TABLE OF CONTENTS
1. SALE AND TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
2. PURCHASE PRICE; PAYMENT; ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.2 Purchase Price Reductions; Rig Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
2.4 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
3.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
3.3 Enforceability; Conflicts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
3.4 Title to Shares; Shares Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
3.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
3.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
3.8 No Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.9 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.10 Tax Returns and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
3.11 Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
3.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
3.13 No Defaults; Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
3.14 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
3.15 Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
3.16 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
3.17 Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
3.18 Payment of Expenses of Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . -24-
3.19 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
3.20 Patents, Trademarks, Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . -24-
3.21 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
3.22 Use of Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
3.23 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
3.24 Performance Bonds; Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
3.25 Certain Property on Rigs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
3.26 Rig Classifications and Certifications; Shipping Laws . . . . . . . . . . . . . . . . . . -26-
3.27 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
3.28 Rig Equipment; Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
3.29 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
3.30 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
3.31 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
3.32 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
3.33 LIMITATION OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . -30-
4. REPRESENTATIONS AND WARRANTIES BY BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
4.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
4.3 No Violation; Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
4.4 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
4.5 Notice; Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
4.6 No Section 338 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
5.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
5.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
5.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
5.4 Matters Involving Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
6.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
6.2 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
6.3 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
6.4 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
6.5 Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
6.6 Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
6.7 Casualty Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
6.8 Board and Shareholder Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
6.9 HOC Agreement; Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
7.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
7.2 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
7.3 Approvals; Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
7.4 Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
7.5 Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
7.6 HOC Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
8. COVENANTS OF SELLER PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
8.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
8.2 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
8.3 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
8.4 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
8.5 Rig Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
8.6 Seller Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -48-
8.7 False Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
9. COVENANTS OF BUYER PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
9.1 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
9.2 Due Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
9.3 False Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
9.4 Buyer Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
10. OTHER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
10.1 Post Closing Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
10.2 Stand Alone Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
10.3 [Intentionally Deleted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
10.4 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
10.5 Taking of Necessary Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
10.6 Press Releases and Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . -55-
11. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
12. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
12.1 Causes for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
12.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -57-
13. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -57-
14. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -58-
14.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -58-
14.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -59-
14.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -59-
14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -59-
14.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -59-
15. ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -59-
15.1 Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -59-
15.2 Powers and Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -60-
15.3 Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -61-
15.4 Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -61-
15.5 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -61-
15.6 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
16. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
16.1 Arbitration Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
16.2 Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
17. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
18. NO THIRD-PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
19. SUCCESSION AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -63-
20. CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -63-
21. INCORPORATION OF EXHIBITS AND SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -63-
22. SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -64-
LIST OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -66-
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated as of May __,
1997 between RASHID & LEE NOMINEES SDN. BHD., a Malaysian private limited
company ("Seller"), and PARKER DRILLING COMPANY, a Delaware corporation
("Parker") and PARKER DRILLING OFFSHORE COMPANY, a Delaware corporation and a
wholly-owned subsidiary of Parker ("Parker Offshore"); Parker and Parker
Offshore being hereinafter referred to as "Buyer";
WITNESSETH
WHEREAS:
(1) Seller owns and wishes to sell to Buyer ONE THOUSAND (1,000)
shares of common stock, each with no nominal or par value (the "Shares"),
representing one hundred percent (100%) of all of the issued and outstanding
common stock, of Hercules Rig Corp., a Texas corporation ("HRC" or the
"Company");
(2) Buyer has agreed to purchase the Shares for the consideration
hereinafter expressed on condition that Buyer is also able to purchase certain
agreed shares of capital stock of Hercules Offshore Corporation, a Texas
corporation, pursuant to the provisions of a separate Stock Purchase Agreement
of even date with this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
1. SALE AND TRANSFER OF SHARES.
1.1 Definitions.
"AFFILIATE" or "AFFILIATES" means, with respect to Buyer or Seller,
any other entity directly or indirectly controlling or controlled by or under
direct or indirect common control with Buyer
or Seller, respectively. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with") used with respect to either Buyer or Seller,
shall mean the possession, directly or indirectly of the beneficial ownership
of fifty (50) percent or more of the voting securities of Buyer or Seller, as
applicable.
"AGREEMENT" has the meaning set forth in the preamble.
"ASSETS" means the Rigs, the Bareboat Charters, the IOLP Charter, the
Contracts and all other tangible or intangible assets, benefits, contracts and
contract rights owned or enuring to the benefit of the Company, including,
without limitation, the assets reflected in the Company's Financial Statements
in accordance with GAAP.
"ASSUMED DEBT" has the meaning set forth in Section 2.2(a).
"AUDIT DATE" means December 31, 1996.
"BAREBOAT CHARTERS" means (a) Bareboat Charter Agreement for Rig 25
dated April 8, 1994, as amended, between HRC, as owner, and HOC, as charterer;
and (b) Bareboat Charter Agreement for Rig 22, dated January 1, 1997 between
HRC, as owner and HOC, as charterer.
"BENEFIT PLANS" has the meaning set forth in Section 3.9.
"BUYER" has the meaning set forth in the preamble.
"BUYER TERMINATION EVENT" has the meaning set forth in Section
12.1(b).
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 -9675.
"CLOSING" and "CLOSING DATE" have the meanings set forth in Section
2.3.
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"COAST GUARD" means the United States Coast Guard as defined in 46
U.S.C. Section 2101.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" means Hercules Rig Corp.
"CONTRACTS" means the Bareboat Charters, the IOLP Charter and all
other contracts to which the Company or any of its Assets are subject which
obligate the Company to make or entitle the Company to receive payments in
excess of $100,000.
"CORPORATE CHARTER DOCUMENTS" has the meaning set forth in Section 3.1
hereof.
"DAMAGES" has the meanings set forth in Sections 5.2(a) and 5.3(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ENVIRONMENTAL LAWS" or "LAW" means the federal and state
environmental laws, health and safety laws, rules or regulations, with respect
to the business or operations of the Company, of the United States of America
and all other applicable jurisdictions, including, but not limited to CERCLA, as
amended by the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Sections 6901-6992k,
the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq., the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701, et seq.; the Clean Air Act, 42
U.S.C. Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251, et
seq., the Toxic Substances Control Act ("TSCA"), 15 U.S.C. Sections 2601-2629,
the Safe Drinking Water Act, 42 U.S.C. Sections 300F-300J, the Occupational
Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq. ("OSHA") and all
similar federal, state (including but not limited to environmental, health and
safety laws of the State of Texas) and local statutes, ordinances and the
regulations, orders and decrees promulgated thereunder.
-3-
"FINANCIAL STATEMENTS" means all books of account and financial
statements of the Company delivered by Seller to Buyer and listed in Section
3.7(a).
"GAAP" means generally accepted accounting principles that are
consistent with principles promulgated or adopted in the United States with
respect to the Company. With respect to the Seller, GAAP shall be deemed to
mean generally accepted accounting principles consistently applied in Malaysia.
"GOVERNMENTAL AGENCY" means any government or any state, department or
other political subdivision thereof or governmental body, agency, authority,
department or commission (including, without limitation, any court or tribunal)
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any corporation, partnership or
other entity directly or indirectly owned by any of the foregoing.
"HOC" means Hercules Offshore Corporation, a Texas corporation.
"HRC" means Hercules Rig Corp.
"HOC AGREEMENT" means the Stock Purchase Agreement between Trenergy
(Malaysia) BHD., HOC's sole shareholder, and Buyer of even date herewith for
the sale to Buyer of all of HOC's shares.
"HSR" means the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976.
"HAZARDOUS SUBSTANCES" means any substance or material that is defined
or otherwise listed as a hazardous substance pursuant to CERCLA, as a toxic
substance pursuant to TSCA, a hazardous waste pursuant to RCRA, a hazardous
material pursuant to the Hazardous Materials Transportation Act or any
petroleum material that in its concentration and location presents a material
endangerment to human health or the environment.
-4-
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" have the meanings set
forth in Section 5.4(a).
"INVENTORY" means any and all inventory of the Company recorded, in
accordance with GAAP, in the Company's Financial Statements.
"IOLP" means Isabella Offshore Limited Partnership, of San Francisco,
California, the owner and bareboat charterer to HRC of Rig 22.
"IOLP CHARTER" means that certain Bareboat Charter Agreement, dated
January 1, 1997, between IOLP as owner, and HRC, as charterer, for and in
connection with Hercules Rig 22, and all of HRC's obligations and indebtedness
thereunder, including, but not limited to, HRC's obligation to purchase Rig 22
on termination of such bareboat charter, all of which is further secured by the
Rig 25 Mortgage.
"IRS" means the Internal Revenue Service of the United States.
"IOLP CONSENTS" means approvals required of IOLP under the IOLP
Charter, if any.
"LIABILITIES" means all liabilities of the Company from time to time
recorded in the Company's Financial Statements in accordance with GAAP.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" or "AFFECT"
means, with respect to any person, a change, event or result that (a) adversely
affects or impairs, as appropriate, the value of any Assets by an amount in
excess of $2,500,000 or (b) creates or results in the incurrence of a
liability or obligation of such person of an amount in excess of $2,500,000.
"NAME" has the meaning set forth in Section 3.22.
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"PERMITTED LIENS" means:
(a) preferred mortgage liens, liens, security interests and
encumbrances on the Rigs and certain other assets of HRC under the Rig 25
Mortgage and the IOLP Charter, provided, however, that such liens shall only be
permitted on the Closing Date if the Rig 25 Mortgage and/or IOLP Charter are
assumed by Buyer;
(b) shipyards' and worker's liens, if any, on the Rigs;
(c) liens for Taxes, assessments and governmental charges not yet
due and payable or the validity of which are being diligently contested in good
faith by appropriate proceedings;
(d) statutory, common law and maritime liens (including liens for
insurance premiums or calls), purchase money liens, liens securing debt under
capital leases and other liens arising in the ordinary course of business
relating to obligations as to which there is no default on the part of the
Company;
(e) charterer's liens or other liens under the Bareboat Charters
and the IOLP Charter in the ordinary course of business as to which there is no
default;
(f) liens in connection with Worker's Compensation, unemployment
insurance or other Social Security, pension or public liability obligations;
and
(g) liens in connection with any litigation or other proceeding or
arising out of a judgment or award for which an appeal is to be prosecuted as
disclosed in Exhibit 3.12; provided, however, that at the Closing "Permitted
Liens" shall not include any liens for Taxes, assessments or governmental
charges filed of record against the Assets, or statutory or maritime liens
filed of record against the Assets, unless any such liens are being diligently
contested in good faith by appropriate proceedings and are disclosed in Exhibit
3.12.
-6-
"PRE-CLOSING TAXABLE PERIOD" means all or a portion of (i) any taxable
period up to and including the Closing Date or (ii) any taxable period with
respect to which the Tax is computed by reference to Tax items, assets, capital
or operations of the Company arising on or before, or existing as of, the
Closing Date.
"PURCHASE PRICE" means the price paid by Buyer for the Shares pursuant
to the provisions of Section 2.2.
"RESTORATION SHORTFALL" has the meaning set forth in Section 8.5(c).
"RIG 25 MORTGAGE" means the mortgage over Rig 25 in favor of IOLP to
secure the IOLP Charter.
"RIG CASUALTY EVENT" has the meaning set forth in Section 8.5(c).
"RIG DEBT" means all outstanding principal and interest, charter hire
fees, fees, expenses and obligations of HRC to IOLP, under and pursuant to the
terms of the IOLP Charter.
"RIG EQUIPMENT" means any and all drilling machinery and equipment
(including, without limitation, floor tools and blow-out preventers), engines,
machinery, equipment, mooring systems and equipment, riser tensioner systems
and equipment, boots, covers, anchors, chains, cables, tackle, rigging,
apparel, furniture, computers and computer equipment, computer software,
fittings and equipment, tools, pumps and pumping equipment, living quarters
located thereon, spare components and parts, tubulars, drill pipe, drill
collars, racking, supporting inventory and stores (unless classified as
Inventory), and all other appurtenances thereto appertaining or belonging to
any of the Rigs (including items under Capital Leases to HOC), including, to
the extent such items are owned by HOC, appertaining or belonging to Rig 22,
whether located on the Rigs, or located elsewhere; and all top drives and
related equipment, if any, owned by HOC
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and used in connection with the Rigs; excluding, however, Rig Rental Equipment
and other equipment and stores owned by (a) any operator, third-party suppliers
(such as catering consumables, cement units or logging equipment) or otherwise,
or (b) with respect to both Rigs, by HOC or (c) with respect to Rig 22, by
IOLP.
"RIG RENTAL EQUIPMENT" means rental equipment on board the Rigs or
stored elsewhere, which is leased or rented by HRC or HOC from third parties
for use in normal drilling or workover operations.
"RIG RESTORATION AMOUNT" has the meaning set forth in Section 8.5(c).
"RIGS" means Rig 25 and all of Seller's right, title and interest in
and to Rig 22, and their associated Rig Equipment and Inventory, owned,
chartered or operated by the Company, which rigs are more specifically
identified in Exhibit 3.15(a).
"SELLER" means Rashid & Lee Nominees SDN. BHD., a Malaysian private
limited company.
"SELLER TERMINATION EVENT" has the meaning set forth in Section
12.1(c).
"SHARES" has the meaning set forth in the preamble.
"SHIPPING LAWS" means all statutory and general maritime laws of the
United States of America governing the documentation, ownership, operation and
inspection of United States vessels or foreign vessels operating in United
States waters including such laws as they relate to drill rigs, jack up or
platform drill rigs, and all U.S. Maritime Administration and Coast Guard rules
and regulations.
"TAX" or "TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, premium
windfall profits, environmental
-8-
(including taxes under Code Sec. 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, alternative or add-on minimum, estimated, or other tax of any
kind whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not, excluding, however, any deferred taxes which appear as a
Liability on the Company's Financial Statements.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 5.4(a).
"TO THE BEST OF SELLER'S KNOWLEDGE", as used in this Agreement, with
respect to Seller, means and applies to the actual knowledge (after reasonable
inquiry) of Seller, its officers, agents or employees.
1.2 Sale of Shares.
Subject to the terms and conditions of this Agreement, on the
Closing Date, Seller agrees to sell, transfer and deliver the Shares to Buyer,
free and clear of all liens, charges, pledges and encumbrances, and on such
date Buyer agrees to purchase and take delivery of title to the Shares.
-9-
2. PURCHASE PRICE; PAYMENT; ADJUSTMENTS.
2.1 Purchase Price.
(a) The purchase price for the Shares, subject to any
adjustment as set out in 2.1(b) below, shall be FIFTY MILLION UNITED STATES
DOLLARS (U.S. $50,000,000), payable in cash at the Closing.
(b) The Purchase Price paid to Seller shall be reduced by
(i) the amount of the Rig Debt, if any, assumed by Buyer at the Closing
pursuant to the provisions of Section 2.2(a) and (ii) any payments by Buyer to
IOLP under 2.2(b).
(c) Subject to Section 2.2(b), all payments of Purchase
Price and other sums due hereunder shall be made in U.S. Dollars in immediately
available funds to Seller by wire transfer to Seller's bank account designated
in writing to Buyer at least two (2) Business Days prior to the Closing, or as
otherwise instructed by Seller in writing.
2.2 Purchase Price Reductions; Rig Debt.
(a) Buyer may at its sole option, by notice in writing to
Seller, given at least thirty-five (35) days prior to Closing (to permit any
necessary notices to be given to IOLP), elect to assume at the Closing, subject
to any necessary IOLP Consents, all of the Rig Debt. If Buyer does elect to
assume such Rig Debt, Buyer and Seller shall act in good faith and cooperate in
obtaining, as promptly as possible but in any event prior to the Closing Date,
all necessary IOLP Consents. At the Closing, Buyer and Seller shall reduce the
Purchase Price by the total amount of Rig Debt outstanding to IOLP, as
certified in writing by IOLP, and Buyer shall pay to Seller, as Purchase Price,
the reduced amount.
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(b) If Buyer does not elect to assume the Rig Debt, or
any necessary IOLP Consents are not obtained on or before the Closing, Buyer
shall pay at Closing (i) directly to IOLP all outstanding amounts owed on the
Rig Debt, as certified in writing by IOLP, and (ii) the balance of the Purchase
Price to Seller.
2.3 Closing.
The "Closing" of the purchase and sale provided for in this
Agreement shall take place at the offices of Griggs & Harrison, P.C., 1301
McKinney St., Suite 3200, Houston, Texas 77010, at 10:00 a.m., Houston time, on
the Closing Date, or at such other time and place as the parties hereto shall
mutually agree in writing. Unless extended by agreement in writing of the
parties, which date is referred to herein as the "Closing Date", the Closing
shall take place on a date and time jointly agreed by Seller and Buyer which is
on or before a date which is two (2) weeks after the date of satisfaction of
(or waiver thereof in accordance with this Agreement) the latest to occur of
the conditions set forth under Sections 6.4 and 7.3. The Closing Date shall in
any event take place prior to December 31, 1997.
2.4 Closing Deliveries.
At the Closing:
(a) Seller shall deliver to Buyer certificates
representing the Shares, duly endorsed to Buyer, together with such instruments
of transfer required by applicable law, which shall transfer to Buyer good and
marketable (legal and beneficial) title to the Shares, free and clear of all
liens and encumbrances;
(b) Seller shall also deliver to Buyer all Contracts and
additional documents, instruments and certificates to be delivered to Buyer
under the terms of this Agreement;
-11-
(c) Buyer shall deliver to Seller the Purchase Price, as
same may be reduced pursuant to the provisions of Section 2.2 of this
Agreement;
(d) If relevant, Buyer shall pay directly to IOLP all
amounts of Rig Debt outstanding, if same is not assumed by Buyer under Section
2.2, and shall pay the balance of the Purchase Price to Seller; and
(e) Buyer shall deliver to Seller all other documents,
instruments and certificates required to be delivered by Buyer pursuant to the
terms of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
3.1 Organization and Good Standing.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas and has full
corporate power and authority to carry on its business as it is now being
conducted, to own, lease or charter the Rigs, properties and Assets which it
owns, leases or charters and to perform all of its obligations under the
agreements and instruments to which it is a party or by which it is bound. The
copies of the Articles of Incorporation, bylaws and other organizational
documents of the Company, as amended to date, true copies of which, certified
by the Secretary of the Company, have heretofore been delivered to Buyer, are
complete and correct, in full force and effect, and no provision thereof or of
Seller's Memorandum and Articles of Association or other organizational
documents would preclude any of the transactions contemplated by this
Agreement. Seller is a private limited company duly organized, validly
existing and in good standing under the laws of Malaysia. Seller's Memorandum
and Articles of Association or other organizational documents are in full force
and
-12-
effect and valid under the laws of Malaysia and no provision thereof would
preclude any of the transactions contemplated by this Agreement. The
organizational documents of the Company and Seller, as appropriate in this
context, are hereinafter referred to as "Corporate Charter Documents."
3.2 Authority.
Seller has all necessary corporate power and authority to
execute and deliver this Agreement and all agreements, instruments and
documents to be executed and delivered hereunder by it, to sell, transfer and
deliver the Shares to Buyer at the Closing, to consummate the transactions
contemplated hereby and to perform all terms and conditions hereof to be
performed by it. The execution and delivery of this Agreement and all
agreements, instruments and documents to be executed and delivered by Seller
hereunder, the performance by Seller of all the terms and conditions hereof and
thereof to be performed, and the consummation of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action of the
board of directors of Seller, and no other corporate proceedings other than
approval of the shareholders of Seller are necessary with respect thereto. All
persons who have executed and delivered this Agreement, and all persons who
will execute and deliver the Shares, transfers and other agreements, documents,
instruments and certificates to be executed and delivered hereunder by Seller
have been duly authorized by all necessary board of director actions on the
part of Seller, as applicable.
-13-
3.3 Enforceability; Conflicts, etc.
This Agreement constitutes the legal, valid and binding
obligations of Seller enforceable against it in accordance with its terms.
Neither the execution and delivery of this Agreement by Seller nor the
consummation of the transactions contemplated hereby to be performed by the
parties hereto will (a) violate or conflict with any provision of the Corporate
Charter Documents of Seller, as amended to date, or (b) violate or conflict
with any provision of any law, rule, regulation, order, permit, certificate,
writ, judgment, injunction, decree, determination, award or other decision of
any court, Governmental Agency, domestic or foreign, or arbitrator binding
upon Seller. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will (except as specified
in Exhibit 3.3 under the caption "Required Consents") result in a breach of, or
constitute a default (or with notice or lapse of time or both would result in a
breach of or constitute a default) under, or otherwise give any person the
right to terminate any lease, license, contract or other agreement or
instrument to which Seller or the Company is a party. Neither the execution
and delivery by Seller of this Agreement nor the consummation of the
transactions contemplated hereby will result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest, or
other charge or encumbrance of any nature upon or with respect to any of the
properties now or hereafter owned by the Company.
3.4 Title to Shares; Shares Pledge.
Seller now has, and will have at Closing, full legal title to
all of the Shares, free and clear of all liens and encumbrances. The Shares
are duly authorized, validly issued, fully paid and nonassessable and
constitute 100% of the issued and outstanding shares of HRC. Seller will,
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by delivery to Buyer of certificates properly endorsed representing the Shares
at the Closing, have transferred, delivered and vested in Buyer good and
marketable (legal and beneficial) title to the whole of the Shares free and
clear of all liens, pledges, encumbrances, security interests, claims, charges
and restrictions whatsoever. There are no outstanding agreements, options,
warrants or other rights of any kind whatsoever entitling any person to
purchase or acquire an interest in any of the Shares. The certificates
representing any Shares delivered at the Closing and the signatures and
endorsements thereof or instruments of transfer delivered therewith will be
valid and genuine.
3.5 Capitalization.
The authorized and issued capital of the Company at December
31, 1996 is as set forth in Exhibit 3.5. There are no outstanding or
authorized options, warrants, rights, calls or commitments of any character
relating to unissued or treasury shares of such capital, and there are no
outstanding securities or other instruments convertible into or exchangeable
for shares of such capital and no commitments to issue such securities or
instruments.
3.6 Subsidiaries.
The Company has no subsidiaries.
3.7 Financial Statements.
(a) The books of account and related records of the
Company fairly reflect in reasonable detail the Assets, Liabilities, and
transactions of the Company and are sufficient to form the basis of financial
statements prepared in accordance with GAAP and are sufficient to permit an
independent auditor to render an unqualified audit opinion with respect to such
financial statements. The Seller has delivered to Buyer the financial
statements of the Company listed in Exhibit 3.7(a) (the "Financial
Statements").
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(b) The Financial Statements (including the notes
thereto) (i) fairly present the financial positions of the Company as of their
respective dates and the results of its operations and cash flow, for the
periods covered thereby, and (ii) are in conformity with and have been prepared
in accordance with GAAP, applied on a consistent basis.
3.8 No Changes.
Since the Audit Date there has not been:
(a) Any material change in the financial position,
results of operations, business, Assets (including any damage, destruction or
loss thereto) or Liabilities of the Company, except changes in the ordinary
course of business;
(b) Any payment, discharge, or satisfaction by the
Company of any liability or obligation (whether accrued, absolute, contingent,
or otherwise), other than the payment, discharge, or satisfaction in the
ordinary course of business, of Liabilities or obligations shown or reflected
on the Financial Statements since the Audit Date;
(c) Any change by the Company in any method of accounting
or the keeping of its books of account or accounting practices;
(d) Any issued, sold, purchased or redeemed shares of the
Company's share capital; any subdivided or in any way reclassified capital
shares, or amendments to the Corporate Charter Documents of the Company;
(e) Except for the IOLP Charter and other obligations in
the ordinary course of business and as otherwise permitted in this Agreement,
any incurred liability or obligation under agreements or otherwise, except for
obligations pursuant to this Agreement; nor has the Company made any material
acquisitions, issued or become obligated, with respect to any notes,
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debentures, bonds or other debt securities or waived any rights or claims which
are material to the business or condition of the Company;
(f) Any transaction, agreement, or event outside the
ordinary course of the Company's business;
(g) Any capital expenditures outside the ordinary course
of business, except Projected CAPEX under the HOC Agreement;
(h) Any material damage, destruction, or loss (whether or
not covered by insurance) to its property, other than ordinary wear and tear;
and
(i) Any legal commitment incurred by the Company to do
any of the foregoing.
3.9 Benefit Plans.
(a) Definitions. Where the following words and phrases
appear in this Agreement, they shall have the respective meanings set forth
below, unless the context clearly indicates to the contrary:
(i) Each "employee benefit plan," as such term is
defined in Section 3(3) of ERISA, including, but not limited to, any employee
benefit plan that may be exempt from some or all provisions of ERISA, which is
sponsored, maintained, or contributed to by the Company or Seller for the
benefit of employees, former employees, independent contractors, or agents of
the Company, or has been so sponsored, maintained, or contributed to since 1974
("Plans").
(ii) Each personnel policy, stock option plan,
collective bargaining agreement, bonus plan or arrangement, incentive award
plan or arrangement, vacation policy, severance pay plan, policy or agreement,
deferred compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment
-17-
agreement, and each other employee benefit plan, agreement, arrangement,
program, practice or understanding, which is not described in Section 3.9(a)(i)
and which is sponsored, maintained, or contributed to by the Company or Seller
for the benefit of the employees, former employees, independent contractors, or
agents of the Company or any of its subsidiaries, or has been so sponsored,
maintained, or contributed to since 1974 ("Benefit Programs or Agreements").
(iii) Collectively, the Plans and Benefit Programs
or Agreements are defined as "Benefit Plans".
(b) The Company has no and has never had any employees,
except its officers, none of whom are or have ever been paid or otherwise
compensated by the Company.
(c) The Company has not ever maintained a Benefit Plan or
had an obligation to contribute to a Benefit Plan.
(d) With respect to any benefit plan, within the meaning
of Section 3(3) of ERISA, which is not a Benefit Plan but which is sponsored,
maintained, or contributed to, or has been sponsored, maintained, or
contributed to within six years prior to the Closing Date, by any corporation,
trade, business, or entity under common control with the Company or Seller,
within the meaning of Section 414(b), (c), (m), or (o) of the Code or Section
4001 of ERISA ("Commonly Controlled Entity"), (A) no withdrawal liability,
within the meaning of Section 4201 of ERISA, has been incurred, which
withdrawal liability has not been satisfied, (B) no liability to the Pension
Benefit Guaranty Corporation has been incurred by any Commonly Controlled
Entity, which liability has not been satisfied, (C) no accumulated funding
deficiency, whether or not waived, within the meaning of Section 302 of ERISA
or Section 412 of the Code has been
-18-
incurred, and (D) all contributions (including installments) to such plans
required by Section 302 of ERISA and Section 412 of the Code have been timely
made.
3.10 Tax Returns and Taxes.
(a) Except as set forth in Exhibit 3.10, (i) all returns
and reports ("Tax Returns") of or with respect to any Tax which is required to
be filed on or before the Closing Date by or with respect to the Company have
been or will be duly and timely filed, (ii) all items of income, gain, loss,
deduction and credit or other items required to be included in each such Tax
Return have been or will be so included and all information provided in each
such Tax Return is true, correct and complete, (iii) all Taxes which have
become or will become due with respect to the period covered by each such Tax
Return have been or will be timely paid in full, (iv) all withholding Tax
requirements imposed on or with respect to the Company have been or will be
satisfied in full, and (v) no penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or late
payment of any such Tax.
(b) There is no claim against the Company for any Taxes,
and no assessment, deficiency or adjustment has been asserted or proposed with
respect to any Tax Return of or with respect to the Company, other than those
disclosed in Exhibit 3.10 (and to which are attached true and complete copies
of all audit or similar reports).
(c) Except as set forth in Exhibit 3.10, there is not in
force any extension of time with respect to the due date for the filing of any
Tax Return of or with respect to the Company or any waiver or agreement for any
extension of time for the assessment or payment of any Tax of or with respect
to the Company.
-19-
(d) The total amounts set up as liabilities for current
and deferred Taxes in the Company's Closing Date balance sheet will be
sufficient to cover the payment of all Taxes, whether or not assessed or
disputed, which are, as of the Closing Date, or which could thereafter be found
to be, due by or with respect to the Company up to and through the periods
covered thereby.
(e) The Company is not and has never been a member of an
affiliated or consolidated group of corporations that files a consolidated Tax
Return in any jurisdiction.
(f) Except as set forth in Exhibit 3.10, none of the
property of the Company is held in an arrangement that could be classified as a
partnership for Tax purposes, and the Company does not own any interest in any
controlled foreign corporation (as defined in section 957 of the Code), passive
foreign investment company (as defined in section 1296 of the Code) or other
entity the income of which is required to be included in the income of the
Company.
(g) Except as set forth in Exhibit 3.10, none of the
property of the Company is subject to a safe- harbor lease (pursuant to section
168(f)(8) of the Internal Revenue Code of 1954 as in effect after the Economic
Recovery Tax Act of 1981 and before the Tax Reform Act of 1986) or is
"tax-exempt use property" (within the meaning of section 168(h) of the Code) or
"tax-exempt bond financed property" (within the meaning of section 168g(5) of
the Code).
(h) Except as set forth in Exhibit 3.10, the Company will
not be required to include any amount in income for any taxable period
beginning on the Closing Date as a result of a change in accounting method for
any taxable period ending on or before the Closing Date or pursuant to any
agreement with any Tax authority with respect to any such taxable period.
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(i) The Company has not consented to have the provisions
of section 341(f)(2) of the Code apply with respect to a sale of its stock.
(j) Except as set forth in Exhibit 3.10, the transfer of
the Shares contemplated by this Agreement will not result in any Tax liability
or gain to the Company, except, however, that the change of control effected by
the transfer of the Shares at Closing could, under IRS rules, restrict the
Company's future use of any net operating losses, which could have an indirect
effect on the Company's Tax liability.
3.11 Regulatory Filings.
All regulatory filings with any Governmental Agency relating
to the operations of the Company (including but not limited to all
environmental filings) required to be made have been made in material
compliance with applicable law, and no material deficiencies have been asserted
by any such authority with respect to such a filing.
3.12 Litigation.
Except as set forth in Exhibit 3.12, there is no action, suit,
proceeding, claim or investigation pending, or to the best of Seller's
knowledge, threatened, against or affecting the Company or any of its Assets
before any court or Governmental Agency or regulatory authority.
3.13 No Defaults; Contracts.
Except as set forth in Exhibit 3.13, no event or condition has
occurred which constitutes, or with the lapse of time or the giving of notice
or both, would constitute a material default or a basis of force majeure or
other claim of excusable delay or non-performance by the Company or any other
person under the IOLP Charter, the Bareboat Charters, the Rig 25
-21-
Mortgage or under any other Contract, agreement, instrument or obligation to
which the Company is a party or by which it is bound and which is material to
the Company.
3.14 Government Regulations.
The Company has no, and is not required by applicable law to
have any, franchises, licenses, permits, certificates and other governmental
approvals necessary to enable the Company to carry on its business in all
material respects as presently conducted except for a Certificate of
Documentation for Rig 25 which is current and in full force and effect; and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not materially affect such Certificate of
Documentation. All certificates of financial responsibility, Coast Guard and
class certificates for the Rigs have been taken out in the name of, and are
currently in full force and effect and maintained by HOC. The Company is not
in material violation of any law, rule, regulation, order, permit, certificate,
writ, judgment, stipulation, injunction, decree, determination, award or
decision of any court, government, or Governmental Agency or instrumentality,
domestic or foreign, or arbitrator binding upon the Company.
3.15 Assets and Liabilities.
Set forth in Exhibits to this Section 3.15 are true and
correct lists of the following Assets and Liabilities as of March 31, 1997:
(a) Rig 25, which is owned by the Company and described
in more detail in Exhibit 3.15(a);
(b) Rig 22, which is chartered to the Company and
described in more detail in Exhibit 3.15(b);
-22-
(c) all Rig Equipment and Inventory, itemized by Rig
number in Exhibit 3.15(c), and all other personal property by category owned by
the Company;
(d) the Bareboat Charters and all other Contracts between
the Company and others which are in force as of the date hereof (including,
without limitation, mortgages, charters, leases, deeds of trust, loan and
credit agreements, security agreements, pledge agreements, employment
contracts, labor union contracts, contracts or commitments for the purchase or
sale of shares, products or services) which impose an obligation on the
Company, or to which the Company's properties are subject, in an amount
exceeding $100,000, all as set forth in Exhibit 3.15(d);
(e) the IOLP Charter, a description of which appears in
Exhibit 3.15(e); and
(f) all Liabilities (including, but not limited to,
indebtedness for borrowed money and obligations under the IOLP Charter) of the
Company, as set forth in Exhibit 3.15(f).
3.16 Employees.
The Company has no employees and has never employed any
persons other than its officers and Seller has caused the Company to give Buyer
true and correct lists of all present directors and officers of the Company.
None of the directors or officers has an employment contract with the Company
or Seller or is entitled to any salary or benefits or severance compensation
from the Company or Seller.
-23-
3.17 Minute Books.
The minute books of the Company made available to Buyer and
its representatives contain true and correct copies of the minutes of each
meeting of and all resolutions passed by the board of directors of the Company
and no meeting or resolution of such board has been held or passed for which
minutes are not contained therein.
3.18 Payment of Expenses of Brokers or Finders.
Seller has hired Jefferies & Co. in connection with the
transactions contemplated by this Agreement and Seller hereby indemnifies and
holds harmless Buyer from any brokerage or finders' fees or agents' commissions
or their like payment in connection with this Agreement alleged to be due by or
through Seller or as a result of the action of Seller.
3.19 Undisclosed Liabilities.
The Company has no, and the Company's Assets are not subject
to, any liability, commitment, indebtedness or obligation of any kind
whatsoever (whether liquidated or unliquidated, actual or contingent), on the
Company or its Assets, and which (a) is not shown and adequately reserved
against in the Financial Statements or (b) has not been disclosed to Buyer in
writing.
3.20 Patents, Trademarks, Licenses and Permits.
The Company is not presently being challenged for infringement
of patents, patent rights or licenses, trademarks or trade names, or copyrights
or copyright registrations, nor to the best of Seller's knowledge, is the
Company in conflict with the rights of others with respect to patents, patent
rights or licenses, trademarks, trade names or copyrights.
-24-
3.21 Powers of Attorney.
No person or company holds any power of attorney or blank
transfer form from the Seller on any of the Shares.
3.22 Use of Names.
Upon consummation of the transactions contemplated hereby,
Buyer shall acquire from Seller all of its respective right, title and interest
to use the name "Hercules Rig Corp." and all derivatives of such name, except
such derivatives as set forth in the HOC Agreement (the "Name"), and shall
obtain the exclusive right to use the Name; and Seller shall not have any right
to use the Name.
3.23 Books and Records.
All of the books and records of the Company are substantially
complete and correct, have been maintained in accordance with good business
practice and all applicable laws, and, in the case of the books of account,
have been prepared and maintained in accordance with GAAP. Such books and
records accurately and fairly reflect, in reasonable detail, all material
transactions, Assets and Liabilities of the Company.
3.24 Performance Bonds; Letters of Credit.
The Company has no outstanding performance or similar bonds
and letters of credit currently posted by, or any certificate of financial
responsibility or similar evidence of financial accountability obtained or
procured by, the Company for the purpose of owning and operating the Rigs or
otherwise conducting its business. All such certificates relating to the
operation of the Rigs are in the name of HOC.
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3.25 Certain Property on Rigs.
After the date hereof, subject to normal wear and tear and
consumption in the ordinary course of business, neither Seller nor the Company
shall remove or permit to be removed any tangible property from any Rig, which
tangible property has a value equal to or greater than $50,000 in the aggregate
for both Rigs except for (a) Rig Rental Equipment, (b) any equipment owned by
oil and gas operators or other operators or contractors working for the Company
in the ordinary course of business, (c) any such tangible property relocated
by HOC from one Rig to another Rig or transferred to storage and held for use
on or in connection with the Rigs and HOC's rigs, and (d) any equipment or
tangible property removed and later returned or replaced as part of the Agreed
CAPEX program under the HOC Agreement approved by Buyer.
3.26 Rig Classifications and Certifications; Shipping Laws.
(a) The classification of each Rig and, if applicable,
the flag under which is documented, together with a summary of the
recommendations to class for each of the Rigs based on the most recent survey
of such Rig as of the date of this Agreement, as well as a listing of required
certifications and the expiration date for each such certification, has been
identified and disclosed to Buyer under the HOC Agreement. Each of the Rigs
has and Seller shall cause the Rigs to have at Closing all required class and
Coast Guard certifications (subject to any listed recommendations) necessary
for its present operations in full force and effect (with the exception of any
Rig that may be affected by any loss or damage referred to in Section 8.5).
(b) Each Rig is duly and correctly documented under the
laws of the jurisdiction where same is required to be documented.
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(c) The Company qualifies as a "citizen" of the United
States of America for purposes of the documentation of vessels in the United
States under the Shipping Laws.
3.27 Title to Assets.
The Company has good and marketable title to Rig 25 and, at
Closing, to Rig 22 (provided Buyer does not assume the Rig Debt), and all other
Assets, real and personal, free and clear of all liens and encumbrances, except
for Permitted Liens, and such other imperfections of title, easements,
restrictions, liens, and encumbrances, if any, do not, individually or in the
aggregate, materially affect the value or intended use or enjoyment of Rig 25
or the other Assets. The Company has not received notice of any violation of,
or default under, any law, ordinance, order, certificate, regulation or
requirement relating to the Rigs or other Assets which remains uncured or has
not been dismissed. The Bareboat Charters, IOLP Charter and other leases and
licenses pursuant to which the Company charters, leases or licenses from or to
others any Rigs, Rig Equipment, Inventory or other material real or personal
property are in all material respects in good standing and valid and effective
in accordance with their respective terms.
3.28 Rig Equipment; Inventory.
As of the date of this Agreement, the Company owns good and
marketable title to the Rig Equipment and Inventory, except for Rig Rental
Equipment and other equipment belonging to third parties, free and clear of all
encumbrances except for Permitted Liens. As of the Closing Date, the Company
will own good and marketable title to the Rig Equipment and Inventory, except
for Rig Rental Equipment and other third party equipment described above, as
such Rig Equipment or Inventory may be reduced through the consumption thereof,
or increased through replacement thereof or additions thereto, in the ordinary
course of the maintenance and
-27-
operation of the Rigs by HOC through the Closing Date, free and clear of all
liens and encumbrances except for Permitted Liens, if any, created or permitted
to be imposed by Buyer.
3.29 Contracts.
Seller has caused the Company to deliver to Buyer for review
complete and correct copies of all Contracts, and all amendments thereto and
assignments thereof. Except for IOLP consent to the Rig 22 Bareboat Charter to
HOC, no consents are needed for any Contracts. As of the date of this
Agreement, each of the Contracts is valid, binding and in full force and effect
against the Company and, as of the Closing, each of the Contracts will be
valid, binding and in full force and effect against the Company. As of the
date hereof, the Company is not in default in any material respect, no notice
of alleged default has been received by Seller or the Company under any of the
Contracts, and no other party thereto is in default thereunder in any material
respect, and there exists no condition or event which, with or without notice
or lapse of time or both, would (i) constitute a material default under any of
the Contracts by the Company, or (ii) otherwise give any other party to such a
Contract the right to charge any material penalties to Seller or the Company or
reduce the rates that would otherwise be payable to the Company under such a
Contract.
3.30 Insurance.
Under the terms of the Bareboat Charters, HOC maintains with
sound and reputable insurers policies of insurance with respect to the Rigs
against such casualties and contingencies of such types and in such amounts as
are customary for drilling contractors of similar size engaged in similar
operations. All premiums due and payable with respect to such policies have
been timely paid and no notice of cancellation of, or any intention not to
renew, any such policy has
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been received by the Company. Set forth in Exhibit 3.15(h) of the HOC
Agreement is a summary description of (a) the insurance maintained by the
Company covering each of the Rigs and/or the operation of its business and (b)
all outstanding insurance claims.
3.31 Environmental Matters.
The Company is in material compliance with all Environmental
Laws applicable to its operations. No notice, citation, summons or order has
been issued, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending or threatened by any Governmental Agency or
other governmental entity or person with respect to any generation, treatment,
storage, recycling, transportation, release or disposal of any Hazardous
Substances by the Company or, to the best of Seller's knowledge on behalf of
the Company. The Company has (a) not received any request for information,
notice of claim, demand, or other notification that the Company is or may be
potentially responsible with respect to any investigation or clean-up of any
threatened or actual release of any Hazardous Substance and (b) received no
notice of, and neither knows of nor suspects, facts or conditions which might
constitute any violation of, give rise to or result in, any remedial
obligations of the Company under any United States Environmental Laws. The
Company has been issued all necessary permits and governmental authorizations
in order to carry on its business as currently operated, and, to the extent
necessary, agrees to transfer all such permits and authorizations to Buyer at
the Closing. To the best of Seller's knowledge, there have been no
environmental inspections, investigations, studies, audits, tests, reviews, or
other analyses conducted in relation to any property or business now or
previously owned, operated or leased by the Company except as set forth in
Exhibit 3.31 hereof. There is no material liability to any non-governmental
third party in tort in connection with any
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release into the environment of, or any exposure to, any Hazardous Substances
as a result of or with respect to the properties which are now or previously
owned or leased by the Company or with respect to the businesses of the
Company.
3.32 Consents.
No consent, approval, or authorization of, or registration or
filing with, any person, including any governmental authority or other
regulatory agency is required of the Seller or the Company in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby except for: (a) a pre-merger notification
filing under HSR and any further filings or Governmental Agency requirements in
connection therewith, and (b) approval of the shareholders of Seller.
3.33 LIMITATION OF REPRESENTATIONS AND WARRANTIES. EXCEPT AS
SPECIFICALLY SET FORTH HEREIN, SELLER MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, IN CONNECTION WITH THE COMPANY, THE RIGS, THE CONTRACTS,
THE BAREBOAT CHARTERS, THE IOLP CHARTER OR ANY OTHER ASSETS OF THE COMPANY OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, VALUE, REPAIR, SEAWORTHINESS, SUITABILITY OR FITNESS FOR A
PARTICULAR USE, OR QUALITY, OR AS TO THE ABSENCE OF ANY DEFECTS THEREIN,
WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT THE RIGS AND ASSETS OF THE
COMPANY ARE BEING TRANSFERRED WITH THE SHARES HEREUNDER "AS IS AND WHERE IS"
WITH ALL FAULTS AND IN THEIR PRESENT STATE AND CONDITION. BUYER ACKNOWLEDGES
THAT IT HAS EXAMINED, AND MADE ITS OWN INDEPENDENT INVESTIGATION OF THE
COMPANY, THE RIGS AND OTHER ASSETS
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AND HAS NOT RELIED ON ANY STATEMENTS OF ANY COMPANY OFFICER OR REPRESENTATIVE
AS TO VALUES, OR CONDITION OR APPRAISALS OF, OR REPRESENTATIONS OR WARRANTIES
(OTHER THAN AS SET FORTH IN THIS AGREEMENT) IN CONNECTION WITH, THE SHARES, THE
COMPANY, THE RIGS, CONTRACTS OR THE OTHER ASSETS.
4. REPRESENTATIONS AND WARRANTIES BY BUYER.
Buyer hereby represents and warrants to Seller as follows:
4.1 Organization and Good Standing.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of Delaware and is duly authorized to carry on
business and is in good standing in the States of Oklahoma and Texas. Buyer is
a "citizen" of the United States for vessel documentation purposes under the
Shipping Laws.
4.2 Authority.
Buyer has all the requisite power and authority to execute and
deliver this Agreement, and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Buyer and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action, and no
other corporate action of, including any action by the shareholders of Buyer,
is necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Buyer and is a
legal, valid and binding obligation of Buyer enforceable against it in
accordance with its terms. Buyer will have at the
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Closing full corporate power and authority to make and perform this Agreement,
purchase and take delivery of the Shares and perform all other transactions
contemplated herein.
4.3 No Violation; Enforceability.
This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against it in accordance with its terms.
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby in accordance with the terms hereto will
violate or conflict with any provision of the Certificate of Incorporation,
bylaws and other applicable organizational documents of Buyer, or violate the
provisions of or result in the acceleration of performance under any material
mortgage, lien, lease, agreement, instrument, order, judgment or decree to
which Buyer is a party or by which it or any of its property is bound, and will
not violate or conflict with any other material restriction to which Buyer is
subject.
4.4 Brokers or Finders.
Buyer has incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other like
payment in connection with this Agreement and WILL INDEMNIFY AND HOLD HARMLESS
Seller from any such payment alleged to be due by or through Buyer as a result
of the action of Buyer.
4.5 Notice; Approvals.
Except for filings and any necessary approvals under HSR, and
the obtaining of the necessary financing to complete its purchase of the Shares
hereunder, Buyer need not give any notice to, make any filing with, or obtain
any authorization or consent or approval of any person
-32-
or Governmental Authority in order to consummate the transactions contemplated
hereby.
4.6 No Section 338 Election.
Buyer will not make an election under Section 338(g) of the
Code with regard to the purchase of the Shares.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
5.1 Survival.
None of the express representations and warranties of the parties
hereto contained in this Agreement shall survive the Closing, except for
representations and warranties under (a) Section 3.4, which shall survive until
the close of business on the date which is ten (10) years after the Closing
Date, (b) Sections 3.9 and 3.10 and the tax representations and agreements
contained in Section 10.4, which shall each survive until five (5) days after
the end of any applicable statutes of limitation, and (c) Section 3.31, which
shall survive for a period of six (6) months after the Closing Date.
5.2 Indemnification by Seller.
(a) SUBJECT TO THE PROVISIONS OF SECTION 5.1 ABOVE, AND
THE LIMITATIONS IN 5.2(b) & (c) BELOW, SELLER SHALL AND DOES HEREBY AGREE TO
DEFEND, INDEMNIFY AND HOLD HARMLESS BUYER AND ITS AFFILIATES AND THEIR
OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS FROM
AND AGAINST:
(i) ANY LOSS, LIABILITY, CLAIM, OBLIGATION, DAMAGE,
DEFICIENCY (AND, WITH RESPECT TO SECTION 3.9 ONLY, ANY TAX), OR ANY JUDGMENT,
ASSESSMENT, INTEREST, PENALTY OR DEFICIENCY ARISING OUT OF OR RESULTING FROM
ANY MISREPRESENTATION, BREACH OF WARRANTY, OR NON-FULFILMENT OF ANY AGREEMENT
OR COVENANT ON THE PART OF SELLER CONTAINED IN THIS
-33-
AGREEMENT OR ANY INACCURACY IN ANY STATEMENT OR CERTIFICATE FURNISHED OR TO BE
FURNISHED TO BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY;
(ii) ANY INSURANCE DEDUCTIBLES AND ANY UNINSURED
LOSS, LIABILITY, CLAIM, OBLIGATION, DAMAGES (PHYSICAL OR MONETARY), JUDGMENTS
OR ORDERS ARISING OUT OF OR RESULTING FROM THE OPERATION BY SELLER OF THE
BUSINESS OF THE COMPANY OR THE RIGS OR OTHER ASSETS PRIOR TO CLOSING, UNLESS
THE FULL AMOUNT OF ANY SUCH UNINSURED LOSS(ES) HAVE BEEN INCLUDED IN ANY
WORKING CAPITAL ADJUSTMENTS AT CLOSING UNDER SECTION 2.2 ABOVE, IN WHICH EVENT
NO INDEMNITY SHALL APPLY TO SUCH LOSS; OR
(iii) ANY ACTIONS, JUDGMENTS, COSTS, AND EXPENSES
(INCLUDING REASONABLE ATTORNEY'S FEES AND ALL OTHER EXPENSES INCURRED IN
INVESTIGATING, PREPARING, OR DEFENDING ANY LITIGATION OR PROCEEDING, COMMENCED
OR THREATENED) INCIDENT TO ANY OF THE FOREGOING OR THE ENFORCEMENT OF THIS
SECTION 5.2.
THE AGGREGATE AMOUNT OF SUCH LOSSES, LIABILITIES, CLAIMS,
DEFICIENCIES, COSTS, EXPENSES, FEES, DAMAGES (AND, WITH RESPECT TO SECTION 3.9
ONLY, ANY TAX), AND ANY JUDGMENT, ASSESSMENTS, INTEREST AND PENALTIES ARE
HEREINAFTER REFERRED TO AS "DAMAGES".
(b) NOTWITHSTANDING THE FOREGOING, SELLER SHALL HAVE NO
LIABILITY UNTIL THE AGGREGATE AMOUNT OF ALL DAMAGES PURSUANT TO SECTION 5.2(a)
EXCEEDS $500,000; THEREAFTER, INDEMNIFICATION SHALL BE PAID AS PROVIDED FOR
HEREIN FOR ALL DAMAGES IN EXCESS OF $500,000; PROVIDED, HOWEVER, THAT ANY
DAMAGES ARISING FROM THE PROVISIONS OF SECTIONS 3.4, 3.9, 3.10, 3.31 AND 10.4
SHALL NOT BE SUBJECT TO THE FOREGOING LIMITATIONS.
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5.3 Indemnification by Buyer.
(a) SUBJECT TO THE PROVISIONS OF SECTION 5.1 ABOVE AND
THE LIMITATIONS IN 5.3(b) BELOW, BUYER SHALL AND DOES HEREBY AGREE TO DEFEND,
INDEMNIFY AND HOLD HARMLESS SELLER AND ITS AFFILIATES AND THEIR OFFICERS,
DIRECTORS, EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS FROM AND AGAINST:
(i) ANY LOSS, LIABILITY, CLAIM, OBLIGATION,
DAMAGE, OR DEFICIENCY ARISING OUT OF OR RESULTING FROM ANY MISREPRESENTATION,
BREACH OF WARRANTY, OR NON-FULFILMENT OF ANY AGREEMENT OR COVENANT ON THE PART
OF BUYER CONTAINED IN THIS AGREEMENT OR ANY INACCURACY IN ANY STATEMENT OR
CERTIFICATE FURNISHED OR TO BE FURNISHED TO SELLER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY;
(ii) ANY LOSS, LIABILITY, CLAIM, OBLIGATION,
DAMAGES (PHYSICAL OR MONETARY), JUDGMENTS, ORDERS ARISING OUT OF OR RESULTING
FROM THE OPERATION BY BUYER OF THE BUSINESS OF THE COMPANY OR OF THE RIGS OR
OTHER ASSETS, SUBSEQUENT TO CLOSING; AND
(iii) ANY ACTIONS, JUDGMENTS, COSTS, AND EXPENSES
(INCLUDING REASONABLE ATTORNEY'S FEES AND ALL OTHER EXPENSES INCURRED IN
INVESTIGATING, PREPARING, OR DEFENDING ANY LITIGATION OR PROCEEDING, COMMENCED
OR THREATENED) INCIDENT TO ANY OF THE FOREGOING OR THE ENFORCEMENT OF THIS
SECTION 5.3.
THE AGGREGATE AMOUNT OF SUCH LOSSES, LIABILITIES, CLAIMS,
COSTS, EXPENSES, AND FEES ARE HEREINAFTER REFERRED TO AS "DAMAGES".
(b) NOTWITHSTANDING, THE FOREGOING, BUYER SHALL HAVE NO
LIABILITY UNTIL THE AGGREGATE AMOUNT OF ALL DAMAGES PURSUANT TO SECTION 5.3(a)
EXCEEDS $500,000; THEREAFTER, INDEMNIFICATION SHALL BE PAID AS PROVIDED FOR
HEREIN FOR ALL DAMAGES IN EXCESS OF $500,000;
-35-
PROVIDED, HOWEVER, THAT ANY DAMAGES ARISING FROM THE PROVISIONS OF SECTIONS
10.1 AND 10.2 SHALL NOT BE SUBJECT TO THE FOREGOING LIMITATIONS.
5.4 Matters Involving Third Parties.
(a) If any third party shall notify any party to this
Agreement (the "Indemnified Party") with respect to any matter (a "Third Party
Claim") that may give rise to a claim for indemnification against any other
party (the "Indemnifying Party") under this Section 5.4, then the Indemnified
Party shall promptly notify the Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is materially prejudiced.
(b) The Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against any
Damages the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim; (ii) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder; (iii) the Third Party Claim involves
only money damages and does not seek an injunction or other equitable relief;
(iv) settlement of, or an adverse judgment with respect to, the Third Party
Claim is not in the good faith judgment of the Indemnified Party, likely to
establish a precedential
-36-
custom or practice materially adverse to the continuing business interests of
the Indemnified Party; and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 5.4(b), (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld); and (iii) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (which consent shall
not be unreasonably withheld).
(d) In the event any of the conditions in Section 5.4(b)
is or becomes unsatisfied, however, (i) the Indemnified Party may defend
against the Third Party Claim in any manner it reasonably may deem appropriate;
provided, however, that the Indemnified Party shall not consent to the entry of
any judgment or enter into any settlement or agreement to settle a Third Party
Claim without the prior written consent of the Indemnifying Party which consent
shall not be unreasonably withheld; (ii) the Indemnifying Party will reimburse
the Indemnified Party promptly and periodically for the reasonable costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses); and (iii) the Indemnifying Party will remain responsible for any
Damages the Indemnified Party actually suffers resulting from, arising out of,
-37-
relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 5.4 subject to any limitations set
forth in Sections 5.2 and 5.3 above.
(e) THE INDEMNIFICATION AGREEMENTS OF THE PARTIES SHALL
HEREIN APPLY NOTWITHSTANDING THAT THE CIRCUMSTANCES RELATING TO SUCH INDEMNITY
MAY RELATE TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE BY ANY INDEMNIFIED
PARTY, ITS SUBSIDIARIES, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.
The obligations of Buyer hereunder are, subject to waiver at the
option of Buyer, subject to the satisfaction, on or prior to the Closing Date,
of the following conditions:
6.1 Representations.
The representations and warranties of Seller contained in this
Agreement shall be true in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been
made on and as of such date; all of the covenants and agreements of Seller and
approvals on Seller's part to be complied with and performed on or before the
Closing pursuant to the terms hereof shall have been complied with and
performed in all material respects; and Seller shall have delivered to Buyer a
certificate to such effect dated the Closing Date and signed by its authorized
representative.
6.2 Litigation.
No action, suit, investigation, or other proceeding or claim
shall have been threatened in writing or instituted before any court or by any
Governmental Agency or instrumentality either (a) to restrain, prohibit or
invalidate the transactions contemplated by this
-38-
Agreement, (b) to impose any material restrictions, limitations or conditions
with respect thereto or with respect to Buyer's ownership interests in the
Company or any of the Rigs or material Assets of the Company, or (c) to obtain
any material damages or other relief in connection with the transactions
contemplated by this Agreement. No action, suit, investigation, other
proceeding or claim against the Company shall have been instituted or shall be
threatened in writing before any court or before or by any government or
Governmental Agency or instrumentality, domestic or foreign, under any
Environmental Laws or other applicable laws, which might have a material effect
on the business or financial condition of the Company.
6.3 No Material Adverse Change.
No Material Adverse Change shall have occurred; provided
however, that for the purposes of this Section 6.3 only, no Material Adverse
Change shall be deemed to have occurred as a result of any casualty loss
(whether partial or total) of or to any of the Rigs, which loss shall be
governed solely by the provisions of Section 8.5 hereof.
6.4 Approvals.
Seller shall have obtained all regulatory approvals required
(including, if necessary, approvals under HSR) to be obtained by it as a
condition to the lawful consummation of the transactions contemplated hereby.
6.5 Legal Opinions.
Buyer shall have received an opinion from independent outside
Malaysian and Texas counsel to Seller and the Company, acceptable to Buyer, to
the matters set forth in Exhibit 6.5 hereof.
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6.6 Deliveries.
Seller shall have effected delivery of all of the items
required to be delivered by it at the Closing.
6.7 Casualty Losses.
No Buyer Termination Event has occurred; provided, however,
that if the Buyer is satisfied that any casualty losses or damages amounting to
a Buyer Termination Event are adequately covered by insurance, it may, at its
option, waive this condition and, pursuant to the provisions of Section 8.5
hereof, proceed with the Closing.
6.8 Board and Shareholder Approvals.
Seller shall have delivered to Buyer a copy of resolutions of
(a) the board of directors of Seller and (b) Seller's shareholders, duly
certified by its Secretary to be true and correct copies, and approving of the
transactions contemplated hereby.
6.9 HOC Agreement; Financing.
Buyer shall have obtained the necessary financing to
consummate the transactions contemplated hereby, and, prior to or
contemporaneously with the sale of the Shares under this Agreement, Buyer shall
have taken delivery and possession of the HOC shares and paid the full purchase
price therefor, as same may be adjusted under the terms of the HOC Agreement.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.
The obligations of Seller hereunder are, subject to waiver at the
option of Seller, subject to the satisfaction, on or prior to the Closing, of
the following conditions:
-40-
7.1 Representations.
The representations and warranties of Buyer contained in this
Agreement shall be true in all material respects on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of such date; all of the covenants and agreements of Buyer to be
complied with and performed on or before the Closing Date pursuant to the terms
hereof shall have been complied with and performed in all material respects;
and Buyer shall have delivered to Seller a certificate to such effect dated the
Closing and signed by its authorized representatives.
7.2 Litigation.
No action, suit, investigation, other proceeding or claim
shall have been threatened or instituted before any court or before or by any
government or Governmental Agency or instrumentality either (a) to restrain,
prohibit or invalidate the transactions contemplated by this Agreement, (b) to
impose any material restrictions, limitations or conditions with respect
thereto, or (c) to obtain any material damages or other relief in connection
with the transactions contemplated by this Agreement.
7.3 Approvals; Financing.
Buyer shall have obtained all regulatory approvals required
(including, if necessary, approvals under HSR) and all required financing to be
obtained by them as a condition to the lawful consummation of the transactions
contemplated hereby.
-41-
7.4 Deliveries.
Buyer shall have effected delivery of all of the items
required to be delivered by it on or before the Closing.
7.5 Board Approval.
Buyer shall have delivered to Seller a copy of the resolutions
of its board of directors duly certified by the Secretary of Buyer, as being
true and correct and all other items and documents required to be delivered by
Buyer hereunder.
7.6 HOC Agreement.
The HOC share purchase transaction shall have been consummated
and the purchase price for the HOC Agreement paid to the shareholders of HOC by
Buyer, as set forth in Section 6.9 above.
8. COVENANTS OF SELLER PRIOR TO CLOSING.
Seller covenants and agrees that, between the date of this
Agreement and the Closing:
8.1 Access.
Seller will furnish Buyer with such additional financial and
operating data, books and records and other information as Buyer shall from
time to time reasonably request; provided that all such access and information
shall be supplied in such a way as to minimize disruption of the business of
Seller and the Company. No further inspections of the Rigs and other Assets
and properties of the Company shall be made by Buyer without Seller's prior
consent (which, in the case of the Rigs, should be in writing), which consent
shall not be unreasonably withheld; provided, however, that (i) any access to
the Rigs and Assets shall be subject to the supervision
-42-
of Seller, the Company and HOC, (ii) Buyer's representatives shall, prior to
any Rig inspections, have executed all standard indemnity forms of HOC and
shall follow all safety procedures required by HOC and the Company, and (iii)
Buyer and its representatives shall strictly comply with the provisions of
Section 9.2 hereof.
8.2 Governmental Approvals.
Seller will take all steps necessary to apply for any consent,
approval or authorization required by applicable law to allow the sale of the
Shares to Buyer and the consummation of the transactions contemplated hereby,
including, without limitation, the approval and authorization of its
shareholders and the applicable Governmental Agency under HSR, and any other
national, state or local Governmental Agency or authority having jurisdiction
over the sale and the transactions contemplated hereby, and such steps shall be
taken as soon as practicable after the date hereof.
8.3 Operations.
Seller will cause the Company to:
(a) continue to conduct its business in its usual and
regular manner and not engage in any material new activity or transaction
including, without limitation, the lease, sale, disposal or purchase of any Rig
or other material Asset;
(b) comply in all material respects with all laws
applicable to it and the conduct of its business;
(c) duly and punctually perform in all material respects
all of its contractual obligations in accordance with the terms thereof;
-43-
(d) maintain or cause to be maintained the Rigs in good
condition and working order, except for ordinary wear and tear and damage
directly attributable to natural disasters;
(e) use its best efforts to preserve the goodwill of its
customers and others having business relations with it;
(f) give prompt written notice to Buyer of any notice
received by it of any default or breach or alleged default or breach under any
material contract, instrument or agreement to which it is a party or by which
it is bound;
(g) give prompt written notice to Buyer of the
commencement of any action, suit, proceeding or investigation or the assertion
of any claim or threat to commence any action, suit, proceeding or
investigation; keep Buyer fully and promptly informed as to any developments in
any pending action, suit, proceeding or investigation;
(h) fully cooperate with Buyer in its efforts to obtain
all necessary governmental consents, authorizations, orders and approvals
required to be obtained by Buyer in connection with the transactions
contemplated by this Agreement;
(i) use its best efforts to preserve its business
organization intact and retain the services of its officers and agents; and
(j) cause to be maintained in full force and effect
insurance policies providing coverage and amounts of coverage comparable to the
coverage and amounts of coverage provided under its policies of insurance now
in effect.
8.4 Restrictions.
(a) Certain Actions. Seller agrees, and will cause the
Company, not to without the prior written consent of Buyer which shall not be
unreasonably withheld:
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(i) enter into any contract or commitment, or
incur or agree to incur any liability or make any capital expenditure, except
in the ordinary course of business where the aggregate payments involved may
reasonably be expected not to exceed $100,000;
(ii) amend its Corporate Charter Documents
(including, without limitation, to change its authorized or issued share
capital by reclassification, subdivision, reorganization or otherwise) or amend
its bylaws;
(iii) incur, or agree to incur, or otherwise
guarantee or become liable for any indebtedness for money borrowed except for
continuing obligations under the IOLP Charter, or money borrowed from HOC in
the ordinary course of business;
(iv) cause or suffer any of the Company's Rigs, or
their other Assets or real or personal property to become subject to any lien
other than Permitted Liens; or
(v) except as may be required in connection with
any required approval of the Seller's shareholders or as otherwise required by
applicable law, make any public announcements concerning the transactions
contemplated hereby without the prior written consent of Buyer, and in all
cases any such public announcement shall be of acceptable form to Buyer; or
(vi) hire any employees.
(b) No Shop. Seller will not, in any way, (i) solicit,
directly or indirectly, or cause any other person to solicit, any offer to
acquire all or any part of the Shares or all or any part of the business or
Assets of the Company, whether by merger, purchase of assets, tender offer or
otherwise, (ii) enter into any discussions, negotiations or agreements which
contemplate the merger of the Company or the sale of all or any part of the
business or Assets of the Company to any person or entity, other than Buyer or
(iii) provide any person or entity other than Buyer
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with any information or data of any nature whatsoever relating to the Shares or
the business or Assets of the Company for the purpose of enabling such person
or entity to develop a proposal for the acquisition of the Shares or all or any
part of the business or Assets of the Company. Seller and the Company, as
applicable, shall immediately advise Buyer in writing, directly or indirectly,
of any inquiries, discussions, negotiations of proposals from or with third
parties including the specific terms thereof and the identification of the
other parties involved.
8.5 Rig Loss.
(a)(1) If any Rig shall become an actual, constructive,
arranged or compromised total loss (as determined by the Company's insurance
underwriter's marine surveyor) prior to the Closing: (i) all insurance proceeds
received for such Rig prior to the Closing shall be held in trust by Seller and
the Company for the use and benefit of Buyer and such proceeds shall be
transferred to Buyer with the Shares and belong to Buyer at the Closing in
addition to any Working Capital covenants herein, and shall not be subject to
or cause any Purchase Price adjustments at Closing, (ii) the terms "Rigs" or
"Assets" shall be deemed not to include such Rig, and (iii) Buyer shall be
required to purchase the Rig at Closing. Additionally, in each case, (x) Buyer
shall be entitled to retain all proceeds of insurance received subsequent to
the Closing which are associated with such loss; (y) the other provisions of
this Agreement shall continue to be in effect; and (z) the Closing shall take
place in the manner contemplated herein; provided, however, that if the
insurance proceeds, net of salvage and removal costs, received by Buyer at or
subsequent to Closing for such Rig loss shall be less than an amount equal to
4.382 times the gross profit attributable to such Rig in the report prepared by
Jefferies & Company, Inc. dated March 1997 (page 9, gross profit run rate),
Seller shall, either at Closing or, if subsequent to Closing, within
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fifteen (15) days after receipt of written demand by Buyer, pay Buyer in cash
an amount equal to the difference between such gross profit multiplier and the
lower amount of insurance proceeds received; provided, further, that if Buyer
has not received the full insurance proceeds attributable to such Rig on or
before the sixtieth (60th) day after the Closing Date (as reasonably verified
to Seller by Buyer), Seller agrees to pay to Buyer, on written demand by Buyer,
interest on an amount equal to the gross profit multiplier set out above for
such Rig (as same may be reduced by any partial proceeds received by Buyer), at
the prime rate of interest (as same may change from time to time) announced by
Citibank, N.A. at its offices in New York, New York, from the Closing Date
until the receipt by Buyer of such full amount of insurance proceeds (based on
a 365 day year and actual days elapsed).
(2) The actual, constructive, arranged or
compromised total loss (as determined by the Company's insurance underwriter's
marine surveyor) of two (2) or more of the Company's Rigs will, however,
constitute a Buyer Termination Event.
(b) Without limiting Seller's obligations under Section
8.5(a), if a Rig sustains damage in an amount exceeding $250,000 but not
amounting to an actual, constructive, arranged or compromised total loss prior
to the Closing, either (i) Seller shall cause the Company to commence repairs
to the Rig using any insurance proceeds recovered by the Company for that Rig
prior to Closing, or (ii) Buyer, at its option exercised by notice in writing
to Seller within twenty-one (21) days after receipt by Buyer of written notice
of any casualty loss from Seller or the Company, may request Seller or the
Company not to commence such repairs and instead to hold any recovered
insurance proceeds in trust for Buyer and to transfer same to Buyer at the
Closing in the same manner and under the same terms as set forth in Section
8.5(a)(i) above. In the case
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of either subclauses 8.5(a) or (b) above, Buyer shall remain obligated to
purchase the Shares at the Closing and the Purchase Price shall not be reduced.
(c) If Seller has commenced repairs on a Rig prior to
Closing under (b)(i) above and if the repairs have not been completed on or
before the Closing Date, Buyer and Seller shall nevertheless proceed with
Closing, the Rig shall be transferred with the Shares at Closing and Buyer
shall pay Seller the full Purchase Price, unless otherwise adjusted pursuant to
Section 2.1(b) above. Buyer and Seller, within fifteen (15) days after
Closing, shall cause a mutually agreed licensed surveyor to perform an audit of
the unrepaired damage and determine the total amount of money ("Rig Restoration
Amount") necessary to complete the repairs in order to restore the Rig to its
state and condition immediately prior to such Rig casualty event ("Rig Casualty
Event"). Promptly upon receipt of the report, Buyer and Seller shall cause the
Company's insurance underwriters to review such report and determine whether
the balance of insurance proceeds attributable to the Rig Casualty Event will
be sufficient to cover in full the Rig Restoration Amount, less any deductibles
("Restoration Shortfall"). Seller agrees to pay to Buyer in cash by wire
transfer, within fifteen (15) days after receipt of the insurance underwriter's
report, the total amount of (a) any deductibles not already paid by Seller or
the Company prior to Closing and (b) any Restoration Shortfall.
8.6 Seller Assistance.
At Buyer's cost, Seller shall, and shall cause the Company, to
cooperate and provide Buyer with true and correct financial statements,
documents or other information reasonably necessary for Buyer's use in
connection with any prospectus, offering memorandum or regulatory filing
required to be issued or made by Buyer in obtaining the financing needed to
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complete the transactions contemplated hereby. Seller agrees to and does
hereby indemnify and hold harmless Buyer from and against any action, claim or
loss arising out of Seller's failure to comply with the provisions of this
Section 8.6.
8.7 False Representations.
Seller will promptly notify Buyer in writing if it becomes
aware of any fact or condition which makes untrue, or causes to be untrue, any
representation or warranty made by Seller in this Agreement.
9. COVENANTS OF BUYER PRIOR TO CLOSING.
Between the date of this Agreement and the Closing:
9.1 Governmental Approvals.
Buyer will cooperate with Seller in taking all steps necessary
by Buyer to obtain any consent, approval or authorization required, pursuant to
HSR, if necessary, of its lenders, if applicable, and as otherwise required by
law to allow the consummation of this Agreement and the transactions
contemplated hereby, including the approval and authorization of any national,
state or local Governmental Agency or authority having jurisdiction over the
transactions contemplated hereby as may be required, and such steps will be
taken as soon as practicable after the date of this Agreement.
9.2 Due Care.
Buyer shall and shall cause its employees, representatives and
agents to take due care and use its and their best efforts to ensure that no
actions or statements by it, its employees or representatives are made which
directly or indirectly materially adversely interfere, or could with the
passage of time, materially adversely interfere with the ordinary course and
operation
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of the business of the Company or its Rigs.
9.3 False Representations.
Buyer will promptly notify Seller in writing if it becomes
aware of any fact or condition which makes untrue, or causes to be untrue, any
representation or warranty made by Buyer in this Agreement.
9.4 Buyer Assistance.
At Seller's cost, Buyer shall cooperate and provide Seller
with true and correct financial statements, documents or other information
reasonably necessary for Seller's use in connection with any approvals or
regulatory filings to be obtained or made by Seller, as set forth in Section
3.32 above, for the consummation of the transactions contemplated hereby.
Buyer agrees to and does hereby indemnify and hold harmless Seller from and
against any action, claim or loss arising out of Buyer's failure to comply with
the provisions of this Section 9.4.
10. OTHER COVENANTS.
10.1 Post Closing Assistance.
After the Closing, Buyer shall give Seller and its authorized
representatives reasonable access, upon prior written notice and during normal
business hours, to books and records of the Company relating to periods prior
to the Closing, and Buyer shall permit such persons to examine and copy at
Seller's expense such books and records to the extent requested by Seller.
Buyer agrees that it shall preserve and keep the records of the business of the
Company and of the Assets for a period of three years from the Closing Date, or
for any longer period as
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may be required by any Governmental Agency or ongoing litigation or as
requested by Seller in connection with any Tax examination.
10.2 Stand Alone Entities.
Buyer acknowledges Seller's significant interest in the
stability, and continued smooth operation and profitability of the Company
through the Closing Date and for a reasonable period beyond. Accordingly,
Buyer agrees that as and from the Closing Date until the close of business on
January 31, 1998, unless otherwise required for tax reasons or to mitigate or
take advantage of any legal requirements under applicable law:
(a) Buyer will treat and keep the Company as a stand
alone and independent entity and subsidiary of Buyer;
(b) Buyer will not merge, consolidate, reorganize or
amalgamate the Company into any other company or entity other than HOC; and
(c) Buyer will not transfer the controlling interest in
the Shares to any other entity within the group of companies or entities
controlled by or affiliated with Buyer, other than to HOC, nor shall it
liquidate the Company unless in connection with a merger or consolidation of
the Company with HOC.
10.3 [Intentionally Deleted].
10.4 Certain Tax Matters.
(a) With respect to each Tax Return covering a taxable
period beginning on or before the Closing Date that is required to be filed
after the Closing Date for, by or with respect to the Company (other than the
Tax Returns described in Section 3.10, Buyer shall cause such Tax Return to be
prepared and shall cause to be included in such Tax Return all Tax items
required
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to be included therein. Buyer shall determine (by an interim closing of the
books as of the Closing Date except for ad valorem Taxes and franchise Taxes
based on capital which shall be prorated on a daily basis) the portion, if any,
of the Tax due with respect to the period covered by such Tax Return which is
attributable to the Company for the Pre-Closing Taxable Period.
(b) At least thirty (30) days prior to the due date
(including extensions) of such Tax Return, Buyer shall deliver to Seller a copy
of such Tax Return and its pre-closing allocation determinations. If Seller
disagrees with such allocation, it shall notify Buyer in writing within seven
(7) days after receipt by Seller of the Buyer's Tax Return and allocation
determinations, listing the items disputed and detailed reasons for its
dispute. If Seller and Buyer cannot agree on the disputed items within five
(5) days after receipt by Buyer of Seller's dispute notice, Buyer and Seller
shall appoint a mutually agreeable independent "Big Six" accounting firm to
review the Tax Return and Buyer's determinations. The findings and allocations
of such independent accounting firm shall be conclusive and binding on Buyer
and Seller.
(c) Buyer and Seller shall cause such independent review
to be completed within fifteen (15) days after the appointment of the
independent accounting firm, if possible. If the independent accounting firm's
report determines that Buyer's Tax Return and allocation determinations are
incorrect, Seller and Buyer shall share the costs of such report equally. If
the report determines that Buyer's determinations are correct, Seller alone
shall pay the costs of such report. If the amount of Tax so determined to be
attributable to the Pre-Closing Taxable Period exceeds the amount reflected as
a current liability for such Tax on the Working Capital Statement, Seller shall
pay to Buyer the amount of such excess Tax not more than ten (10) days after
Seller either (i) agrees with Buyer's determinations or (ii) receives the
independent auditor's final
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determinations, whichever is earlier. If the amount of tax determined to be
attributable to the Pre-Closing Taxable Period is less than the amount
reflected as a liability for such Tax Return on the Working Capital Statement,
Buyer shall pay Seller the amount of such deficiency within ten (10) days after
the allocation was finally determined in the manner set forth above. Buyer
shall cause the Company to file timely such Tax Return with the appropriate
taxing authority and to pay timely the amount of Taxes shown to be due on such
Tax Return.
(d) Any Tax Return to be prepared pursuant to the
provisions of this Section 10.4 shall be prepared in a manner consistent with
practices followed in prior years with respect to similar Tax Returns, unless
otherwise agreed by the Parties hereto or except for changes required by
changes in law.
(e) Seller shall grant to Buyer (or its designees) access
at all reasonable times to all of the information, books and records relating
to the Company within the possession of Seller (including workpapers and
correspondence with taxing authorities), and shall afford Buyer (or its
designees) the right (at Buyer's expense) to take extracts therefrom and to
make copies thereof, to the extent reasonably necessary to permit Buyer (or its
designees) to prepare Tax Returns, to conduct negotiations with Tax
authorities, and to implement the provisions of, or to investigate or defend
any claims between the parties arising under, this Agreement.
(f) Buyer shall grant or cause the Company to grant
Seller (or its designees) access at all reasonable times to all of the
information, books and records relating to the Company within the possession of
Buyer, (including workpapers and correspondence with taxing authorities), and
shall afford Seller (or its designees) the right (at Seller's expense) to take
extracts therefrom and to make copies thereof, to the extent reasonably
necessary to permit Seller (or its
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designees) to prepare Tax Returns, to conduct negotiations with Tax
authorities, and to implement the provisions of, or to investigate or defend
any claims between the parties arising under, this Agreement.
(g) If subsequent to the Closing, the Company or any
other entity within Buyer's group of Companies should be audited with respect
to any taxable period (including the Pre-Closing Taxable Period) prior to the
Closing Date, Buyer shall permit Seller's representatives to participate fully
(including attending all auditing discussions or meetings with the IRS) in any
such audit.
(h) Each of the parties hereto will preserve and retain
all schedules, workpapers and other documents relating to any Tax Returns of or
with respect to the Company or to any claims, audits or other proceedings
affecting the Company until the expiration of the statute of limitations
(including extensions) applicable to the taxable period to which such documents
relate or until the final determination of any controversy with respect to such
taxable period, and until the final determination of any payments that may be
required with respect to such taxable period under this Agreement.
(i) The Tax matters set forth in this Section 10.4 shall
survive until the close of business on the date which is five (5) days after
the end of any applicable statutes of limitation. In the event of a conflict
between the provisions of Section 3.10 or this Article 10 and any other
provisions of this Agreement, the provisions of Section 3.10 or this Article
10 shall control.
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10.5 Taking of Necessary Action.
The parties hereto shall take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the
transactions contemplated hereby as promptly as possible.
10.6 Press Releases and Public Announcements.
Neither Buyer nor Seller shall issue any press release or make
any public announcement relating to the subject matter of this Agreement prior
to the Closing without prior written approval of both Buyer or Seller;
provided, however, that either party may make any public disclosure it believes
in good faith is required by applicable law (in which case the disclosing party
will use all reasonable efforts to advise the other party prior to making the
disclosure).
11. EXPENSES.
Buyer and Seller shall each pay their own expenses in connection with
the preparation, execution and consummation of this Agreement, including,
without limitation, all legal and accounting expenses and fees and other fees
of their representatives or agents. The parties shall each pay their own
filing fees and other expenses in connection with any required HSR filings
required by applicable law and any other regulatory or governmental filings and
approvals required for the transactions contemplated hereby.
12. TERMINATION.
12.1 Causes for Termination.
This Agreement may be terminated at or at any time prior to
the Closing:
(a) by mutual consent in writing of Buyer and Seller;
(b) by Buyer (a "Buyer Termination Event"), as follows:
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(i) if for any reason not the fault or cause or
within the control of Buyer or its representatives, the Closing does not occur
prior to December 31, 1997;
(ii) if the Buyer is entitled to terminate
pursuant to the provisions of Section 8.5;
(iii) upon a breach on the part of Seller of any
representation, warranty, covenant or agreement set forth in this Agreement, or
if any representation or warranty of Seller shall have become untrue, and such
breach or change causes, or would with the passage of time cause, a Material
Adverse Effect to the Company; or
(iv) Seller terminates or takes any affirmative
action seeking to terminate this Agreement for any reason other than a Seller
Termination Event.
(c) by Seller (a "Seller Termination Event"), as follows:
(i) if for any reason not the fault or cause or
within the control of Seller or its representatives, the Closing does not occur
prior to December 31, 1997;
(ii) upon a material breach on the part of Buyer
of any representation, warranty, covenant or agreement set forth in this
Agreement, or if any material representation or warranty of Buyer shall have
become untrue in any material respect; or
(iii) Buyer terminates or takes any affirmative
action seeking to terminate this Agreement for any reason other than a Buyer
Termination Event; or
(d) by either Buyer or Seller, as follows:
(i) Buyer is unable to obtain the financing
necessary to close and otherwise consummate this transaction;
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(ii) for any reason, not the fault or cause or
within the control of the party seeking to terminate, the parties are unable to
complete the purchase of the HOC shares on or prior to the Closing Date under
the provisions of the HOC Agreement; or
(iii) Seller is unable, despite best efforts, to
obtain the necessary approval of its shareholders, or either Buyer or Seller
are unable to obtain the approval, if necessary, of any Governmental Agency
under HSR.
12.2 Effect of Termination.
(a) In the event of termination of this Agreement, this
Agreement shall forthwith become null and void and, except as otherwise
specifically provided herein, there shall be no liability on the part of either
Buyer or Seller or their respective officers, directors, employees or agent.
(b) In no event shall either Seller or Buyer be liable
for any consequential damages; provided, however that nothing contained in this
Agreement shall relieve any party from liability for damages actually incurred
as a result of any breach of this Agreement.
13. NOTICES.
All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given and delivered, when given in person or by prepaid telegram or
telefax, acknowledgment received, or mailed first class, postage prepaid,
registered or certified mail, as follows:
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If to Buyer:
Parker Drilling Company
Eight East Third Street
Tulsa, Oklahoma 74103
Attn: Robert L. Parker, Jr.
Telephone: (918) 631-1212
Facsimile: (918) 631-1253
With a copy to:
Vinson & Elkins, L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002
Attn: T. Mark Kelly
Telephone: (713) 758-4592
Facsimile: (713) 615-5531
If to Seller:
Rashid & Lee Nominees SDN BHD
Tingkat 6 No. 56, Jalan Tuanku Abdul Rahman
50100 Kuala Lumpur, Malaysia
Telephone: 011-603-293-4800
Facsimile: 011-603-293-4826
With a copy to:
M.A. (Tony) Nunes
Griggs & Harrison, P.C.
1301 McKinney, Suite 3200
Houston, Texas 77010
Facsimile: (713) 651-1944
Telephone: (713) 651-0600
14. GENERAL.
14.1 Entire Agreement.
This Agreement, together with all exhibits hereto, constitutes
the entire agreement between the parties relating to the subject matter hereof
and supersedes all prior and
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contemporaneous agreements, understandings, negotiations and discussions,
whether written or oral, among the parties concerning such subject matter, with
the exception of the Confidentiality Agreement executed by Seller, the Company,
HOC and Buyer on April 11, 1997, as extended, which shall continue in full
force and effect and bind Buyer and Seller hereunder.
14.2 Amendments.
This Agreement may not be amended except by an instrument in
writing specifically amending same signed by Seller and Buyer.
14.3 Waivers.
No waiver by a party of any default by the other party in the
performance of any provision of this Agreement shall operate or be construed as
a waiver of any future default whether of a like or of a different character.
14.4 Headings.
The headings used in this Agreement are for the convenience of
reference only and shall not be construed to define or limit any of the
provisions hereof.
14.5 Severability.
In the event that any one or more of the provisions contained
in this Agreement or in any other instrument referred to herein, shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument.
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15. ARBITRATION.
15.1 Rules.
All disputes arising in connection with this Agreement shall
be finally settled by binding arbitration under the general Commercial
Arbitration Rules of the American Arbitration Association ("AAA"), as same is
supplemented and modified by its International Arbitration Rules and
Procedures, by three arbitrators appointed in accordance with Section 15.2 of
this Agreement. All arbitration proceedings shall be conducted, and any
awards handed down shall be, in the English language.
15.2 Powers and Selection.
(a) The party that submits a dispute to the AAA under
this Agreement shall name in its submission one arbitrator. The party against
whom the request for arbitration is filed must select an arbitrator and notify
the other party and the AAA of its selection within ten (10) days of receipt of
written notice from the AAA of the other party's demand for arbitration. If
either party fails to notify the AAA of its selection, within ten (10) days
after written notice by the AAA to do so, the AAA is empowered to select an
arbitrator for such party. The two arbitrators selected by the parties shall
mutually select a third arbitrator to chair the arbitral panel and notify the
AAA of their selection within fifteen (15) days after the appointment of the
two party-appointed arbitrators. If the arbitrators selected by the parties
are unable to agree on a third arbitrator within such time period, then the AAA
shall appoint the third arbitrator.
(b) The arbitrators shall have the power to gather such
materials, documents, information, testimony and evidence as they deem relevant
to the dispute and the parties shall provide such materials, documents,
information, testimony and evidence requested by the arbitrators, except to the
extent that it is proprietary, subject to third-party confidentiality
-60-
restrictions or subject to an attorney-client or other legal privilege. Any
challenge to a claim of privilege shall be resolved by the arbitrators.
15.3 Venue.
Arbitration conducted pursuant to this Agreement shall be held
in New York, New York. Judgment on any award resulting therefrom may be
entered in and enforced by any court having jurisdiction over any of the
parties (or the assets of any of the parties) against whom such award is
rendered, and the parties hereby waive any claim of immunity to such
enforcement. Any awards hereunder shall be deemed to be non-domestic and may
also be enforced in accordance with the provisions of the New York Convention
on the Enforcement of Foreign Arbitral Awards (1958), as adopted and codified
by the United States of America.
15.4 Award.
The arbitrators shall commence and conclude the arbitration
and render their award within one hundred twenty (120) days of either party's
demand for arbitration. The award rendered by the arbitrators shall be the
sole and exclusive remedy of the parties regarding any claims, counterclaims,
issues or accounting arising under this Agreement or the transactions
contemplated hereby (whether sounding in contract or tort). The arbitrators
may make any award of money damages or provide specific performance or
injunctive relief, including awarding interest and attorneys' fees. Any award
shall be final and binding on the parties and non-appealable and the
arbitrators shall give written reasons for their award.
15.5 Service.
Service of any and all notices of arbitration hereunder may be
made by either party on the other in the manner and to the address set forth in
Section 13 hereof and service thus made
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shall be taken and held to be valid personal service upon such party by any
party to this Agreement on whose behalf such service is made.
15.6 Costs.
All administrative costs of the American Arbitration
Association together with all fees and expenses of the arbitrators shall be
borne equally by the parties and all costs, fees and expenses incident to
enforcing any award shall be charged to and borne by the party resisting the
award.
16. GOVERNING LAW.
16.1 Arbitration Provisions.
Section 15 shall be governed by the procedural rules of the
American Arbitration Association and, to the extent applicable, the United
States Federal Arbitration Act, Title 9, United States Code.
16.2 Other Provisions.
Except as provided in Section 16.1, this Agreement shall be
construed in accordance with the laws of the State of Texas, excluding,
however, any Texas conflict of laws' rules that would refer the resolution of
any issue to the law of a jurisdiction other than the State of Texas.
17. COUNTERPARTS.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
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18. NO THIRD-PARTY BENEFICIARIES.
This Agreement shall not confer any rights or remedies upon any person
other than the parties hereto and their respective successors and permitted
assigns.
19. SUCCESSION AND ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective heirs, successors and permitted
assigns. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other parties hereto; provided, however, that, subject to the provisions of
Section 10.2, Buyer may assign its rights hereunder to any of its affiliates,
but such assignment shall not relieve Buyer of any of its obligations or
indemnities hereunder, and Seller may assign its rights and interests in and to
any of the Purchase Price to any other party provided such assignment of
proceeds shall not relieve Seller of any of its obligations or indemnities
hereunder.
20. CONSTRUCTION.
The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring either party by virtue of the authorship of any of the provisions
of this Agreement. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation.
21. INCORPORATION OF EXHIBITS AND SCHEDULES.
The Exhibits identified in this Agreement are incorporated herein by
reference and made a part hereof.
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22. SPECIFIC PERFORMANCE.
The parties hereto agree that this Agreement and any provisions hereof
(including but not limited to the provisions of Section 10.2) shall be
specifically enforceable and the parties hereto hereby waive any defense to
such a proceeding in equity that monetary damages are sufficient. IN
WITNESS WHEREOF, Buyer and Seller have each caused this Stock Purchase
Agreement to be executed as of the date first written above by its duly
authorized officers.
ALL SIGNATURES ARE ON FOLLOWING PAGE
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PARKER DRILLING COMPANY
By
-----------------------------
Name
---------------------------
Title
--------------------------
RASHID & LEE NOMINEES SDN BHD
By
-----------------------------
Name
---------------------------
Title
--------------------------
PARKER DRILLING OFFSHORE COMPANY
By
-----------------------------
Name
---------------------------
Title
--------------------------
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LIST OF EXHIBITS
3.3 Required Consents.
3.5 Authorized and Issued Capital of the Company.
3.7(a) Financial Statements.
3.10 Tax Returns.
3.12 Litigation/Claims.
3.13 Material Defaults/Force Majeure.
3.15(a) Rigs owned by the Company.
3.15(b) Rigs Chartered to or operated by the Company.
3.15(c) Personal Property owned by the Company.
3.15(d) Other Contracts.
3.15(e) Description of the IOLP Charter.
3.15(f) Liabilities of the Company.
3.31 Environmental Studies/Investigations.
6.5 Legal Opinion Matters.
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