closing as may be necessary or desirable to carry out the
purposes of this Agreement. The Selling Entities hereby authorize Purchaser
after the Closing to receive and, subject to the following sentence, open all
mail and other communications addressed to the Selling Entities received by
Purchaser. Purchaser agrees (i) to promptly forward to Seller and to hold in
confidence any such mail or other communications that do not relate to the
Business and (ii) to forward to Seller unopened any such mail or communications
addressed to Seller's executive offices or corporate headquarters. To the
extent Purchaser reasonably requires access to any books or records relating
36
<PAGE> 43
in whole or in part to the Business or Assets that are not conveyed under
Section 2.01(a)(6), the Selling Entities shall cooperate in granting Purchaser
with access to all documents, records and information reasonably required by
Purchaser.
12.15 BULK SALES COMPLIANCE. The parties hereto waive compliance
with all applicable provisions, if any, of the bulk sales laws of the states in
which the Assets are located, or similar laws of any jurisdiction.
12.16 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Except as otherwise provided in this Section 12.16 or elsewhere in
this Agreement, all representations, warranties, covenants and agreements of
the parties contained in this Agreement or in any Schedule or Exhibit and any
related agreements shall survive the execution and delivery of this Agreement
and consummation of the transactions provided for in this Agreement and any
related agreements, notwithstanding any investigation made by or on behalf of
the parties. The representations and warranties contained in Article IV and
Article V of this Agreement shall terminate two years following the Closing
Date, except for the representations, warranties, covenants and agreements
contained in Sections 4.02, 5.02, 5.03 and 5.05 which shall have no termination
date. No representation, warranty or covenant shall merge into the deeds, Act
of Sale, bills of sale, assignments, documents, agreements and instruments to
be delivered at Closing.
12.17 RISK OF LOSS. The risk of any loss, damage, impairment,
confiscation or condemnation of Selling Entities' Assets, or any part thereof,
shall be upon the Selling Entities at all times prior to the Closing. 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
Selling Entities. In such event, Selling Entities 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 or as soon thereafter as possible; provided that
in the event of damage that would have a material adverse effect on the
Business or the Assets taken as a whole, either party may, by written notice
made pursuant to Section 12.03, terminate this Agreement. To the extent any
such proceeds shall be payable after the Closing, the Selling Entities shall
cooperate with Purchaser in pursuing these claims.
ARTICLE XIII
TERMINATION
13.01 TERMINATION RIGHTS. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing:
(a) by execution and delivery of a written agreement to
that effect by duly authorized officers of Purchaser and the Selling Entities;
or
37
<PAGE> 44
(b) by written notice given by Purchaser or the Selling
Entities if the Closing hereunder has not occurred by June 30, 1995;
(c) by notice pursuant to Section 12.17;
(d) by written notice given by either party hereto if
there shall be in effect at any time a final unappealable injunction, order or
decree of any court or governmental entity of competent jurisdiction that
restrains or enjoins in any material respect the consummation of the
transaction contemplated hereby;
(e) by written notice given by the Selling Entities at
such time as any of the conditions to the obligations of the Selling Entities
provided in Article X cannot be satisfied and will not be waived by the Selling
Entities; or
(f) by written notice given by the Purchaser at such time
as any of the conditions to the obligations of the Purchaser provided in
Article IX cannot be satisfied and will not be waived by the Purchaser.
13.02 EFFECT OF TERMINATION. If this Agreement is terminated under
Section 13.01 herein, neither Purchaser nor the Selling Entities nor any of
their respective stockholders, directors, officers or employees shall have any
liability to the other party or any of the foregoing for loss of anticipated
profit, for other losses, damages or expenses or otherwise.
REMAINDER OF PAGE 38 AND PAGE 39 INTENTIONALLY LEFT BLANK
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<PAGE> 45
13.03 CONTINUING OBLIGATIONS. Any termination pursuant to this
Article XIII shall not affect the obligations of the parties hereto under
Sections 12.04, 12.05, 12.08 and 12.11 hereof.
IN WITNESS WHEREOF, this Purchase and Sale Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first above written.
PURCHASER:
TIDEWATER INC.
a Delaware corporation
By:_____________________________________
Ken C. Tamblyn
Its: Executive Vice President
SELLER
HALLIBURTON COMPANY,
a Delaware corporation
By:_____________________________________
Its:____________________________________
SELLER'S AFFILIATE:
HALLIBURTON CANADA INC.,
an Alberta, Canada corporation
By:_____________________________________
Its:____________________________________
39
<PAGE> 1
EXHIBIT 11
TIDEWATER INC.
COMPUTATION OF EARNINGS AND SHARES USED IN ARRIVING
AT PRIMARY AND FULLY-DILUTED EARNINGS PER SHARE FOR THE
QUARTER AND SIX-MONTH PERIOD ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
(In Thousands)
Quarter Ended Six Months Ended
September 30, 1994 September 30, 1994
------------------ ------------------
<S> <C> <C>
Net Earnings $ 12,327 $ 25,768
========== ==========
Computation of weighted
average number of shares
outstanding:
- ------------------------
Issued: 53,095,353 shares
Weighted average shares
outstanding 53,088,668 53,076,455
Add: Incremental shares
applicable to stock
options 333,160 328,198
---------- ----------
Weighted average common
shares & equivalents 53,421,828 53,404,653
========== ==========
Primary and fully diluted
earnings per common share $.23 $.48
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND THE CONDENSED CONSOLIDATED STATEMENTS
OF EARNINGS AT THE DATE AND FOR THE PERIOD INDICATED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
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0
0
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