1
EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
AMONG
UTI ENERGY CORP. ("UTI"),
SUITS ACQUISITION CORP., A WHOLLY-OWNED SUBSIDIARY OF UTI,
SUITS ENTERPRISES, INC. ("SUITS")
AND
THE SHAREHOLDERS OF SUITS
DATED AS OF JULY 31, 1998
2
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Balance Sheet Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Benefit Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Cash Consideration" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Certificate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Certificate of Merger" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Commission" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Constituent Corporations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Damages" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Debt Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Effective Time" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Environmental Condition" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Environmental Laws" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Environmental Liabilities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Environmental Permit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Estimated Working Capital" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Excluded Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Exhibit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Extended Representations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Final Statement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Financial Statements" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"GAAP" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Governmental Entity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Governmental Requirement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"HSR Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Hazardous Material" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Holder" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Indemnified Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Indemnifying Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Indemnity Claim" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Latigo" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Latigo Note Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Material Adverse Effect" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Merger" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Merger Consideration" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Notes" and each a "Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Notes Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Ordinary Course of Business" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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"Other UTI Common Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Pepesa" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Proportionate Share" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Reference Balance Sheet" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Registration Expenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Requesting Holder" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Rigs" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Securities Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Selling Expenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Severance and Retention Bonus Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Shareholders" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Shareholders Indemnified Parties" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Shareholder Representative" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Shareholder Retained Liabilities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Shares" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"SUITS Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"SUITS Common Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"SUITS Peru" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Subsidiaries and Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Survival Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Surviving Corporation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Taxes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Tax Returns" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"UTI Common Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"UTI Indemnified Parties" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"UTI Sub" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Warrants" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Warrant Shares" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Welfare Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Working Capital" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II THE MERGER
Section 2.1 The Merger; Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCKOF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Conversion of UTI Sub Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Cancellation of Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Consideration for SUITS Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Conversion and Cancellation of SUITS Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Exchange Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Distributions with Respect to Unexchanged Shares . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) No Further Ownership Rights in SUITS Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Lost Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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Section 3.3 Shares of Dissenting Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.4 Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV-A REPRESENTATIONS AND WARRANTIES OF SUITS
Section 4.1 Incorporation; Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2 Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.5 Liabilities, Debts and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.6 Events Since Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.7 Directors, Officers and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.8 Taxes and Governmental Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.10 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.11 Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.12 Properties, Assets and Leasehold Estates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.13 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.14 Suits, Actions and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.15 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.16 Licenses and Permits; Compliance with Governmental Requirements . . . . . . . . . . . . . . . . . 23
Section 4.17 No Untrue Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.18 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.19 Environmental Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.20 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.21 No Affiliate or Excluded Asset Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.22 SUITS Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV-B REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Section 4.23 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.24 Effect of Agreement on Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.25 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.26 No Untrue Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.27 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.28 No Affiliate Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.29 Investment Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.30 Indebtedness and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.31 Individual Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF UTI
Section 5.1 Due Incorporation and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.2 Performance of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.4 Financial Ability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.5 Authorization for Warrants, Warrant Shares and Note . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.6 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI OBLIGATIONS OF PARTIES PRIOR TO CLOSING
Section 6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.2 Access to Records and Properties of SUITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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Section 6.3 Conduct of Business of SUITS Until the Closing . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.4 Transfer of Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OFSUITS AND THE SHAREHOLDERS
Section 7.1 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.2 Performance and Obligations of UTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.3 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.4 Release of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF UTI
Section 8.1 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.2 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.3 Performance and Obligations of the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.4 Covenants and Agreements Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.5 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.7 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.8 Diminution in Value of the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IX CLOSING
Section 9.1 Place of Closing and Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.2 Closing Deliveries by UTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.3 Closing Deliveries by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE X TERMINATION
Section 10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XI OBLIGATIONS OF PARTIES AFTER CLOSING
Section 11.1 Post-Closing Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 11.2 Cooperation Regarding Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.3 Covenant Not to Compete With the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.4 Severance and Retention Bonuses and Notes Receivable . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.5 Final Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XII NATURE OF STATEMENTS AND SURVIVAL
Section 12.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 12.2 Effect of Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 12.3 Effect of Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 12.4 Survival of Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XIII INDEMNIFICATION
Section 13.1 General Indemnity by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 13.2 General Indemnity by UTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 13.3 Indemnification Basket; Limitation; Effect of Materiality Qualifiers; Pro Rata Obligation . . . . 39
Section 13.4 Waiver of Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 13.5 Notice of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 13.6 Right to Participate in Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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Section 13.7 Payment and Right of Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XIV RELEASE
Section 14.1 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XV REGISTRATION RIGHTS
Section 15.1 Piggyback Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 15.2 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 15.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 15.4 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XVI MISCELLANEOUS
Section 16.1 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 16.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 16.3 Shareholder Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 16.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 16.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 16.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 16.7 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 16.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 16.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 16.10 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 16.11 Construction of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 16.12 References to Articles, Sections and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . 47
EXHIBITS
Exhibit A List of Excluded Assets and Liabilities
Exhibit B Latigo Note Receivable
Exhibit C Form of Note
Exhibit D IRC Note Receivable
Exhibit E Description of Rigs
Exhibit F Severance & Retention Bonuses
Exhibit G Form of Warrant
Exhibit H Opinion of UTI counsel
Exhibit I UTI Closing Certificate
Exhibit J Opinion of SUITS counsel
Exhibit K SUITS/Shareholders closing certificate
Exhibit L Shareholder Retained Liabilities
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EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of July 31, 1998, among UTI Energy Corp., a Delaware corporation ("UTI"), SUITS
Acquisition Corp., a Delaware corporation ("UTI Sub"), SUITS Enterprises, Inc.,
an Oklahoma corporation ("SUITS"), and Xxxxx X. Suits Revocable Trust dated
April 27, 1997, Xxx X. Xxxxxxxxxx Revocable Trust, Xxxxx X. Xxxxxxxxxx
Revocable Trust dated May 13, 1997, E. Gay Xxxxxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxx
Xxxxxxx Xxxxxxxxxx Trust, Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxxxx and Xxx X.
Xxxxxxxxxx Revocable Trust (collectively, the "Shareholders" and each a
"Shareholder");
W I T N E S S E T H:
WHEREAS, the Boards of Directors of each of UTI and SUITS have
determined that it is in the best interests of their respective shareholders
for UTI Sub to merge with and into SUITS (the "Merger") upon the terms and
subject to the conditions of this Agreement; and
WHEREAS, UTI, SUITS and the Shareholders desire to make
certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise specifically stated in the text of this Agreement,
the following terms shall have the following meanings:
"Affiliate" shall mean, in relation to any Person (the "First Party"),
any other Person (a) that is directly or indirectly controlled by the First
Party, or (b) that directly or indirectly controls the First Party, or (c) that
is, directly or indirectly, controlled by a Person that also, directly or
indirectly, controls the First Party.
"Agreement" means this Agreement and Plan of Merger among UTI, SUITS,
UTI Sub and the Shareholders, including all exhibits hereto.
"Balance Sheet Date" shall have the meaning ascribed thereto in
Section 4.4.
"Benefit Plan" shall mean any collective bargaining agreement or any
bonus, Welfare Plan, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical dependent care, cafeteria, employee assistance, scholarship program or
other plan, arrangement or understanding (whether or not legally binding)
providing benefits.
"Cash Consideration" means $2.27 million in cash plus the difference
between Estimated Working Capital and zero.
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"Certificate" shall have the meaning ascribed thereto in Section
3.2(a).
"Certificate of Merger" shall have the meaning ascribed thereto in
Section 2.1.
"Closing" has the meaning ascribed thereto in Section 9.1.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of any subsequent federal Tax laws.
"Commission" shall mean the Securities and Exchange Commission.
"Constituent Corporations" has the meaning ascribed thereto in Section
2.2.
"Contracts" has the meaning ascribed thereto in Section 4.10.
"Damages" shall mean any and all liabilities, losses, damages,
assessments, claims, costs and expenses (including interest, awards, judgments,
penalties, settlements, fines, costs of remediation, diminutions in value,
costs and expenses incurred in connection with investigating and defending any
claims or causes of action (including, without limitation, reasonable
attorneys' fees and expenses and all reasonable fees and expenses of
consultants and other professionals)).
"Debt" shall mean (i) the principal amount of all Debt Obligations,
(ii) the carrying value of all capital leases and (iii) all accrued
liabilities, including deferred income Taxes, if any.
"Debt Obligations" shall mean any contract, agreement, indenture, note
or other instrument relating to the borrowing of money or any guarantee or
other contingent liability in respect of any indebtedness for borrowed money or
obligation of any Person (other than the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business).
"Effective Time" has the meaning ascribed thereto in Section 2.1.
"Environmental Condition" means any pollution, contamination,
degradation, damage or injury to human health or the environment caused by,
related to or arising from the generation, handling, use, treatment, storage,
transportation, disposal, discharge, release or emission of any Hazardous
Materials.
"Environmental Laws" shall mean all federal, state, provincial or
municipal laws, rules, regulations, statutes, ordinances, or orders of any
Governmental Entity relating to (a) the control of any potential pollutant or
protection of the air, water, or land, (b) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation and (c)
exposure to hazardous, toxic or other substances alleged to be harmful to human
health or the environment. The term "Environmental Laws" shall also include
all state, local and municipal laws, rules, regulations, statutes, ordinances
and orders dealing with the same subject matter or promulgated by any
governmental or quasi- governmental agency thereunder or to carry out the
purposes of any federal, state, local and municipal law.
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"Environmental Liabilities" shall mean any and all Damages (including
remediation, removal, response, abatement, clean-up, investigative and/or
monitoring costs and any other related costs and expenses) incurred or imposed
(a) pursuant to any agreement, order, notice, requirement, responsibility or
directive (including directives embodied in Environmental Laws), injunction,
judgment or similar documents (including settlements) arising out of, in
connection with or under Environmental Laws, or (b) pursuant to any claim by a
Governmental Entity or other third Person or entity for personal injury,
property damage, damage to natural resources, remediation or similar costs or
expenses incurred or asserted by such entity or person pursuant to common law
or statute and arising out of or in connection with a release, as such term is
defined in Environmental Laws, of Hazardous Materials.
"Environmental Permit" shall mean any permit, license, approval,
registration, identification number or other authorization with respect to
SUITS under any applicable law, regulation or other requirement of the United
States or of any state, province, municipality or other subdivision thereof
relating to the control of any pollutant or protection of health or the
environment, including laws, regulations or other requirements relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air,
surface water, groundwater or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
materials or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Estimated Working Capital" shall mean $225,000, the estimated amount,
as agreed upon by SUITS and UTI prior to the Closing, of Working Capital of
SUITS as of the Closing Date.
"Exchange Act" has the meaning ascribed thereto in Section 5.6.
"Excluded Assets" shall mean those assets and liabilities and
obligations listed on Exhibit A hereto, including, without limitation, (i) all
right title and interest (including interests as a limited liability company
member or owner of capital stock) that SUITS or any Affiliate of SUITS owns or
possesses or has owned or possessed in SUITS Peru or Pepesa and all assets and
liabilities and obligations, contingent or otherwise, of SUITS Peru or Pepesa,
and (ii) all of the assets and liabilities and obligations, contingent or
otherwise, of Latigo.
"Exhibit" shall refer to the Exhibits to this Agreement, unless
otherwise stated, and an Exhibit may be attached to the Agreement or set forth
in a separate document denoted as an Exhibit to this Agreement.
"Extended Representations" shall mean the representations and
warranties set forth in Sections 4.1, 4.2, 4.3, 4.7, 4.9, 4.12 (first three
sentences only), 4.21, 4.22, 4.23, 4.24, 4.25, 4.28, 4.29, 4.30, 4.31, 5.1, 5.2
and 5.5.
"Final Statement" has the meaning ascribed thereto in Section 3.4.
"Financial Statements" has the meaning in Section 4.4.
"GAAP" means generally accepted accounting principles applied on a
consistent basis throughout all of the periods presented.
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"Governmental Entity" shall mean any and all foreign, federal, state
or local governments, governmental institutions, public authorities and
governmental entities of any nature whatsoever, and any subdivisions or
instrumentalities thereof, including, but not limited to, departments, boards,
bureaus, commissions, agencies, courts, administrations and panels, and any
divisions or instrumentalities thereof, whether permanent or ad hoc and whether
now or hereafter constituted and existing.
"Governmental Requirement" shall mean any and all laws (including, but
not limited to, applicable common law principles), statutes, ordinances, codes,
rules, regulations, interpretations, guidelines, directions, orders, judgments,
writs, injunctions, decrees, decisions or similar items or pronouncements,
promulgated, issued, passed or set forth by any Governmental Entity.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Hazardous Material" shall mean (a) any petroleum or petroleum
products, (b) radioactive materials, urea formaldehyde, asbestos and PCBs and
(c) any other chemical, substance or waste that is regulated by any
Governmental Entity under any Environmental Law.
"Holder" has the meaning ascribed thereto in Section 15.1.
"Indemnified Person" has the meaning ascribed thereto in Section 13.6.
"Indemnifying Person" has the meaning ascribed thereto in Section
13.6.
"Indemnity Claim" has the meaning ascribed thereto in Section 13.6.
"Latigo" means Latigo Energy Company, an Oklahoma corporation.
"Latigo Note Receivable" means the $150,000 notes receivable payable
by the Shareholders to SUITS, true and correct copies of which are attached
hereto as Exhibit B.
"Material Adverse Effect" shall mean a single event, occurrence or
fact that (together with all other events, occurrences and facts that could
reasonably be expected to result in a loss to SUITS and its Subsidiaries
considered as a whole following disposition by SUITS of the Excluded Assets)
that would have, or might reasonably be expected to have, a material adverse
effect on the assets, business, operations or financial condition of SUITS or
any of the Subsidiaries taken as a whole following and after giving effect to
the disposition by SUITS of the Excluded Assets, or that would constitute a
criminal violation of law involving a felony or indictable offense.
"Merger" has the meaning ascribed thereto in the recitals to this
Agreement.
"Merger Consideration" means the Cash Consideration, the Warrants and
the Note, subject to adjustment as provided herein.
"Notes" and each a "Note" means the promissory notes payable by UTI to
each of the Shareholders, substantially in the form of Exhibit C hereto, which
shall have an aggregate principal amount of $7.79 million.
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"Notes Receivable" means the $1.5 million notes receivable payable by
IRC to SUITS Drilling Company, a true and correct copy of which is attached
hereto as Exhibit D, and the Latigo Note Receivable.
"Ordinary Course of Business" shall mean the operation of SUITS'
business in the ordinary course consistent with past practices.
"Other UTI Common Stock" has the meaning ascribed thereto in Section
15.1.
"Pepesa" means Peruana de Perforacion, S.A., a corporation existing
under the laws of Peru.
"Person" shall mean any natural person, any Governmental Entity and
any entity the separate existence of which is recognized by any Governmental
Entity or Governmental Requirement, including, but not limited to,
corporations, partnerships, limited liabilities companies, joint ventures,
joint stock companies, trusts, estates, companies and associations, whether
organized for profit or otherwise.
"Proportionate Share" in respect of any Shareholder shall mean a
fraction, the numerator of which shall be the total number of shares of SUITS
Common Stock held by such Shareholder immediately prior to the Merger and the
denominator of which is the total number of issued and outstanding shares of
SUITS Common Stock immediately prior to the Merger.
"Reference Balance Sheet" has the meaning ascribed thereto in Section
4.4.
"Registration Expenses" has the meaning ascribed thereto in Section
15.2.
"Requesting Holder" has the meaning ascribed thereto in Section 15.1.
"Rigs" shall mean the equipment described on Exhibit E that
constitutes seven fully-equipped land drilling rigs and parts and equipment
relating thereto.
"Securities Act" has the meaning ascribed in Section 4.29.
"Selling Expenses" has the meaning ascribed thereto in Section 15.2.
"Severance and Retention Bonus Obligations" shall mean the severance
and retention obligations of SUITS that SUITS has agreed to pay to the
employees of SUITS and its subsidiaries following consummation of the Merger (a
schedule summarizing such payments is attached hereto as Exhibit F).
"Shareholders" has the meaning ascribed in the opening paragraph of
this Agreement.
"Shareholders Indemnified Parties" has the meaning ascribed thereto in
Section 13.2.
"Shareholder Representative" shall mean Xxxxx X. Xxxxxxxxxx.
"Shareholder Retained Liabilities" shall means all obligations (but
excluding obligations arising after the Closing Date under contracts performed
in the ordinary course of business) of SUITS (including indemnification and
other contingent obligations) to the extent not fully accrued
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in Working Capital in the Final Statement or relating to (i) acts, events or
omissions occurring, or circumstances relating to SUITS or its business or
assets existing, at or prior to the Closing, (ii) goods or services provided to
or for the benefit of SUITS or any of its Affiliates prior to the Closing,
(iii) goods or services provided by or on behalf of SUITS or any of its
Affiliates prior to the Closing, (iv) any pending or threatened litigation or
claims made or threatened prior to the Closing, (v) any of the matters listed
on Exhibit L hereto, (vi) any obligation relating to the conduct of the
business of SUITS, the ownership or operation of the assets of SUITS or any
benefit realized by SUITS prior to the Closing, (vii) contracts, agreements and
other commitments that were required to be scheduled in the Disclosure Schedule
and were not scheduled, (viii) any Taxes for any period through the Closing
Date, (ix) any liabilities or obligations relating to or arising from the
Excluded Assets, and (x) except for the Severance and Retention Bonus
Obligations to the extent fully accrued for and included in Working Capital as
of the Closing, any obligations to the employees of SUITS under any contracts,
agreements, arrangements or understandings with such employees entered into or
existing at or prior to the Closing and all other obligations with such
employees entered into or existing at or prior to the Closing and all other
obligations of SUITS or any of its Affiliates with respect to its employees at
or prior to the Closing.
"Shares" shall mean all of the issued and outstanding shares of
capital stock of SUITS.
"SUITS Assets" has the meaning ascribed thereto in Section 4.19.
"SUITS Common Stock" shall have the meaning ascribed thereto in
Section 3.1.
"SUITS Peru" means SUITS Peru, L.C., an Oklahoma limited liability
company.
"Subsidiaries and Subsidiary" has the meaning assigned thereto in
Section 4.3.
"Survival Period" has the meaning ascribed thereto in Section 12.1.
"Surviving Corporation" has the meaning ascribed thereto in Section
2.2.
"Taxes" shall mean all federal, state, local, foreign and other taxes
assessments or duties, including, but not limited to, all income, gross
receipts, ad valorem, sales, use, franchise, transfer, profits, value added,
withholding, payroll, employment, excise, estimated severance, property,
windfall profits and other taxes, assessments or duties of any kind whatsoever,
imposed or collected by any Governmental Entity or pursuant to any Governmental
Requirement, together with any interest, penalty, addition to tax, fine or
other additional amounts imposed thereon or related thereto, and the term "Tax"
means any one of the foregoing items.
"Tax Returns" shall mean all returns (including information returns),
declarations, reports, statements and other documents of, relating to, or
required to be filed in respect of, any and all Taxes, whether or not based in
whole or in part on net income (including, but not limited to, the Texas
franchise tax), and the term "Tax Return" shall mean any one of the foregoing
Tax Returns.
"UTI Common Stock" means the common stock, $.001 par value, of UTI.
"UTI Indemnified Parties" has the meaning ascribed thereto in Section
13.1.
"UTI Sub" has the meaning ascribed thereto in the opening paragraph of
this Agreement.
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"Warrants" and each a "Warrant" means the stock purchase warrants to
be issued to the Shareholders in substantially the same form as Exhibit G, with
underlying shares aggregating 100,000 shares of UTI Common Stock, with stock
purchase warrants to purchase 75,000 shares having an exercise price of $26.50
per share and stock purchase warrants to purchase 25,000 shares having an
exercise price of $35.00 per share..
"Warrant Shares" means the shares of UTI Common Stock underlying the
Warrants.
"Welfare Plan" shall have the meaning ascribed thereto in Section 4.9.
"Working Capital" means cash and cash equivalents, the trade accounts
receivable and prepaid assets (to the extent required by GAAP to be classified
as a current asset), less all liabilities and obligations of SUITS and the
Subsidiaries, including all accounts payable and Debt, subject to the special
rules of construction contained in Section 3.4(c).
ARTICLE II
THE MERGER
Section 2.1 The Merger; Effective Time of the Merger. Upon the
terms and conditions of this Agreement and in accordance with Oklahoma and
Delaware law and other applicable laws, UTI Sub shall be merged with and into
SUITS at the Effective Time. The Merger shall become effective immediately
when a certificate of merger (the "Certificate of Merger"), prepared and
executed in accordance with the relevant laws of Oklahoma and Delaware, is
filed with the Secretary of State of the States of Oklahoma and Delaware or, if
agreed to by the parties, at such time thereafter as is provided in the
Certificate of Merger (the "Effective Time"). The filing of the Certificate of
Merger shall be made as soon as practicable on or after the Closing.
Section 2.2 Effects of the Merger.
(a) At the Effective Time: (i) UTI Sub shall be merged
with and into SUITS, the separate existence of UTI Sub shall cease and SUITS
shall continue as the surviving corporation (UTI Sub and SUITS are sometimes
referred to herein as the "Constituent Corporations" and SUITS is sometimes
referred to herein as the "Surviving Corporation"); (ii) the Articles of
Incorporation of SUITS as in effect immediately prior to the Effective Time
shall be the Articles of Incorporation of the Surviving Corporation; and (iii)
the Bylaws of SUITS as in effect immediately prior to the Effective Time shall
be the Bylaws of the Surviving Corporation.
(b) The directors and officers of UTI Sub at the
Effective Time shall, from and after the Effective Time, be the directors and
officers of the Surviving Corporation and shall serve until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's Articles
of Incorporation and Bylaws.
(c) At and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises of
a public as well as of a private nature, and be subject to all the
restrictions, disabilities and duties of each of the Constituent Corporations;
and all and singular rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, and all
debts due to either of the Constituent Corporations on whatever account, as
well as for stock subscriptions and all other things in action or belonging to
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each of the Constituent Corporations, shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all and every other interest shall be thereafter as effectually the property of
the Surviving Corporation as they were of the Constituent Corporations; and the
title to any real estate vested by deed or otherwise, in either of the
Constituent Corporations, shall not revert or be in any way impaired; but all
rights of creditors and all liens upon any property of either of the
Constituent Corporations shall be preserved unimpaired; and all debts,
liabilities and duties of the Constituent Corporations shall thenceforth attach
to the Surviving Corporation, and may be enforced against it to the same extent
as if said debts and liabilities had been incurred by it.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of common stock, $1.00 par value, of SUITS ("SUITS Common Stock") or
capital stock of UTI Sub:
(a) Conversion of UTI Sub Capital Stock. Each issued and
outstanding share of capital stock of UTI Sub shall be converted into
and become one fully paid and nonassessable share of common stock of
the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of SUITS
Common Stock and all other shares of capital stock of SUITS that are
owned by SUITS as treasury stock shall be canceled and retired and
shall cease to exist and no stock of UTI or other consideration shall
be delivered or deliverable in exchange therefor.
(c) Consideration for SUITS Common Stock. Subject to the
provisions of Section 3.1(d), each share of SUITS Common Stock issued
and outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 3.1(a)) shall be
converted into the right to receive a Proportionate Share of the
Merger Consideration.
(d) Conversion and Cancellation of SUITS Common Stock.
All shares of SUITS Common Stock, when converted as provided in
Section 3.1(c), shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
Certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive such holder's
Proportionate Share of the Merger Consideration upon the surrender of
such certificate in accordance with Section 3.2, without interest, and
the right to receive such holder's Proportionate Share of the
post-closing adjustment in accordance with Section 3.4.
Section 3.2 Exchange of Certificates.
(a) Exchange Procedure. Upon surrender of a certificate
representing outstanding shares of SUITS Common Stock (a "Certificate") for
cancellation to the Surviving Corporation or UTI, together with any other
documents reasonably required by UTI, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration that such
holder has the right to receive pursuant to the provisions of Section 3.1, and
the Certificate so surrendered shall
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forthwith be canceled. Until surrendered as contemplated by this Section 3.2,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration as contemplated by Section 3.1.
(b) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to SUITS Common Stock declared or
made after the Effective Time with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate.
(c) No Further Ownership Rights in SUITS Common Stock.
The Merger Consideration to be issued upon the surrender for exchange of shares
of SUITS Common Stock in accordance with the terms hereof shall be deemed to
have been issued, paid or delivered in full satisfaction of all rights
pertaining to such shares of SUITS Common Stock, and after the Effective Time
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of SUITS Common Stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article III.
(d) No Liability. Neither UTI nor UTI Sub shall be
liable to any holder of shares of SUITS Common Stock for any cash amounts to
the extent such amount is delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. Any amounts remaining
unclaimed by holders of any such shares two years after the Effective Time (or
such earlier date immediately prior to the time at which such amounts would
otherwise escheat to or become property of any Governmental Entity) shall, to
the extent permitted by applicable law, become the property of UTI free and
clear of any claims or interest of any such holders or their successors,
assigns or personal representatives previously entitled thereto.
(e) Lost Share Certificates. If a holder shall have lost
or had destroyed such holder's Certificate, such holder may be entitled to
receive the Merger Consideration and other payments provided for hereunder
subject to such holder providing UTI Sub and UTI with a lost certificate
affidavit and indemnification acceptable to UTI.
Section 3.3 Shares of Dissenting Shareholders. Each Shareholder
hereby waives any and all rights to dissent or appraisal with respect to the
Merger.
Section 3.4 Post-Closing Adjustment.
(a) Within 60 calendar days after the Closing Date, UTI
shall prepare and deliver to the Shareholder Representative a statement
reflecting UTI's calculation of the Working Capital as of the Closing Date (the
"Final Statement"). UTI shall provide the Shareholder Representative with
access to copies of all work papers and other relevant documents to verify the
entries contained in the Final Statement. The Final Statement shall be
prepared in accordance with GAAP applied on a basis consistent with the
accounting principles applied in the preparation of the Reference Balance
Sheet. The Shareholder Representative shall have a period of 15 calendar days
after delivery to him of the Final Statement to review it and make any
objections the Shareholders may have in writing to UTI. If written objections
to the Final Statement are delivered to UTI within such 15-day period, then UTI
and the Shareholder Representative shall attempt to resolve the matter or
matters in dispute. If no written objections are made within the time period
provided above, within five calendar days after the end of such 15-day period,
(i) the Shareholders shall jointly and severally reimburse UTI the amount, if
any, by which the Working Capital reflected on the Final Statement
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is less than Estimated Working Capital and (ii) UTI shall pay to each
Shareholder his or her Proportionate Share of the amount, if any, by which the
Working Capital reflected on the Final Statement exceeds Estimated Working
Capital. All payments made pursuant to this Section 3.4 shall be paid in
immediately available funds by wire transfer to a bank account or accounts to
be designated by the party or parties to receive the payments.
(b) If disputes with respect to the Final Statement
cannot be resolved by UTI and the Shareholder Representative within 15 calendar
days after the delivery of the objections to the Final Statement, then either
party with notice to the other party may submit the specific matters in dispute
to Xxxxxx Xxxxxxxx LLP, Oklahoma City, Oklahoma office, or such other
nationally recognized independent accounting firm as may be approved by UTI and
the Shareholder Representative, which firm shall render its opinion as to such
matters. Based on such opinion, such accounting firm will then send to UTI and
the Shareholder Representative its determination on the specific matters in
dispute, which determination shall be final and binding on the parties hereto.
Within five calendar days after delivery of such opinion to UTI and the
Shareholder Representative, the Shareholders shall jointly and severally
reimburse UTI the amount, if any, by which the Working Capital reflected on the
Final Statement as revised by Xxxxxx Xxxxxxxx LLP is less than Estimated
Working Capital and UTI shall pay to each Shareholder his or her Proportionate
Share of the amount, if any, by which the Working Capital reflected on the
Final Statement as revised by Xxxxxx Xxxxxxxx LLP exceeds Estimated Working
Capital. The fees and other costs charged by each party's own independent
accounting firm shall be borne by such party and the fees and other costs
charged by Xxxxxx Xxxxxxxx LLP in connection with resolving any dispute
pursuant to this Section 3.4(b) shall be borne by UTI, on the one hand, and the
Shareholders, on the other hand, equally. All payments made pursuant to this
Section 3.4(b) shall be paid in immediately available funds by wire transfer to
a bank account or accounts to be designated by the party or parties to receive
the payments.
(c) For purposes of determining the Working Capital under
this Section 3.4, the following shall, without duplication, be applied in the
event such principles would not otherwise be applied in calculating Working
Capital:
(i) write-ups of other assets during the period
beginning on the day following the Balance Sheet Date and ending on
the Closing Date (the "Adjustment Period") shall be excluded from the
calculation of Working Capital as of the Closing Date;
(ii) all fees of all law firms and accountants
providing services for SUITS, the Shareholders and any Affiliates of
SUITS or the Shareholders and for which SUITS or the Subsidiaries are
liable, including in connection with the Merger and the transfer of
the Excluded Assets, shall be accrued for and decrease Working Capital
as of the Closing Date;
(iii) all Taxes of SUITS and the Subsidiaries and
SUITS Peru and any other entities comprising part of the Excluded
Assets (including all Taxes as a result of the Merger or as a result
of the transfer of the Excluded Assets, net of any applicable losses
on the transfer of the Excluded Assets, to the extent such amounts
would be payable by SUITS, the Subsidiaries, UTI Sub or UTI, shall be
fully accrued for and reduce Working Capital as of the Closing Date;
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(iv) no increases to Working Capital as of the
Closing Date shall be made for the addition of non-cash assets (other
than prepaid expenses and accounts receivable) and no increases in
assets or reductions for liabilities shall be made for reduction of
reserves recorded as of the Balance Sheet Date;
(v) all accounts payable and other amounts due
from SDC to SUITS Peru, to the extent not paid prior to the Closing,
shall reduce Working Capital as of the Closing Date;
(vi) the Notes Receivable (and accrued interest
thereon) shall be excluded from the calculation of Working Capital as
of the Closing Date;
(vii) the Severance and Retention Bonus Obligations
shall reduce Working Capital as of the Closing Date to the extent such
obligations exceed $660,000;
(viii) principal and accrued interest on Debt
Obligations shall not be included in the calculation of Working
Capital; provided, however, the full amount of all principal and
accrued interest on all Debt Obligations as of the Closing that in the
aggregate exceeds $1.5 million shall reduce Working Capital and the
principal and accrued interest on all Debt Obligations as of the
Closing that in the aggregate are less than $1.5 million shall
increase Working Capital;
(ix) the Excluded Assets shall be excluded from
Working Capital and any non-cash income or assets arising from or
attributable to the transfer or disposition of the Excluded Assets
shall not increase Working Capital as of the Closing Date; and
(x) the special services bonuses payable to Xxx
X. Xxxxxxxxxx Revocable Trust and Xxx X. Xxxxxxxxxx Revocable Trust in
the aggregate amount of $120,000 shall be deducted from Working
Capital;
(d) Except for normal expense account advances, the
Shareholders shall cause all accounts receivable and other amounts owed to
SUITS from related parties to be paid in full prior to the Closing.
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES OF SUITS
SUITS represents and warrants to UTI pursuant to Sections 4.1 through
4.22 that:
Section 4.1 Incorporation; Authority. Each of SUITS and each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Oklahoma, and is duly authorized,
qualified and licensed under all applicable Governmental Requirements to carry
on its business in the places and in the manner as now conducted. Section 4.1
of the Disclosure Schedule sets forth a complete list of all jurisdictions in
which SUITS or any Subsidiary owns or leases properties, has employees or
currently conducts business, and a complete list of all jurisdictions in which
SUITS or any Subsidiary is qualified as a foreign corporation. Each of SUITS
and each Subsidiary is duly qualified or licensed to do business and in good
standing as a foreign
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corporation in every jurisdiction (which jurisdictions are listed in Section
4.1 of the Disclosure Schedule) in which the conduct of its business or the
ownership or leasing of its assets requires it to be so qualified or licensed,
except where the failure to be so qualified or licensed would not have a
Material Adverse Effect. Each of SUITS and each Subsidiary has the corporate
power and authority to carry on its business as it is now being conducted and
to own and operate its assets, properties and business. The copies of the
Certificate of Incorporation of each of SUITS and each Subsidiary and all
amendments thereto to date (certified by the Secretary of the State of
Oklahoma) and of the bylaws of each of SUITS and each Subsidiary as amended to
date (certified by its Secretary), each of which are included in Section 4.1 of
the Disclosure Schedule, are true, complete and correct.
Section 4.2 Share Capital. The authorized capital stock of SUITS
consists of 3,000 shares of common stock, $1.00 par value, of which 3,000
shares are issued and 3,000 shares are outstanding as of the date of this
Agreement and 3,000 shares will be outstanding as of the Closing Date. All of
such issued and outstanding shares are validly issued and outstanding, fully
paid and nonassessable or will be validly issued, fully paid and nonassessable
on the Closing Date. Except as set forth on Schedule 4.2 hereto, there are no
outstanding subscriptions, options, warrants, calls, commitments, obligations
or agreements relating to any of the authorized or outstanding capital stock of
SUITS. The Shareholders are the record owners of all of the Shares and such
ownership is set forth on Section 4.2 of the Disclosure Schedule.
Section 4.3 Subsidiaries. Except for Latigo, SUITS Peru,
Pepesa and the entities listed in Section 4.3 to the Disclosure Schedule
(collectively, excluding SUITS Peru, Pepesa and the entities listed on Section
4.3 to the Disclosure Schedule, the "Subsidiaries"), SUITS does not, directly
or indirectly, own or control, and has not, directly or indirectly, since its
inception owned or controlled, any capital stock or equity interest, or have
any proprietary interest, in any Person, nor does it directly or indirectly
control the management of any Person, nor does it have any obligation to
acquire any such interest in the future, and SUITS has not, during the past
five years, directly or indirectly owned or controlled any capital stock or
equity interest, or had any proprietary interest, in any Person, nor has it
directly or indirectly controlled the management of any Person. The
capitalization of each Subsidiary is set forth on Section 4.3 to the Disclosure
Schedule, and all capital stock and other ownership interests in each
Subsidiary is validly issued, fully paid and nonassessable and is directly or
indirectly wholly-owned by SUITS and there are no outstanding subscriptions,
options, warrants, calls, commitments, obligations or agreements relating to
any of the authorized or outstanding capital stock of any Subsidiary. All of
SUITS' or its Affiliates' interest in the Excluded Assets has been sold prior
to the date hereof in consideration for the Note Receivable, and true and
correct copies of all documents executed in connection with such transfers are
included in Section 4.3 to the Disclosure Schedule.
Section 4.4 Financial Statements. SUITS has delivered to UTI
copies of the SUITS June 30, 1998 consolidated balance sheet (the "Reference
Balance Sheet"), and income statement for the 7-month period ended on such date
(the "Balance Sheet Date"), copies of which are included in Section 4.4 of the
Disclosure Schedule (the "Financial Statements"). The Excluded Assets did not
have a material impact on results of operations and financial condition of the
SUITS reflected in the Financial Statements. Except as declared in Section 4.4
of the Disclosure Schedule, each of the Financial Statements has been prepared
in conformity with GAAP, as adjusted to give effect to the transfer of the
Excluded Assets, and fairly presents in all material respects the financial
condition as of such date and results of operations of SUITS and its
Subsidiaries for the 12-month period ended on such date (subject, in the case
of the unaudited statements, to the absence of footnotes and to
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normal, recurring year-end adjustments, that are not, and will not be,
individually or in the aggregate, material to the financial condition and
results of operations of SUITS and the Subsidiaries, as adjusted to reflect the
transfer of the Excluded Assets) taken as a whole, as of the respective dates
thereof and for the respective periods indicated. Each of the Financial
Statements is complete, correct and in accordance with the books of account and
records of SUITS and the Subsidiaries in all material respects, as adjusted to
reflect the transfer of the Excluded Assets.
Section 4.5 Liabilities, Debts and Obligations. SUITS and the
Subsidiaries have no liabilities, debts or obligations of any nature
whatsoever, whether due or to become due, and whether accrued, absolute,
contingent or otherwise, that are not disclosed on the Reference Balance Sheet
or in this Agreement or in Section 4.5 of the Disclosure Schedule, except for
(a) liabilities incurred in the Ordinary Course of Business subsequent to the
Balance Sheet Date and (b) obligations under contracts and commitments entered
into in the Ordinary Course of Business and not required under GAAP to be
reflected on the Reference Balance Sheet (including required footnotes), which,
in both cases, individually or in the aggregate are not material to the
financial condition or operating results of SUITS.
Section 4.6 Events Since Balance Sheet Date. Since the Balance
Sheet Date there has not been, except for the transfer of the Excluded Assets
and as disclosed in Section 4.6 of the Disclosure Schedule:
(a) any change in the condition (financial or otherwise)
or in the properties, assets, liabilities, business or prospects of SUITS or
any Subsidiary, except normal and usual changes in the Ordinary Course of
Business that in the aggregate have not had a Material Adverse Effect;
(b) any declaration, setting aside, or payment of any
dividend or other distribution on or in respect of the capital stock of SUITS
or a Subsidiary, or any direct or indirect redemption, purchase or other
acquisition of any of such stock or any issuance of any shares of such stock or
any granting or entering into of any option or commitment relating to any of
such stock;
(c) any increase in the compensation or rate of
compensation or commissions payable or to become payable by SUITS or a
Subsidiary to any of its directors, officers, employees or consultants, or any
hiring of any employee by SUITS or a Subsidiary who is entitled to
compensation, or any payment or accrual of any bonus, profit-sharing or other
extraordinary compensation to any director, officer, employee or consultant, or
any change in any then existing bonus, profit-sharing, pension, retirement or
other similar plan, agreement or arrangement or any adoption of or entering
into of any new bonus, profit-sharing, pension, stock option, retirement, group
life or health insurance or other similar plan, agreement or arrangement;
(d) any change in the accounting methods or practices
followed by SUITS or any Subsidiary, including, but not limited to, the method
for accounting for contract revenues and expenses, or any change in
depreciation or amortization policies or rates heretofore adopted by it;
(e) any sale, lease, abandonment or other disposition by
SUITS or a Subsidiary of any interest in real property or of any machinery,
equipment or other tangible asset, except for any sales, leases, abandonments
or other dispositions in the Ordinary Course of Business not exceeding $25,000
individually or $50,000 in the aggregate;
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(f) any labor trouble, strike or any other occurrence,
event or condition affecting the employees of SUITS or a Subsidiary that has or
is reasonably expected to have a Material Adverse Effect;
(g) any damage, destruction or loss (whether or not
covered by insurance) adversely affecting the assets or the business of SUITS
or a Subsidiary, except for damages, destruction or loss that reasonably would
be expected to occur in the Ordinary Course of Business not exceeding $25,000,
individually or in the aggregate;
(h) any transaction entered into or engaged in by SUITS
or a Subsidiary other than transactions in the Ordinary Course of Business;
(i) any waiver by SUITS or a Subsidiary of a valuable
right or of a material debt owed to it, or any satisfaction or discharge of any
encumbrance or payment of any obligation by SUITS or a Subsidiary except in the
Ordinary Course of Business; or
(j) any transaction between SUITS or a Subsidiary and any
Shareholder or any Affiliate of a Shareholder or any family member of a
Shareholder or Affiliate of such family member.
Section 4.7 Directors, Officers and Employees. Section 4.7 of
the Disclosure Schedule contains a true and complete list of the names of and
current annual rate of compensation paid by SUITS or a Subsidiary to each
director, officer and employee of SUITS or a Subsidiary and its Affiliates and
subsidiaries. Except as previously disclosed to UTI, with respect to each
employee of SUITS Affiliates and Subsidiaries hired after October 15, 1987,
SUITS maintains in its files a fully completed Form I-9 pursuant to the
Immigration Reform and Control Act of 1986, and the rules and regulations
promulgated thereunder. To the best of SUITS' knowledge, no officer or key
employee of SUITS or a Subsidiary is in violation of any term of any employment
contract, patent disclosure agreement or any other contract or agreement
relating to the relationship of any such employee with SUITS or a Subsidiary,
or any other party. To the best of SUITS' knowledge, no employee of SUITS or a
Subsidiary has received notice from a former employer claiming such employee to
be in breach of any such employment contract, patent disclosure agreement or
other contract or agreement. Neither SUITS nor any Subsidiary has any
collective bargaining agreements covering any of its employees. The employment
of each officer and employee of SUITS or a Subsidiary is terminable at the
will of SUITS or such Subsidiary at no cost to SUITS or any Subsidiary.
Section 4.8 Taxes and Governmental Returns and Reports.
(a) All Tax Returns of or relating to any Tax that are
required to be filed on or before the Closing Date for, by, on behalf of or
with respect to SUITS and the Subsidiaries with respect to any period ending
prior to the Closing Date, including, but not limited to, those relating to the
income, business, operations or property of SUITS and the Subsidiaries and
those that include or should include SUITS and the Subsidiaries (whether on a
separate, consolidated, affiliated, combined, unitary or any other basis) have
been or will be timely filed with the appropriate foreign, federal, provincial,
state and local authorities on or before the Closing Date in accordance with
applicable tax laws, and all Taxes shown to be due and payable on such Tax
Returns or related to such Tax Returns have been (and as to all Taxes shown as
due and payable on such Tax Returns filed as of the Closing Date, will be) paid
in full in accordance with applicable laws;
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(b) all such Tax Returns and the information and data
contained therein have been or will be properly and accurately compiled in all
material respects and completed, fairly present or will fairly present the
information purported to be shown therein, and reflect or will reflect all
liabilities for Taxes for the periods covered by such Tax Returns;
(c) none of such Tax Returns are under audit or
examination by any foreign, federal, state or local authority and there are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment or collection of any Tax or deficiency of any
nature against SUITS and the Subsidiaries or with respect to any such Tax
Return, or any suits or other actions, proceedings, investigations or claims
now pending or threatened against SUITS or the Subsidiaries with respect to
any Tax, or any matters under discussion with any foreign, federal, provincial,
state or local authority relating to any Tax, or any claims for any additional
Tax asserted by any such authority;
(d) all Taxes assessed and that are due and owing from or
against SUITS or a Subsidiary for all tax periods ending prior to or on the
Closing Date (including, but not limited to, ad valorem Taxes relating to any
property of SUITS or a Subsidiary) have been or will be timely paid in full on
or before the Closing Date;
(e) all withholding Tax and Tax deposit requirements
imposed on SUITS or a Subsidiary for any and all periods ending prior to or on
the Closing Date, or through and including the close of business on the day
next preceding the Closing Date for periods that have not ended on or before
the Closing Date, have been or will be timely satisfied in full on or before
the Closing Date;
(f) the Financial Statements reflect and include adequate
charges, accruals, reserves and provisions for the payment in full of any and
all Taxes payable by SUITS or a Subsidiary with respect to any and all taxable
periods ending on or before the respective dates thereof;
(g) SUITS has received no notice of proposed reassessment
of Tax or of any special assessments on any assets of SUITS or a Subsidiary;
(h) the charges, accruals and reserves for Taxes with
respect to SUITS and the Subsidiaries for any period ending on or before the
Closing Date (including any such period for which a Tax Return is not yet
required to be filed) reflected on the books of SUITS (excluding any provision
for deferred income Taxes) are reasonably adequate to cover such Taxes;
(i) neither SUITS or the Subsidiaries nor any other
Person on behalf of SUITS or the Subsidiaries has entered into nor will it
enter into any agreement or consent pursuant to Section 341(f) of the Code;
(j) there are no liens for Taxes upon the assets of SUITS
or the Subsidiaries except liens for current property Taxes not yet due and
payable;
(k) neither SUITS nor any Subsidiary is delinquent in the
payment of any Tax and neither SUITS nor any Subsidiary has requested any
extension of time within which to file any Tax Return that has not been filed;
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(l) there are no requests or determinations in respect of
any Tax matter relating to SUITS or a Subsidiary pending before or with any
Governmental Authority;
(m) all Tax Returns filed with respect to the Tax years
of SUITS or the Subsidiaries through the Tax year ended November 30, 1993, have
been examined and closed or are Tax Returns with respect to which the
applicable period for assessment under applicable law, after giving effect to
extensions or waivers, has expired;
(n) Neither SUITS nor any Subsidiary has:
(i) been a member of any affiliated,
consolidated, combined, or unitary group, or
(ii) participated in any arrangement whereby any
income, revenues, receipts, gain, loss, deduction or credit of SUITS
or such Subsidiary was determined or taken into account for Tax
purposes with reference to or in conjunction with any income,
revenues, receipts, gain, loss, deduction, credit, or liability of any
other Person (other than SUITS);
(o) SUITS has no "net unrealized built-in gains" as that
term is defined in section 1374 of the Code;
(p) Neither SUITS nor any Subsidiary is a party to any
Tax allocation or Tax sharing agreement;
(q) SUITS has not issued or entered into any restricted
stock, deferred compensation or profit-sharing plans, call options, warrants
or similar instruments with respect to its stock, stock appreciation rights,
convertible debt instruments, stock-based employee incentive plans, or other
similar instruments, obligations or arrangements;
(r) SUITS has not issued or entered into any indebtedness
other than indebtedness which constitutes "straight debt" within the meaning of
section 1361(c)(5) of the Code and Treas. Reg. Section 1.1361-1(l)(5);
(s) neither SUITS nor any Person who currently is the
record or beneficial owner of any Shares (or any interest therein) has entered
into any binding agreements relating to rights to distributions or liquidation
proceeds in respect of the Shares, or any other agreement with respect to the
Shares, including, but not limited to, buy-sell agreements, agreements
restricting the transferability of Shares, or redemption agreements;
(t) SUITS has not acquired the assets of any other
corporation in a transaction described in section 381(a) of the Code;
(u) SUITS does not own any stock (including any
instrument or interest that constitutes stock for U.S. federal income tax
purposes) of any corporation and has not been a party during the past five
years to any partnership, joint venture, marketing or other similar contract or
arrangement with any person;
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(v) Schedule 4.8 contains a list of all jurisdictions
(whether foreign or domestic) to which any Tax is properly payable by SUITS or
any Subsidiary; and
(w) As of the Closing Date, SUITS shall have fully
accrued for all Taxes that may be required to be paid as a result of the
transfer of the Excluded Assets, after giving effect to any applicable offsets,
credits, carryforwards or carrybacks; the value of the Excluded Assets sold by
SUITS reflects an amount equal to or greater than the fair value of such
assets; and prior to the sale of the Excluded Assets, there were no deferred
intercompany gains between SUITS or the Subsidiaries and SUITS Peru, Pepesa or
Latigo or the other entities comprising part of the Excluded Assets..
Section 4.9 Employee Benefit Plans.
(a) Neither SUITS nor any Subsidiary maintains or
contributes, or has maintained or contributed within the preceding six years,
to any "employee pension plan" as that term is defined in Section 3(2) of
ERISA. Section 4.9 of the Disclosure Schedule contains a list and brief
description of all "employee welfare benefit plans" (as defined in Section 3(1)
of ERISA) (sometimes referred to herein as "Welfare Plans") and all other
Benefit Plans maintained, or contributed to, by SUITS or a Subsidiary for the
benefit of any present or former officers or employees of SUITS or a
Subsidiary. SUITS has delivered to UTI true, complete and correct copies of
(i) each Benefit Plan and Welfare Plan (or, in the case of any unwritten
Benefit Plans and Welfare Plans, descriptions thereof), (ii) the most recent
three annual reports on Form 5500 filed with the IRS with respect to each
Benefit Plan (if any such report was required), (iii) the most recent IRS
determination letter and all rulings or determinations requested subsequent to
the date of that letter, (iv) the most recent actuarial report for each Benefit
Plan for which an actuarial report is required, (v) the most recent summary
plan description for each Benefit Plan for which such summary plan description
is required and each summary of material modifications prepared after the last
summary plan description, (vi) each trust agreement and group annuity contract
relating to any Benefit Plan and (vii) all material correspondence for the last
three years with the IRS or Department of Labor relating to plan qualification,
filing of required forms, or pending, contemplated or announced plan audits.
Neither SUITS nor any Subsidiary is aware of any commitment, whether legally
binding or not, to create any new plan or agreement or to modify any existing
plan or agreement.
(b) Each Benefit Plan that has been or is sponsored,
participated in or contributed to by SUITS or a Subsidiary: (i) is in
compliance in all material respects with all requirements of ERISA, (ii) has no
issue pending (other than the payment of benefits in the normal course) nor any
issue resolved adversely to SUITS or a Subsidiary that may subject SUITS or a
Subsidiary to the payment of any penalty, interest, tax or other obligation,
and (iii) is in compliance with the terms of the Benefit Plan and the Code.
(c) The execution of this Agreement or the consummation
of the transactions contemplated by this Agreement will not give rise to any,
or trigger any, change of control, severance benefit, accelerated payment or
vesting or other similar provision in any Benefit Plan, nor will it increase
the amount of compensation due to any director, officer or employee or former
director, officer or employee (including beneficiaries) from SUITS or a
Subsidiary.
(d) SUITS and the Subsidiaries do not provide employee
post-retirement medical or health coverage or contribute to or maintain any
employee welfare benefit plan that provides for health benefit coverage
following termination of employment except as is required by
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Section 4980B(f) of the Code or other applicable statute, nor has it made any
representations, agreements, covenants or commitments to provide that coverage.
Each Benefit Plan can be unilaterally amended and/or terminated. No notice has
been received by SUITS or a Subsidiary of an increase or proposed increase in
the cost of a Benefit Plan.
(e) Neither SUITS nor a Subsidiary has ever been a party
to or contributed to a "multiemployer pension plan" (as such term is defined in
Section 4001(a)(3) of ERISA).
(f) With respect to any Benefit Plan that is a Welfare
Plan, (i) no such Benefit Plan includes a welfare benefits fund, as such term
is defined in Section 419(e) of the Code, (ii) each such Benefit Plan that is a
group health plan, as such term is defined in Section 5000(b)(1) of the Code,
complies with the applicable requirements of Section 4980B(f) of the Code and
(iii) each such Benefit Plan (including any such Benefit Plan covering retirees
or other former employees) may be amended or terminated without material
liability to SUITS or a Subsidiary on or at any time after the Closing.
(g) Neither SUITS or the Subsidiaries, the Shareholders,
nor any member of a controlled group or affiliated service group as defined in
Sections 414(b), (c), (m) and (o) of the Code of which SUITS or the
Subsidiaries or the Shareholders is a member has made a complete or partial
withdrawal from a multiemployer plan (as defined in Section 3(37) of ERISA) so
as to incur withdrawal liability (as defined in Section 4201 of ERISA) that
remains unpaid. The execution of this Agreement or the consummation of the
transactions contemplated by this Agreement will not give rise to, or trigger,
any liability under ERISA to SUITS or a Subsidiary. SUITS and each Subsidiary,
and each Benefit Plan maintained by SUITS and each Subsidiary, has complied
with all the requirements of such Benefit Plan, ERISA, and the Code.
Section 4.10 Contracts and Agreements. Section 4.10 of the
Disclosure Schedule sets forth a true and complete list of all of the following
contracts, agreements, leases, licenses, plans, arrangements or commitments,
written or oral, to the extent there exist any continuing obligation of SUITS
or a Subsidiary thereunder, or to SUITS' knowledge, any unperformed obligations
on behalf of any other party thereto, or any of the assets or properties of
SUITS or a Subsidiary is in any way bound or obligated (including all
amendments, supplements and modifications thereto):
(a) all contracts, agreements or commitments in an
amount in excess of $25,000 in the aggregate, including, but not limited to,
drilling contracts (identifying each contract that is a turn-key contract), all
subcontracts and contracts in respect of the provision of services or the
purchase of raw materials, supplies or other products or utilities, except
those entered into in the Ordinary Course of Business involving payments or
receipts by SUITS or a Subsidiary of less than $25,000;
(b) all outstanding offers, tenders, bids or the like
outstanding and capable of being converted into an obligation of SUITS or a
Subsidiary in an amount in excess of $25,000 in the aggregate by an acceptance
or other act of some other Person, including bids to provide turn-key drilling
services;
(c) all master supply and service contracts;
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(d) all collective bargaining agreements, union
agreements, employment agreements, consulting agreements or agreements
providing for the services of an independent contractor;
(e) all profit-sharing, pension, stock option, severance
pay, retirement, bonus, deferred compensation, group life and health insurance
or other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever and all agreements with any present or former officer,
director or stockholder of SUITS or a Subsidiary;
(f) all leases and all other contracts, agreements or
legally enforceable commitments relating to or affecting real property or any
interest therein;
(g) all Debt Obligations;
(h) all contracts, agreements, arrangements or legally
enforceable commitments relating to the issuance of capital stock, bonds or
other securities of SUITS or a Subsidiary;
(i) all contracts, agreements, arrangements or legally
enforceable commitments relating to the acquisition by SUITS or a Subsidiary of
any of its assets having a value in excess of $25,000 in the aggregate;
(j) all performance bonds, bid bonds, surety bonds and
the like, all contracts and bids covered by such bonds, and all letters of
credit and guaranties;
(k) all consent decrees and other judgments, decrees or
orders, settlement agreements and agreements relating to competitive
activities, requiring or prohibiting any future action;
(l) all accounts, notes and other receivables (other
than the Notes Receivable and customer account receivables generated in the
Ordinary Course of Business), and all security therefor, and all documents and
agreements related thereto;
(m) all contracts, agreements, arrangements or legally
enforceable commitments of any nature with the Shareholders or any Affiliate of
the Shareholders or any family member of a Shareholder or Affiliate of such
family member;
(n) all licenses of intellectual property to or from
SUITS or a Subsidiary;
(o) all contracts, agreements, arrangements or legally
enforceable commitments that cannot be canceled by SUITS or a Subsidiary by
notice of 60 days or less or without penalty involving amounts in excess of
$25,000 in the aggregate or that would restrict the operations of SUITS, the
Subsidiaries or Affiliates thereof after the Closing; and
(p) all contracts, agreements, arrangements or legally
enforceable commitments that are material to SUITS or a Subsidiary or the
operation of any of its businesses.
All of such contracts, agreements, leases, licenses, plans, arrangements and
commitments and all other such items binding on SUITS or a Subsidiary or its
assets not specifically described above (collectively, the "Contracts") are
valid, binding and in full force and effect in accordance with their
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terms and conditions and there is no existing default thereunder or breach
thereof by SUITS or a Subsidiary, or, to the best of SUITS' and each
Subsidiary's knowledge, by any other party to the Contracts, or any conditions
that, with the passage of time or the giving of notice or both, might
constitute such a default by SUITS or a Subsidiary, or, to the best of SUITS'
and each Subsidiary's knowledge, by any other party to the Contracts, and the
Contracts will not be breached by or give any other party a right of
termination as a result of the transactions contemplated by this Agreement.
Copies of all of the documents (or in the case of oral commitments,
descriptions of the material terms thereof) relevant to the Contracts listed on
Section 4.10 of the Disclosure Schedule have been delivered by the Shareholders
to UTI and such copies and descriptions are true and accurate and include all
amendments, supplements or modifications to the Contracts.
Section 4.11 Effect of Agreement. Except as set forth on Section
4.11 of the Disclosure Schedule, the execution and delivery of this Agreement
by SUITS and the consummation of the Merger and the transactions contemplated
hereby will not (i) result in any breach of any of the terms or conditions of,
or constitute a default under, the Certificate of Incorporation or other
charter documents or bylaws of SUITS or any Subsidiary or any Contract; (ii)
result in any violation of any Governmental Requirement applicable to SUITS or
a Subsidiary; (iii) cause SUITS or a Subsidiary to lose the benefit of any
material right or privilege it presently enjoys or, to the best of SUITS'
knowledge, cause any Person who normally does business with SUITS or a
Subsidiary not to continue to do so on the same basis as before; (iv) relieve
any Person of any obligation to SUITS or a Subsidiary (whether contractual or
otherwise) or enable any other Person to terminate any such obligation or any
right or benefit enjoyed by SUITS or a Subsidiary or to exercise any right
under any agreement, including any Contract, with or otherwise in respect of
SUITS or a Subsidiary or the assets or business of SUITS or a Subsidiary; or
(v) require notice to or the consent, authorization, approval or order of any
Person.
Section 4.12 Properties, Assets and Leasehold Estates. SUITS or
a Subsidiary owns or has the right to use (pursuant to a valid lease or license
disclosed on Section 4.12 of the Disclosure Schedule) all property, real or
personal, tangible or intangible, (i) reflected on the Reference Balance Sheet
(other than the Excluded Assets and items sold by SUITS or a Subsidiary since
the Balance Sheet Date in the Ordinary Course of Business for which the
proceeds from such sales did not exceed $25,000 individually or $50,000 in the
aggregate) or (ii) utilized in or necessary for the operation of its business
(including without limitation the Rigs). Section 4.12 of the Disclosure
Schedule sets forth a true and complete list of all such property (other than
the Rigs which are fully described on Exhibit E hereto) as of the date hereof
(with all property that is leased or licensed being designated as such). SUITS
or a Subsidiary has good and indefeasible title to all real property interests
(including leasehold estates) and good and marketable title to all other
properties and assets, each as set forth in Section 4.12 of the Disclosure
Schedule, free and clear of all mortgages, liens, pledges, conditional sales
agreements, charges, easements, covenants, assessments, restrictions and
encumbrances of any nature whatsoever, and there are no pending or, to SUITS'
knowledge, no threatened claims of any Person challenging SUITS' or a
Subsidiary's title or rights to the properties, assets and leasehold estates
listed on Schedule 4.12 or otherwise utilized in or necessary for the operation
of SUITS' or the Subsidiaries' business. All material leases of property under
which SUITS or a Subsidiary purports to be a lessee are valid, binding and in
full force and effect. All such structures, equipment and other properties of
SUITS or a Subsidiary and the present use of such items conform to all
Governmental Requirements, and no notice of any violation of any such
Governmental Requirements relating to such assets or their use has been
received by SUITS or a Subsidiary. SUITS and each Subsidiary has all
easements, rights of ingress and egress, and utilities and services necessary
for all operations conducted by it. Neither the whole nor any portion of any
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real property currently owned or occupied by SUITS or a Subsidiary has been
condemned or otherwise taken by any public authority, nor, to the best of the
Shareholders's and SUITS' knowledge, is any such condemnation or taking
threatened or planned. Neither SUITS nor any Shareholder makes any
representation or warranty, express or implied, as to the condition, fitness
for a particular purpose, quantity, quality or usefulness of any tangible
property of SUITS or the Subsidiaries, notwithstanding any other implied
provision of this Agreement or the law. UTI and UTI Sub have made and are
relying solely on their own independent inspection and examination of such
property and neither UTI nor UTI Sub is relying on any representation or
warranty except as set forth in this Agreement, express or implied, by SUITS or
a Shareholder as to the quality of any of such property, its condition, fitness
for a particular purpose or merchantability, and the same is accepted AS IS,
WHERE IS, with all defects and redhibitory vices, known or unknown, apparent or
hidden.
Section 4.13 Bank Accounts. Section 4.13 of the Disclosure
Schedule sets forth a true and complete list of all bank or financial accounts
and safe deposit boxes of SUITS and each Subsidiary and of the credit and debit
balances of such bank and financial accounts as of the most recent practicable
date.
Section 4.14 Suits, Actions and Claims. Except as set forth in
Section 4.14 of the Disclosure Schedule, (i) there are no suits, actions,
claims, inquiries, investigations or legal, administrative or arbitration
proceedings involving SUITS or a Subsidiary or in which SUITS or a Subsidiary
is engaged or that are pending or, to the best of SUITS' knowledge, threatened
against or affecting SUITS or a Subsidiary or any of its properties, assets or
business, or that question the validity or legality of the transactions
contemplated hereby, (ii) no reasonable basis or grounds for any such suit,
action, claim, inquiry, investigation or proceeding exists, and (iii) there is
no outstanding order, writ, injunction or decree of any Governmental Entity
against or affecting SUITS or a Subsidiary or any of its properties, assets or
business. Section 4.14 of the Disclosure Schedule sets forth all claims,
including the status thereof, since January 1, 1996 against SUITS or a
Subsidiary with respect to personal injury, negligence or responsibility for
damages or injuries relating to SUITS' and the Subsidiaries' business and
operations or for reservoir damage or obligation to redrill or work over a
well.
Section 4.15 Insurance Policies. Section 4.15 of the Disclosure
Schedule contains a list of all insurance policies (specifying the insurer, the
amount of coverage, the type of insurance and the policy number) covering SUITS
or a Subsidiary or its properties, assets, business and personnel. Such
policies afford SUITS and each Subsidiary coverage in such amounts and against
such risks as reflected in such policies. SUITS is not aware of any special
circumstances with respect to such policies or the business or operations of
SUITS or a Subsidiary that lead to any liability under such insurance policies
being avoided by the insurers issuing such policies or the premiums thereunder
being increased. Except as set forth on Section 4.15 of the Disclosure
Schedule, there is no claim outstanding under any such insurance policy nor to
the best of SUITS' knowledge are there any circumstances that are likely to
give rise to such a claim. Neither SUITS nor any Subsidiary is in default with
respect to any provision contained in such insurance policies except as would
not have a Material Adverse Effect, nor has it failed to give any notice or
present any claim thereunder in timely fashion. All such policies are in full
force and effect, with all premiums due thereon to date fully paid.
Section 4.16 Licenses and Permits; Compliance with Governmental
Requirements.
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(a) Section 4.16 of the Disclosure Schedule sets forth a
true and complete list of all licenses and permits necessary for the conduct of
SUITS' and the Subsidiaries' business. SUITS and each Subsidiary has all such
licenses and permits validly issued to it and in its name, and all such
licenses and permits are in full force and effect. To the best of SUITS'
knowledge, no violations are or have been recorded in respect of such licenses
or permits and no proceeding is pending or, to the best of the Shareholders's
and SUITS' knowledge, threatened seeking the revocation or limitation of any of
such licenses or permits. Except as set forth in Section 4.16 of the
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not constitute a violation of any such license or permit or
impair or adversely affect in any manner any such license or permit. SUITS and
each Subsidiary has complied in all material respects with all Governmental
Requirements applicable to its business, and all Governmental Requirements with
respect to the distribution and sale of products and services by it.
(b) Except for any matters set forth in Section 4.16 of
the Disclosure Schedule, no consent, approval, authorization, declaration,
filing or registration with any Governmental Entity or any other Person is
required to be made or obtained by SUITS or a Subsidiary or the Shareholders in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
Section 4.17 No Untrue Statements. The statements,
representations and warranties of SUITS set forth in this Agreement, the
Disclosure Schedule and the Exhibits hereto and in all other documents and
information furnished to UTI and UTI Sub and its representatives in connection
herewith do not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements, representations and
warranties made not misleading.
Section 4.18 Records. The books, records and minutes kept by
SUITS and each Subsidiary with respect to its business and assets have been
kept properly in all material respects in accordance with all Governmental
Requirements and contain records of all matters required to be included therein
by any Governmental Requirement, and such books, records and minutes are true,
accurate and complete in all material respects.
Section 4.19 Environmental Representations and Warranties.
Except as otherwise set forth in Section 4.19 of the Disclosure Schedule:
(a) Neither SUITS nor a Subsidiary has received any
written notice of any investigation or inquiry by any Governmental Entity under
any applicable Environmental Laws relating to the ownership or operation of the
assets of SUITS or a Subsidiary. Neither SUITS nor any Subsidiary has disposed
of any Hazardous Material on any of the assets currently owned or leased, or
that have been owned or leased, by SUITS or a Subsidiary or its Affiliates or
predecessor entitles (the "SUITS Assets") and no condition exists on any of the
SUITS Assets, that, in either instance, would subject SUITS or a Subsidiary or
the SUITS Assets to any remedial obligations under any applicable Environmental
Law.
(b) Except where the failure to do so would not have a
Material Adverse Effect, SUITS and each Subsidiary has obtained and been in
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations that are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables that are contained in, all applicable
Environmental Laws relating to the SUITS Assets.
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(c) Neither SUITS nor any Subsidiary, and to the best of
its knowledge, any prior owner or operator of the SUITS Assets, has caused or
allowed the generation, use, treatment, storage or disposal of Hazardous
Materials at any site or facility owned, leased or operated by SUITS or a
Subsidiary or its Affiliates or used in connection with the SUITS Assets except
in accordance with all applicable Environmental Laws or except to the extent
the same would not have a Material Adverse Effect.
(d) None of the SUITS Assets have been subject to the
release of any Hazardous Materials except to the extent that the same would not
have a Material Adverse Effect.
(e) Except where the failure to do so would not have a
Material Adverse Effect, SUITS or a Subsidiary has secured all Environmental
Permits necessary to the operation of the SUITS Assets currently owned by SUITS
or a Subsidiary and SUITS and each Subsidiary is in compliance with such
permits.
(f) Neither SUITS nor any Subsidiary has received any
notice, nor is it aware, of any proposal by a Governmental Entity to amend,
revoke or replace any Environmental Permit, or requiring the issuance of any
additional Environmental Permit, necessary to operate the SUITS Assets owned by
SUITS or a Subsidiary that, in any of the foregoing instances, could reasonably
be expected to have a Material Adverse Effect on SUITS or such Subsidiary.
(g) Neither SUITS nor any Subsidiary has received
inquiry or notice, or has any reasonable basis to believe that it will receive
inquiry or notice, of any actual or potential proceedings, claims or lawsuits
related to or arising under any Environmental Laws and related to the SUITS
Assets.
(h) Neither SUITS nor any Subsidiary is currently
operating or required to be operating any of the SUITS Assets under any
compliance order, schedule, decree or agreement, any consent decree, order or
agreement, or any corrective action decree, order or agreement issued or
entered into under any Environmental Law, except for Environmental Permits
currently held by or issued to SUITS or a Subsidiary.
(i) SUITS, each Subsidiary and the SUITS Assets are to
the best of SUITS' knowledge in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements and obligations
established under Environmental Laws except to the extent any such
noncompliance would not have a Material Adverse Effect.
Section 4.20 Brokers and Finders. No broker or finder has acted
for SUITS in connection with this Agreement or the transactions contemplated by
this Agreement and no broker or finder is entitled to any brokerage or finder's
fee or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of SUITS. Section 4.20 of
the Disclosure Schedule sets forth the total amount that may be owed in
connection with such broker or finder's fees, if any.
Section 4.21 No Affiliate or Excluded Asset Obligations. Neither
SUITS nor any Subsidiary has any obligations or liabilities to the Shareholders
or any Affiliate of the Shareholders, except for obligations and liabilities
that will be released in full at no cost to SUITS and the Subsidiaries on or
prior to the Closing Date and, except for the Notes Receivable, no Shareholder
or Affiliate of a Shareholder has any obligation or liability to SUITS or the
Subsidiaries. Following
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the transfer of the Excluded Assets prior to the Closing and thereafter, except
for the Notes Receivable, neither SUITS nor any of the Subsidiaries or
Affiliate thereof will have any obligations or liabilities, contingent,
deferred or otherwise, relating in any respect to or arising from its ownership
or former ownership of the Excluded Assets.
Section 4.22 SUITS Corporate Authority. The execution and
delivery of this Agreement by SUITS, the performance by it of all the terms and
conditions hereof to be performed by it and the consummation of the
transactions contemplated hereby by it, including the Merger, have been duly
authorized and approved by any requisite corporate action on the part of SUITS,
including all necessary approvals by the Shareholders of the Merger and this
Agreement. This Agreement constitutes the legal, valid and binding obligation
of SUITS, enforceable against SUITS in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, moratorium,
insolvency or other similar laws affecting generally the rights of creditors or
by principles of equity.
ARTICLE IV-B
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder, severally and not jointly, represents and warrants
to UTI pursuant to Sections 4.23 through 4.31, solely as to itself and not as
to any other Shareholder, that:
Section 4.23 No Liens. The shares of SUITS Common Stock owned by
such Shareholder is set forth beside such Shareholder's name on Schedule 4.2_
hereto, and such Shareholder owns all of such shares of SUITS Common Stock free
and clear of all liabilities, liens, encumbrances, pledges, trusts, voting
trusts or stockholders' agreements, equities, charges, options, conditional
sale or title retention agreements, covenants, restrictions, reservations,
commitments, obligations or other burdens or encumbrances of any nature
whatsoever.
Section 4.24 Effect of Agreement on Shareholders. The execution
and delivery of this Agreement by such Shareholder and the consummation of the
Merger and the transactions contemplated hereby will not (i) result in any
breach of any of the terms or conditions of, or constitute a default under any
commitment, mortgage, note, bond, debenture, deed of trust, contract,
agreement, license or other instrument or obligation to which such Shareholder
is now a party or by which such Shareholder or any of such Shareholder's
properties or assets may be bound or affected and which breach or default could
have an adverse effect on the Shareholders' ability to vote to approve the
Merger; (ii) result in any violation of any Governmental Requirement applicable
to such Shareholder; or (iii) to the best of such Shareholder's knowledge,
cause any Person who normally does business with SUITS not to continue to do so
on the same basis as before.
Section 4.25 Authorization.
(a) Such Shareholder has all requisite legal right,
power, capacity and authority to execute and deliver this Agreement and to
perform fully such Shareholder's obligations hereunder. This Agreement has
been duly executed by such Shareholder and constitutes the legal, valid and
binding obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, moratorium, insolvency or other similar laws affecting
generally the rights of creditors or by principles of equity and the
indemnification provisions contained in Section 13.1 being subject to
limitation under public policy.
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(b) No consent, approval, authorization, declaration,
filing or registration with any Governmental Entity or any other Person is
required to be made or obtained by such Shareholder in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.
Section 4.26 No Untrue Statements.
(a) To the best knowledge of such Shareholder, the
representations of SUITS contained herein are true and correct.
(b) The statements, representations and warranties of
such Shareholder set forth in this Agreement and the Exhibits hereto and in all
other documents and information furnished to UTI and UTI Sub and its
representatives in connection herewith do not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements, representations and warranties made not misleading.
Section 4.27 Brokers and Finders. No broker or finder has acted
for such Shareholder in connection with this Agreement or the transactions
contemplated by this Agreement and no broker or finder is entitled to any
brokerage or finder's fee or to any commission in respect thereof based in any
way on agreements, arrangements or understandings made by or on behalf of such
Shareholder.
Section 4.28 No Affiliate Obligations. SUITS and the
Subsidiaries do not have any obligations or liabilities to such Shareholder or
any Affiliate of such Shareholder, except for obligations and liabilities that
will be released in full at no cost to SUITS and the Subsidiaries on or prior
to the Closing Date.
Section 4.29 Investment Purpose. Such Shareholder is acquiring
a Warrant and a Note for its own account, for investment purposes and not with
a view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act, except pursuant to a
valid registration statement under the Securities Act declared effective by the
Commission or pursuant to a valid exemption from registration under the
Securities Act. Such Shareholder acknowledges that the issuance to such
Shareholder of such Note, such Warrant and any Warrant Shares has not been, and
will not be, registered under the Securities Act or the securities laws of any
state and such Note, such Warrant and, when issued, the Warrant Shares will
contain an appropriate restrictive legend. Each Shareholder acknowledges and
agrees that an investment in such Note, such Warrant and any Warrant Shares
involves risks of investment, including the risks set forth in UTI's Annual
Report on Form 10-K for the year ended December 31, 1997, previously provided
to such Shareholder. Such Shareholder further acknowledges and agrees that
such Shareholder has received such Form 10-K and has had an opportunity to ask
questions regarding UTI and such Shareholder's investment in such Note, such
Warrant and any Warrant Shares. Such Shareholder acknowledges and agrees that
UTI is relying on the representations contained in this Section 4.29 in
connection with entering into this Agreement. Each Shareholder agrees that
such Note, such Warrant and the certificates representing his or her Warrant
Shares (when issued) will be imprinted with an appropriate "1933 Act"
restrictive legend. Such Shareholder represents and warrants that he or she
(a) has the financial ability to bear the economic risk of his or her
investment in such Note, such Warrant and any Warrant Shares (including the
possible loss of the entire amount thereof), (b) has adequate means for
providing for his or her current and future needs and personal contingencies
notwithstanding his or her investment in such Note, such Warrant and any
Warrant Shares, (c) has
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no need for liquidity with respect to the investment in such Note, such Warrant
and any Warrant Shares and (d) is in such financial and other circumstances
that he or she can foresee no situation in which the undersigned may be
required to sell such Note, such Warrant or any Warrant Shares. Such
Shareholder has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment in such
Note, such Warrant and any Warrant Shares.
Section 4.30 Indebtedness and Agreements. Immediately subsequent
to the Effective Time, the Surviving Corporation will have no indebtedness
outstanding that is payable to any Shareholder or any of their respective
Affiliates. Immediately subsequent to the Effective Time, except for this
Agreement, there will be no agreements, contracts, leases, arrangements or
other understandings (either written or oral) between such Shareholder and the
Surviving Corporation.
Section 4.31 Individual Shareholder. Such Shareholder is a
natural person and is not a foreign person within the meaning of Code Section
1445.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF UTI
UTI represents and warrants to the Shareholders that:
Section 5.1 Due Incorporation and Qualification. UTI is a
corporation duly organized and validly existing under Delaware law and has all
requisite power to carry on its business as now being conducted. UTI Sub is a
corporation duly organized and validly existing under Texas law. Each of UTI
and UTI Sub is qualified to do business in each other jurisdiction in which its
failure to so qualify would materially and adversely affect UTI or its
financial condition or business or ability to perform the transactions
contemplated by this Agreement.
Section 5.2 Performance of Agreement.
(a) Each of UTI and UTI Sub has all necessary corporate
power and authority to enter into and carry out the transactions contemplated
by this Agreement.
(b) Each of UTI's and UTI Sub's execution, delivery and
performance of this Agreement have been duly and validly authorized and
approved by all necessary corporate action on the part of UTI and UTI Sub, as
applicable.
(c) The execution, delivery and performance of this
Agreement by UTI and UTI Sub, and the transactions contemplated hereby, will
not violate (i) any provision of the certificate or articles of incorporation
or bylaws of UTI and UTI Sub, (ii) any material agreement or instrument to
which UTI is a party or by which UTI is bound or (iii) any judgment, order,
ruling, or decree applicable to UTI as a party in interest.
(d) Except for the applicable requirements of the HSR
Act and any matters set forth in Section 5.2 of the Disclosure Schedule, no
consent, approval, authorization, declaration, filing or registration with any
Governmental Entity or any other Person is required to be made or obtained by
UTI in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.
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(e) This Agreement is the valid and binding agreement of
UTI and UTI Sub, enforceable against UTI and UTI Sub in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
moratorium, insolvency or other similar laws affecting generally the rights of
creditors or by principles of equity and the indemnification provisions
contained in Section 13.2 being subject to limitation under public policy.
Section 5.3 Brokers and Finders. No agent, broker, investment
banker, person or firm acting on behalf of UTI or under its authority is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly in connection with any of the transactions
contemplated hereby.
Section 5.4 Financial Ability. UTI has on the date hereof, and
on the Closing Date will have, the financial ability to perform its obligations
under this Agreement.
Section 5.5 Authorization for Warrants, Warrant Shares and Note.
UTI has taken all necessary corporate action required to authorize it to issue
the Notes, the Warrants and the Warrant Shares. Subject to the provisions of
Section 2.1, the Warrant Shares will, when issued in accordance with the
Warrants, be validly issued, fully paid and nonassessable and not subject to
preemptive rights. The Warrant Shares will, when issued, be listed on the
American Stock Exchange (or other principal exchange on which the UTI Common
Stock is traded, or the Nasdaq National Market System, if quoted thereon,
subject to official notice of issuance. UTI has duly reserved for issuance
from its authorized and unissued shares of UTI Common Stock the number of
shares of UTI Common Stock needed for issuance of the Warrant Shares. Subject
to the provisions of Section 2.1, the Note, when issued pursuant to the terms
hereof, will constitute the legal, valid and binding obligation of UTI,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, moratorium, insolvency
or other similar laws affecting generally the rights of creditors or by
principles of equity.
Section 5.6 SEC Documents. UTI has provided to SUITS its Annual
Report on Form 10-K for the year ended December 31, 1997, its Current Reports
on Form 8-K dated April 23, 1998, as amended, its quarterly report on Form 10-Q
for the three months ended March 31, 1998 and its proxy statement with respect
to its Annual Meeting of Stockholders for 1998 (such documents collectively
referred to herein as the "SEC Documents"). As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of UTI included in the SEC Documents comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto, have been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of UTI and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended. Since March 31,
1998, other than as discussed in the SEC Documents, there has been no material
adverse change in the business of UTI and its subsidiaries, taken as a whole.
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ARTICLE VI
OBLIGATIONS OF PARTIES PRIOR TO CLOSING
Section 6.1 General. Up to and including the Closing Date, none
of the parties will take any action that would cause any of its representations
and warranties herein not to be true and correct in all material respects as of
the Closing Date except by written authorization of the other parties. Each
party shall use its best efforts to carry out and comply with the provisions of
this Agreement, to satisfy the conditions applicable to such party and to
consummate the Merger in accordance with this Agreement.
Section 6.2 Access to Records and Properties of SUITS. Subject
to requirements of confidentiality imposed by contract or by law, SUITS will,
and the Shareholders will cause SUITS to, make available to UTI and its
accountants, counsel and other representatives access during normal business
hours to the properties, books and records of SUITS and the Subsidiaries and
allow SUITS' and the Subsidiaries' officers and representatives to be available
to UTI for consultation.
Section 6.3 Conduct of Business of SUITS Until the Closing.
Except as set forth in Section 6.3 of the Disclosure Schedule, up to and
including the Closing Date, unless UTI consents in writing to contrary action,
SUITS will and will cause each Subsidiary to, and the Shareholders will cause
SUITS to:
(a) not change its capital stock by reclassification,
subdivision, reorganization, issuance of additional stock or otherwise;
(b) not issue or sell, or purchase or otherwise
reacquire, any of its capital stock, or grant or commit to grant any options,
warrants, or other rights to subscribe for, or purchase, or otherwise acquire,
any shares of its capital stock, or issue or commit to issue any securities
convertible into or exchangeable for shares of its capital stock;
(c) not declare any dividend on its capital stock or
make any other similar payment or distribution thereon or in respect thereof
except for those made in the Ordinary Course of Business and that shall reduce
Working Capital except to the extent accrued on the Reference Balance Sheet;
(d) not change or amend its Certificate of Incorporation
or By-Laws;
(e) maintain its books, records and accounts in
accordance with its historical practice and in the usual and regular manner
consistent with prior years;
(f) not borrow or agree to borrow any money or
guarantee, or agree to guarantee the obligations of others;
(g) not make any contracts or commitments other than in
the Ordinary Course of Business;
(h) not allow any material contract to be terminated or
to be materially modified prior to the full term of the contract unless
approved by the Board of Directors or by a duly authorized officer;
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(i) not create, assume or permit to exist any mortgage,
pledge or other lien or encumbrance on any of its assets except in the Ordinary
Course of Business;
(j) other than the Excluded Assets, not sell, assign,
lease or otherwise dispose of any of its material assets other than in
connection with the replacement of obsolete or worn-out items;
(k) use best efforts to (i) preserve intact the current
business organizations of SUITS and the Subsidiaries, (ii) keep available the
services of the current officers, employees and agents of the SUITS and the
Subsidiaries, and (iii) maintain the relations and goodwill with all suppliers,
customers, licensers, licensees, landlords, trade creditors, employees, agents
and others having business relationships with SUITS or the Subsidiaries;
(l) furnish to UTI copies of all financial statements
and certificates and reports concerning operation of the business, as and when
such financial statements, certificates and reports are delivered to any
Shareholder or pursuant to any material contract of SUITS or a Subsidiary; and
(m) use its best efforts not to do, or fail to do, any
act that results or will result (i) in any of the representations and
warranties of SUITS or the Shareholders under this Agreement being materially
incorrect or (ii) in the nonfulfillment of any of the conditions stated in
Article VII.
Section 6.4 Transfer of Excluded Assets. Prior to the Closing,
the Shareholders shall cause SUITS to transfer the Excluded Assets to the
Shareholders pursuant to the transfer documents attached to Section 4.3 of the
Disclosure Schedule. As part of the transfer of the Excluded Assets, the
transferee of the Excluded Assets shall assume all obligations and liabilities
relating to the Excluded Assets. The transferees of the Excluded Assets shall
at or prior to the Closing execute, at the sole cost of the transferee, any
agreements, certificates or other documents upon the reasonable request of UTI
that are reasonably necessary to effectuate an orderly transfer of the Excluded
Assets and to evidence the assumption of all liabilities and obligations
relating to the Excluded Assets.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SUITS AND THE SHAREHOLDERS
The obligations of SUITS and the Shareholders to close the
transactions contemplated herein are subject to satisfaction of the conditions
set out in this Article VII at or before the Closing Date.
Section 7.1 Opinion of Counsel. SUITS shall have received the
opinion of counsel to UTI, dated the Closing Date, substantially in the form of
Exhibit H.
Section 7.2 Performance and Obligations of UTI.
(a) All of the terms and conditions of this Agreement to
be complied with and performed by UTI at or before the Closing Date shall have
been complied with and performed in all material respects, and the
representations and warranties made by UTI in this Agreement shall be correct
in all material respects with the same force and effect as though such
representations and warranties had been made at and as of the Closing Date.
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(b) UTI shall have delivered to SUITS a certificate,
dated the Closing Date, substantially in the form of Exhibit I.
(c) UTI shall have complied on or before the Closing
Date in all material respects with each of its covenants or agreements of UTI
contained in this Agreement to be performed on or before the Closing Date.
Section 7.3 Governmental Approvals. The waiting period (and any
extension thereof) under the HSR Act shall have expired or been terminated. No
statute, rule or regulation or order of any court or administrative agency
shall be in effect that prohibits SUITS and the Shareholders from consummating
the transactions contemplated hereby and no suit, action, investigation or
other proceeding by any Governmental Entity shall have been instituted or
threatened seeking to restrain or prohibit UTI, SUITS or the Shareholders from
consummating the transactions contemplated hereby.
Section 7.4 Release of Guaranty. SUITS, the Subsidiaries and
the Shareholders (and any other person who may be a guarantor) shall have been
fully released from all obligations as guarantors of indebtedness and other
obligations of SUITS to Security National Bank of Enid, Oklahoma.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF UTI
The obligations of UTI to close the transactions contemplated herein
are subject to satisfaction of the conditions set out in this Article VIII at
or before the Closing Date.
Section 8.1 Absence of Litigation. No suit, action or other
proceeding by a third party or Governmental Entity shall have been instituted
or threatened before any Governmental Entity to enjoin, restrain or prohibit,
or to obtain substantial damages in respect of, or that is related to or arises
out of, this Agreement or the consummation of the transactions contemplated
hereby, that, in the reasonable judgment of UTI, would make it inadvisable to
consummate such transactions.
Section 8.2 Opinion of Counsel. UTI shall have received the
opinion of counsel to SUITS and the Shareholders, dated the Closing Date,
substantially in the form of Exhibit J.
Section 8.3 Performance and Obligations of the Shareholders.
(a) All of the terms and conditions of this Agreement to
be complied with and performed by SUITS and the Shareholders at or before the
Closing Date shall have been complied with and performed in all material
respects, and the representations and warranties made by SUITS and the
Shareholders in this Agreement shall be correct in all material respects with
the same force and effect as though such representations and warranties had
been made as of the Closing Date.
(b) The Shareholders and SUITS shall have delivered to
UTI a certificate, dated the Closing Date, substantially in the form of Exhibit
K.
Section 8.4 Covenants and Agreements Performed. SUITS and the
Shareholders shall have complied on or before the Closing Date in all material
respects with each of the covenants
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or agreements of SUITS and the Shareholders contained in this Agreement to be
performed on or before the Closing Date.
Section 8.5 Governmental Approvals. The waiting period (and any
extension thereof) under the HSR Act shall have expired or been terminated. No
statute, rule or regulation or order of any court or administrative agency
shall be in effect that prohibits UTI from consummating the transactions
contemplated hereby and no suit, action, investigation or other proceeding by
any Governmental Entity shall have been instituted or threatened seeking to
restrain or prohibit UTI, SUITS or the Shareholders from consummating the
transactions contemplated hereby.
Section 8.6 Consents. All consents, approvals, authorizations,
exemptions and waivers set forth in Section 4.16 of the Disclosure Schedule
shall been obtained and be effective and all other consents, approvals,
authorizations, exceptions and waivers from third persons that shall be
required in order to enable SUITS and the Shareholders to consummate the
transactions contemplated hereby shall have been obtained.
Section 8.7 No Adverse Change. There shall not have occurred
any Material Adverse Effect.
Section 8.8 Diminution in Value of the Assets. Since the date
of this Agreement, there shall not have been an actual or constructive total
loss of any of the Rigs.
ARTICLE IX
CLOSING
Section 9.1 Place of Closing and Closing Date. The closing of
the transactions contemplated herein (the "Closing") shall take place at the
offices of Fulbright & Xxxxxxxx L.L.P. in Houston, Texas, subject to the
satisfaction of the conditions precedent stated in Articles VII and VIII on
August 15, 1998, or such other date as may be mutually agreed.
Section 9.2 Closing Deliveries by UTI. At the Closing, UTI
shall deliver to SUITS and the Shareholders as provided in Article III the
following:
(a) the Cash Consideration, the Warrants and the Note;
(b) the executed Opinion of Counsel described in Section
7.1;
(c) the certificate executed by an authorized officer of
UTI described in Section 7.2(b); and
(d) a certificate executed by the Secretary (or
Assistant Secretary) of UTI and UTI Sub dated as of the Closing Date, providing
the resolutions adopted by the Board of Directors of UTI and UTI Sub and the
sole shareholder of UTI Sub authorizing the Merger under this Agreement and the
continued effectiveness of such resolutions, and presenting the incumbency and
representative signatures of the officers executing this Agreement on behalf of
UTI and UTI Sub, as the case may be.
Section 9.3 Closing Deliveries by the Shareholders. At the
Closing, the Shareholders shall deliver to UTI the following:
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(a) certificates evidencing the Shares duly endorsed for
transfer to UTI;
(b) a certificate of good standing for SUITS issued by
the Oklahoma Secretary of State, a good standing tax certificate from the
Oklahoma Tax Commission and a certificate of existence and good standing
(including as to tax status) in each jurisdiction listed on Section 4.1 of the
Disclosure Schedule, in each case and dated as of a date no more than ten days
prior to the Closing Date;
(c) the executed Opinion of Counsel described in Section
8.2;
(d) the certificate described in Section 8.3(b);
(e) a certificate executed by the Secretary (or
Assistant Secretary) of SUITS dated as of the Closing Date, providing the
resolutions adopted by the Board of Directors of SUITS authorizing the Merger
under this Agreement and the continued effectiveness of such resolutions, and
presenting the incumbency and representative signatures of the officers
executing this Agreement on behalf of SUITS and, if applicable, the authority
of such officers executing this Agreement on behalf of the Shareholders; and
(f) certificate providing all documents relating to the
transfer of the Excluded Assets.
ARTICLE X
TERMINATION
Section 10.1 Termination. This Agreement may be terminated:
(a) At any time prior to the Closing Date with the
mutual written consent of the Shareholders, SUITS, UTI and UTI Sub;
(b) By UTI, if a material default shall have occurred in
the observance or in the due and timely performance by SUITS or the
Shareholders of any agreements and covenants of SUITS or the Shareholders
herein contained, or if there shall have occurred a breach by SUITS or the
Shareholders of any of the warranties and representations of SUITS or the
Shareholders herein contained, and such default or breach has not been cured by
SUITS or the Shareholders, as the case may be, or has not been waived by UTI;
(c) By SUITS, if a material default shall have occurred
in the observance or in the due and timely performance by UTI of any agreements
and covenants of UTI herein contained, or if there shall have occurred a breach
by UTI of any of the warranties and representations of UTI herein contained,
and such default or breach has not been cured by UTI or has not been waived by
SUITS; and
(d) By UTI or SUITS (provided the terminating party
(including the Shareholders in the case of SUITS) has not materially breached
any of its agreements, covenants or representations and warranties herein
contained) if the Closing shall not have occurred on or before August 31, 1998.
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ARTICLE XI
OBLIGATIONS OF PARTIES AFTER CLOSING
Section 11.1 Post-Closing Confidentiality. After the Closing,
the Shareholders and their Affiliates shall maintain as confidential
information all information in their possession regarding SUITS or its business
or assets, and shall not disclose any of such information to any Person except
as may be required to comply with applicable law.
Section 11.2 Cooperation Regarding Financial Information. The
Shareholders, if requested by UTI and at UTI's expense, shall cooperate and
assist Ernst & Young LLP or other accounting firm designated by UTI (the
"Accountants") in preparing such audited financial statements of SUITS that UTI
may reasonably require to permit UTI to timely file a Current Report Form 8-K
with the Commission in accordance with the Exchange Act and the rules and
regulations thereunder in connection with the transactions contemplated hereby
and to comply with any financial statement requirements with respect to SUITS
applicable to UTI under the Exchange Act, the Securities Act and the rules and
regulations thereunder. If requested, the Shareholders shall use reasonable
good faith efforts to cause Xxxxx Xxxxx & Xxxxxx to assist the Accountants, at
UTI's expense, in delivering such audited financial statements to UTI within
ten business days prior to the date that UTI is required to file such financial
statements with the Commission in connection with such obligations. The
Shareholders shall cause Xxxxx Xxxxx and Xxxxxx to provide UTI, at UTI's
expense, with access to such firm's work papers in support of any accounting or
auditing work performed by the Accountants in respect of SUITS. The
Shareholders will cooperate with and assist UTI in preparing, and, if
requested, shall use reasonable efforts to cause Xxxxx Xxxxx and Xxxxxx to
cooperate with and assist the Accountants in preparing, such other audited
financial statements for SUITS as may be specified by UTI.
Section 11.3 Covenant Not to Compete With the Business. As an
inducement to UTI and UTI Sub to effect the Merger and subject to the cash
payments aggregating $150,000 to Xxxxx X. Suits and $100,000 to Xxxxx X.
Xxxxxxxxxx (which shall be paid in equal one-third installments ($50,000 for
Xxxxx X. Suits and $33,333 for Xxxxx X. Xxxxxxxxxx) on the Closing Date, on
July 31, 1999, and on July 31, 2000), each of Xxxxx X. Suits and Xxxxx X.
Xxxxxxxxxx, agrees that, effective as of the Closing Date, for a period of
three years thereafter in all jurisdictions other than Louisiana, for which the
period shall be two years, he will not, and will cause each of his Affiliates
to not, without the consent of UTI, directly or indirectly, provide contract
land drilling services in the States of Oklahoma, Texas and New Mexico and the
parishes in Louisiana listed in Section 11.3 of the Disclosure Schedule, except
for the account of UTI and its Affiliates; provided that nothing herein
contained shall prevent Xxxxx Suits or Xxxxx Xxxxxxxxxx from providing
consulting services relating to oilfield service operations not involving
contract drilling services. Each of Xxxxx X. Suits and Xxxxx X. Xxxxxxxxxx
acknowledges that a remedy at law for any breach or attempted breach of this
Section 11.3 will be inadequate and further agrees that any breach of this
Section 11.3 will result in irreparable harm to UTI and UTI Sub, and,
accordingly, UTI shall, in addition to any other remedy that may be available
to any of them, be entitled to specific performance and injunctive and other
equitable relief in case of any such breach or attempted breach. Each of Xxxxx
X. Suits and Xxxxx X. Xxxxxxxxxx acknowledges that this covenant not to compete
is being provided as an inducement to UTI to effect the Merger and that this
Section 11.3 contains reasonable limitations as to time, geographical area and
scope of activity to be restrained that do not impose a greater restraint than
is necessary to protect the goodwill or other business interest of UTI and
SUITS. Whenever possible, each provision of this Section 11.3 shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Section 11.3 shall be prohibited by or
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invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remaining
provisions of this Section 11.3. If any provision of this Section 11.3 shall,
for any reason, be judged by any court of competent jurisdiction to be invalid
or unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Section 11.3 but shall be confined in its operation to the
provision of this Section 11.3 directly involved in the controversy in which
such judgment shall have been rendered. In the event that the provisions of
this Section 11.3 should ever be deemed to exceed the time or geographic
limitations permitted by applicable law, then such provision shall be reformed
to the maximum time or geographic limitations permitted by applicable law. Any
other provision of this Agreement to the contrary notwithstanding, the
ownership of less than 5% of any class of stock of a publicly-traded company
engaged in providing contract land drilling services shall not, solely by
reason of such investment, be deemed a violation of this Section 11.3.
Section 11.4 Severance and Retention Bonuses and Notes
Receivable. UTI agrees to cause the Surviving Corporation to honor and perform
the Severance and Retention Bonus Obligations with respect to all employees of
SUITS as of the date hereof. Nothing contained in this Section 11.4, however,
shall prohibit or prevent the Surviving Corporation or UTI from terminating the
employment of any employee of SUITS nor shall this provision constitute an
agreement to employ any of such persons. Immediately following the Closing,
the Shareholders shall cause the Notes Receivable, including the $70,000 in
accrued and unpaid interest thereon, to be repaid to SUITS. In the event such
repayment is not made within five business days of the Closing, UTI's
obligations under the Notes shall terminate immediately.
Section 11.5 Final Tax Return. UTI agrees that, as soon as
reasonably practicable following the Closing, it will file consolidated federal
income tax return for SUITS relating to the period beginning on December 1,
1997 through the Closing Date. To the extent that as a result of the
preparation of such federal income tax return, a net operating loss is
generated that may be carried back to the prior taxable year, UTI shall cause
SUITS to make all filings with the Internal Revenue Service reasonably
necessary for SUITS to apply such net operating losses (to the extent permitted
by applicable law) to prior year taxable income of SUITS. To the extent SUITS
actually receives a refund from the IRS relating to a reduction in previously
paid Taxes as a result of the carry back of any such net operating loss, SUITS
shall forward such amounts to the Shareholders according to their respective
Proportionate Shares.
ARTICLE XII
NATURE OF STATEMENTS AND SURVIVAL
Section 12.1 Representations and Warranties. The several
representations and warranties of the parties shall survive the execution and
delivery of this Agreement and the Closing and shall remain in full force and
effect for a period beginning on the date hereof and ending three years
following the Closing Date, with the following exceptions:
(a) the Extended Representations shall survive the
execution and delivery of this Agreement and the Closing and shall remain in
full force and effect without limitation as to time; and
(b) the representations and warranties set forth in
Sections 4.8, 4.20, 4.27 and 5.3 shall survive the execution and delivery of
this Agreement and the Closing and shall remain in
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full force and effect for a period beginning on the date hereof and ending on
the 90th day after the expiration of all applicable statutes of limitations,
including any and all extensions thereof.
The period during which the representations and warranties shall survive is
referred to herein with respect to such representations and warranties as the
"Survival Period".
Section 12.2 Effect of Survival. The several representations and
warranties made herein by each party shall be effective with respect to any
inaccuracy therein or breach thereof (and a claim for indemnification under
Article XIII may be made thereon) if a written notice asserting the claim shall
have been given within the Survival Period to the party that made the
representation or warranty. Any claim for indemnification made during the
Survival Period shall be valid, and the representations and warranties relating
thereto shall remain in effect for purposes of that indemnification,
notwithstanding the fact that the claim may not be resolved within the Survival
Period.
Section 12.3 Effect of Investigation. All representations,
warranties, covenants and agreements made by the parties shall not be affected
by any investigation heretofore or hereafter made by and on behalf of any of
them and shall not be deemed merged into any instruments or agreements
delivered in connection with this Agreement or the Closing or otherwise in
connection with the transactions contemplated hereby.
Section 12.4 Survival of Covenants and Agreements. The covenants
and agreements entered into pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing without limitation.
ARTICLE XIII
INDEMNIFICATION
Section 13.1 General Indemnity by the Shareholders. Each
Shareholder, jointly and severally (except with respect to representations and
warranties contained in Article IV-B, as to which each Shareholder severally,
and not jointly), covenants and agrees that such Shareholder will indemnify,
hold harmless and defend UTI and UTI Sub and their respective officers,
directors, employees, agents, representatives and affiliates and successors and
assigns (collectively, the "UTI Indemnified Parties"), at all times from and
after the Closing Date, from and against any and all Damages of or to any of
UTI Indemnified Parties that may now or in the future be paid, incurred or
suffered by any UTI Indemnified Party or asserted against any UTI Indemnified
Party by any Person resulting or arising from or incurred in connection with
any one or more of the following:
(a) any Shareholder Retained Liabilities or any of the
Excluded Assets, to the extent such amounts are not specifically accrued for in
Working Capital on the Final Statement;
(b) any and all Taxes pertaining or attributable to
SUITS and any of the Subsidiaries or their Affiliates with respect to any and
all taxable periods or discrete portions thereof ending on or before the
Closing Date, including any Taxes payable by SUITS, UTI or UTI Sub as a result
of the Merger or the transfer of the Excluded Assets, to the extent such
amounts are not specifically accrued for in Working Capital on the Final
Statement;
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(c) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related to any
liens, obligations or encumbrances of any nature whatsoever against or in any
way related to the Excluded Assets or the assets or the business of SUITS or
any of the Subsidiaries or Affiliates to the extent such liability or claim for
liability arises in connection with any lien, obligation or encumbrance that is
in existence at or attributable to periods prior to the Closing Date, to the
extent not specifically accrued for in Working Capital on the Final Statement;
(d) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related to any
lawsuit or threatened lawsuit or claim involving the Shareholders, SUITS or any
of their Subsidiaries or Affiliates based upon actions, omissions or events
occurring on or prior to the Closing Date;.
(e) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related to any
workers' compensation or worker injury claim based on any actions, omissions or
events occurring on or prior to the Closing Date, except to the extent accrued
for in Working Capital on the Final Statement;
(f) any obligation, liability or claim for liability
(whether in contract, in tort, or otherwise, and whether or not successful) of
SUITS or any of the Subsidiaries to any Affiliate of such Shareholders to the
extent such obligation, liability or claim arises in connection with any
action, omission or event occurring on or prior to the Closing Date or relates
to any agreement or commitment in existence on the Closing Date, except to the
extent accrued for in Working Capital on the Final Statement;
(g) any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of SUITS or the
Shareholders under this Agreement or from any misrepresentation in or omission
from any list, schedule, certificate or other instrument furnished or to be
furnished to UTI pursuant to the terms of this Agreement; and
(h) all Environmental Liabilities, whenever incurred,
based upon, arising from or related to any conditions, events, circumstances,
facts, activities, practices, incidents, actions or omissions occurring or
existing on or prior to the Closing Date at, on, under, about, or within any
SUITS Asset regardless of whether such Environmental Liabilities are known,
unknown, disclosed, undisclosed, fixed or contingent, or whether such
Environmental Liabilities relate to on-site or off-site Environmental
Conditions, including without limitation any such Environmental Liabilities
arising from the use, storage, handling, treatment, disposal, generation,
transportation or release of any Hazardous Materials on or prior to the Closing
Date.
Section 13.2 General Indemnity by UTI. UTI covenants and agrees
that it will indemnify, hold harmless and defend the Shareholders and their
representatives and affiliates (collectively, the "Shareholders Indemnified
Parties"), at all times from and after the Closing Date, from and against any
and all Damages that may now or in the future be paid, incurred or suffered by
any Shareholders Indemnified Party or asserted against any Shareholders
Indemnified Party by any Person resulting or arising from or incurred in
connection with any misrepresentation, breach of warranty or nonfulfillment of
any covenant or agreement on the part of UTI under this Agreement or from any
misrepresentation in or omission from any list, schedule, certificate or other
instrument furnished or to be furnished to the Shareholders pursuant to the
terms of this Agreement (excluding in each
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case all liabilities and obligations for which the Shareholders have agreed to
indemnify the UTI Indemnified Parties pursuant to Section 13.1 above).
Section 13.3 Indemnification Basket; Limitation; Effect of
Materiality Qualifiers; Pro Rata Obligation.
(a) There shall be no indemnification for a breach of a
representation or warranty recoverable against a party obligated to provide
indemnification therefor under this Article XIII until the Damages for all
breaches of representations and warranties by such party exceed $100,000 in the
aggregate (the "Basket Amount"), and once all such damages for breaches of
representations and warranties exceed the Basket Amount, such party shall be
obligated to the other party for any and all such Damages for breaches of
representations and warranties in excess of the Basket Amount, provided,
however, that such liability for Damages for breach of such representations and
warranties shall not exceed, in the aggregate, the amount of the Merger
Consideration.
(b) Any claim for indemnification with respect to the
breach or inaccuracy of a representation or warranty must be made within the
Survival Period applicable to the representation or warranty subject to
indemnification. Any claim for indemnification that is made during the
applicable period for making such claim shall remain in effect for purposes of
such indemnification and all matters relating to such claim, including
counterclaims and other claims arising out of or relating to the same general
matter, notwithstanding such claim may not be resolved within the applicable
Survival Period.
(c) For purposes of determining the right of a party to
make a claim for indemnification for a breach of representation or warranty
under Sections 13.1 and 13.2, all representations and warranties that have been
made subject to a materiality or dollar qualification (including any Material
Adverse Effect) shall be deemed to have been made without that qualification,
it being understood and agreed that the thresholds provided for under Section
13.3(a) are intended to be the only materiality qualification for such matters
for purposes of indemnification.
Section 13.4 Waiver of Contribution. Any claim for
indemnification made by any UTI Indemnified Party pursuant to Article XIII
shall be asserted against the Shareholders and their successors and assigns.
Each Shareholder hereby expressly acknowledges and agrees that he shall be
liable and responsible therefor and that he shall not seek or receive
indemnification or contribution from SUITS with respect to such claim for
indemnification.
Section 13.5 Notice of Claim. UTI agrees that upon its discovery
of facts giving rise to a claim for indemnity under the provisions of this
Agreement (such facts being referred to herein as an "Indemnity Claim"), UTI
will give prompt notice thereof in writing to the party from which indemnity
may be sought, together with a statement of such information regarding the
Indemnity Claim as it shall then have, provided that any delay in giving or
failure to give such notice shall not limit any UTI Indemnified Party's rights
to indemnity hereunder except to the extent that the indemnifying party is
shown to have been materially prejudiced by such delay or failure.
Section 13.6 Right to Participate in Defense. With respect to
any Indemnity Claim related to third party claims or liabilities, the Person
seeking indemnification (the "Indemnified Person") shall notify the Person from
whom indemnification is sought (the "Indemnifying Person") in writing of such
claim or of the commencement of such action, and, subject to provisions
hereinafter stated, in case any such action shall be brought against an
Indemnified Person and such Indemnifying
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Person shall have been notified of the same, such Indemnifying Person shall be
entitled to participate therein, and, to the extent it shall wish, to assume
the defense thereof, with counsel reasonably satisfactory to such Indemnified
Person, and after notice from the Indemnifying Person to such Indemnified
Person of its election to assume the defense thereof, such Indemnifying Person
shall not be liable to such Indemnified Person for the fees and expenses of
legal counsel for such Indemnified Person incurred thereafter in connection
with the defense thereof; provided, however, if there exists or will exist a
conflict of interest that would make it inappropriate in the reasonable
judgment of the Indemnified Person for the same counsel to represent both the
Indemnified Person and such Indemnifying Person, then such Indemnified Person
shall be entitled to retain its own counsel at the expense of such Indemnifying
Person; provided further, however, the Indemnifying Person shall not be
required to pay for more than one separate counsel for all of the Indemnified
Persons in addition to any local counsel. The Indemnifying Party and the
Indemnified Party agree to cooperate fully in the conduct of any such claim,
suit or proceeding, negotiation, compromise or settlement thereof, but no such
compromise or settlement shall be made without the express prior written
consent of the Indemnified Party.
Section 13.7 Payment and Right of Offset. Each party owing an
indemnity obligation hereunder shall promptly pay to the party entitled to
indemnity hereunder the amount of any Damages to which such party is entitled
by reason of the provisions of this Agreement. The indemnifying party shall
pay to the indemnified parties all costs of investigation and defense with
respect to matters subject to indemnity hereunder as such costs are incurred.
The parties agree that UTI shall have the right to set-off and shall first
apply and reduce against its obligations under the Note against interest, then
against principal any amounts owing by the Shareholders to UTI as a result of
the Shareholders' indemnity obligations under this Article XIII. UTI shall
give written notice to the Shareholders of any exercise of such set-off,
including the amount owed UTI by the Shareholders under this Article XIII that
UTI desires to set-off against principal or interest owed by UTI under the Note
(the "Proposed Set-Off Amount"); provided, however, the failure to give such
notice shall in no manner affect the right of UTI in respect to set-offs and
corresponding applications of funds. During the period beginning when UTI
notifies the Shareholders of a set-off claim for indemnification under this
Article XIII and the date the claim is resolved, interest shall not accrue on
the principal amount of the Note equal to the amount of the Proposed Set-Off
Amount; provided further, however, that if such claim is ultimately resolved
for an amount less than the Proposed Set-Off Amount (the difference between
such amount and the Proposed Set-Off Amount referred to herein as the "Claim
Amount Difference"), UTI shall pay to the Shareholders, at the next interest
payment date, the amount of interest (to the extent not already paid) not paid
on the Claim Amount Difference prior to the ultimate resolution of such claim.
In the event there be any outstanding claim for indemnification by UTI under
this Article XIII that has not been resolved as of the maturity date of the
Note, UTI shall be entitled to defer payment of such principal in the amount
that UTI believes the Shareholders will be required to indemnify UTI. Any
amounts deposited into an escrow account to be governed by the escrow agreement
referred to in the Note shall continue to be subject to UTI's right to set-off
described herein.
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ARTICLE XIV
RELEASE
Section 14.1 Release.
(a) AS OF THE CLOSING DATE, EACH SHAREHOLDER DOES HEREBY
FOR HIMSELF AND HIS SUCCESSORS AND ASSIGNS REMISE, RELEASE, ACQUIT AND FOREVER
DISCHARGE UTI, UTI SUB, SUITS AND THEIR RESPECTIVE AFFILIATES, AND THEIR
SUCCESSORS AND ASSIGNS, FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES,
RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION AND OBLIGATIONS OF EVERY NATURE
WHATSOEVER, LIQUIDATED OR UNLIQUIDATED, KNOWN OR UNKNOWN, MATURED OR UNMATURED,
FIXED OR CONTINGENT, THAT THE SHAREHOLDER OR HIS AFFILIATES NOW HAS, OWNS OR
HOLDS OR HAS AT ANY TIME PREVIOUSLY HAD, OWNED OR HELD AGAINST SUCH PARTIES,
INCLUDING WITHOUT LIMITATION ALL LIABILITIES CREATED AS A RESULT OF THE
NEGLIGENCE, GROSS NEGLIGENCE AND WILLFUL ACTS OF SUITS AND ITS EMPLOYEES AND
AGENTS, OR UNDER A THEORY OF STRICT LIABILITY, EXISTING AS OF THE CLOSING DATE
OR RELATING TO ANY ACTION, OMISSION OR EVENT OCCURRING ON OR PRIOR TO THE
CLOSING DATE; PROVIDED, HOWEVER, THAT ANY CLAIMS, LIABILITIES, DEBTS OR CAUSES
OF ACTION THAT MAY ARISE IN THE CONNECTION WITH THE FAILURE OF ANY OF THE
PARTIES HERETO TO PERFORM ANY OF THEIR OBLIGATIONS HEREUNDER OR UNDER ANY OTHER
AGREEMENT RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OR FROM ANY BREACHES
BY ANY OF THEM OF ANY REPRESENTATIONS OR WARRANTIES HEREIN OR IN CONNECTION
WITH ANY OF SUCH OTHER AGREEMENTS SHALL NOT BE RELEASED OR DISCHARGED PURSUANT
TO THIS AGREEMENT; PROVIDED, HOWEVER, WITH RESPECT TO THE INDIVIDUALS WHO ARE
OR HAVE BEEN DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS OF SUITS PRIOR TO THE
CLOSING, THIS RELEASE WILL DOES NOT EXTEND TO ACTS OF FRAUD PERPETRATED AGAINST
THE SHAREHOLDERS BY ANY OF SUCH PERSONS, NOR WITH RESPECT TO ANY TRANSACTION
BETWEEN SUITS AND ANY OF SUCH PERSONS IN WHICH ANY OF SUCH PERSONS HAD A DIRECT
FINANCIAL INTEREST AND IN WHICH THE SHAREHOLDERS DID NOT PARTICIPATE,
FINANCIALLY OR OTHERWISE.
(b) Each Shareholder represents and warrants that it has
not previously assigned or transferred, or purported to assign or transfer, to
any Person or entity whatsoever all or any part of the claims, demands,
liabilities, responsibilities, disputes, causes of action or obligations
released herein. Each Shareholder covenants and agrees that such Shareholder
will not assign or transfer to any Person or entity whatsoever all or any part
of the claims, demands, liabilities, responsibilities, disputes, causes of
action or obligations to be released herein. Each Shareholder represents and
warrants that such Shareholder has read and understands all of the provisions
of this Section 14.1 and that he has been represented by legal counsel of his
own choosing in connection with the negotiation, execution and delivery of this
Agreement.
ARTICLE XV
REGISTRATION RIGHTS
Section 15.1 Piggyback Rights. If, at any time after the date
hereof, UTI proposes to register under the Securities Act any shares of UTI
Common Stock for sale by it pursuant to an underwritten public offering of UTI
Common Stock (except with respect to registration statements filed on Form S-4
or such other forms as shall be prescribed under the Securities Act for the
same purposes as such form), it will at each such time, prior to the filing of
any such registration statement, give written notice to each Shareholder that
is a holder of a Warrant (each a "Holder") of its intention so to do,
regardless of whether such Holder has previously exercised piggyback
registration rights as to any other shares of stock held by it, and, upon the
written request (which must specify the number of Warrant Shares requested to
be included in such underwritten offering) of such Holder (a "Requesting
Holder") delivered to UTI within five days of receipt of UTI's notice,
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UTI will use commercially reasonable efforts to cause any Warrant Shares as to
which registration shall have been so requested to be included in the shares to
be covered by the registration statement proposed to be filed by UTI. Nothing
contained in this Section 15.1 shall, however, limit UTI's right to cancel,
postpone or withdraw any such proposed registration for any reason. Any
request by a Requesting Holder pursuant to this Section 15.1 to register
Warrant Shares for sale in the underwriting shall be on the same terms and
conditions as the shares of UTI Common Stock to be registered and sold through
underwriters under such registration; provided, however, that as a condition to
such inclusion such Requesting Holder shall execute an underwriting agreement
acceptable to the underwriters and, if requested, a custody agreement and power
of attorney having such customary terms as the underwriters shall request,
including indemnification, and if the managing underwriter determines and
advises in writing that the inclusion in the underwriting of all Warrant Shares
proposed to be included by such Requesting Holder and any other shares of UTI
Common Stock sought to be registered by any other stockholder of UTI exercising
rights comparable to those of the Requesting Holders under this Article 15 (the
"Other UTI Common Stock") would, in its reasonable and good faith judgment,
interfere with the successful marketing of the securities proposed to be
registered for underwriting by UTI, then the number of Warrant Shares and Other
UTI Common Stock requested to be included in the underwriting shall be reduced
pro rata among the Requesting Holders and the holders of Other UTI Common Stock
requesting such registration and inclusion in the underwriting and may, in the
determination of such managing underwriter and consistent with pro rata
reduction, be reduced to zero.
Section 15.2 Procedure. If and whenever UTI is required by the
provisions of this Article 15 to use commercially reasonable efforts to effect
the registration of any Warrant Shares under the Securities Act, UTI will,
subject to the other provisions of this Article 15:
(a) as expeditiously as reasonably practicable, prepare
and file with the Commission the registration statement on in which
such Warrant Shares are to be included and seek to cause such
registration statement to become and remain effective;
(b) as expeditiously as reasonably practicable, prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act in accordance with
the intended method of distribution set forth in such registration
statement;
(c) as expeditiously as reasonably practicable, furnish
to each Requesting Holder such number of copies of prospectuses and
preliminary prospectuses in conformity with the requirements of the
Securities Act, and such other documents as such Requesting Holder may
reasonably request, in order to facilitate the public sale of such
Warrant Shares; provided, however, that the obligation of UTI to
deliver copies of prospectuses or preliminary prospectuses to such
Requesting Holder shall be subject to the receipt by UTI of reasonable
assurances from such Requesting Holder that it will comply with the
applicable provisions of the Securities Act and of such other
securities laws as may be applicable in connection with any use by it
of any prospectuses or preliminary prospectuses;
(d) as expeditiously as reasonably practicable, furnish,
at the request of such Requesting Holder, on the date that Warrant
Shares are to be delivered to the underwriters for sale pursuant to
such registration (i) an opinion, dated such date, of the independent
counsel representing UTI for the purposes of such registration,
addressed to the underwriters
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and to the Requesting Holders, stating that such registration
statement has become effective under the Securities Act and that (A)
the registration statement and the related prospectus, and each
amendment or supplement thereto, comply as to form in all material
respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder (except
that such counsel need express no opinion as to financial statements
or other financial or statistical or reserve data contained or
incorporated by reference therein); and (B) no facts have come to the
attention of such counsel that caused such counsel to believe (with
customary qualifications) that either the registration statement or
the final prospectus, or any amendment or supplement thereto, in light
of the circumstances under which they were made, contains any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading (except that such counsel need express no
belief as to financial statements or other financial or statistical or
reserve data contained or incorporated by reference therein or as to
any information provided by the Requesting Holders or any underwriter
for inclusion therein); and (ii) a letter, dated such date, from the
independent certified public accountants of UTI, addressed to the
underwriters, stating that they are independent certified public
accountants within the meaning of the Securities Act and that in the
opinion of such accountants, the financial statements and other
financial data of UTI included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as to form
in all material respects with the applicable accounting requirements
of the Securities Act. Such letter from the independent certified
public accountants shall additionally cover such other customary
financial matters (including information as to the period ending not
more than five business days prior to the date of such letter) with
respect to the registration in respect of which such letter is being
given as such underwriters or the Requesting Holders may reasonably
request;
(e) as expeditiously as practicable, use its best
efforts to register or qualify Warrant Shares covered by such
registration statement under such other securities laws of such United
States jurisdictions as the Requesting Holders shall reasonably
request (considering the nature and size of the offering) and do any
and all other acts and things that may be necessary or desirable to
enable the Requesting Holders to consummate the public sale or other
disposition in such jurisdictions of Warrant Shares; provided,
however, that UTI shall not be required to qualify to transact
business as a foreign corporation in any jurisdiction in which it
would otherwise not be required to be so qualified or to take any
action that would subject it to general service of process in any
jurisdiction in which it is not then so subject;
(f) bear all Registration Expenses (as defined below) in
connection with all registrations hereunder; provided, however, that
all Selling Expenses (as defined below) of Warrant Shares and all fees
and disbursements of counsel for the Requesting Holders in connection
with each registration pursuant to this Article 15 shall be borne by
the Requesting Holders. Expenses incurred by UTI in complying with
this Article 15, including, without limitation: (i) all registration
and filing fees; (ii) all printing expenses; (iii) all fees and
disbursements of counsel for UTI; (iv) all blue sky fees and expenses;
and (v) all fees and expenses of accountants for UTI, are herein
referred to as "Registration Expenses". All underwriting fees and
discounts and brokerage and selling commissions relating to Warrant
Shares to be registered for sale by the Requesting Holders and fees
and expenses of the counsel for the Requesting Holders applicable to
the sales by the Requesting Holders in connection with any such
registration are herein referred to as "Selling Expenses".
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Nothing contained in this Section 15.2 shall, however, limit UTI's right to
cancel, postpone or withdraw any proposed registration for any reason.
Section 15.3 Indemnification.
(a) In the event of a registration of any Warrant Shares
under the Securities Act pursuant to this Article 15, UTI will
indemnify and hold harmless the Requesting Holders and any other
Person, if any, who controls a Requesting Holder within the meaning of
Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which the Requesting Holders or
such controlling Persons may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities
or actions in respect thereof arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration
statement under which such Warrant Shares were registered under the
Securities Act, any preliminary prospectus distributed with the
consent of UTI or final prospectus contained in such effective
registration statement, or any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and will reimburse the Requesting Holders and each such controlling
Person for any legal or any other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that UTI will not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in
such registration statement, such preliminary prospectus, such final
prospectus or such amendment or supplement, in reliance upon and in
conformity with written information furnished to UTI by or on behalf
of a Requesting Holder or a controlling Person of a Requesting Holder
specifically for use in the preparation thereof.
(b) In the event of any registration of any Warrant
Shares under the Securities Act pursuant to this Article 15, each
Requesting Holder will indemnify and hold harmless UTI and each
Person, if any, who controls UTI within the meaning of Section 15 of
the Securities Act, each officer of UTI who signs the registration
statement, each director of UTI and each underwriter and each Person
who controls any underwriter within the meaning of Section 15 of the
Securities Act, against any and all such losses, claims, damages,
liabilities or actions that UTI or such officer, director, underwriter
or controlling Person may become subject under the Securities Act or
otherwise, and will reimburse UTI and each such officer, director,
underwriter and controlling Person for any legal or any other expenses
reasonably incurred by such party in connection with investigating or
defending any such loss, claim, damage, liability or action, if (a)
such loss, claim, damage, liability or action in respect thereof
arises out of or is based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration
statement, such preliminary prospectus or such final prospectus, or
any amendment thereof or supplement thereto, or arises out of or is
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (b) any such untrue statement
or omission of a material fact was made in reliance upon and in
conformity with written information furnished to UTI by or on behalf
of such Requesting Holder specifically for use in connection with the
preparation of such registration statement or prospectus. In
connection with any transaction contemplated by Section 15.1 hereof,
each Requesting Holder also agrees to indemnify each such underwriter
and each Person who
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controls any such underwriter within the meaning of Section 15 of the
Securities Act as may reasonably and customarily be requested by the
underwriters in connection with any underwritten offering of such
Warrant Shares.
(c) Promptly after receipt by any indemnified Person of
notice of any claim or commencement of any action in respect of which
indemnity is to be sought against an indemnifying Person pursuant to
this Article 15, such indemnified Person shall notify the indemnifying
Person in writing of such claim or of the commencement of such action,
and, subject to provisions hereinafter stated, in case any such action
shall be brought against an indemnified Person and such indemnifying
Person shall have been notified of the same, such indemnifying Person
shall be entitled to participate therein, and, to the extent it shall
wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified Person, and after notice from the
indemnifying Person to such indemnified Person of its election to
assume the defense thereof, such indemnifying Person shall not be
liable to such indemnified Person for the fees and expenses of legal
counsel for such indemnified Person incurred thereafter in connection
with the defense thereof; provided, however, if there exists or will
exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified Person for the same counsel to
represent both the indemnified Person and such indemnifying Person,
then such indemnified Person shall be entitled to retain its own
counsel at the expense of such indemnifying Person; provided further,
however, the indemnifying Person shall not be required to pay for more
than one separate counsel for all of the indemnified Persons in
addition to any local counsel.
Section 15.4 Termination. If Rule 144 or Rule 145 as
promulgated under the Securities Act or any successor or similar rule or
statute shall permit the sale of Warrant Shares in compliance with the
conditions thereof and the provisions thereof, the rights of the Holders as to
registration provided for in this Article 15 as to such Warrant Shares shall
terminate immediately.
ARTICLE XVI
MISCELLANEOUS
Section 16.1 Binding Agreement. All the provisions, covenants,
representations, warranties and conditions of this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and assigns. No party hereto may assign any of its
interest herein without the written consent of the other party (which consent
will not be unreasonably withheld), provided that any Shareholder that is a
trust or estate may assign its rights hereunder to its beneficiaries provided
that such beneficiaries assume in writing (in a form reasonably satisfactory to
UTI) all obligations of such Shareholder hereunder.
Section 16.2 Notices. All notices, requests, waivers and other
communications required or permitted to be given pursuant to this Agreement
shall be in writing and shall be deemed to have been duly given upon receipt by
personal delivery, messenger delivery, first-class mail or telecopier, at the
addresses set forth below (or at such other address for a party as such party
shall specify by like notice):
--if to the Shareholders, Xx. Xxxxx X. Xxxxxxxxxx
to the Shareholder P. O. Box 1669
Representative: Xxxx, Xxxxxxxx 00000
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with copies to: Xxxxxxxx X. Xxxx, Esq.
McAfee & Xxxx
000 X. Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000
--if to UTI, to: UTI Energy Corp.
00000 Xxxxxxxxxxx Xxxx, Xxxxx 000X
Xxxxxxx, Xxxxx 00000
Attention: President
Telecopier No.: (000) 000-0000
with copies to: Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
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Section 16.3 Shareholder Representative. Each of the
Shareholders hereby irrevocably appoints the Shareholders Representative to be
the representatives of the Shareholders following the Closing Date in any
matter arising out of this Agreement. For any matter in which UTI, UTI Sub or
SUITS is entitled to rely on or otherwise deal with the Shareholders, UTI, UTI
Sub or SUITS shall be entitled to communicate solely with the Shareholders
Representative and shall be entitled to rely on any such communications as
being the desire and will of, and such communications shall be binding upon,
the Shareholders. Notice delivered to the Shareholder Representative in
accordance with Section 16.2 hereof shall be deemed to be notice to all of the
Shareholders.
Section 16.4 Entire Agreement. This Agreement (including the
Disclosure Schedule and the Exhibits hereto) is the entire agreement between
the parties with respect to the subject matter hereof, and supersedes all prior
agreements and understandings, written and oral, among the parties hereto with
respect to the subject matter hereof.
Section 16.5 Expenses. Except as otherwise provided herein,
each party shall be solely responsible for all expenses incurred by it in
connection with this transaction (including, without limitation, fees and
expenses of its own counsel and accountants).
Section 16.6 Severability. If any term or other provision of
this Agreement is held invalid, illegal or incapable of being enforced under
any rule or law, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in a
materially adverse manner with respect to either party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
Section 16.7 Waivers. The failure of any party at any time to
require performance of any provision hereof shall not affect its right later to
require such performance. No waiver in any one or more instances shall (except
as otherwise stated therein) be deemed to be a further or continuing waiver of
any such condition or breach in other instances or a waiver of any condition or
breach of any other term, covenant, representation or warranty.
Section 16.8 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
Section 16.9 Headings. The headings preceding the text of
articles and sections of this Agreement are for convenience only and are not
part of this Agreement.
Section 16.10 Applicable Law. This Agreement is governed by and
shall be construed and enforced in accordance with the internal laws of the
State of Texas.
Section 16.11 Construction of Agreement. This Agreement
constitutes a negotiated agreement among the parties and the fact that one
party or the other shall have drafted a particular provision or provisions
shall not be material in the construction of any provision. All Exhibits
referred to in this Agreement are a part of this Agreement.
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Section 16.12 References to Articles, Sections and Exhibits.
Unless the context otherwise requires, all references herein to Articles,
Sections and Exhibits shall be to the Articles, Sections and Exhibits of and to
this Agreement.
(SIGNATURES BEGIN ON THE FOLLOWING PAGE)
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
UTI ENERGY CORP.
By: /s/ Xxxxxx X. Drum
-----------------------------------
Name: Xxxxxx X. Drum
---------------------------------
Title: President
--------------------------------
SUITS ENTERPRISES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxxxx
---------------------------------
Title: CEO
--------------------------------
SUITS ACQUISITION CORP.
By: /s/ Xxxxxx X. Drum
-----------------------------------
Name: Xxxxxx X. Drum
---------------------------------
Title: President
--------------------------------
XXXXX X. SUITS REVOCABLE TRUST
DATED 4/23/97
By: /s/ Xxxxx X. Suits
-----------------------------------
Name: Xxxxx X. Suits
---------------------------------
Trustee
XXX X. XXXXXXXXXX REVOCABLE TRUST
By: /s/ E. G. Ungeleider
-----------------------------------
Name: E. G. Ungeleider
---------------------------------
Trustee
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XXXXX X. XXXXXXXXXX REVOCABLE TRUST
DATED 5/13/97
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxxxx
---------------------------------
Trustee
/s/ E. Gay Ungerleider
--------------------------------------
E. Gay Ungerleider
/s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
XXXXX XXXXXXX XXXXXXXXXX TRUST
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
---------------------------------
Trustee
/s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxxx
XXX X. XXXXXXXXXX REVOCABLE TRUST
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
---------------------------------
Truste
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