SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 30, 1999
SUPERIOR ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20310 75-2379388
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1105 Peters Road, Harvey, Louisiana 70058
(Address of principal executive offices) (Zip Code)
(504) 362-4321
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
ITEM 5. OTHER EVENTS
On June 30, 1999, Superior Energy Services, Inc. ("Superior") entered
into Amendment No. 1 (the "Amendment") to the Agreement and Plan of Merger
(the "Merger Agreement") dated April 20, 1999, by and among Superior,
Superior Cardinal Acquisition Company, Inc., Cardinal Holding Corp.
("Cardinal"), First Reserve Fund VII, Limited Partnership and First Reserve
Fund VIII, L.P.
The terms of the Merger Agreement require each stockholder of Cardinal
to execute an Agreement and Release, in the form attached to the Merger
Agreement. In order to reflect the revised agreements described in the
Amendment, conforming changes were also made to the form of Agreement and
Release.
The Amendment and the amended form of Agreement and Release are filed
herewith as exhibits and incorporated herein by reference.
In addition, in connection with the merger, certain officers of
Superior and Cardinal will receive non-qualified stock options under
Superior's proposed 1999 Stock Incentive Plan. These option grants are
described in Superior's Proxy Statement, which was filed with the
Securities and Exchange Commission on June 18, 1999. It is now
contemplated that, except for the options proposed to be granted to Mr.
Hall and the 107,000 options specified on page 29 of the Proxy Statement
to be granted to certain Superior executive officers, the options listed on
the chart on page 29 of the Proxy Statement will vest in one-half (instead
of one-third) increments on each of the first two (instead of three)
anniversaries of the Closing Date.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Exhibits.
2.1 Amendment No. 1 to the Agreement and Plan of Merger dated as
of June 30, 1999, by and among Superior, Superior Cardinal
Acquisition Company, Inc., Cardinal Holding Corp., First
Reserve Fund VII, Limited Partnership, and First Reserve
Fund VIII, L.P.
2.2 Form of Agreement and Release, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SUPERIOR ENERGY SERVICES, INC.
By: /S/ ROBERT S. TAYLOR
Robert S. Taylor
Chief Financial Officer
Dated: July 7, 1999.
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (this
"Amendment"), dated as of June 30, 1999, is by and among Superior Energy
Services, Inc., a Delaware corporation ("SESI"), Superior Cardinal
Acquisition Company, Inc., a Delaware corporation and a wholly-owned
subsidiary of SESI ("Sub"), Cardinal Holding Corp., a Delaware corporation
("Cardinal"), First Reserve Fund VII, Limited Partnership and First Reserve
Fund VIII, L.P., each of which is a Delaware limited partnership (together,
the "Funds").
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain Agreement
and Plan of Merger dated as of April 20, 1999 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement in the manner
provided below;
NOW, THEREFORE, the parties agree as follows:
1. Section 1.1 is amended to add the following defined terms:
"Capital Contribution" shall have the meaning ascribed to it
in Section 6.19(a) hereof.
"Contributing Stockholders" shall have the meaning ascribed
to it in Section 6.19(a) hereof.
"EBITDA" shall have the meaning ascribed to it in Section
6.19(a) hereof.
"EBITDA Notice" shall have the meaning ascribed to it in
Section 6.19(d) hereof.
"Neutral Auditors" shall have the meaning ascribed to it in
Section 6.19(f) hereof.
2. The second sentence of Section 6.4(a) is amended to change the
amount specified therein from "$45 million" to "$50 million."
3. A new Section 6.19 shall be added to the Agreement to read in its
entirety as follows:
Section 6.19 POST-CLOSING CAPITAL CONTRIBUTION. (a) The
Cardinal Stockholders listed on Section 6.19 of the Disclosure
Schedule, a copy of which is attached hereto, (the "Contributing
Stockholders") shall make a contribution to SESI's capital (the
"Capital Contribution") if the EBITDA (earnings before interest,
taxes, depreciation and amortization determined in accordance
with generally accepted accounting principles as of the Closing
Date, applied on a basis consistent with the practices of
Cardinal for prior periods) generated by Cardinal and its direct
or indirect subsidiaries during the fiscal year ending December
31, 2000 is less than $20 million.
(b) If EBITDA generated during such fiscal year is less than
$20 million, the amount of the Capital Contribution shall be $2
million plus (i) $1.50 for every $1.00 that EBITDA is less than
$19 million but more than $16 million, (ii) $1.00 for every $1.00
that EBITDA is less than $16 million but more than $13 million,
and (iii) $0.50 for every $1.00 that EBITDA is less than $13
million; provided however, that in no event shall the amount of
the Capital Contribution exceed $10 million. If EBITDA generated
during such fiscal year equals or exceeds $20 million, no Capital
Contribution shall be made.
(c) For purposes of determining EBITDA hereunder: (i) no
expenses (including any general overhead expenses or any other
expense or allocated charge of SESI or any other parent company
of Cardinal or its affiliates) other than those actually incurred
by Cardinal for goods and services provided at the request or
with the approval of Cardinal's management for the operations of
Cardinal shall be included for purposes of calculating EBITDA and
(ii) to the extent that SESI or any parent company of Cardinal or
its affiliates invest in, advance or contribute to Cardinal
amounts in excess of Cardinal's net income after taxes plus
depreciation and amortization for that period there shall be
included an imputed interest expense to Cardinal equal to the
average blended interest rate incurred during the period by SESI
under its credit facilities.
(d) Within 90 days following the close of the fiscal year
ending December 31, 2000, SESI shall deliver to the Contributing
Stockholders a consolidated income statement of Cardinal and its
subsidiaries for such fiscal year accompanied by (i) a
certification thereof by SESI's Chief Financial Officer to the
effect that such income statement (A) has been prepared in
conformity with generally accepted accounting principles as of
the Closing Date, applied on a basis consistent with the
practices of Cardinal for prior periods, and (B) fairly presents
the results of Cardinal and its subsidiaries for the period then
ended, (ii) a notice specifying the EBITDA for such fiscal year
(the "EBITDA Notice") showing in reasonable detail the
computation thereof to be accompanied by a certification by
SESI's Chief Financial Officer that such computation was
performed in a manner consistent with this Section 6.19 and with
the preparation of Cardinal's consolidated financial statements
and based on Cardinal's books and records, and (iii) a
certification by SESI's Chief Financial Officer that the
covenants of SESI set forth in subparagraph (i) below have been
fulfilled.
(e) During the preparation of the EBITDA Notice and the
period of any review contemplated by this Section 6.19, SESI
shall (i) provide the Contributing Stockholders and their
authorized representatives, upon reasonable notice, full access
during normal business hours to the books, records, facilities
and employees of Cardinal and its subsidiaries and their
independent accountants and their respective work papers to
review the preparation of the EBITDA Notice and (ii) cooperate
with the Contributing Stockholders and their authorized
representatives, including the provision on a timely basis of all
information reasonably requested by the Contributing Stockholders
or their authorized representatives and necessary or useful in
reviewing the preparation of the EBITDA Notice.
(f) After receipt of the EBITDA Notice, the Contributing
Stockholders shall have 30 days to review the EBITDA Notice,
together with all the work papers used in the preparation
thereof. Unless the Contributing Stockholders deliver a written
notice to SESI on or before the 30th day after the Contributing
Stockholders' receipt of the EBITDA Notice specifying in
reasonable detail, all disputed items and the basis therefor, the
Contributing Stockholders shall be deemed to have accepted and
agreed to the EBITDA Notice. If the Contributing Stockholders so
notify SESI of their objection to the EBITDA Notice, the
Contributing Stockholders and SESI shall, within 30 days
following such notice, attempt to resolve their differences and
any resolution by them as to any disputed amounts shall be final,
binding and conclusive. If at the end of such 30-day period, any
amounts shall remain in dispute, then all amounts remaining in
dispute and any dispute as to exclusions of or additions to
revenue and any allocations of expenses contemplated by the
definition of EBITDA shall be submitted to a firm of nationally
recognized, independent public accountants selected (the "Neutral
Auditors") by the Contributing Stockholders and SESI within ten
days after the expiration of the 30-day period. If the
Contributing Stockholders and SESI are unable to agree on the
Neutral Auditors, then the Contributing Stockholders and SESI
shall each have the right to request the American Arbitration
Association to appoint the Neutral Auditor who shall not have had
a material business relationship with the Contributing
Stockholders, SESI or any of their respective Affiliates within
the past two years. The parties hereto agree to execute, if
requested by the Neutral Auditors, a reasonable engagement
letter. All fees and expenses relating to the work, if any, to
be performed by the Neutral Auditors shall be borne 50% by the
Contributing Stockholders and 50% by SESI. The Neutral Auditors
shall act as arbitrators to determine only those issues still in
dispute between the Contributing Stockholders and SESI. The
Neutral Auditors' determination shall be made within 30 days of
their selection, shall be set forth in a written statement
delivered to the Contributing Stockholders and SESI and shall be
final, binding and conclusive.
(g) The payment of the Capital Contribution, if any, shall
be paid by wire transfer of immediately available federal funds
to such account or accounts designated by SESI within 30 days
following the later to occur of (i) the deliveries required by
Section 6.19(d) and (ii) the resolution of any disputes pursuant
to Section 6.19(f). Any payment of the Capital Contribution
shall be allocated among the Contributing Stockholders in
accordance with Section 6.19 of the Disclosure Schedule; and the
obligation of each Contributing Stockholder to pay its percentage
of the Capital Contribution shall be a several, and not joint,
obligation, and in no event shall any Contributing Stockholder be
liable for any other Contributing Stockholder's percentage of any
Capital Contribution required to be paid hereunder.
(h) Any action or notice required under this Section 6.19 to
be taken or given by the Contributing Stockholders shall be
deemed taken or given if taken or given by those Contributing
Stockholders having at least 51% of the allocated percentages set
forth in Section 6.19 of the Disclosure Schedule.
(i) Superior covenants and agrees for the benefit of the
Contributing Stockholders that following the Closing Date, it
will use its reasonable best efforts to (A) cause Cardinal and
its subsidiaries and their businesses to continue to be operated
in the same manner as they were operated prior to the Closing
Date, as if Cardinal continued to be a stand-alone business
following the Closing Date, and, except with the approval of the
Contributing Stockholders or with respect to any such businesses
that have suffered a net loss for the most recent two consecutive
fiscal quarters, not to discontinue, in whole or in part, any of
their businesses as conducted as of the Closing Date; provided
however, that Superior may combine Cardinal's P&A operations with
those of Superior as long as in connection therewith, the EBITDA
target set forth in subparagraph (a) above is modified to such
number as may be mutually agreed to by SESI and the Contributing
Stockholders to appropriately reflect such action; and (B)
conduct its other operations and activities in the ordinary
course consistent with past practices and not to take any actions
inconsistent with such past practices that would interfere with
the ability of Cardinal to achieve the EBITDA target set forth in
subparagraph (a) above.
5. Section 7.1(m) is amended to change the share number specified
therein from "892,000" to "818,182."
6. Section 9.4(b) is amended to read in its entirety as follows:
"except as provided in Sections 6.16 and 6.19 hereof, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder."
7. Except as expressly set forth herein, the terms and provisions of
the Agreement are hereby ratified and confirmed.
8. This Amendment shall be governed by, and shall be construed and
enforced in accordance with, the substantive laws of the State of Delaware.
9. Capitalized terms used but not defined herein shall have the
respective meanings ascribed to such terms in the Agreement. From and
after the effectiveness of this Amendment, the terms "this Agreement",
"hereof", "herein", "hereunder" and terms of like import, when used herein
or in the Agreement shall, except where the context otherwise requires,
refer to the Agreement, as amended by this Amendment.
10. This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which shall
constitute one and the same Amendment.
SUPERIOR ENERGY SERVICES, INC.
By: /S/ ROBERT S. TAYLOR
Robert S. Taylor
Vice President and Chief Financial Officer
SUPERIOR CARDINAL ACQUISITION
COMPANY, INC.
By: /S/ ROBERT S. TAYLOR
Robert S. Taylor
Treasurer
CARDINAL HOLDING CORP.
By: /S/ BEN A. GUILL
Ben A. Guill
Interim Chief Executive Officer
FIRST RESERVE FUND VII,
LIMITED PARTNERSHIP
By: FIRST RESERVE GP VII, LIMITED
PARTNERSHIP, its General Partner
By: FIRST RESERVE CORPORATION,
its General Partner
By: /S/ BEN A. GUILL
Ben A. Guill
President
FIRST RESERVE FUND VIII, L.P.
By: FIRST RESERVE GP VIII, L.P.,
its General Partner
By: FIRST RESERVE CORPORATION,
its General Partner
By: /S/ BEN A GUILL
Ben A. Guill
President
SCHEDULE 6.19
MAXIMUM POTENTIAL
POST-CLOSING
CAPITAL
CONTRIBUTING STOCKHOLDER CONTRIBUTION PERCENTAGE
- ---------------------------- ----------------- ------------
First Reserve Fund VII, LP $ 3,802,810 38.0%
First Reserve Fund VIII, LP 2,535,206 25.4%
Kotts Capital Holdings, LP 2,093,147 20.9%
GE Capital Corporation 826,899 8.3%
DLJ Investment Partners, L.P. 450,206 4.5%
DLJ Investment Funding, Inc. 64,125 0.6%
DLJ ESC, L.P. 42,812 0.4%
Hibernia Corporation 9,627 0.1%
Hibernia Capital Corporation 17,260 0.2%
Keith Acker 38,237 0.4%
John R. Gunn 39,890 0.4%
Robert J. Gunn 39,890 0.4%
John F. Kerker 39,890 0.4%
---------------- -----------
Total $ 10,000,000 $ 100.0%
================ ===========
AGREEMENT AND RELEASE
This Agreement and Release (the "Release"), dated ____________, 1999,
is by the undersigned Stockholder of Cardinal Holding Corp., a Delaware
corporation ("Cardinal").
RECITALS
WHEREAS, Cardinal, Superior Energy Services, Inc. a Delaware
corporation ("Superior") and Superior Cardinal Acquisition Company, Inc., a
Delaware corporation, among others, have entered into an Agreement and Plan
of Merger dated as of April 20, 1999, as amended by Amendment No. 1 thereto
dated as of June 30, 1999 (as amended, the "Merger Agreement"); and
WHEREAS, it is a condition to the consummation of the transactions
contemplated by the Merger Agreement, that the undersigned Stockholder
provide the agreements, representations, waivers and releases provided
herein;
NOW THEREFORE, in consideration of the benefits to be derived by
Cardinal and its stockholders pursuant to the transactions contemplated by
the Merger Agreement, the undersigned Stockholder hereby agrees with
Superior and Cardinal and the other stockholders of Cardinal as follows:
1. DEFINITIONS. (a) "Cardinal Capital Stock" shall mean the
Cardinal Common Stock, the Cardinal Preferred Stock, the Management Common
Shares and the Management Preferred Shares.
(b) All capitalized terms used herein but not defined herein
shall have the meaning ascribed to such terms in the Merger Agreement.
2. INVESTMENT REPRESENTATIONS.
(a) The Stockholder will acquire SESI Common Stock in the Merger
for investment for his or its own account and not with a view to, or for
sale or other disposition in connection with, any distribution of all or
any part thereof except (i) in an offering covered by a registration
statement filed with the Securities and Exchange Commission under the
Securities Act covering SESI Common Stock acquired by the Stockholder or
(ii) pursuant to an applicable exemption under the Securities Act. In
receiving SESI Common Stock, such Stockholder is not offering or selling,
and will not offer and sell, for SESI in connection with any distribution
of such SESI Common Stock, except in compliance with Applicable Law, and
such Stockholder does not have any contract, undertaking, agreement or
arrangement with any person for the distribution of SESI Common Stock and
will not participate in any undertaking or in any underwriting of such an
undertaking except in compliance with Applicable Law.
(b) The Stockholder is an "accredited investor" as that term is
defined in Rule 501 of Regulation D under the Securities Act.
(c) The Stockholder has received from SESI and has reviewed with
his or its representatives a copy of each of the SESI Commission Filings
that the Stockholder has requested. The Stockholder has also been afforded
access to information about SESI and SESI's financial position, results of
operations, business, property and management sufficient to enable him or
it to evaluate an investment in SESI Common Stock, and has had the
opportunity to ask questions of and has received satisfactory answers from
SESI concerning the foregoing matters.
(d) The Stockholder understands that shares of SESI Common Stock
acquired pursuant hereto have not been registered under the Securities Act
on the basis that the sale provided for in the Merger Agreement and the
issuance of SESI's Common Stock upon consummation of the Merger is exempt
from registration under the Securities Act, and that SESI's reliance on
such exemption is based, in part, upon such Stockholder's representations
set forth herein.
3. SESI CAPITAL CONTRIBUTION. To the extent that such Stockholder
is listed as a "Contributing Stockholder" in Section 6.19 of the Disclosure
Schedule, such Stockholder acknowledges, and agrees to be bound by the
obligations of the Contributing Stockholders set forth in, Section 6.19 of
the Merger Agreement. Such Contributing Stockholder acknowledges and
agrees that the allocation of the Capital Contribution among each of the
Contributing Stockholders as set forth in Section 6.19 of the Disclosure
Schedule is the sole responsibility of the Contributing Stockholders, and
that SESI shall have no obligation or other responsibility with respect to
such allocation. The obligation of such Contributing Stockholder to pay
its allocated percentage of the Capital Contribution, if any, when due, is
a several, and not joint, obligation and in no event shall any Contributing
Stockholder be liable for any other Contributing Stockholder's allocated
percentage of any Capital Contribution required to be paid.
4. RELEASE OF CARDINAL. Such Stockholder hereby releases and
discharges Cardinal, its Subsidiaries, and its officers and directors, from
any obligations (including indemnification obligations) arising under
charter documents, any contract (other than the Merger Agreement), the
Delaware General Corporation Law, or the Louisiana Business Corporation
Law, in each case, to the extent relating to actions or omissions of
Cardinal, its Subsidiaries, or any acts or omissions of the directors,
stockholders or officers (former or present) including those committed
while serving in their capacity as stockholders, directors, officers,
employees or similar capacities of Cardinal or its Subsidiaries prior to
the Closing. Each Stockholder further hereby waives any preemptive rights
that he or it may have, or ever had, with respect to any of the capital
stock of Cardinal or any of its Subsidiaries, or any other claim the
Stockholder may have relating to the dilution of its interest in Cardinal
or any other claim to receive any additional securities of Cardinal, and
waives any right that he or it may have under the constituent documents of
Cardinal, or its Subsidiaries, or otherwise to acquire any shares of
capital stock of Cardinal being exchanged pursuant to, or as contemplated
by, the Merger Agreement or any transfer that occurred prior to the date
hereof, including the $50,000,000 of Class A Cardinal Common Stock to be
issued as part of the Equity Contribution as contemplated by the Merger
Agreement, the offering price for which issuance was determined on the
basis of the average of the closing price per share of the SESI Common
Stock for the ten (10) days preceding April 20, 1999 ($3.34 per share), and
the Stockholder consents and approves of such issuance in all respects,
subject to the right of the Stockholder to acquire a portion of the
securities to be offered in connection with the Equity Contribution to the
extent that such Stockholder has heretofore exercised its preemptive rights
provided for in the Cardinal Stockholders Agreement in connection with such
issuance.
5. ACCEPTANCE OF MERGER SHARES. The Stockholder hereby acknowledges
that the portion of the Merger Shares to be received by such Stockholder,
and cash in lieu of any fractional share to which such Stockholder would be
entitled pursuant to the Merger, represents full payment by SESI for the
Cardinal Capital Stock owned by such Stockholder (including any such
portion to be delivered into escrow pursuant to the instructions of the
Stockholder). The Stockholder waives all rights of appraisal with respect
to the Cardinal Capital Stock under charter documents, any contract, the
Delaware General Corporation Law, or the Louisiana Business Corporation
Law.
6. TERMINATION OF REGISTRATION RIGHTS AND STOCKHOLDER AGREEMENT. By
execution of this Release, the Stockholder hereby agrees that (a) all
registration rights, if any, that such Stockholder has with respect to any
of the Cardinal Capital Stock are hereby terminated, and (b) the
Stockholders Agreement by and among Cardinal and its stockholders dated
February 26, 1998, as amended, is hereby terminated and of no other force
or effect, except as expressly provided to the contrary in Section 6.1(c)
of such Stockholders Agreement. Notwithstanding anything to the contrary,
the foregoing termination of the Stockholder's registration rights and the
Cardinal Stockholders Agreement shall be null and void and have no force
and effect if the Merger is not consummated prior to October 15, 1999.
7. REPRESENTATIONS AND WARRANTIES. The Stockholder hereby
represents and warrants to and agrees with SESI as follows:
(a) OWNERSHIP. Exhibit 1 attached hereto sets forth (i) the
number of shares of Cardinal Capital Stock which the Stockholder is the
record and beneficial owner as of the date hereof and (ii) the number of
shares of Cardinal Capital Stock which will be issued to the Stockholder
after the date hereof and prior to the Closing and which the Stockholder
will be the record and beneficial owner of as of the Closing. At the
Closing the Stockholder will have, good and valid title to all such shares
and the absolute right to deliver such shares in accordance with the terms
hereof, free and clear of all Liens, except for restrictions on transfer
under federal and state securities laws, and any Liens that may be created
by SESI.
(b) AUTHORITY. The Stockholder has full legal right, power and
authority to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby and by the Merger Agreement. This
Agreement and each other agreement, instrument or document executed or to
be executed by such Stockholder in connection with the transactions
contemplated by the Merger Agreement, has been duly executed and delivered
by such Stockholder and constitutes, a valid and legally binding obligation
of such Stockholder, enforceable against such Stockholder in accordance
with their respective terms, except that such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights generally and equitable principles
which may limit the availability of certain equitable remedies in certain
instances.
(c) NONCONTRAVENTION. The execution, delivery and performance
by the Stockholder of this Agreement and the consummation by the
Stockholder of the transactions contemplated hereby and by the Merger
Agreement do not (i) result in the creation or imposition of any Lien upon
the Cardinal Capital Stock held by such Stockholder or (ii) violate any
Applicable Law binding upon such Stockholder.
The undersigned Stockholder has executed this Agreement as of the date
first set forth above.
___________________________