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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CEANIC CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-12.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[CEANIC CORPORATION LOGO]
July 17, 1998
Dear Fellow Shareholders:
You are cordially invited to attend a Special Meeting of shareholders (the
"Special Meeting") of Ceanic Corporation ("Ceanic") to be held on August 17,
1998 at 9:00 a.m., local time, at Radisson Suite Hotel Houston West, 10655 Katy
Freeway, Houston, Texas 77024. Notice of the Special Meeting is enclosed.
At the Special Meeting, you will be asked to consider and vote upon the
approval and adoption of an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which, among other things, a wholly-owned subsidiary of
Stolt Comex Seaway Inc. ("SCSI") (which is an indirect wholly-owned subsidiary
of Stolt Comex Seaway S.A.) will merge (the "Merger") with and into Ceanic, and
Ceanic will become a wholly-owned subsidiary of SCSI. The terms of the Merger
Agreement provide that upon consummation of the Merger, holders of issued and
outstanding common stock, no par value per share, of Ceanic ("Ceanic Common
Stock") will be entitled to receive $20 in cash per share, without interest, in
exchange for all their shares of Ceanic Common Stock.
After careful consideration, the Board of Directors of Ceanic (the "Ceanic
Board") has unanimously approved the Merger, believes the Merger is in the best
interest of Ceanic and its shareholders and unanimously recommends that all
shareholders vote FOR approval and adoption of the Merger Agreement.
All shareholders are invited to attend the Special Meeting in person. The
affirmative vote of at least two-thirds ( 2/3) of the shares of Ceanic Common
Stock in attendance or represented by proxy at the Special Meeting will be
necessary for approval and adoption of the Merger Agreement.
In order that your shares may be represented at the Special Meeting, you
are urged to complete, sign, date and promptly return the accompanying proxy in
the enclosed envelope, whether or not you plan to attend the Special Meeting. If
you attend the Special Meeting in person, you may, if you wish, vote personally
on all matters brought before the Special Meeting even if you have previously
returned your proxy.
PLEASE READ CAREFULLY THE ENCLOSED PROXY STATEMENT IN ITS ENTIRETY FOR A
MORE COMPLETE DESCRIPTION OF THE MERGER AGREEMENT AND THE MERGER.
Morgan Keegan & Company, Inc. has acted as financial advisor to Ceanic in
connection with the Merger and delivered its written opinion dated June 25, 1998
to the Ceanic Board to the effect that, based upon and subject to certain
matters stated therein, as of the date of such opinion, the consideration to be
received by Ceanic shareholders pursuant to the Merger is fair to Ceanic
shareholders from a financial point of view. The full text of the Morgan Keegan
& Company, Inc. opinion, which sets forth a description of the assumptions made,
matters considered and limitations on the review undertaken, is included as
Appendix B to the accompanying Proxy Statement and should be read carefully in
its entirety.
We are gratified by your continued support.
Sincerely yours,
/s/ GEORGE C. YAX
George C. Yax
Chairman of the Board
/s/ KEVIN C. PETERSON
Kevin C. Peterson
President and Chief Executive
Officer
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CEANIC CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 17, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of shareholders of Ceanic
Corporation, a Louisiana corporation ("Ceanic"), will be held on August 17, 1998
at 9:00 a.m., local time, at Radisson Suite Hotel Houston West, 10655 Katy
Freeway, Houston, Texas 77024 and any adjournment or postponement thereof (the
"Special Meeting"), for the following purposes:
1. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of June 26, 1998 (the "Merger
Agreement"), by and among Ceanic, Stolt Comex Seaway S.A., a Luxembourg
corporation ("SCSSA"), Stolt Comex Seaway Inc., a Delaware corporation and
indirect wholly-owned subsidiary of SCSSA ("SCSI"), and CC Acquisition
Corp., a Louisiana corporation and wholly-owned subsidiary of SCSI ("Merger
Sub"). Upon the terms and subject to the conditions of the Merger
Agreement, Merger Sub will merge (the "Merger") with and into Ceanic, and
Ceanic will become a wholly-owned subsidiary of SCSI. In the Merger, and as
more fully described in the accompanying Proxy Statement and in the Merger
Agreement included as Appendix A thereto, (a) the Ceanic Articles of
Incorporation will be amended to delete the provisions therein limiting
ownership of Ceanic capital stock by non-United States citizens and, as so
amended, will become the initial Articles of Incorporation of Ceanic after
the effective time of the Merger, and (b) the shares of common stock, no
par value per share, of Ceanic ("Ceanic Common Stock") issued and
outstanding immediately prior to the effective time of the Merger will be
converted into the right to receive $20 in cash per share, without
interest. In addition, each option to purchase Ceanic Common Stock
outstanding at the effective time of the Merger will be converted into an
option to purchase SCSSA common stock on the terms and subject to the
conditions set forth in the Merger Agreement.
2. To transact such other business as may properly come before the
Special Meeting.
The close of business on July 15, 1998 has been fixed as the record date
for the determination of the shareholders entitled to notice of and to vote at
the Special Meeting. The list of shareholders of record of Ceanic may be
examined at the principal executive offices of Ceanic located at 900 Town &
Country Lane, Suite 400, Houston, Texas 77024.
Approval and adoption of the Merger Agreement require the affirmative vote
of at least two-thirds ( 2/3) of the shares of Ceanic Common Stock present in
person or by proxy at the Special Meeting.
DISSENTING SHAREHOLDERS WHO COMPLY WITH THE PROCEDURAL REQUIREMENTS OF THE
BUSINESS CORPORATION LAW OF LOUISIANA WILL BE ENTITLED TO RECEIVE PAYMENT OF THE
FAIR CASH VALUE OF THEIR SHARES IF THE MERGER IS EFFECTED UPON APPROVAL BY LESS
THAN EIGHTY PERCENT OF THE CORPORATION'S TOTAL VOTING POWER. THOSE PROCEDURAL
REQUIREMENTS ARE SUMMARIZED IN THE ACCOMPANYING PROXY STATEMENT UNDER THE
CAPTION "DISSENTERS' RIGHTS" AND ARE SET FORTH IN DETAIL IN APPENDIX C TO THE
ACCOMPANYING PROXY STATEMENT.
Shareholders are invited to attend the Special Meeting. Whether or not you
expect to attend, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. If you attend the
Special Meeting, you may vote your shares in person, which will revoke any
previously executed proxy.
If your shares are held of record by a broker, bank or other nominee and
you wish to attend the Special Meeting, you must obtain a letter from the
broker, bank or other nominee confirming your beneficial ownership of the shares
and bring it to the Special Meeting. To vote your shares at the Special Meeting
you must obtain from the record holder a proxy issued in your name.
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If you have any questions regarding voting your shares, please call
Corporate Investor Communications, Inc., whom Ceanic has retained to assist in
the solicitation of proxies, at 1-888-805-6301.
Regardless of how many shares you own, your vote is very important.
By order of the Board of Directors,
/s/ QUINN J. HEBERT
Quinn J. Hebert
Secretary
July 17, 1998
900 Town & Country Lane, Suite 400
Houston, Texas 77024
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PROXY STATEMENT
CEANIC CORPORATION
900 TOWN & COUNTRY LANE, SUITE 400
HOUSTON, TEXAS 77024
This Proxy Statement ("Proxy Statement") is furnished in connection with
the solicitation of proxies by the Board of Directors (the "Ceanic Board") of
Ceanic Corporation, a Louisiana corporation ("Ceanic"), for use at a special
meeting of Ceanic shareholders (including any adjournments or postponements
thereof) to be held at 9:00 a.m., local time, on August 17, 1998 at Radisson
Suite Hotel Houston West, 10655 Katy Freeway, Houston, Texas 77024 (the "Special
Meeting"). At the Special Meeting, Ceanic shareholders will be asked to consider
and vote upon a proposal to approve and adopt an Agreement and Plan of Merger,
dated as of June 26, 1998 (the "Merger Agreement"), by and among Stolt Comex
Seaway S.A., a Luxembourg corporation ("SCSSA"), Stolt Comex Seaway Inc., a
Delaware corporation and indirect wholly-owned subsidiary of SCSSA ("SCSI"), and
CC Acquisition Corp., a Louisiana corporation and wholly-owned subsidiary of
SCSI ("Merger Sub," and together with SCSSA and SCSI, the "SCS Parties"), and
Ceanic. A copy of the Merger Agreement is included as Appendix A to this Proxy
Statement.
Upon the terms and subject to the conditions of the Merger Agreement,
Merger Sub will be merged with and into Ceanic (the "Merger") and Ceanic will
become a wholly-owned subsidiary of SCSI upon the filing of a certificate of
merger (the "Certificate of Merger") with the Secretary of State of Louisiana or
at such later time as may be agreed by the SCS Parties and Ceanic and specified
in the Certificate of Merger (the "Effective Time"). In the Merger, and as more
fully described in this Proxy Statement and in the Merger Agreement, (a) the
Ceanic Articles of Incorporation will be amended to delete the provisions
therein limiting ownership of Ceanic capital stock by non-United States citizens
and, as so amended, will become the initial Articles of Incorporation of Ceanic
after the Effective Time and (b) each share of common stock, no par value per
share, of Ceanic ("Ceanic Common Stock") issued and outstanding immediately
prior to the Merger will be converted into the right to receive $20 in cash per
share, without interest (assuming no shareholders exercise their statutory
dissenters' rights). In addition, each option to purchase Ceanic Common Stock
outstanding as of the Effective Time will be converted into an option to
purchase SCSSA common stock on the terms and subject to the conditions set forth
in the Merger Agreement.
The consummation of the Merger is subject, among other things, to the
approval and adoption of the Merger Agreement by the affirmative vote of at
least two-thirds ( 2/3) of the shares of Ceanic Common Stock present in person
or by proxy at the Special Meeting.
Ceanic Common Stock is listed on the Nasdaq National Market ("Nasdaq")
under the symbol "DIVE." The last reported sale price of Ceanic Common Stock on
Nasdaq on June 9, 1998, the trading day immediately preceding the date on which
Ceanic and the SCS Parties announced that they had entered into a letter of
intent with respect to a proposed merger, was $15.4375 per share. The last
reported sale price of Ceanic Common Stock on Nasdaq on July 15, 1998 was
$19.4375 per share.
This Proxy Statement and the accompanying proxies are expected to be first
mailed or delivered to Ceanic shareholders on or about July 17, 1998.
The date of this Proxy Statement is July 17, 1998.
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TABLE OF CONTENTS
PAGE
----
SUMMARY................................ 1
The Parties.......................... 1
The Special Meeting.................. 1
The Merger and Certain Provisions of
the Merger Agreement.............. 2
Market Price Data.................... 4
FORWARD-LOOKING STATEMENTS............. 5
THE SPECIAL MEETING.................... 5
Time, Date and Place of the Special
Meeting........................... 5
Matters to be Considered at the
Special Meeting................... 5
Board of Directors Recommendation.... 5
Voting at Meeting; Record Date....... 5
Vote Required........................ 6
Dissenters' Rights................... 6
Ceanic Proxies....................... 6
Solicitation of Proxies.............. 6
Stock Ownership of Directors and
Executive Officers................ 7
Stock Ownership of Certain Beneficial
Owners............................ 7
Shareholder Proposals................ 7
THE PROPOSED MERGER.................... 8
Background of the Merger............. 8
Ceanic's Reasons for the Merger;
Recommendation of the Ceanic
Board............................. 8
Fairness Opinion of Morgan Keegan &
Company, Inc. .................... 10
The SCS Parties' Reasons for the
Merger............................ 13
Interests of Certain Persons in the
Merger............................ 14
TERMS OF THE MERGER.................... 14
The Merger; Effective Time........... 14
Conversion of Securities............. 15
Treatment of Ceanic Options.......... 15
Exchange of Stock Certificates....... 15
Directors and Officers of Ceanic..... 16
Articles of Incorporation and By-laws
of Ceanic......................... 16
PAGE
----
Representations and Warranties....... 16
Conduct of Business Pending the
Merger............................ 16
Other Acquisition Proposals.......... 17
Indemnification...................... 17
Special Meeting...................... 17
Conditions to the Merger............. 18
Termination.......................... 18
Expenses............................. 19
Termination Fee...................... 19
Amendment and Waiver................. 19
Regulatory Approvals................. 20
Accounting Treatment................. 20
Certain Federal Income Tax
Consequences of the Merger........ 20
DISSENTERS' RIGHTS..................... 21
RELATIONSHIPS BETWEEN CEANIC AND THE
SCS PARTIES.......................... 22
RELATIONSHIP WITH INDEPENDENT
ACCOUNTANTS.......................... 22
INFORMATION REGARDING
CEANIC............................... 22
INFORMATION REGARDING THE SCS
PARTIES.............................. 22
EXPERTS................................ 23
AVAILABLE INFORMATION.................. 23
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE............................ 23
APPENDICES
Appendix A -- Agreement and Plan of
Merger............................ A-1
Appendix B -- Fairness Opinion of
Morgan Keegan & Company, Inc. .... B-1
Appendix C -- Excerpt from Section
131 of the Louisiana Business
Corporation Law................... C-1
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SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement and does not purport to be complete. Reference is made to,
and this Summary is qualified in its entirety by, the more detailed information
contained elsewhere or incorporated by reference in this Proxy Statement. Unless
otherwise defined herein, capitalized terms used in this Summary have the
respective meanings ascribed to them elsewhere in this Proxy Statement.
Shareholders of Ceanic are urged to read this Proxy Statement and the Merger
Agreement in their entirety. A copy of the Merger Agreement is included as
Appendix A to this Proxy Statement.
THE PARTIES
Ceanic. Ceanic is a leading provider of diving services, intervention
technologies, subsea products, field development, general contracting and marine
construction services to offshore, governmental and industrial customers in the
United States and internationally.
SCS Parties. Stolt Comex Seaway S.A. (SCSSA), through its subsidiaries,
including SCSI, is a leading subsea contractor to the oil and gas industry,
specializing in technologically sophisticated subsea engineering, flowline lay,
construction, inspection and maintenance services. SCSSA operates today
predominantly in Europe, the Middle East, West Africa, Asia Pacific, South
America and Mexico. Merger Sub is a wholly-owned subsidiary of SCSI incorporated
in Louisiana in 1998 for the sole purpose of effectuating the Merger in
accordance with the terms of the Merger Agreement.
THE SPECIAL MEETING
Time, Date, Place and Purposes. The Special Meeting will be held on August
17, 1998, at Radisson Suite Hotel Houston West, 10655 Katy Freeway, Houston,
Texas, 77024 commencing at 9:00 a.m., local time, for the purpose of considering
and voting upon a proposal, as required by the Louisiana Business Corporation
Law (the "Louisiana Act"), to approve and adopt the Merger Agreement (the
"Merger Proposal"). See "The Special Meeting."
Record Date. Only those shareholders of Ceanic of record at the close of
business on July 15, 1998 (the "Record Date") are entitled to notice of, and to
vote at, the Special Meeting. See "The Special Meeting -- Voting at Meeting;
Record Date."
Vote Required for Merger Proposal. Provided that the holders of at least a
majority of the outstanding shares of Ceanic Common Stock (i.e., a quorum) are
present in person or by proxy at the Special Meeting, the affirmative vote of at
least two-thirds ( 2/3) of the shares of Ceanic Common Stock present in person
or by proxy at the Special Meeting will be required to approve and adopt the
Merger Agreement. Abstentions and broker non-votes (as defined herein) will be
counted in determining whether a quorum is present at the Special Meeting.
Abstentions will have the effect of a vote against the Merger Proposal, but
"broker non-votes" will not count as votes for or against the Merger Proposal.
On July 15, 1998, there were a total of 10,681,131 shares of Ceanic Common
Stock outstanding and entitled to vote at the Special Meeting. Directors and
executive officers of Ceanic and their affiliates held on such date
approximately 9.5% of the shares of Ceanic Common Stock entitled to vote at the
Special Meeting. All such directors and executive officers have advised Ceanic
that they intend to vote for the approval and adoption of the Merger Proposal.
Of such shares of Ceanic Common Stock, 885,000 or approximately 8.3% of the
shares of Ceanic Common Stock entitled to vote at the Special Meeting are held
by George C. Yax, who has agreed to vote for the approval and adoption of the
Merger Proposal, and has granted SCSI a proxy to so vote his shares. Dissenting
shareholders who comply with the procedural requirements of the business
corporation law of Louisiana will be entitled to receive payment of the fair
cash value of their shares if the Merger is effected upon approval of less than
eighty percent of Ceanic's total voting power. See "The Special
Meeting -- Voting at Meeting; Record Date," "The Special Meeting -- Vote
Required" and "Dissenters' Rights."
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THE MERGER AND CERTAIN PROVISIONS OF THE MERGER AGREEMENT
General. If the requisite Ceanic shareholder approval is obtained and all
other terms and conditions to the Merger are satisfied (or waived, if
permissible), then at the Effective Time, Merger Sub will be merged with and
into Ceanic, and Ceanic will be the surviving corporation (the "Surviving
Corporation"), whereupon Ceanic will become a wholly-owned subsidiary of SCSI.
In the Merger, each share of Ceanic Common Stock issued and outstanding
immediately prior to the Effective Time will be converted into the right to
receive $20 in cash per share, without interest. The total amount to be paid to
all holders of Ceanic Common Stock (assuming no options for Ceanic stock are
exercised and that no shareholders exercise their statutory dissenters' rights)
will be approximately $213,622,620 million. See "Terms of the Merger -- Exchange
of Stock Certificates."
Recommendation of the Board of Directors. The Ceanic Board has unanimously
approved the Merger and the consummation of the transactions contemplated
thereby and unanimously recommends that Ceanic shareholders vote FOR the
approval and adoption of the Merger Agreement. See "The Proposed Merger --
Ceanic's Reasons for the Merger; Recommendation of the Ceanic Board."
Effective Time. The Effective Time will occur (upon the filing of the
Certificate of Merger with the Secretary of State of the State of Louisiana) as
soon as practicable after the requisite approvals of the Ceanic shareholders has
been obtained, and all other conditions to the Merger have been satisfied or
waived, but in no event later than the second business day thereafter, unless
the parties agree otherwise.
Fairness Opinion. Morgan Keegan & Company, Inc. ("Morgan Keegan") has
rendered its written opinion to the Ceanic Board dated June 25, 1998 that, based
upon and subject to certain matters stated therein, as of the date of such
opinion, the consideration to be received by Ceanic shareholders pursuant to the
Merger is fair, from a financial point of view, to the Ceanic shareholders. A
copy of such opinion is included as Appendix B to this Proxy Statement and
should be read carefully by Ceanic shareholders in its entirety with respect to
the assumptions made, other matters considered and the limitations on the review
undertaken in arriving at such opinion. See "The Proposed Merger -- Fairness
Opinion of Morgan Keegan & Company, Inc."
Amendment of Ceanic's Articles of Incorporation. The Ceanic Articles of
Incorporation will be amended to delete the provisions therein limiting
ownership of Ceanic capital stock by non-United States citizens and, as so
amended, will become the initial Articles of Incorporation of Ceanic after the
Effective Time. See "Terms of the Merger -- Articles of Incorporation and
By-laws of Ceanic."
Certain United States Federal Income Tax Consequences. The consideration to
be paid to all holders of Ceanic Common Stock (assuming no shareholders exercise
their statutory dissenters' rights) will be $20.00 per share. You will be taxed
for federal income tax purposes on your receipt of the merger consideration to
the extent that the amount you receive exceeds your tax basis in your Ceanic
Common Stock. Because determining the tax consequences of the Merger can be
complicated, especially in light of recent changes to the federal tax laws
governing capital gains, and because state tax laws may apply as well, you are
urged to consult your tax advisor to understand fully how the Merger will affect
you.
Regulatory Approvals. Consummation of the Merger is conditioned upon the
expiration or early termination of the waiting period applicable under the Hart
Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act").
Ceanic and the SCS Parties are not aware of any other material governmental or
regulatory approvals required to be obtained for consummation of the Merger,
other than compliance with federal securities laws and with state securities
"Blue Sky" laws.
Accounting Treatment. SCSI intends to account for the Merger under the
purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16 and, without limitation, the FASB, Accounting Standards, FASB
EITF Abstracts, FASB Bulletins and SEC Accounting Bulletins and Accounting
Series Releases relating thereto. See "Terms of the Merger -- Accounting
Treatment."
Interests of Certain Persons in the Merger. In considering the
recommendation of the Ceanic Board with respect to the Merger Agreement, Ceanic
shareholders should be aware that certain members of the
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management of Ceanic and the Ceanic Board have certain interests in the Merger
that are in addition to the interests of shareholders of Ceanic generally
including, without limitation, rights to indemnification. See "The Proposed
Merger -- Interests of Certain Persons in the Merger."
Management. Pursuant to the Merger Agreement, upon the consummation of the
Merger, certain of the officers and directors of Ceanic and Bernard Vossier,
Paul Frikstad and Bruno Chabas, who are officers or directors of one or more of
the SCS Parties, will be the initial officers and directors of the Surviving
Corporation at and as of the Effective Time. See "Terms of the
Merger -- Directors and Officers of Ceanic."
Procedures for Exchange of Certificates. As soon as reasonably practicable
after the Effective Time, a letter of transmittal and instructions for
surrendering stock certificates will be mailed to each person who, as of the
Effective Time, holds shares of Ceanic Common Stock, for use in exchanging such
person's stock certificates for $20 in cash per share, without interest. CEANIC
SHAREHOLDERS SHOULD NOT SEND ANY CEANIC COMMON STOCK CERTIFICATES WITH THE
ENCLOSED PROXY CARD. INSTEAD, CEANIC SHAREHOLDERS SHOULD SEND SUCH CERTIFICATES
TO THE PAYING AGENT (AS DEFINED IN THE MERGER AGREEMENT) IN ACCORDANCE WITH THE
INSTRUCTIONS CONTAINED IN THE EXCHANGE TRANSMITTAL MATERIALS THAT WILL BE MAILED
TO CEANIC SHAREHOLDERS AS SOON AS REASONABLY PRACTICABLE AFTER THE EFFECTIVE
TIME. See "Terms of the Merger -- Exchange of Stock Certificates."
Representations and Warranties. The Merger Agreement contains various
representations and warranties of Ceanic and the SCS Parties. See "Terms of the
Merger -- Representations and Warranties."
Conduct of Business Pending the Merger. The Merger Agreement restricts the
ability of Ceanic to take certain actions and enter into certain transactions
pending the Merger. See "Terms of the Merger -- Conduct of Business Pending the
Merger" and "Terms of the Merger -- Other Acquisition Proposals."
Conditions to the Consummation of the Merger. The obligations of Ceanic and
the SCS Parties to consummate the Merger are subject to the satisfaction or,
where legally permissible, waiver of various conditions, including, among
others: (i) approval and adoption of the Merger Agreement by the shareholders of
Ceanic and (ii) the absence of any order, executive order, stay, decree,
judgment, injunction, statute, rule or regulation issued by any United States
(federal, state or local) or foreign government, or governmental, regulatory or
administrative authority, agency or commission or court of competent
jurisdiction prohibiting consummation of the Merger or making the Merger
illegal. See "Terms of the Merger -- Conditions to the Merger."
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time by mutual consent of Ceanic and the SCS Parties, or by either
Ceanic or the SCS Parties if, subject to certain limitations: (i) there exists
any permanent injunction or other order or decree that is final and
nonappealable preventing the consummation of the Merger; (ii) the Effective Time
has not occurred on or before December 31, 1998; (iii) the shareholders of
Ceanic fail to approve and adopt the Merger Agreement; or (iv) the other party
has breached any representation, warranty, covenant or agreement in the Merger
Agreement such that the related closing conditions would not be satisfied
(unless the breach is curable by the breaching party). In addition, (i) Ceanic
may terminate the Merger Agreement if the Ceanic Board shall determine to engage
in a Ceanic Competing Transaction (as defined herein) and (ii) the SCS Parties
may terminate the Merger Agreement if the Ceanic Board shall have materially
modified or rescinded its recommendation of the Merger or its approval of the
Merger Agreement, if a tender offer or exchange offer for 20% or more of the
Ceanic Common Stock is commenced and the Ceanic Board fails to recommend against
tendering into such offer or if any person other than an SCS Party acquires more
than 20% of the outstanding Ceanic Common Stock. See "Terms of the
Merger -- Termination."
Termination Fee. In connection with the termination of the Merger Agreement
upon the occurrence of certain events, Ceanic would be required to pay to the
SCS Parties a fee equal to three percent (3%) of the product of (i) the sum of
the total number of issued and outstanding shares of Ceanic Common Stock as of
the date of termination plus the total number of shares of Ceanic Common Stock
issuable upon the exercise of outstanding options as of the date of termination,
multiplied by (ii) U.S. $20.00 (the "Termination Fee"), which fee would be
approximately $6.6 million. See "Terms of the Merger -- Termination Fee."
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Shareholders' Rights. Dissenting shareholders who comply with the
procedural requirements of the business corporation law of Louisiana will be
entitled to receive payment of the fair cash value of their shares if the Merger
is effected upon approval by less than eighty percent of the total voting power
of Ceanic. See "Dissenters' Rights."
Treatment of Ceanic Options. Pursuant to the Merger Agreement, all options
to purchase shares of Ceanic Common Stock ("Ceanic Options") outstanding under
Ceanic's various stock option plans (the "Ceanic Option Plans") as of the
Effective Time will be converted into options to purchase SCSSA common stock.
See "Terms of the Merger -- Treatment of Ceanic Options."
MARKET PRICE DATA
The following table sets forth for the calendar periods indicated the high
and low per share sale prices of Ceanic Common Stock as reported by the Nasdaq
National Market.
PERIOD HIGH LOW
- ------ -------- --------
July 1, 1998 to July 15, 1998............................... $19.5000 $19.3125
Quarter Ended:
June 30, 1998............................................. 19.4375 14.1250
March 31, 1998............................................ 15.0000 9.7500
Quarter Ended:
December 31, 1997......................................... 20.7500 10.6250
September 30, 1997........................................ 19.3750 11.8750
June 30, 1997............................................. 12.2500 8.7500
March 31, 1997............................................ 13.0000 10.6250
Quarter Ended:
December 31, 1996......................................... 14.1250 9.7500
September 30, 1996........................................ 11.3750 8.1250
June 30, 1996............................................. 11.0000 8.1250
March 31, 1996............................................ 8.7500 6.7500
The last reported sale price of Ceanic Common Stock on Nasdaq on June 9,
1998, the trading day immediately preceding the public announcement of the
execution by Ceanic and SCSSA of the letter of intent with respect to the
Merger, was $15.4375 share. The last reported sale price of Ceanic Common Stock
on Nasdaq on June 29, 1998, the trading day immediately preceding the public
announcement of the execution of the Merger Agreement, was $18.8750 per share.
The last reported sale price of Ceanic Common Stock on Nasdaq on July 15, 1998,
the trading day immediately preceding the printing of this Proxy Statement, was
$19.4375 per share.
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FORWARD-LOOKING STATEMENTS
This Proxy Statement includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"). All statements other
than statements of historical fact included in this Proxy Statement, including,
without limitation, statements under "Summary," "The Special Meeting" and "The
Proposed Merger" regarding the financial condition, business strategy and plans
and objectives for future operations of the SCS Parties, Ceanic and the
Surviving Corporation are forward-looking statements. These forward-looking
statements are commonly identified by the use of such terms and phrases as
"intends," "estimates," "expects," "project," "anticipates," "foreseeable
future," "seeks," "believes" and "scheduled." Although Ceanic believes that the
assumptions upon which such forward-looking statements are based are reasonable,
all such statements are subject to risks and uncertainties that could cause the
statements to be incorrect.
THE SPECIAL MEETING
TIME, DATE AND PLACE OF THE SPECIAL MEETING
This Proxy Statement is being furnished to the holders of shares of Ceanic
Common Stock in connection with the solicitation of proxies by the Ceanic Board
for use at the Special Meeting to be held on August 17, 1998, at Radisson Suite
Hotel Houston West, 10655 Katy Freeway, Houston, Texas 77024, commencing at 9:00
a.m., local time, and at any adjournments or postponements thereof.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, holders of Ceanic Common Stock will be asked to
consider and vote upon the approval and adoption of the Merger Agreement and act
on such other matters as may properly be brought before the Special Meeting or
any adjournments or postponements thereof.
BOARD OF DIRECTORS RECOMMENDATION
THE CEANIC BOARD HAS UNANIMOUSLY APPROVED THE MERGER AND UNANIMOUSLY
RECOMMENDS THAT CEANIC'S SHAREHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
VOTING AT MEETING; RECORD DATE
Ceanic has established the close of business on July 15, 1998 as the Record
Date for the determination of shareholders entitled to notice of and to vote at
the Special Meeting. Only holders of record of Ceanic Common Stock at the close
of business on the Record Date are entitled to vote at the Special Meeting. On
July 15, 1998, Ceanic had outstanding and entitled to vote 10,681,131 shares of
Ceanic Common Stock, each of which is entitled to one vote per share. On such
date, there were approximately 3,200 holders of Ceanic Common Stock, including
record holders and individual participants in security position listings.
As of July 15, 1998, directors and executive officers of Ceanic and their
affiliates, including George C. Yax, beneficially owned approximately 9.5% of
the outstanding shares of Ceanic Common Stock. Each such director and executive
officer has advised Ceanic that he intends to vote or direct the vote of all
shares of Ceanic Common Stock over which he has voting control for the approval
and adoption of the Merger Agreement. Of such shares of Ceanic Common Stock,
885,000 or approximately 8.3% of the shares of Ceanic Common Stock entitled to
vote at the Special Meeting are held by Mr. Yax, who has agreed to vote for the
approval and adoption of the Merger Proposal, and has granted SCSI a proxy to so
vote his shares.
The SCS Parties do not own any shares of Ceanic Common Stock.
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VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding
shares of Ceanic Common Stock is necessary to constitute a quorum. Shareholders
voting, or abstaining from voting, by proxy on any issue will be counted as
present for purposes of constituting a quorum. If a quorum is present, (a) the
affirmative vote of the holders of two-thirds ( 2/3) of the shares present in
person or by proxy at the Special Meeting will be required to approve the Merger
Proposal and (b) a majority of votes actually cast will decide any other matter
properly brought before the Special Meeting for a vote of shareholders unless
otherwise required by law or Ceanic's Articles of Incorporation. With respect to
the Merger Proposal, shares abstained from voting will be considered present at
the Special Meeting for purposes of determining whether or not two-thirds of the
shares present at the Special Meeting were voted for the Merger Proposal, but
shares not voted by brokers who may hold shares on behalf of the beneficial
owners ("broker non-votes") will not be so considered. With respect to all other
matters, shares not voted as a result of abstentions will be considered present
at the Special Meeting for purposes of determining whether a majority of the
shares present were voted in favor of such matters, but broker non-votes will
not be considered as voted for purposes of determining whether or not a majority
of votes were cast for such matters.
DISSENTERS' RIGHTS
Dissenting shareholders who comply with the procedural requirements of the
business corporation law of Louisiana will be entitled to receive payment of the
fair cash value of their shares if the Merger is effected upon approval by less
than eighty percent of the total voting power of Ceanic. See "Dissenters'
Rights" and Appendix C.
CEANIC PROXIES
Shares of Ceanic Common Stock represented by proxies received by Ceanic
prior to or at the Special Meeting will be voted in accordance with the
instructions contained therein. Shares of Ceanic Common Stock represented by
proxies for which no instruction is given will be voted FOR the Merger Proposal.
Holders of shares of Ceanic Common Stock are requested to complete, sign,
date and return promptly the enclosed proxy card in the postage paid envelope
provided for this purpose to ensure that their shares are voted. A proxy may be
revoked at any time prior to the exercise of the authority granted thereunder.
Revocation may be accomplished by the granting of a later-dated proxy with
respect to the same shares by giving notice of revocation to Ceanic in writing
or at the Special Meeting at any time prior to the vote on the matters to be
considered at the Special Meeting, or by attending the Special Meeting and
voting in person. The presence at the Special Meeting of a shareholder who
signed a proxy does not in and of itself revoke the proxy.
The Ceanic Board is aware of no matters to be presented at the Special
Meeting other than those described in this Proxy Statement. If other matters are
properly brought before the Special Meeting, it is the intention of the persons
named in the proxies to vote the shares to which such proxies relate in
accordance with their judgment.
SOLICITATION OF PROXIES
Corporate Investor Communications, Inc. has been retained to solicit
proxies on behalf of Ceanic for a fee of approximately $6,000 plus out-of-pocket
expenses. Ceanic will bear the cost of the solicitation of proxies from its
shareholders. In addition to solicitation by Corporate Investor Communications,
Inc., directors, officers and employees of Ceanic and its subsidiaries, who will
receive no additional compensation for their services, may solicit proxies from
its shareholders in person, by telephone or otherwise. Arrangements will also be
made with banks, brokerage firms and other custodians, nominees and fiduciaries
to forward solicitation materials to the beneficial owners of Ceanic Common
Stock. Ceanic will reimburse such persons for their reasonable expenses in
communicating with the persons for whom they hold Ceanic Common Stock.
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STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as of July 1, 1998
concerning the number and percentage of shares of Ceanic Common Stock
beneficially owned by each director and each executive officer of Ceanic,
determined in accordance with Rule 13d-3 under Exchange Act. The address of each
director and executive officer is c/o Ceanic Corporation, 900 Town & Country
Lane, Suite 400, Houston, Texas 77024.
SHARES BENEFICIALLY
NAME OWNED(1) PERCENT
---- ------------------- -------
Gordon J. Cowe.............................................. 4,000 *
Quinn J. Hebert............................................. 10,000 *
Stephen A. Lasher........................................... 22,500 *
William C. O'Malley......................................... 20,150 *
Bradley M. Parro............................................ 0 *
Kevin C. Peterson........................................... 42,100 *
Robert B. Suggs............................................. 97,000 *
George C. Yax............................................... 885,000 8.3%
All directors and executive officers as a group (8
persons).................................................. 1,080,750 10.1%
- ---------------
* Less than one percent.
(1) Includes shares that may be purchased upon the exercise of currently
exercisable stock options, as follows: Mr. Cowe, 4,000 shares; Mr. Hebert,
10,000 shares; Mr. Lasher, 7,500 shares; Mr. O'Malley, 7,500 shares; Mr.
Peterson, 40,000 shares; all directors and executive officers as a group,
69,000 shares. Does not include 319,000 shares, in the aggregate, held by
executive officers subject to options that are not currently exercisable.
See "Terms of the Merger -- Treatment of Ceanic Options."
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to the only persons known by
Ceanic to have beneficial ownership, as of March 1, 1998, of more than 5% of the
outstanding shares of Ceanic Common Stock, other than George C. Yax, whose
beneficial ownership and address is disclosed under "Stock Ownership of
Directors and Executive Officers." As of March 1, 1998, Ceanic had 10,640,760
shares outstanding. To Ceanic's knowledge, all shares shown as beneficially
owned are held with sole voting power and sole dispositive power unless
otherwise indicated. The information set forth below has been determined in
accordance with Rule 13d-3 under the Exchange Act on the basis of the most
recent information furnished to Ceanic by the person listed.
NAME AND ADDRESS SHARES BENEFICIALLY OWNED PERCENT OF CLASS
---------------- ------------------------- ----------------
David L. Babson and Company.............................. 754,800 7.1%
One Memorial Drive
Cambridge, Massachusetts 02142
Wellington Management Group.............................. 587,500(1) 5.5%
75 State Street
Boston, Massachusetts
- ---------------
(1) Of the 587,500 shares, Wellington Management Company has shared voting power
over 307,500 shares and shared dispositive power over all 587,500 shares.
SHAREHOLDER PROPOSALS
If the Merger Agreement is not approved and adopted by Ceanic shareholders,
shareholder proposals intended for inclusion in the proxy materials relating to
the Ceanic 1999 annual meeting of shareholders (the "1999 Annual Meeting") must
be received by Ceanic's corporate secretary at Ceanic's principal executive
offices prior to December 9, 1998. Any proxies solicited on behalf of the Ceanic
Board for the 1999 Annual Meeting will confer discretionary authority to vote
with respect to any matter properly submitted by a
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shareholder for action at the 1999 Annual Meeting if Ceanic does not receive
notice of the matter on or before February 23, 1999.
THE PROPOSED MERGER
BACKGROUND OF THE MERGER
Initial discussions between top level executives of Ceanic and SCSSA
occurred on May 5, 1998 in Houston, Texas when Kevin Peterson, Chief Executive
Officer, and two other officers of Ceanic met with Bernard Vossier, Chief
Executive Officer of SCSSA and two other officers of SCSSA. Discussions at this
meeting consisted of exchange of general information about the two companies and
areas of possible cooperation between them. There were further conversations
between a director of Ceanic and a business associate of his who served on
SCSSA's board of directors and on May 15, 1998 when George Yax, Ceanic's
Chairman of the Board, and Mr. Peterson met in Ceanic's Houston offices with Mr.
Vossier and SCSI's President. Information was exchanged in these conversations
regarding SCSSA's interest in acquiring Ceanic and Ceanic's interest in
entertaining an offer for such an acquisition. Prior to the May 15 meeting the
companies exchanged confidentiality agreements and subsequently in various
communications Ceanic supplied written and oral information regarding itself, as
SCSSA representatives requested. On May 18, 1998 Ceanic received a written offer
from SCSSA of a cash purchase of all outstanding Ceanic shares at a price of
$18.75 per share. Negotiations ensued between representatives of the two
companies in which both the $18.75 offer and a subsequent $19.75 per share offer
were rejected by Ceanic. After further discussions, on June 3, 1998 Ceanic
received a written offer of $20.00 per share from SCSSA in the form of a
proposed letter of intent. In subsequent conversations that included Mr. Yax and
Mr. Vossier, SCSSA made it clear that it would not increase its cash offer
beyond $20.00. Other terms of the letter of intent were then discussed and
negotiated among representatives of the two companies, including legal counsel.
The terms negotiated included the size of the termination fee and the
circumstances under which it would be payable, and the circumstances under which
the Ceanic Board would be entitled to receive and negotiate a competing offer
from a third party, as to which it was agreed that the Ceanic Board could do so
in the exercise of its fiduciary duty. The negotiated letter of intent was
executed by the parties on June 9, 1998 and a joint press release was issued the
following morning, prior to the opening of trading on the Nasdaq National
Market. Negotiation of a definitive agreement commenced immediately, and on June
26, 1998 the Merger Agreement was executed by the two companies.
Prior to the initiation of discussions between Ceanic and SCSSA, Ceanic
representatives had discussions concerning various strategic alliances with
several corporations, including discussions of sales of business divisions of
Ceanic and sale of the entire company. Principal among these were discussions
with a competitor of Ceanic's in the Gulf of Mexico diving services market
("Company A"), with which Ceanic had discussions as to business combinations
several times in the past, most recently beginning in February 1998. From then
until the end of May 1998 discussions were held among various members of
management and directors of the two corporations concerning a possible
acquisition of Ceanic. In late May Company A indicated first orally and then in
writing its interest in acquiring Ceanic in a stock-for-stock transaction
evaluated at a maximum of approximately $21.00 per share on the basis of the
closing price of Company A stock on the day of the oral indication of interest
and approximately $20.25 on the day of the written indication of interest.
Management of Ceanic and the Ceanic Board considered that, while this price
reflected near maximum value of Ceanic in an acquisition by a strategic
acquiror, it was inferior to the all-cash proposal that had been received from
SCSSA, primarily because there was doubt that a definitive agreement could be
negotiated at the maximum price stated in Company A's proposal and because of
the inherent uncertainty as to the ongoing value of Company A stock.
CEANIC'S REASONS FOR THE MERGER; RECOMMENDATION OF THE CEANIC BOARD
At meetings of the Ceanic Board on June 5 and June 8, 1998 the directors
considered and approved the letter of intent that led to the negotiation of the
Merger Agreement, and at its meeting on June 25, 1998 the Ceanic Board
considered the proposed Merger Agreement. Legal counsel to Ceanic participated
in all of these
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meetings and Morgan Keegan, which had been retained by Ceanic as its financial
advisor, was present at the June 25, 1998 meeting. At these meetings, the Ceanic
Board discussed extensively the terms of the letter of intent and the definitive
Merger Agreement and considered, among other things, management's presentation
of the business outlook of Ceanic; the strategic alternatives available to
Ceanic, including the SCSSA proposal, the Company A proposal, and remaining
independent; and the fairness opinion of Morgan Keegan.
AT ITS MEETING HELD JUNE 25, 1998, THE CEANIC BOARD UNANIMOUSLY CONCLUDED
THAT THE MERGER AND THE MERGER AGREEMENT ARE IN THE BEST INTEREST OF CEANIC
SHAREHOLDERS AND RECOMMENDED THAT SHAREHOLDERS VOTE FOR ADOPTION OF THE MERGER
AGREEMENT.
The Ceanic Board, in making the determination that the Merger is in the
best interest of Ceanic shareholders, considered the following factors, among
others:
The all-cash consideration of $20.00 per share, without interest, for
each issued and outstanding share of Ceanic Common Stock (the "Merger
Consideration") represents a 29% percent premium over the closing price of
Ceanic Common Stock on June 9, 1998, the last trading day before public
announcement of the proposed Merger.
The Ceanic Board's belief that the Merger Consideration represents the
highest price that SCSSA would be willing to pay in acquiring Ceanic, which
belief resulted in part from the substantial negotiations between Ceanic
management and directors, on the one hand, and SCSSA executives, on the
other hand.
The opinion of Morgan Keegan, discussed below, that the Merger
Consideration is fair, from a financial point of view, to Ceanic
shareholders.
The Ceanic Board's belief that the Merger Consideration was superior
to the indication of interest received from Company A, for which Ceanic,
considering its competitive relationship with Company A, would have been a
very valuable strategic acquisition.
While Ceanic's financial prospects appeared favorable, its business is
cyclical and subject to many risks and uncertainties, including the
uncertainty of continued investment by oil and gas companies in offshore
exploration and production. Moreover, in view of Ceanic's need to focus
increasingly on deep water activity, heavy capital expenditures would be
required, so that Ceanic, if it remained independent, would need in the
relatively near future to do an equity offering, the success of which was
uncertain in view of recent trends in the equity markets for energy-related
companies.
The fact that the proposed Merger and the $20.00 per share Merger
Consideration were publicly disclosed on June 10, 1998 and that, through
the time of the June 25, 1998 meeting of the Ceanic Board, no competing
offer or proposal of any kind had been received from any third party.
The provisions of the Merger Agreement are structured (i) to
accommodate unsolicited offers from third parties to acquire Ceanic and to
permit Ceanic to furnish information to and negotiate with such third
parties, to the extent that such actions must be taken by the Ceanic Board
to comply with its fiduciary duties; and (ii) to enable the Ceanic Board to
terminate the Merger Agreement and accept a financially superior proposal
subject to the payment of a termination fee of approximately $6.6 million
(see "Terms of the Merger -- Other Acquisition Proposals," "-- Termination"
and "-- Termination Fee").
The financial condition of SCSSA and the fact that the Merger
Agreement does not contain a financing condition to the obligation of SCSSA
to consummate the Merger.
That Ceanic shareholders will have, unless the Merger Agreement is
approved by 80% or more of Ceanic's total voting power, dissenters'
appraisal rights, under which shareholders who comply with the procedural
requirements of the Louisiana Act will be entitled to receive payment of
the fair cash value of their shares, as determined ultimately by a
Louisiana court (see "Dissenters' Rights").
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FAIRNESS OPINION OF MORGAN KEEGAN & COMPANY, INC.
On June 17, 1998, the Ceanic Board retained Morgan Keegan & Company, Inc.
("Morgan Keegan") to render an opinion to the Ceanic Board concerning the
fairness, from a financial point of view, to Ceanic shareholders of the
consideration to be received by Ceanic shareholders pursuant to the Merger
Agreement. Morgan Keegan was retained by Ceanic on the basis of, among other
things, its experience and expertise and familiarity with the offshore oil and
gas services industry. Morgan Keegan was one of the underwriters of the Ceanic
initial public offering of July 1993, and acted as the lead managing underwriter
for Ceanic's second public offering in February 1997. As part of its investment
banking services, Morgan Keegan is regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
corporate restructurings, strategic alliances, negotiated underwritings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes.
Morgan Keegan's engagement was limited to rendering the opinion described
herein to the Ceanic Board. Morgan Keegan did not provide any services to any
other party to the proposed Merger.
Representatives of Morgan Keegan met with Ceanic management on June 22,
1998 and attended the June 25, 1998 meeting of the Ceanic Board at which the
Ceanic directors considered the proposed Merger and approved the Merger
Agreement. At such meeting, representatives of Morgan Keegan made presentations
and reviewed various aspects of the Merger, including the financial terms and
conditions of the Merger.
At the June 25, 1998 meeting of the Ceanic Board, Morgan Keegan rendered
its written opinion to the Ceanic Board to the effect that, as of that date, the
consideration to be received by Ceanic shareholders in connection with the
Merger was fair, from a financial point of view, to the Ceanic shareholders. The
full text of Morgan Keegan's opinion is attached as Appendix B to this Proxy
Statement and is incorporated herein by reference. The description of the
opinion set forth herein is qualified in its entirety by reference to Appendix
B. Ceanic shareholders are urged to read the opinion in its entirety for a
description of the procedures followed, qualifications made, matters considered
and limitations undertaken by Morgan Keegan. The assumptions that Morgan Keegan
made for purposes of conducting its analysis are described below.
MORGAN KEEGAN'S OPINION IS DIRECTED TO THE CEANIC BOARD AND ADDRESSES ONLY
THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, TO THE CEANIC SHAREHOLDERS OF THE
CONSIDERATION TO BE RECEIVED BY CEANIC SHAREHOLDERS PURSUANT TO THE MERGER
AGREEMENT. MORGAN KEEGAN'S OPINION DOES NOT ADDRESS THE RELATIVE MERITS OF THE
MERGER AND THE OTHER BUSINESS STRATEGIES CONSIDERED BY THE CEANIC BOARD, NOR
DOES IT ADDRESS THE CEANIC BOARD'S DECISION TO PROCEED WITH THE MERGER. THE
OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY CEANIC SHAREHOLDER AS TO HOW
SUCH CEANIC SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING.
In connection with rendering its opinion, Morgan Keegan: (i) reviewed
certain publicly available consolidated financial statements of Ceanic and
certain other relevant financial and operating data of Ceanic made available to
it from published sources and by Ceanic officers; (ii) reviewed certain internal
financial and operating information, including certain projections, relating to
Ceanic prepared by Ceanic management; (iii) discussed the business, financial
condition and prospects of Ceanic with certain Ceanic officers; (iv) reviewed
the financial terms of the Merger; (v) reviewed the financial terms, to the
extent publicly available, of certain similar transactions it deemed relevant;
(vi) reviewed certain publicly available information relating to certain
companies it deemed appropriate in analyzing Ceanic; (vii) reviewed the trading
history of Ceanic Common Stock; (viii) reviewed a draft of the Merger Agreement;
and (ix) performed such other analyses and examinations and considered such
other information, financial studies, analysis and investigations and financial,
economic and market data it deemed relevant.
Morgan Keegan assumed and relied upon the accuracy and completeness of all
the information concerning Ceanic considered by it for purposes of its opinion
and did not independently verify any such information. With respect to the
financial forecasts and projections made available to Morgan Keegan and used in
its analysis, Morgan Keegan assumed that such financial forecasts and
projections were reasonably prepared on bases reflecting the best currently
available estimates and judgments of Ceanic management as to the expected future
financial performance of Ceanic. Morgan Keegan was not engaged to assess the
achievability of such projections or the assumptions on which they were based.
Morgan Keegan did not
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conduct a physical inspection or appraisal of any of the Ceanic assets,
properties or facilities, nor was it furnished with any such evaluation or
appraisal. Morgan Keegan assumed that the Merger would be consummated on the
terms and subject to the conditions described in the Merger Agreement. Morgan
Keegan also assumed that all necessary governmental approvals and third party
consents would be obtained on terms and conditions that will not have a material
adverse effect on Ceanic.
The following is a summary of analyses presented by Morgan Keegan to the
Ceanic Board on June 25, 1998 (the "Morgan Keegan Report") in connection with
its opinion.
Comparable Company Analysis. Morgan Keegan compared selected historical and
projected market value multiples of a group of publicly-traded oil service
companies that it deemed to be comparable to Ceanic. The group included nine oil
service companies that Morgan Keegan considered most comparable to Ceanic based
on a variety of criteria (the "Peer Group"). This group consisted of CalDive
International, Inc., Global Industries, Ltd., Gulf Island Fabrication, Inc.,
Halter Marine Group, Horizon Offshore, Inc., J. Ray McDermott, S.A., Oceaneering
International, Inc., Stolt Comex Seaway S.A., and UNIFAB International, Inc. No
company used in Morgan Keegan's analysis was identical to Ceanic. Accordingly,
Morgan Keegan considered the market multiples for the composite of comparable
companies to be more relevant than the market multiples of any single company.
Morgan Keegan calculated a range of implied values based upon the market
multiples of companies in the Peer Group and applied them to the historical and
projected results of Ceanic to determine a range of implied values for Ceanic
Common Stock. Morgan Keegan calculated the multiples of adjusted market value
(i.e., equity market capitalization plus debt less cash) to latest twelve months
("LTM") revenues, Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA"), and Earnings Before Interest and Taxes ("EBIT") and multiples of
market value (equity market capitalization) to LTM net income, earnings per
share ("EPS"), projected EPS and cash flow per share ("CFPS") (based on
published third party estimates) for calendar 1998 and 1999, and tangible book
value for each of the companies in the Peer Group. Morgan Keegan applied the
multiples of the Peer Group companies to Ceanic's LTM revenues, EBITDA, EBIT,
net income, and tangible book value. The companies in the Peer Group had
multiples ranging from 0.9x to 5.5x LTM revenues, 7.9x to 26.9x LTM EBITDA, 9.3x
to 30.3x LTM EBIT, 15.1x to 66.0x LTM net income, and 2.4x to 6.3x LTM tangible
book value, with median multiples of 1.4x LTM revenue, 10.1x LTM EBITDA, 16.6x
LTM EBIT, 25.9x LTM net income, and 4.3x LTM tangible book value. Morgan Keegan
considered revenue and tangible book value less meaningful than the other
measures.
Application of the median Peer Group multiples to Ceanic resulted in an
implied equity value per share of Ceanic Common Stock of $14.68 based on LTM
revenues, $13.64 based on LTM EBITDA, $5.14 based on LTM EBIT, $10.76 based on
LTM net income, and $30.24 based on LTM tangible book value. Thus, after the
elimination of the measures that Morgan Keegan considered less meaningful, the
median implied equity value per share of Ceanic Common Stock ranged from $5.14
to $13.64.
Discounted Cash Flow Analysis. Morgan Keegan performed a discounted cash
flow analysis to calculate the implied price per share of Ceanic Common Stock
based on management's projections through December 31, 2002. Using this
information, Morgan Keegan calculated the present value of free cash flows that
Ceanic could generate through December 31, 2002 using discount rates ranging
from 14.0% to 18.0%. Morgan Keegan also calculated the terminal value of Ceanic
in the year 2002 based on multiples ranging from 6.0x to 8.0x discretionary cash
flow (net income plus depreciation) and discounted these terminal values using
discount rates ranging from 14.0% to 18.0%. Morgan Keegan's judgment concerning
the risks associated with the cash flows was a key factor in its determination
of an appropriate discount rate to use in its analysis. Among the factors
contributing to Morgan Keegan's conclusions about an appropriate discount rate
was management's estimated weighted average cost of capital analysis. The sum of
the present value of the free cash flows and terminal values less outstanding
debt (net of cash) yielded an implied price per share of Ceanic Common Stock
ranging from $14.74 to $22.91.
Inherent in any discounted cash flow valuation are the use of a number of
assumptions, including the accuracy of management's projections, and the
subjective determination of an appropriate terminal value and discount rate to
apply to the projected cash flows of the entity under examination. Variations in
any of these
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assumptions or judgments and variables beyond management's control, such as the
general economy, world-wide oil and gas prices, adverse weather conditions, and
the availability of personnel and equipment, could significantly alter the
results of a discounted cash flow analysis.
Comparable Acquisitions Analysis. To assess market pricing for oil service
Company Acquisitions, Morgan Keegan identified 11 acquisition transactions in
the oil service company industry completed since June 1, 1996 or currently
pending. No transaction identified was considered by Morgan Keegan to be
identical to the proposed Merger. Morgan Keegan analyzed the range of LTM
revenue, EBITDA, EBIT, net income and book value multiples represented by the
purchase price paid in the oil service company transactions it reviewed. The
comparable acquisitions in the oil service industry identified by Morgan Keegan
had multiples ranging from 0.93x to 8.28x LTM revenues, 6.87x to 20.88x LTM
EBITDA, 8.87x to 68.92x LTM EBIT, 0.41x to 48.09x LTM net income, and 1.54x to
5.95x LTM book value, with median multiples of 1.59x LTM revenues, 9.87x LTM
EBITDA, 20.78x LTM EBIT, 21.94x LTM net income, and 2.85x LTM book value. Morgan
Keegan considered revenues and book value less meaningful than the other
measures. Application of such median multiples to Ceanic resulted in an implied
equity value per share of Ceanic Common Stock of $16.36 based on LTM sales,
$13.33 based on LTM EBITDA, $7.01 based on LTM EBIT, $9.12 based on LTM net
income, and $19.91 based on LTM book value. Thus, after the elimination of the
measures Morgan Keegan considered less meaningful, the median implied equity
value per share of Ceanic Common Stock ranged from $7.01 to $13.33.
A comparable acquisitions analysis is inherently limited. There are a
limited number of comparable transactions, and many of them are not fully
disclosed. It may be unclear what "add-backs" or other adjustments buyers made
in valuing the targets. In addition, other, non-financial factors can influence
a valuation based on comparable acquisitions.
Leveraged Buyout Analysis. Morgan Keegan also performed a leveraged buyout
analysis, which evaluated the purchase price to be paid and hypothetical
financing arrangements for the proposed transaction from the perspective of an
unaffiliated financial buyer. Morgan Keegan concluded that an equity purchase
price per share of Ceanic Common Stock of up to $17.39 could be financed.
Management's projections provided the income statement forecasts for 1998-2002,
which were used in the leveraged buyout analysis.
Premium Analysis. Morgan Keegan reviewed publicly-available information
concerning premiums paid in two categories of acquisition transactions and
derived an implied price per share of Ceanic Common Stock based on the median
premiums paid in these transactions. Morgan Keegan reviewed the premiums paid in
24 energy industry transactions completed since January 1, 1997. Morgan Keegan
then calculated the median premiums represented by the offer price in those
transactions over the market price of the securities four weeks, one week and
one day prior to the public announcement of the proposed transaction. The median
premiums represented by the purchase prices paid in the energy industry
acquisitions reviewed by Morgan Keegan were 26.8% (four weeks prior to
announcement), 13.8% (one week prior to announcement) and 12.3% (one day prior
to announcement). The implied price resulting from the application of these
median premiums to Ceanic ranged from $16.50 to $19.65 per share of Ceanic
Common Stock as compared to the Merger consideration of $20.00 per share of
Ceanic Common Stock.
Morgan Keegan also reviewed publicly-available information concerning
premiums paid in 24 acquisition transactions completed since January 1, 1997
involving an all-cash purchase price of between $150 million and $300 million.
The median premiums over market prices paid in these transactions were 35.4%
(four weeks prior to announcement), 35.7% (one week prior to announcement) and
28.9% (one day prior to announcement). Morgan Keegan's analysis of the median
premiums paid in the acquisition transactions involving an all-cash purchase
price of between $150 million and $300 million indicated an implied value for
Ceanic Common Stock ranging from $19.67 to $20.99 per share of Ceanic Common
Stock.
No company or transaction used in the above analyses for comparative
purposes is identical to Ceanic. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of the companies and
other factors. Mathematical analysis (such as determining the average or median)
is not, in itself, a meaningful method of using comparable company or
transaction data.
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The summary of the Morgan Keegan Report set forth above describes all
material analyses performed by Morgan Keegan. The preparation of a fairness
opinion is not necessarily susceptible to partial analysis or summary
description. Morgan Keegan believes that its analyses and the summary set forth
above must be considered as a whole and that selecting portions of its analyses,
without considering all analyses, or the above summary, without considering all
factors and analyses, would create an incomplete view of the process underlying
the analyses set forth in the Morgan Keegan Report and the Fairness Opinion. In
addition, Morgan Keegan may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of valuations resulting from
any particular analysis described above should not be taken to represent the
actual value of Ceanic.
In performing its analyses, Morgan Keegan made numerous assumptions with
respect to industry performance and general business and economic conditions.
Morgan Keegan assumed that long-term growth rates in the oil service industry
would not deviate significantly from historic levels, that industry practices
with respect to pricing adjustments relating to changes in industry costs would
remain consistent with historic practices, that the United States economy would
continue to experience a moderate rate of growth over the long-term, that any
recession would not be more severe or of longer duration than that experienced
in 1991-1992, and that inflation and interest rates would remain within the
ranges experienced over the past five years. Many of these factors are beyond
the control of Ceanic. The analyses performed by Morgan Keegan are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. Such
analyses were prepared solely as part of Morgan Keegan's analysis of the
fairness of the consideration to be paid pursuant to the Merger and were
provided to the Ceanic Board in connection with the delivery of the Fairness
Opinion. The analyses do not purport to be appraisals or to reflect the prices
at which a company might actually be sold or the prices at which any securities
may trade at the present time or at any time in the future. In addition, as
described above, the Fairness Opinion and presentation to the Ceanic Board was
one of many factors taken into consideration by the Ceanic Board in making its
determination to approve the Merger Agreement.
Morgan Keegan has expressed no opinion as to the prices at which Ceanic
Common Stock may trade following the date of its opinion.
Ceanic agreed to pay Morgan Keegan a fee of $150,000 for its services
pursuant to an engagement letter between Ceanic and Morgan Keegan. An aggregate
of $50,000 was paid upon execution of the engagement letter, and an additional
$100,000 was paid upon delivery of the Fairness Opinion. No portion of Morgan
Keegan's fee was contingent upon the closing of the transaction or whether
Morgan Keegan gave a favorable opinion with respect to a proposed transaction.
Ceanic also has agreed to reimburse Morgan Keegan for its reasonable
out-of-pocket expenses and to indemnify Morgan Keegan against certain
liabilities, including liabilities under the federal securities laws.
THE SCS PARTIES' REASONS FOR THE MERGER
SCSSA is a leading international provider of high technology underwater
construction and pipelaying services to the oil and gas industry. SCSSA has
focused primarily in the North Sea, but has expanded into West Africa, Asia
Pacific and Brazil in recent years. For 1997, over 61% of its revenue was
derived from the North Sea, 18% from West Africa, 9% from Asia Pacific, 2% from
the Gulf of Mexico and 10% from South America. In recent years, SCSSA has
focused on acquiring and developing technology for carrying out subsea
construction projects in very deep waters, down to 10,000 feet. Its customers
include major worldwide oil companies, as well as national oil companies and
other contractors. Due to increasing interest in exploring oil and gas in the
deep waters of the Gulf of Mexico, SCSSA believes that its U.S.-based customers
will require the high technology deepwater construction services that SCSSA has
developed in order to allow them to exploit competitively deepwater oil and gas
producing fields. In addition, it has been SCSSA's experience that customers
increasingly ask that contractors provide a wide range of services as well as
undertake increasingly technological and capital intensive projects.
To respond to the growing demand for contractors to provide increasingly
complex and wide-ranging projects and services for deepwater field development
in the Gulf of Mexico, SCSSA concluded that acquiring
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or merging with a well-established and well-reputed U.S. and Gulf of Mexico
based subsea contractor would provide the best basis for serving U.S.-based oil
companies' needs for subsea construction services. On this basis, SCSSA proposed
to merge with Ceanic, a well-established and well-reputed subsea contractor in
the Gulf of Mexico. Although Ceanic, which has traditionally focused on the
large shallow water market segment, has identified the growing deepwater market
as a target for expansion, it needs access to new deepwater technology and
capital in order to address its customers' deepwater needs. The combination of
Ceanic with SCSSA will provide the combined entity with a strong presence in the
Gulf of Mexico and will allow it to provide its customers with high technology
deepwater construction, pipelaying and inspection services, as well as
traditional shallow water services. In addition, it will enable Houston-based
customers better access to SCSSA's deepwater technology for projects in other
markets such as West Africa and Brazil.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Ceanic shareholders should be aware that certain directors and members of
management of Ceanic may be deemed to have certain interests in the Merger in
addition to their interests as Ceanic shareholders, as the case may be. The
Ceanic Board was aware of these interests and considered them, among other
matters, in approving the Merger Agreement and the Merger and the other
transactions contemplated by the Merger Agreement and in recommending
shareholder approval and adoption of the Merger Agreement.
The SCS Parties have agreed to cause the Surviving Corporation to keep in
its Articles of Incorporation the provisions relating to the indemnification of
directors and employees currently contained in Ceanic's Articles of
Incorporation. See "Terms of the Merger -- Indemnification."
In addition, certain of Ceanic's senior management will continue to be
employed after the Merger and will be entitled to participate in SCSSA's stock
option and other benefit plans as employees of the Surviving Corporation.
The arrangements with respect to the termination of options to purchase
SCSSA common stock that will be granted to Kevin C. Peterson, Gordon J. Cowe,
and Quinn J. Hebert (who are Ceanic executive officers) will not be the same as
those arrangements with other persons who will also be granted options to
purchase SCSSA common stock in connection with the Merger. See "Terms of the
Merger -- Treatment of Ceanic Options."
TERMS OF THE MERGER
The following is a summary of the material provisions of the Merger
Agreement. A copy of the Merger Agreement is attached as Appendix A to this
Proxy Statement and is incorporated herein by reference. The following summary
does not purport to be complete and is qualified in its entirety by reference to
the Merger Agreement.
THE MERGER; EFFECTIVE TIME
Upon the terms and subject to the conditions of the Merger Agreement, at
the Effective Time, Merger Sub will merge with and into Ceanic and the separate
corporate existence of Merger Sub will terminate. Ceanic will be the surviving
corporation in the Merger, and will continue its corporate existence under the
Louisiana Act under the same name as a wholly-owned subsidiary of SCSI. As more
fully discussed below, the Articles of Incorporation of Ceanic, as in effect
immediately prior to the Effective Time, will be amended to delete Article XI
thereof and any references thereto and will be the initial Articles of
Incorporation of Ceanic, as the Surviving Corporation; the By-laws of Merger
Sub, as in effect immediately prior to the Effective Time, will be the initial
By-laws of the Surviving Corporation. The Merger will become effective upon the
execution and filing of the Certificate of Merger with the Secretary of State of
Louisiana or at such subsequent date or time as shall be agreed by Ceanic and
the SCS Parties and be specified in the Certificate of Merger. Such filing will
be made or otherwise become effective on the closing date (the "Closing Date"),
which Closing Date will be no later than two business days after satisfaction or
waiver of the conditions set forth in Article VI of the Merger Agreement or upon
such later date as the parties agree.
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CONVERSION OF SECURITIES
Upon the terms and subject to the conditions of the Merger Agreement, at
the Effective Time each outstanding share of Ceanic Common Stock will be
converted into the right to receive $20 in cash per share, without interest. All
shares of Ceanic Common Stock that are owned by Ceanic as treasury shares, and
any shares of Ceanic Common Stock directly or indirectly owned by the SCS
Parties, will be canceled and will cease to exist at the Effective Time and no
consideration will be delivered in exchange therefor.
TREATMENT OF CEANIC OPTIONS
As of July 15, 1998, approximately 1,185,328 shares of Ceanic Common Stock
were issuable upon exercise of Ceanic Options, of which 226,246 were exercisable
and 959,082 were scheduled to become exercisable in the future. Under the Merger
Agreement, one-third ( 1/3) of the portion of each Ceanic Option that is not
exercisable on the date of the Effective Time will be accelerated and become
exercisable immediately prior to the Effective Time.
Immediately after the Effective Time, each Ceanic Option to the extent not
exercised by the holder thereof will be converted into an adjusted option (an
"Adjusted Option") to purchase shares of SCSSA common stock. The number of
shares of SCSSA common stock subject to an Adjusted Option and the exercise
price of an Adjusted Option will be determined by application of a conversion
ratio to the number of shares of Ceanic Common Stock subject to, and the
exercise price of, the Ceanic Option to which it relates, respectively. The
conversion ratio will be based on the average closing price of SCSSA common
stock on the Nasdaq National Market for the twenty trading days immediately
preceding the Closing Date, with the intent that the economic position of the
Ceanic Options will be preserved in the corresponding Adjusted Options.
The portion of an Adjusted Option that is derived from the portion of the
underlying Ceanic Option that was exercisable immediately prior to the Effective
Time (including the portion thereof that was accelerated), to the extent not
exercised by the optionholder, will be immediately exercisable, and the
remainder of such Adjusted Option will become exercisable in four equal
installments on the first four anniversaries of the Closing Date subject to the
receipt of any necessary optionholder consents. Except with respect to certain
Ceanic executive officers as indicated below, if and when an optionholder's
employment with SCSSA is terminated for cause or voluntarily by the optionholder
(other than due to retirement in accordance with Ceanic's policy, disability or
death), the unexercisable portion of such optionholder's Adjusted Options would
be immediately forfeited but, if and when an optionholder's employment with
SCSSA is terminated other than involuntarily for cause or voluntarily by the
optionholder (other than due to retirement in accordance with Ceanic's policy,
disability or death), all of the unexercisable portion of such optionholder's
Adjusted Options would be immediately exercisable. With respect to Kevin C.
Peterson, Gordon J. Cowe and Quinn J. Hebert (who are Ceanic executive
officers), the unexercisable portion of any such executive officer's Adjusted
Options would become immediately exercisable if such person's employment with
SCSSA is terminated after the first year following the Closing Date for any
reason or if such person's employment with SCSSA is terminated during the first
year following Closing Date for any reason other than termination by such person
without "Good Reason," as defined in the Merger Agreement specifically to that
person. In the event of termination by such person without "Good Reason," the
unexercisable portion of such person's Adjusted Options would be immediately
forfeited.
EXCHANGE OF STOCK CERTIFICATES
As of the Effective Time, the SCS Parties will deposit with a paying agent
designated by the SCS Parties and reasonably acceptable to Ceanic (the "Paying
Agent"), for the benefit of Ceanic shareholders, the Aggregate Consideration.
As soon as practicable after the Effective Time, the SCS Parties shall
cause the Paying Agent to mail a form of transmittal letter to the holders of
certificates representing shares of Ceanic Common Stock. The form of transmittal
letter will contain instructions with respect to the surrender of such
certificates in exchange for $20 in cash per share, without interest.
CEANIC STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY
CARD AND SHOULD NOT BE PROVIDED TO THE PAYING AGENT EXCEPT WITH A
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TRANSMITTAL FORM, WHICH WILL BE PROVIDED TO CEANIC SHAREHOLDERS FOLLOWING THE
EFFECTIVE TIME.
If a certificate representing shares of Ceanic Common Stock has been lost,
stolen or destroyed, the Paying Agent will issue the consideration properly
payable in accordance with the Merger Agreement upon receipt of appropriate
evidence as to such loss, theft or destruction, appropriate evidence as to the
ownership of such certificate and appropriate and customary indemnification.
DIRECTORS AND OFFICERS OF CEANIC
Pursuant to the Merger Agreement, the initial directors and officers of
Ceanic following the Merger, who will serve in each case until their respective
successors are duly elected or appointed and duly qualified, will be: Bernard
Vossier, Chairman of the Board; Kevin Peterson, Director, President and Chief
Executive Officer; Paul Frikstad, Director; Bruno Chabas, Director; Quinn
Hebert, Director, Corporate Counsel and Secretary; Brad Parro, Chief Financial
Officer and Treasurer; and Gordon Cowe, Vice President - Engineering.
ARTICLES OF INCORPORATION AND BY-LAWS OF CEANIC
Pursuant to the Merger Agreement, (a) the Articles of Incorporation of
Ceanic, as in effect immediately prior to the Effective Time, will be amended to
delete Article XI thereof, which limits ownership of Ceanic capital stock by
non-United States citizens, and any references thereto and, as so amended, will
be the initial Articles of Incorporation of the Surviving Corporation, and (b)
the By-laws of Merger Sub, as in effect prior to the Effective Time, will be the
initial By-laws of the Surviving Corporation following the Merger. Article XI of
the Ceanic Articles of Incorporation as currently in effect limits the ownership
or control by one or more Non-U.S. Citizens (as defined therein) of the
outstanding Ceanic capital stock in excess of a certain percentage set forth
therein. The proposed amendment to the Ceanic Articles of Incorporation as
currently in effect would delete those provisions and would provide no
limitation on the ownership or control by one or more Non-U.S. Citizens of the
outstanding capital stock of the Surviving Corporation.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of
Ceanic and the SCS Parties regarding, among other things, corporate organization
and standing, subsidiaries, corporate power and authority, capitalization,
conflicts, consents and approvals, absence of certain changes, taxes and tax
returns, compliance with applicable law, this Proxy Statement, litigation,
brokerage and finder's fees, the opinion of Morgan Keegan, accounting matters,
employee benefit plans, contracts, labor relations, permits, environmental
matters and stock ownership in Ceanic. The representations and warranties of
each of Ceanic and the SCS Parties will not survive the Merger.
CONDUCT OF BUSINESS PENDING THE MERGER
During the period from the date of the Merger Agreement to the Effective
Time, Ceanic agreed, and agreed to cause each of its subsidiaries, to generally
conduct their operations in the ordinary course except as expressly contemplated
by the Merger Agreement, including without limitation not to, and not to allow
its subsidiaries to, without the prior written consent of the SCS Parties: (i)
effect certain actions with respect to its securities; (ii) sell, encumber or
otherwise dispose of any material property or assets; (iii) make or propose any
changes in its articles of incorporation, by-laws or other organizational
documents; (iv) merge or consolidate with any other person or acquire a material
amount of assets or capital stock of and other person or enter into any
confidentiality agreement with any person, other than in connection with the
Merger Agreement and the Merger and the other transactions contemplated by the
Merger Agreement; (v) incur, or otherwise become liable for, indebtedness other
than in the ordinary course of business consistent with past practice, but in no
event in excess of $100,000, or guarantee, endorse or otherwise become liable
for obligations of any other entity, other than in the ordinary course of
business consistent with past practice; (vi) enter into or modify any
employment, severance or similar agreements or arrangements with, or otherwise
increase the compensation or benefits provided to, any employee other than
salary increases and bonuses and severance payments granted
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to employees who are not officers or directors in the ordinary course of
business consistent with past practice; (vii) change its method of doing
business or change any method or principle of accounting in a manner that is
inconsistent with past practice; (viii) settle any legal action involving an
amount in excess of $100,000 other than certain specified Jones Act claims; (ix)
modify, terminate, release or assign any material rights or claims with respect
to any material contract to which Ceanic is a party; (x) incur or commit to any
capital expenditures, obligations or liabilities in respect thereof, other than
in the ordinary course of business consistent with past practice, but in no
event in excess of $50,000 individually or $250,000 in the aggregate; (xi) take
any other action other than as contemplated in "Other Acquisition Proposals"
below that would reasonably be expected to prevent or materially delay Ceanic
from consummating the transactions contemplated by the Merger Agreement; (xii)
fail to take such actions as are in its power and authority that are necessary
to render the fair price protection provisions and the control share acquisition
provisions of the Louisiana Act inapplicable to the Merger; or (xiii) agree to
take any action prohibited by the foregoing.
OTHER ACQUISITION PROPOSALS
Ceanic has agreed that, during the term of the Merger Agreement, it shall
not, and shall not permit any of its directors, officers, employees, agents,
affiliates or representatives, directly or indirectly, to (i) initiate contact
with, (ii) make, solicit or encourage any inquiries or proposals from, (iii)
enter into, or participate in, any discussions or negotiations with, (iv)
disclose, directly or indirectly, any information not customarily disclosed
concerning the business and properties of Ceanic or its subsidiaries to or (v)
afford any access to Ceanic's or its subsidiaries' properties, books and records
to any person (other than the SCS Parties or their respective directors,
officers, employees, agents and representatives) in connection with any possible
proposal relating to (a) the disposition of Ceanic's business or all or
substantially all of its assets (except for disposition of assets in the
ordinary course of business consistent with past practice), (b) the acquisition
of equity or debt securities of Ceanic or its subsidiaries (except in connection
with the exercise of options) or (c) the merger, share exchange or business
combination, or similar acquisition transaction, of or involving Ceanic or its
subsidiaries with any person other than the SCS Parties (each or any combination
of the foregoing a ("Ceanic Competing Transaction"); provided that Ceanic may
(1) furnish information (subject to a confidentiality agreement in reasonably
customary form) to, and negotiate or otherwise engage in discussions with, any
party who delivers a written proposal for a Ceanic Competing Transaction if and
so long as the Ceanic Board determines in good faith, based upon advice of its
outside legal counsel, that failing to take such action would reasonably be
expected to constitute a breach of the fiduciary duties of the Ceanic Board and
(2) take a position with respect to the Merger or a Ceanic Competing
Transaction, or amend or withdraw such position, in compliance with Rule 14d-9
or Rule 14e-2 promulgated under the Exchange Act with regard to a Ceanic
Competing Transaction. Ceanic also agreed to advise the SCS Parties immediately
of the receipt of any inquiries or proposals relating to a Ceanic Competing
Transaction and promptly furnish to the SCS Parties in writing all the relevant
details of any such proposal or inquiry.
INDEMNIFICATION
After the Effective Time, the SCS Parties will cause the Surviving
Corporation to indemnify and hold harmless the current directors and officers of
Ceanic for actions, errors or omissions prior to the Effective Time to the same
extent that such directors and officers are currently entitled to
indemnification under Ceanic's Articles of Incorporation and By-laws.
SPECIAL MEETING
The Merger Agreement provides that Ceanic will duly call, give notice of,
convene and hold a meeting of its shareholders, to be held as promptly as
practicable following the date of the Merger Agreement, for the purpose of
obtaining the requisite shareholder approval and adoption in connection with the
Merger Agreement and the Merger. Ceanic also agreed that the Ceanic Board will
(i) recommend that its shareholders approve such matters and (ii) use reasonable
best efforts to obtain any necessary approvals by its shareholders.
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CONDITIONS TO THE MERGER
The respective obligations of each party to consummate the Merger are
generally subject to fulfillment of the following conditions: (i) no order or
decree that prevents the consummation of the Merger shall have been issued and
remain in effect, and no statute, rule or regulation shall have been enacted by
any Governmental Authority (as defined in the Merger Agreement) that prevents
the consummation of the Merger; (ii) all material consents, approvals, permits
or authorizations required to be obtained prior to the Effective Time from any
Governmental Authority shall have been obtained; (iii) the Merger Agreement and
the Merger and the other transactions contemplated by the Merger Agreement shall
have been approved and adopted by the Ceanic shareholders; and (iv) no Action
(as defined in the Merger Agreement) shall have been instituted by any
Governmental Authority that seeks to prevent consummation of the Merger, or that
seeks material damages, shall continue to be outstanding.
The obligations of Ceanic to consummate the Merger shall be subject to the
fulfillment of the following conditions unless waived by Ceanic: (i) the
representations and warranties of the SCS Parties shall be true and correct on
the date of the Merger Agreement and on and as of the Closing Date and (ii) each
of the SCS Parties shall have performed in all material respects each of its
obligations under the Merger Agreement.
The obligations of the SCS Parties to consummate the Merger and the other
transactions contemplated hereby shall be generally subject to the fulfillment
of the following conditions unless waived by the SCS Parties: (i) the
representations and warranties of Ceanic shall be true and correct on the date
of the Merger Agreement and on and as of the Closing Date; (ii) Ceanic shall
have performed in all material respects each of its obligations under the Merger
Agreement; (iii) Ceanic shall not have suffered or incurred any material
liability, adverse change or damage to assets; (iv) all consents, waivers and
approvals of third parties required in connection with the transactions
contemplated by the Merger Agreement shall have been obtained; (v) the SCS
Parties shall have received an opinion of Jones, Walker, Poitevent, Carrere &
Denegre, L.L.P., substantially in the form of Exhibit 6.3(e) to the Merger
Agreement; and (vi) Mr. Yax shall have delivered the Voting Agreement (the form
of which is attached as Exhibit 6.3(f) to the Merger Agreement) pursuant to
which he agreed, so long as the Merger Agreement has not been terminated, to
vote his shares of Ceanic Common Stock for approval and adoption of the Merger
Agreement and the Merger, and granted SCSI a proxy to so vote his shares.
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval and adoption of the Merger Agreement by
Ceanic shareholders: (i) by mutual consent of Ceanic and the SCS Parties; (ii)
by either Ceanic or the SCS Parties if any permanent injunction or other order
or decree of a court or other competent Governmental Authority preventing the
consummation of the Merger shall have become final and nonappealable; (iii) by
either Ceanic or the SCS Parties if the Merger shall not have been consummated
before December 31, 1998; (iv) by Ceanic or the SCS Parties if at the Special
Meeting the requisite vote of Ceanic shareholders to approve the Merger and the
transactions contemplated by the Merger Agreement shall not have been obtained;
(v) by Ceanic or the SCS Parties if there shall have been a material breach of
any of the covenants or agreements or any of the representations or warranties
set forth in the Merger Agreement on the part of the other party, which breach
is not cured within 10 days following written notice, or which breach, by its
nature, cannot be cured prior to the Closing (as defined in the Merger
Agreement), but only if such breach would constitute a failure of a condition to
closing; (vi) by Ceanic if the Ceanic Board shall determine to engage in a
Ceanic Competing Transaction and Ceanic shall have delivered to the SCS Parties
a written notice of the determination by the Ceanic Board to terminate the
Merger Agreement pursuant to this clause; provided, however, that Ceanic may not
terminate the Merger Agreement pursuant to this clause unless (a) five business
days shall have elapsed after delivery to the SCS Parties of such notice, (b) at
the end of such five business day period the Ceanic Board shall continue to
believe that the failure to engage in such Ceanic Competing Transaction would
reasonably be expected to be a breach of the fiduciary duties of the Ceanic
Board (after giving effect to any adjustment to the terms and conditions of such
transactions proposed by the SCS Parties in response to such Ceanic Competing
Transaction) and (c) at the time of such termination, Ceanic shall have paid to
the SCS Parties the
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Termination Fee; or (vii) by the SCS Parties if (a) the Ceanic Board shall not
have recommended the Merger to Ceanic shareholders, or shall have materially
modified or rescinded its recommendation of the Merger to Ceanic shareholders,
or shall have modified or rescinded its approval of the Merger Agreement, or
shall have resolved to do any of the foregoing, (b) a tender offer or exchange
offer for 20% or more of the outstanding capital stock of Ceanic is commenced,
and the Ceanic Board shall have failed to recommend against the shareholders of
Ceanic tendering their shares into such tender offer or exchange offer or (c)
any person or group of persons other than SCSSA or any of its affiliates
acquires more than 20% of the outstanding capital stock of Ceanic.
EXPENSES
Whether or not the Merger is consummated, all costs and expenses incurred
in connection with the Merger Agreement and the transactions contemplated
thereby, including, without limitation, the fees and disbursements of counsel,
financial advisors and accountants, will be paid by the party incurring such
costs and expenses.
TERMINATION FEE
If the Merger Agreement is terminated: (i) by Ceanic or the SCS Parties
because at the Special Meeting the requisite vote of Ceanic shareholders to
approve the Merger and the transactions contemplated by the Merger Agreement
shall not have been obtained and either (a) Ceanic enters into a definitive
agreement with respect to a Ceanic Competing Transaction within six months
following such termination and such Ceanic Competing Transaction is thereafter
consummated, or (b) a Ceanic Competing Transaction is consummated within six
months following such termination; (ii) by Ceanic if the Ceanic Board determines
to engage in a Ceanic Competing Transaction, provided, that SCS shall have five
days to respond to the terms and conditions of the proposed Ceanic Competing
Transaction and that after such five-day period, the Ceanic Board shall believe
that the failure to engage in the Ceanic Competing Transaction would reasonably
be expected to be a breach of the Ceanic Board's fiduciary duties to Ceanic
(after giving effect to any adjustment to the terms and conditions of such
transactions proposed by the SCS Parties in response to such Ceanic Competing
Transaction); or (iii) by the SCS Parties because (a) the Ceanic Board shall
have materially modified or rescinded its recommendation of the Merger or its
approval of the Merger Agreement, (b) a tender offer or exchange offer for 20%
or more of the outstanding capital stock of Ceanic is commenced, and the Ceanic
Board shall have failed to recommend against the shareholders of Ceanic
tendering their shares into such tender offer or exchange offer, or (c) any
person or group of persons other than SCSSA or any of its affiliates acquires
more than 20% of the outstanding capital stock of Ceanic, then in any such case
Ceanic will pay to the SCS the Termination Fee, which is equal to three percent
(3%) of the product of (i) the sum of the total number of issued and outstanding
shares of Ceanic Common Stock as of the date of termination plus the total
number of shares of Ceanic Common Stock issuable upon the exercise of
outstanding options as of the date of termination, multiplied by (ii) U.S.
$20.00 (approximately $6.6 million).
AMENDMENT AND WAIVER
The Merger Agreement may be amended by the parties thereto, at any time
before or after approval and adoption of the Merger Agreement by the Ceanic
shareholders, but after such approval or authorization, no amendment shall be
made that by law requires further approval by the Ceanic shareholders without
such further approval. Notwithstanding the foregoing, the Merger Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties thereto.
At any time prior to the Effective Time, the SCS Parties (with respect to
Ceanic) and Ceanic (with respect to the SCS Parties) may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of such party, (ii) waive any inaccuracies in the representations and
warranties contained in the Merger Agreement or in any document delivered
pursuant thereto and (iii) waive compliance with any of the agreements or
conditions contained in the Merger Agreement. Any agreement on the part of a
party thereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party.
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REGULATORY APPROVALS
Consummation of the Merger is conditioned upon the expiration or early
termination of the waiting period applicable under the HSR Act. Ceanic and the
SCS Parties are not aware of any material governmental or regulatory approvals
required to be obtained for consummation of the Merger, other than compliance
with federal securities laws and with state securities "Blue Sky" laws.
ACCOUNTING TREATMENT
It is intended that the SCS Parties will account for the Merger under the
purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16 and, without limitation, the FASB, Accounting Standards, FASB
EITF Abstracts, FASB Bulletins and SEC Accounting Bulletins and Accounting
Series Release relating thereto. The effect of purchase accounting treatment is
that the acquired assets and assumed liabilities will be recorded at their fair
values at the Effective Time. Any excess of consideration paid by the SCS
Parties over the estimated fair value of Ceanic's assets will be recorded as
goodwill.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the material federal income tax
consequences of the Merger to the Ceanic shareholders. The discussion is based
on provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations thereunder, current administrative rulings and court
decisions that are in effect on the date of this Proxy Statement. All of the
foregoing are subject to change and any such change could be made with
retroactive effect and/or affect the continuing validity of this discussion.
Ceanic and the SCS Parties have not sought, and will not seek, any rulings from
the Internal Revenue Service with respect to any of the matters discussed
herein.
The receipt of cash pursuant to the Merger (including any cash amounts
received by dissenting shareholders pursuant to the exercise of dissenters'
rights) will be a taxable transaction for federal income tax purposes under the
Code. In general, for federal income tax purposes, a shareholder will recognize
gain or loss equal to the difference between the cash received by the
shareholder pursuant to the Merger Agreement and the shareholder's adjusted tax
basis in the shares of Ceanic Common Stock surrendered pursuant to the Merger
Agreement. Any such gain or loss will be capital gain or loss, provided the
Ceanic Common Stock is held as a capital asset (generally property held for
investment) within the meaning of Section 1221 of the Code. The Code as of the
date of this Proxy Statement provides for a top marginal tax rate of 39.6% for
individuals and a maximum marginal rate for long-term capital gains of
individuals of 28% with respect to Ceanic Common Stock held more than one year
but not more than 18 months, and of 20% with respect to Ceanic Common Stock held
more than 18 months. The recently adopted Conference Agreement on H.R. 2676, the
IRS Restructuring and Reform Act of 1998, provides for a reduction of the
18-month holding period for the 20% capital gains tax rate to 12 months. It
cannot currently be predicted whether or when this Conference Agreement might be
passed by the Congress, signed by the President and become effective. No such
rate differential exists for corporations, however, the distinction between a
capital gain or loss and ordinary income or loss remains relevant to corporate
taxpayers for other purposes.
Payments in connection with the Merger may be subject to "backup
withholding" at a 31% rate. Backup withholding generally applies if the
shareholder fails to furnish such shareholder's social security number or other
taxpayer identification number ("TIN"), or furnishes an incorrect TIN. Backup
withholding is not an additional tax but merely a creditable advance payment,
which may be refunded to the extent it results in an overpayment of tax. Certain
persons generally are exempt from backup withholding, including corporations and
financial institutions. Certain penalties apply for failure to furnish correct
information and for failure to include reportable payments in income.
Shareholders should consult with their own tax advisors as to the qualifications
and procedures for exemption from backup withholding.
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DISSENTERS' RIGHTS
Unless the Merger is approved by the holders of at least 80% of the total
voting power of Ceanic, Section 131 of the Louisiana Act allows a shareholder of
Ceanic who objects to the Merger and who complies with the provisions of that
section to dissent from the Merger and to have paid to him in cash the fair cash
value of his shares of Ceanic Common Stock as of the day before the Special
Meeting, as determined by agreement between the shareholder and the Surviving
Corporation or by the state district court for the Parish of Lafayette, State of
Louisiana, if the shareholder and the Surviving Corporation are unable to agree
upon the fair cash value.
To exercise the right of dissent, a shareholder (i) must file with Ceanic a
written objection to the Merger prior to or at the Special Meeting and (ii) must
also vote his shares (in person or by proxy) against the Merger at the Special
Meeting. Neither a vote against the Merger nor a specification in a proxy to
vote against the Merger will in and of itself constitute the necessary written
objection to the Merger. Moreover, by voting in favor of, or abstaining from
voting on, the Merger, or by returning the enclosed proxy without instructing
the proxy holders to vote against the Merger, a shareholder waives his rights
under Section 131. The right to dissent may be exercised only by the record
owners of the shares and not by persons who hold shares only beneficially.
Beneficial owners who wish to dissent to the Merger should have the record
ownership of the shares transferred to their names or instruct the record owner
to follow Section 131's procedure on their behalf.
If the Merger is approved by less than 80% of the total voting power of
Ceanic, then promptly after the Effective Time, written notice of the
consummation of the Merger will be given to each former shareholder of Ceanic
who filed a written objection to the Merger and voted against it. Within 20 days
after the mailing of such notice, the shareholder must file with the Surviving
Corporation a written demand for payment for his shares at their fair cash value
as of the day before the Special Meeting and must state the amount demanded and
a post office address to which the Surviving Corporation may reply. He must also
deposit the certificate(s) formerly representing his shares of Ceanic Common
Stock in escrow with a bank or trust company located in Lafayette Parish, State
of Louisiana. With the above-mentioned demand, the shareholder must also deliver
to the Surviving Corporation the written acknowledgment of such bank or trust
company that it holds the certificate(s), duly endorsed and transferred to the
Surviving Corporation, upon the sole condition that the certificate(s) will be
delivered to the Surviving Corporation upon payment of the value of the shares
in accordance with Section 131.
Unless the shareholder objects to and votes against the Merger, demands
payment, deposits his certificates and delivers the required acknowledgment in
accordance with the aforementioned procedures and within the time periods set
forth above, the shareholder will conclusively be presumed to have acquiesced to
the Merger and will forfeit any right to seek payment pursuant to Section 131.
If the Surviving Corporation does not agree to the amount demanded by the
shareholder, or does not agree that payment is due, it will, within 20 days
after receipt of such demand and acknowledgment, notify such shareholder in
writing of either (i) the value it will agree to pay or (ii) its belief that no
payment is due. If the shareholder does not agree to accept the offered amount,
or disagrees with the Surviving Corporation's assertion that no payment is due,
he must, within 60 days after receipt of such notice, file suit against the
Surviving Corporation in the state district court for the Parish of Lafayette,
State of Louisiana, for a judicial determination of the fair cash value of the
shares. Any shareholder entitled to file such suit may, within such 60-day
period but not thereafter, intervene as a plaintiff in any suit filed against
the Surviving Corporation by another former shareholder of the Company for a
judicial determination of the fair cash value of such other shareholder's
shares. If a shareholder fails to bring or to intervene in such a suit within
the applicable 60-day period, he will be deemed to have consented to accept the
Surviving Corporation's statement that no payment is due or, if the Surviving
Corporation does not contend that no payment is due, to accept the amount
specified by the Surviving Corporation in its notice of disagreement.
If upon the filing of any such suit or intervention the Surviving
Corporation deposits with the court the amount, if any, that it specified in its
notice of disagreement, and if in that notice the Surviving Corporation offered
to pay such amount to the shareholder on demand, then the costs (not including
legal fees) of the suit
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or intervention will be taxed against the shareholder if the amount finally
awarded to him, exclusive of interest and costs, is equal to or less than the
amount so deposited; otherwise, the costs (not including legal fees) will be
taxed against the Surviving Corporation.
Upon filing a demand for the value of his shares, a shareholder ceases to
have any rights of a shareholder except the rights created by Section 131. The
shareholder's demand may be withdrawn voluntarily at any time before the
Surviving Corporation gives its notice of disagreement, but thereafter only with
the written consent of the Surviving Corporation. If withdrawn, or if the
shareholder otherwise loses his dissenters' rights, he will be restored to his
rights as a shareholder as of the time of filing of his demand for fair cash
value.
Dissenting shareholders of Ceanic should send any communications regarding
their rights to Quinn J. Hebert, Corporate Counsel and Secretary, Ceanic
Corporation, 900 Town & Country Lane, Suite 400, Houston, Texas 77024. All such
communications should be signed by or on behalf of the dissenting shareholder in
the form in which his shares are registered on the books of Ceanic.
The foregoing summary of Section 131 of the Louisiana Act is necessarily
incomplete and is qualified in its entirety by reference to excerpts from that
section set forth herein as Appendix C.
RELATIONSHIPS BETWEEN CEANIC AND THE SCS PARTIES
Ceanic made in favor of an affiliate of the SCS Parties a $5.0 million
unsecured promissory note with a seven-day term on July 6, 1998 that contained a
negative pledge and other customary covenants. The promissory note was repaid
with proceeds borrowed by Ceanic from an affiliate of the SCS Parties under a
$15.0 million secured credit facility that was entered into on July 13, 1998.
The remaining proceeds of the secured credit facility will be used to finance
the acquisition of certain waterborne vessels and to fund general corporate
expenses. Security for the credit facility is provided by first priority
preferred ship mortgages on two ships owned by a subsidiary of Ceanic, by a
corporate guaranty from such Ceanic subsidiary and by security interests in four
remotely-operated underwater vehicles owned by Ceanic. The credit facility
contains customary loan-related covenants, negative pledges and agreements.
Additional security for the credit facility may be provided by a ship mortgage
on one additional ship that is expected to be acquired by Ceanic in the near
future.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Ceanic financial statements for 1997 were audited by the firm of Price
Waterhouse LLP. Representatives of Price Waterhouse LLP are not expected to be
present at the Special Meeting, but will be available to respond to appropriate
questions in writing.
INFORMATION REGARDING CEANIC
Ceanic provides subsea services and products including field development
services to the offshore oil and gas industry as well as industrial and
governmental customers in the Americas region, Europe Africa region and Asia
Pacific region. Ceanic's services are provided through approximately 550 divers,
tenders, diving supervisors, vessel captains and crewmen and are supported by a
Ceanic-owned fleet of 21 diving support vessels ("DSVs"), 16 of which operate in
the Gulf of Mexico. Based upon the number of divers employed, the size of its
DSV fleet and the number of customers served, Ceanic believes that it is the
leading provider of diving services in the Gulf of Mexico.
INFORMATION REGARDING THE SCS PARTIES
SCSSA is a leading worldwide subsea services contractor, providing
technologically sophisticated subsea engineering, flexible and rigid flowline
lay and subsea construction, inspection, maintenance and repair services to its
customers in the offshore oil and gas industry. SCSSA's services cover all
phases of offshore oil and gas operations from exploration to decommissioning.
SCSSA operates today predominantly in Europe,
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the Middle East, West Africa, Asia Pacific, South America and Mexico. SCSI is an
indirect wholly-owned subsidiary of SCSSA and markets various services for
subsidiaries of SCSSA. Merger Sub is a wholly-owned corporation recently
organized by SCSI in Louisiana for the purpose of effecting the Merger. It has
no material assets and is not engaged in any material activities, except in
connection with the Merger and the transactions contemplated thereby.
The registered office of SCSSA is located at 11, rue Aldringen, Luxembourg
and it is registered in the Companies' Registrar of the Luxembourg District
Court under the designation "R.C. Luxembourg B 43172." SCSSA's principal
executive offices are c/o Stolt Comex Seaway M.S. Ltd., Bucksburn House, Howes
Road, Bucksburn, Aberdeen AB21 9RQ, Scotland, where its telephone number is (44)
1224-718200. The principal executive offices of SCSI and Merger Sub are located
at 1340 Poydras Street, Suite 2100, New Orleans, Louisiana 70112, where the
telephone number is (504) 566-1900.
SCSSA will finance the payment of the Merger Consideration from loan
availability under SCSSA's current credit facilities from external banks and
from additional funding made available by Stolt-Nielsen S.A., a Luxembourg
corporation and owner of approximately 60% of the voting interest of SCSSA.
EXPERTS
The consolidated financial statements of Ceanic as of December 31, 1996 and
1997, for each of the two years in the period ended December 31, 1997, for the
year ended October 31, 1995 and for the two months ended December 31, 1995
incorporated by reference in this Proxy Statement have been so included in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
Ceanic and the SCS Parties are currently subject to the informational
requirements of the Exchange Act and, in accordance therewith, file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). All such information may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549-1004, and at the
following Regional Offices of the Commission: Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and
New York Regional Office, 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such materials may also be obtained at prescribed rates from
the Public Reference Section of the Commission at its principal office at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549-1004. The Commission
maintains a site on the World Wide Web that contains certain documents filed
with the Commission electronically. The address of such site is
http://www.sec.gov. In addition, Ceanic Common Stock and the common shares and
American Depository Shares representing Class A shares of SCSSA are listed for
quotation on The Nasdaq National Market and such statements, reports and other
information concerning Ceanic and SCSSA may also be inspected at the offices of
The Nasdaq Stock Market, Inc., Nasdaq Regulatory Filings, 1735 K Street, N.W.,
Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Ceanic incorporates herein by reference the following documents filed by it
with the Commission (File No. 0-22032) pursuant to the Exchange Act: (i) its
Annual Report on Form 10-K for the fiscal year ended December 31, 1997; (ii) its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998; (iii) its
Current Report on Form 8-K filed on March 3, 1998; (iv) its Current Report on
Form 8-K filed on June 2, 1998; and (v) all documents subsequently filed by it
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
date of the Special Meeting.
This Proxy Statement incorporates documents by reference that are not
presented herein or delivered herewith. Ceanic hereby undertakes to provide
without charge to each person, including any beneficial owner
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of Ceanic Common Stock to whom a copy of this Proxy Statement has been
delivered, on the written or oral request of any such person, a copy of any and
all of the documents referred to above that have been or may be incorporated in
this Proxy Statement by reference, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into such documents).
Requests for any such Ceanic documents should be directed to Ceanic Corporation,
900 Town & Country Lane, Suite 400, Houston, Texas 77024, telephone number (713)
430-1100. To ensure delivery of the documents prior to the Special Meeting,
requests should be received on or before August 7, 1998.
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APPENDICES
APPENDIX A -- AGREEMENT AND PLAN OF MERGER
APPENDIX B -- FAIRNESS OPINION OF MORGAN KEEGAN & COMPANY, INC.
APPENDIX C -- EXCERPT FROM SECTION 131 OF THE LOUISIANA BUSINESS CORPORATION LAW
32
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
STOLT COMEX SEAWAY S.A.
STOLT COMEX SEAWAY INC.
CC ACQUISITION CORP.
AND
CEANIC CORPORATION
DATED AS OF JUNE 26, 1998
A-1
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TABLE OF CONTENTS
PAGE
----
CEANIC CORPORATION.......................................... A-1
ARTICLE I THE MERGER....................................... A-4
1.1 The Merger.......................................... A-4
1.2 Effective Time...................................... A-4
1.3 Effects of the Merger............................... A-4
1.4 Articles of Incorporation; Bylaws................... A-5
1.5 Directors and Officers.............................. A-5
1.6 Additional Actions.................................. A-5
1.7 Tax and Accounting Treatment........................ A-5
ARTICLE II CONVERSION OF SECURITIES........................ A-5
2.1 Conversion of Capital Stock......................... A-5
2.2 Exchange of Certificates............................ A-5
2.3 Treatment of Stock Options.......................... A-6
2.4 Dissenting Shares................................... A-7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SCS A-7
PARTIES...................................................
3.1 Organization and Standing........................... A-7
3.2 Corporate Power and Authority....................... A-7
3.3 Conflicts, Consents and Approvals................... A-8
3.4 Brokerage and Finder's Fees......................... A-8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY... A-8
4.1 Organization and Standing........................... A-8
4.2 Subsidiaries........................................ A-9
4.3 Corporate Power and Authority....................... A-9
4.4 Capitalization of the Company and its A-9
Subsidiaries...........................................
4.5 Conflicts, Consents and Approvals................... A-10
4.6 Absence of Certain Changes.......................... A-10
4.7 Company SEC Documents............................... A-10
4.8 Undisclosed Liabilities............................. A-11
4.9 Taxes............................................... A-11
4.10 Compliance with Law................................. A-11
4.11 Litigation.......................................... A-12
4.12 Brokerage and Finder's Fees......................... A-12
4.13 Opinion of Financial Advisor........................ A-12
4.14 Employee Benefit Plans.............................. A-12
4.15 Contracts........................................... A-13
4.16 Labor Relations..................................... A-14
4.17 Permits............................................. A-14
4.18 Environmental Matters............................... A-14
4.19 Year 2000 Readiness................................. A-15
ARTICLE V COVENANTS OF THE PARTIES......................... A-15
5.1 General Covenants................................... A-15
5.2 Covenants of the SCS Parties........................ A-16
5.3 Covenants of the Company............................ A-16
ARTICLE VI CONDITIONS...................................... A-19
6.1 Mutual Conditions................................... A-19
6.2 Conditions to Obligations of the Company............ A-19
6.3 Conditions to Obligations of the SCS Parties........ A-19
A-2
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PAGE
----
ARTICLE VII TERMINATION AND AMENDMENT...................... A-20
7.1 Termination......................................... A-20
7.2 Effect of Termination............................... A-21
7.3 Amendment........................................... A-22
7.4 Extension; Waiver................................... A-22
ARTICLE VIII GENERAL PROVISIONS............................ A-22
8.1 Survival of Representations and Warranties.......... A-22
8.2 Notices............................................. A-22
8.3 Interpretation...................................... A-23
8.4 Counterparts........................................ A-23
8.5 Entire Agreement.................................... A-23
8.6 Third Party Beneficiaries........................... A-23
8.7 Governing Law....................................... A-23
8.8 Specific Performance................................ A-23
8.9 Assignment.......................................... A-24
8.10 Fees and Expenses................................... A-24
8.11 Incorporation of Disclosure Schedules............... A-24
8.12 Severability........................................ A-24
8.13 Subsidiaries and Affiliates......................... A-24
8.14 Time of Essence..................................... A-24
8.15 Post-Closing Agreement of SCS Parties............... A-24
GLOSSARY.................................................... A-26
A-3
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of the 26th day of June, 1998, by and among Stolt Comex Seaway S.A., a
Luxembourg corporation ("SCSSA"), Stolt Comex Seaway Inc., a Delaware
corporation and indirect wholly-owned subsidiary of SCSSA ("SCSI") and CC
Acquisition Corp., a Louisiana corporation and wholly-owned subsidiary of SCSI
("Merger Sub", and together with SCSSA and SCSI, the "SCS Parties"), and Ceanic
Corporation, a Louisiana corporation formerly known as American Oilfield Divers,
Inc. (the "Company").
RECITALS
A. The SCS Parties desire to combine certain of their business and
operations with the business and operations of the Company through the merger
(the "Merger") of Merger Sub with and into the Company, with the Company as the
surviving corporation, pursuant to which each issued and outstanding share of
Company Common Stock (as defined herein) outstanding at the Effective Time (as
defined herein) will be converted into the right to receive U.S. Twenty Dollars
(US $20.00) per share as more fully provided herein.
B. The Company desires to combine its business and operations with the
business and operations of the SCS Parties, to become a wholly owned subsidiary
of SCSI and to have the holders of issued and outstanding shares of Company
Common Stock ("Company Shareholders") receive the Aggregate Consideration (as
defined herein) as consideration for the contemplated transactions.
C. The parties intend that the Merger be accounted for under the purchase
method of accounting.
D. The respective Boards of Directors of the SCS Parties and the Company
have determined that the Merger, in the manner contemplated herein, is fair to,
and in the best interests of, their respective shareholders and, by duly adopted
resolutions, have approved and adopted this Agreement.
TERMS OF AGREEMENT
Now, therefore, in consideration of these premises and the mutual and
dependent promises hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof, the
Merger shall be consummated, in accordance with the provisions of the Louisiana
Business Corporation Law (the "Louisiana Act"), as soon as practicable following
the satisfaction or waiver of the conditions set forth in Article VI, but in no
event later than two business days thereafter (the effective date of the Merger
being referred to herein as the "Closing Date"). Following the Merger, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue its existence under the laws of the State of Louisiana. The Company, in
its capacity as the corporation surviving the Merger, is hereinafter sometimes
referred to as the "Surviving Corporation."
1.2 Effective Time. The Merger shall be consummated by filing with the
Secretary of State of the State of Louisiana (the "Louisiana Secretary of
State") a certificate of merger (the "Certificate of Merger") in such form as is
required by and executed in accordance with the Louisiana Act. The Merger shall
become effective (the "Effective Time") when the Certificate of Merger has been
filed with and accepted by the Louisiana Secretary of State or at such later
time as may be agreed by SCSI and the Company and specified in the Certificate
of Merger. Prior to the filing referred to in this Section 1.2, closing (the
"Closing") shall be held at the offices of Akin, Gump, Strauss, Hauer & Feld,
L.L.P. at 711 Louisiana Street, Suite 1900, Houston, Texas 77002, or such other
place as the parties may agree.
1.3 Effects of the Merger. The Merger shall have the effects set forth in
the Louisiana Act.
A-4
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1.4 Articles of Incorporation; Bylaws. At the Effective Time, (a) the
Company's Amended and Restated Articles of Incorporation, as in effect
immediately prior to the Effective Time (the "Company Articles of
Incorporation"), shall be amended pursuant to an amendment thereto provided for
in the Certificate of Merger to delete Article XI thereof (Limitations on
Ownership by Non-U.S. Citizens) and any references thereto, (b) the amended
Company Articles of Incorporation shall become the Articles of Incorporation of
the Surviving Corporation and (c) the By-laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall become the initial By-laws of the
Surviving Corporation.
1.5 Directors and Officers. At and after the Effective Time, the directors
and officers of the Surviving Corporation shall be the persons listed on
Schedule 1.5, each to hold a directorship or office, as applicable, in
accordance with the Articles of Incorporation and the By-laws of the Surviving
Corporation, in each case until his/her respective successor is duly elected and
qualified.
1.6 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or otherwise are necessary or desirable to
carry out the provisions of this Agreement, the proper officers and directors of
SCSI and the Surviving Corporation shall take any and all such necessary
actions.
1.7 Tax and Accounting Treatment. The parties hereto acknowledge and agree
that (a) the Merger shall be treated for tax purposes as a taxable sales
transaction under the Internal Revenue Code of 1986, as amended (together with
the rules and regulations thereunder, the "Code"), and (b) that the Merger shall
be accounted for under the purchase method of accounting; provided, however,
that none of the parties hereto makes any representation or warranty as to the
appropriate tax treatment of the transactions contemplated hereby.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the SCS Parties, the Company or the
Company Shareholders:
(a) Each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share
of common stock of the Surviving Corporation. Such shares shall thereafter
constitute all of the issued and outstanding capital stock of the Surviving
Corporation.
(b) Each issued and outstanding share of Company Common Stock shall be
converted into the right to receive U.S. Twenty Dollars (U.S. $20.00),
without interest.
(c) For purposes of this Agreement, the term "Aggregate Consideration"
shall mean that number of U.S. dollars that is the product of the total
number of issued and outstanding shares of Company Common Stock as of the
Effective Time multiplied by U.S. Twenty Dollars (U.S. $20.00).
(d) Each share of capital stock of the Company held in the treasury of
the Company or held by SCSI or any of its subsidiaries shall be canceled
and retired and no payment shall be made in respect thereof.
2.2 Exchange of Certificates.
(a) Payment Fund. Prior to the Effective Time, SCSI shall appoint a
paying agent reasonably acceptable to the Company for the purpose of
exchanging all issued and outstanding shares of Company Common Stock for
the Aggregate Consideration (the "Paying Agent"). At or prior to the
Effective Time, SCSI shall deposit the Aggregate Consideration with the
Paying Agent, in trust for the benefit of holders of Company Common Stock
(the "Payment Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, SCSI shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates (the "Certificates")
A-5
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that immediately prior to the Effective Time represented outstanding shares
of Company Common Stock (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent and shall be in such form and have such other provisions as
SCSI may reasonably specify) and (ii) instructions for effecting the
surrender of the Certificates in exchange for a pro rata portion of the
Aggregate Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent, together with a duly executed letter of transmittal,
the holder of such Certificate shall be entitled to receive in exchange
therefor a check representing the amount of cash that such holder has the
right to receive pursuant to Section 2.1(b), after giving effect to any
required withholding tax, and the shares represented by the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or
accrued on the amount payable to holders of shares of Company Common Stock.
In the event of a transfer of ownership of shares of Company Common Stock
that is not registered on the transfer records of the Company, a check for
the proper amount to be paid may be issued to such transferee if the
Certificate representing such shares of Company Common Stock held by such
transferee is presented to the Paying Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
surrender U.S. Twenty Dollars (U.S. $20.00) per share of Company Common
Stock as provided in this Article II.
(c) Distributions with Respect to Unexchanged Shares. Notwithstanding
any other provisions of this Agreement, no distribution or payment shall be
made to any such holder until the holder shall surrender such Certificate
as provided in Section 2.2(b) and then the holder shall be entitled only to
such consideration as is provided for in Section 2.1(b).
(d) No Further Ownership Rights in Company Common Stock. All amounts
paid upon surrender of Certificates in accordance with the terms hereof
shall be deemed to have been made in full satisfaction of all rights
pertaining to such shares of Company Common Stock represented thereby, and
from and after the Effective Time there shall be no further registration of
transfers on the stock transfer books of the Company of shares of Company
Common Stock. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in Section 2.2(b).
(e) Termination of Payment Fund. Any portion of the Payment Fund that
remains undistributed to Company Shareholders for six months after the
Effective Time shall be delivered to SCSI or the Surviving Corporation,
upon demand thereby, and holders of shares of Company Common Stock who have
not theretofore complied with this Section 2.2 shall thereafter look only
to SCSI for payment.
(f) No Liability. None of SCSI, the Surviving Corporation or the
Paying Agent shall be liable to any person in respect of any shares of
Company Common Stock (or dividends or distributions with respect thereto)
or payment from the Payment Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to two years after the
Effective Time (or immediately prior to such earlier date on which any
payment in respect of such Certificate would otherwise escheat to or become
the property of any Governmental Authority (as defined herein)), any such
payment in respect of such Certificate shall, to the extent permitted by
Applicable Law (as defined herein), become the property of SCSI, free and
clear of all claims or interest of any person previously entitled thereto.
(g) Investment of Payment Fund. The Paying Agent shall invest the
Aggregate Consideration included in the Payment Fund, as directed by SCSI,
on a daily basis. Any interest and other income resulting from such
investments shall be paid to SCSI. In the event the Payment Fund shall
realize a loss on any such investment, SCSI shall promptly thereafter
deposit, or cause to be deposited, in such Payment Fund on behalf of the
Surviving Corporation cash in an amount equal to such loss.
2.3 Treatment of Stock Options. The Company's various stock option plans
and options issued and outstanding thereunder shall be treated as is set forth
on Schedule 2.3 hereto.
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2.4 Dissenting Shares. If it is determined that Section 131 of the
Louisiana Act ("Section 131") is applicable, then:
(a) Notwithstanding any other provisions of this Agreement to the
contrary, if the Merger is approved by less than 80% of the total voting
power of the Company, then shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and as to which
dissenters' rights have been perfected and not withdrawn or otherwise
forfeited under Section 131 (collectively, the "Dissenting Shares") shall
not be converted into the right to receive a portion of the Aggregate
Consideration as contemplated by Section 2.1(b). The holders of the
Dissenting Shares who comply with the requirements of Section 131 shall be
entitled to receive payment of the fair cash value of such Dissenting
Shares held by them in accordance with the provisions of Section 131,
except that all shares of Company Common Stock held by shareholders who
shall have failed to perfect or who effectively shall have withdrawn,
forfeited or lost their rights to receive payment of the fair cash value of
such shares of Company Common Stock under Section 131 shall thereupon be
deemed to have been converted into the right to receive a portion of the
Aggregate Consideration, in the manner contemplated by Section 2.1(b).
(b) The Company shall give SCSI prompt notice of any demands for the
fair cash value of shares, withdrawals of such demands, and any other
instruments served pursuant to the Louisiana Act and received by Company
and relating thereto. Company and SCSI shall jointly direct all
negotiations and proceedings with respect to demands for the fair cash
value of shares under Section 131. Neither Company nor SCSI shall, except
with the prior written consent of the other or except as otherwise required
by law, make any payment with respect to any demands for the fair cash
value of shares, or offer to settle, or settle, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SCS PARTIES
Except as set forth in the disclosure schedule delivered by the SCS Parties
to the Company dated as of the date hereof and attached hereto (the "SCS Parties
Disclosure Schedule") (each section of which limits or qualifies the
correspondingly numbered representation and warranty or covenant to the extent
specified therein), the SCS Parties hereby represent and warrant to the Company
as follows:
3.1 Organization and Standing. Each of the SCS Parties is a corporation,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization. All of the outstanding shares of the capital
stock of Merger Sub will be directly owned by SCSI.
3.2 Corporate Power and Authority.
(a) Each of SCSSA and SCSI has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by each of SCSSA and SCSI and the consummation by SCSSA and SCSI
of the transactions contemplated hereby have been duly authorized by the
Board of Directors of SCSSA and SCSI. This Agreement has been duly executed
and delivered by each of SCSSA and SCSI and constitutes a valid and binding
obligation of each of SCSSA and SCSI, enforceable against each of SCSSA and
SCSI in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting creditors generally, by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by an implied covenant on the part of
the Company of good faith and fair dealing.
(b) At or prior to Closing, Merger Sub will have all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Merger Sub and the consummation by Merger Sub of the
transactions contemplated hereby will have been duly authorized by the
Board of Directors of Merger Sub and by SCSI as the sole shareholder of
Merger Sub at or prior to Closing. This Agreement will have
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been duly executed and delivered by Merger Sub and will constitute a valid
and binding obligation of Merger Sub, enforceable against Merger Sub in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally, by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant on the part of the Company of
good faith and fair dealing.
3.3 Conflicts, Consents and Approvals. Neither the execution and delivery
of this Agreement by the SCS Parties nor the consummation of the transactions
contemplated hereby will (except where, in the aggregate, it would not have a
material adverse effect on the SCS Parties or prevent the consummation of the
transactions contemplated hereby):
(a) conflict with or violate any provision of the Articles of
Incorporation or By-laws (or any similar organizational document) of any of
the SCS Parties;
(b) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event that, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a default under, or
result in the termination, acceleration or cancellation of, or result in
the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of any of the SCS Parties under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, Contract (as herein defined), undertaking,
agreement, lease or other instrument or obligation to which any of the SCS
Parties is a party or by which any of their respective properties or assets
may be bound;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation, applicable to the SCS Parties or their respective properties or
assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing by the SCS Parties with any third party or any
foreign, federal, state or local court, arbitral tribunal, administrative
agency or commission or other governmental or regulatory body, agency,
instrumentality or authority (a "Governmental Authority"), other than (i)
actions required, if any, by the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and (ii) registrations or other
actions required under federal and state securities laws as are
contemplated by this Agreement.
3.4 Brokerage and Finder's Fees. None of the SCS Parties has incurred and
will not incur, directly or indirectly, any brokerage, finder's or similar fee
in connection with the transactions contemplated by this Agreement. None of the
SCS Parties is aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments from the SCS Parties in connection
with the negotiation of this Agreement or in connection with the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by Company to SCSI
dated as of the date hereof and attached hereto (the "Company Disclosure
Schedule") (each section of which limits or qualifies the correspondingly
numbered representation and warranty or covenant to the extent specified
therein), Company hereby represents and warrants to the SCS Parties as follows:
4.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Louisiana with all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company is
duly qualified to do business and in good standing in each jurisdiction in which
the nature of the business conducted by it or the property it owns, leases or
operates makes such qualification necessary, except where the failure to be so
qualified or in good standing in such jurisdiction would not have a material
adverse effect on the Company. The copies of the Articles of Incorporation and
By-laws (or similar organizational documents) of the
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Company, which have previously been made available to the SCS Parties, are true,
complete and correct copies of such documents as in effect as of the date of
this Agreement.
4.2 Subsidiaries. As of the date hereof, other than immaterial interests,
the Company does not own, directly or indirectly, any equity or other ownership
interest in any corporation, partnership, joint venture or other entity or
enterprise. Each of the entities listed on Section 4.2 to the Company Disclosure
Schedule (individually a "Subsidiary" and collectively the "Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation with full power and authority to own,
lease, use and operate its properties and to conduct its business as and where
now owned, leased, used, operated and conducted. Each Subsidiary is duly
qualified to do business and in good standing in each jurisdiction in which the
nature of the business conducted by it or the property it owns, leases or
operates makes such qualification necessary, except where the failure to be so
qualified or in good standing in such jurisdiction would not have a material
adverse effect on the Company. The Company is the sole legal, beneficial and
record owner, directly or indirectly, of all outstanding capital stock of the
Subsidiaries, all of which are owned by the Company free and clear of all liens,
claims and encumbrances. The Subsidiaries have no assets or liabilities, and are
not parties to any agreements or Contracts, other than (i) those reflected on
the Company's consolidated financial statements for the three month period ended
March 31, 1998 and (ii) those that would not have a material adverse effect on
the Company or any of its Subsidiaries.
4.3 Corporate Power and Authority. The Company has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to the approval of the Merger and the
adoption and authorization of this Agreement by the shareholders of the Company
in accordance with the Louisiana Act and this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by the unanimous
vote of the Board of Directors of the Company (the "Required Board Vote"). The
Board of Directors of the Company has directed that this Agreement and the
transactions contemplated hereby be submitted to the Company Shareholders for
adoption at the Shareholders Meeting (as defined herein) and, except for the
approval and adoption of this Agreement by the affirmative vote of the holders
of at least two-thirds ( 2/3) of the shares of Company Common Stock in
attendance or represented by proxy at such Shareholders Meeting in accordance
with Applicable Law (the "Required Shareholder Vote"), no other corporate
proceedings on the part of the Company are necessary to approve this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditors generally, by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
or by an implied covenant on the part of the SCS Parties of good faith and fair
dealing.
4.4 Capitalization of the Company and its Subsidiaries. As of June 26,
1998, Company's authorized capital stock consisted of (a) 35,000,000 shares of
common stock, no par value per share ("Company Common Stock"), and (b) 5,000,000
shares of preferred stock, no par value per share ("Company Preferred Stock"),
of which (i) 10,674,716 shares of Company Common Stock were issued and
outstanding, (ii) 1,194,444 shares of Company Common Stock were issuable upon
the exercise of outstanding options, and no shares of Company Common Stock were
issuable upon the exercise or conversion of outstanding warrants or convertible
securities granted or issuable (on a contingent basis or otherwise) by the
Company, and (iii) no shares of Company Preferred Stock were issued and
outstanding. Since June 26, 1998, the Company has not issued any shares of its
capital stock except upon the exercise of such options, warrants or convertible
securities. Each outstanding share of capital stock of the Company and each
Subsidiary is duly authorized and validly issued, fully paid and nonassessable
and free of any preemptive rights. As of the date hereof, other than as set
forth above or in the Company SEC Documents (as defined herein), there are no
outstanding shares of capital stock or subscriptions, options, warrants, puts,
calls, agreements, understandings, claims or other commitments or rights of any
type relating to the issuance, sale or transfer by the Company or any Subsidiary
of any securities of the Company or any Subsidiary, nor are there outstanding
any securities that are convertible into or exchangeable for any shares of
capital stock of the Company or any Subsidiary; and neither
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the Company nor any Subsidiary has any obligation of any kind to issue any
additional securities or to pay for securities of the Company or any Subsidiary
or any predecessor. The Company has no outstanding bonds, debentures, notes or
other similar obligations the holders of which have the right to vote generally
with holders of Company Common Stock.
4.5 Conflicts, Consents and Approvals. Neither the execution and delivery
of this Agreement by the Company, nor the consummation of the transactions
contemplated hereby will (except where, in the aggregate, it would not have a
material adverse effect on the Company or prevent the consummation of the
transactions contemplated hereby):
(a) conflict with, or violate any provision of the Articles of
Incorporation or By-laws (or any similar organizational document) of the
Company or any Subsidiary;
(b) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event that, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a default under, or
result in the termination, acceleration or cancellation of, or result in
the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of the Company or any Subsidiary under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, Contract, undertaking, agreement, lease or other
instrument or obligation to which the Company or any of the Subsidiaries is
a party or by which any of its properties or assets may be bound;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or the Subsidiaries or any of its
properties or assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing by the Company or its Subsidiaries or any of its
affiliates with any third party or any Governmental Authority, other than
(i) authorization of the Merger and the transactions contemplated hereby by
Company Shareholders in accordance with Section 5.1(f), (ii) actions
required, if any, by the HSR Act and (iii) registrations or other actions
required under federal and state securities laws as are contemplated by
this Agreement.
4.6 Absence of Certain Changes. Except as disclosed in the Company SEC
Documents filed with the U.S. Securities and Exchange Commission (the
"Commission") prior to the date hereof, since January 1, 1998, (a) each of the
Company and its Subsidiaries has conducted its business in the ordinary course,
consistent with past practice, (b) no event, fact or development has occurred or
exists that has or that would reasonably be expected to have, in the aggregate,
a material adverse effect on the Company and (c) the Company has not taken any
action that would be prohibited by Section 5.3(a).
4.7 Company SEC Documents. Since January 1, 1995, the Company has timely
filed with the Commission all forms, reports, schedules, statements, exhibits
and other documents required to be filed by it under the Securities Exchange Act
of 1934, as amended (together with the rules and regulations thereunder, the
"Exchange Act") and the Securities Act of 1933, as amended (together with the
rules and regulations thereunder, the "Securities Act") (such documents, as
supplemented and amended since the time of filing, collectively, the "Company
SEC Documents"). The Company SEC Documents, including, without limitation, any
financial statements or schedules included therein, at the time filed (and, in
the case of registration statements and proxy statements, on the dates of
effectiveness and the dates of mailing, respectively) (a) did not contain any
untrue statement of a material fact or omit 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, and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be. The consolidated
financial statements (including the related notes) of the Company included in
the Company SEC Documents were prepared in accordance with generally accepted
accounting principles in effect in the United States of America from time to
time ("GAAP") applied on a consistent basis during the periods involved (except
as indicated in the notes thereto), fairly present in all material respects the
consolidated financial position of the Company as of the
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dates thereof and the consolidated results of its operations and cash flows for
the periods then ended, are correct and complete in all respects and are
consistent with the books and records of the Company and the Subsidiaries.
4.8 Undisclosed Liabilities. Neither the Company nor the Subsidiaries have
any liability (whether asserted or unasserted, liquidated or unliquidated, or
due or to become due), except for (a) liabilities set forth on the face of or
disclosed in the notes to the balance sheet of the Company for the fiscal period
ended March 31, 1998, (b) liabilities that have arisen after March 31, 1998 in
the ordinary course of business (none of which is reasonably expected to have a
material adverse effect on the Company or (iii) those disclosed in Section 4.11
of the Company Disclosure Schedule.
4.9 Taxes. Except as set forth in the Company SEC Documents, (a) the
Company and each Subsidiary has duly filed all federal and state income tax
returns and all other material tax returns (including, but not limited to, those
filed on a consolidated, combined or unitary basis) required to have been filed
by it prior to the date hereof and will file, on or before the Effective Time,
all such returns that are required to be filed after the date hereof and on or
before the Effective Time, (b) all of the foregoing returns and reports are true
and correct in all material respects, and the Company and each Subsidiary has
paid or, prior to the Effective Time, will pay all taxes required to be paid in
respect of the periods covered by such returns or reports to any foreign,
federal, state, local or other taxing authority, (c) the Company and each
Subsidiary has paid or made adequate provision (in accordance with GAAP) in the
consolidated financial statements of the Company and its Subsidiaries included
in the Company SEC Documents for all taxes payable in respect of all periods
ending on or prior to the date hereof, (d) neither the Company nor any
Subsidiary will have any material liability for any taxes in excess of the
amounts so paid or reserves so established and neither the Company nor any
Subsidiary is delinquent in the payment of any material tax, assessment or
governmental charge and has not requested any extension of time within which to
file any returns in respect of any fiscal year which have not since been filed,
(e) no deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed in writing (tentatively or definitely), in each
case, by any taxing authority, against the Company or any Subsidiary for which
there are not adequate reserves in its financial statements (in accordance with
GAAP), (f) as of the date of this Agreement, there are no extensions or waivers
or pending requests for extensions or waivers of the time to assess or collect
any such tax, (g) the federal income tax returns of the Company and its
Subsidiaries have not been audited by the Internal Revenue Service, U.S.
Department of the Treasury ("IRS"), (h) neither the Company nor any Subsidiary
is or has been a party to any tax sharing agreement with any corporation that is
not currently a member of the affiliated group of which the Company or any
Subsidiary is currently a member, (i) there are no liens for taxes on any assets
of the Company or any Subsidiary (other than statutory liens for taxes not yet
due or liens for which adequate reserves have been established in its financial
statements in accordance with GAAP), (j) the Company and each Subsidiary has
withheld and/or paid (and until the Effective Time will withhold and pay) all
income, social security, unemployment, and all other material payroll taxes
required to be withheld (including, without limitation, pursuant to Sections
1441 and 1442 of the Code or similar provisions under foreign law) and/or paid
in connection with amounts paid to any employee, independent contractor,
shareholder, creditor or other third party, and (k) neither the Company nor any
Subsidiary has filed an election under Section 341(f) of the Code to be treated
as a consenting corporation. For purposes of this Agreement, the term "tax"
shall include all federal, state, local and foreign taxes including interest and
penalties thereon and additions to tax. In addition, the term "tax return" shall
mean any return, declaration, statement, report, schedule, certificate, form
information return, or any other document (including any related or supporting
information) required to be supplied to, or filed with, a taxing authority
(foreign or domestic) in connection with taxes.
4.10 Compliance with Law. The Company and each of its Subsidiaries is in
compliance with, and at all times has been in compliance with, all applicable
laws, statutes, orders, rules, ordinances and regulations of, policies or
guidelines promulgated by, or judgments, decisions or orders entered by, any
Governmental Authority (collectively, "Applicable Law") relating to it or its
business or properties, except for any such failures to be in compliance
therewith that, in the aggregate, would not have a material adverse effect on
the Company or any of the Subsidiaries.
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4.11 Litigation. Except as set forth in the Company SEC Documents, there
is no suit, claim, action, injunction, order, decree, proceeding or
investigation (an "Action") pending or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries that, in the aggregate, could
reasonably be expected to have a material adverse effect on the Company or any
of the Subsidiaries. Neither the Company nor any of the Subsidiaries is subject
to any outstanding order, writ, injunction or decree that, in the aggregate,
could reasonably be expected to have a material adverse effect on the Company or
any of the Subsidiaries.
4.12 Brokerage and Finder's Fees. Neither the Company nor the Subsidiaries
have incurred and will not incur, directly or indirectly, any brokerage,
finder's or similar fee in connection with the transactions contemplated by this
Agreement. The Company is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments from the Company
or the Subsidiaries in connection with the negotiation of this Agreement or in
connection with the transactions contemplated hereby.
4.13 Opinion of Financial Advisor. The Company has received a written
fairness opinion from Morgan Keegan & Company, Inc. to the effect that, as of
the date hereof, the transactions contemplated by this Agreement are fair to the
Company Shareholders from a financial point of view.
4.14 Employee Benefit Plans.
(a) For purposes of this Agreement, the following terms have the
definitions given below:
"Company Controlled Group Member" means a member of a group of
entities or trades or businesses that is aggregated with and includes
Company or any of its Subsidiaries under Code Section 414(b), (c), (m)
or (o) and the Treasury Regulations thereunder or under Section 4001 of
ERISA.
"Company Controlled Group Plan" means a Company Plan and any other
Plan maintained by or contributed to, at any time within six years prior
to the Closing Date, by any Company Controlled Group Member.
"Company Plans" means all Plans maintained by or contributed to by
Company or any of its Subsidiaries or which cover any employees, former
employees, retirees, directors or independent contractors of Company or
any of its Subsidiaries.
"Plan" means any bonus, deferred compensation, incentive
compensation, stock purchase, restricted stock, stock option, severance,
hospitalization or other medical, life or other insurance, employee
welfare, supplemental unemployment benefit, profit-sharing, pension or
retirement plan, program, agreement or arrangement or any other employee
benefit plan, program, agreement or arrangement, including any such
plan, program, agreement or arrangement covering retirees or former
employees and including without limitation any "employee pension benefit
plan" and any "employee welfare benefit plan" as those terms are defined
in Section 3 of ERISA.
(b) Except as set forth in Section 4.14 of the Company Disclosure
Schedule, each of the Company Plans is, and has been, adopted and operated
in material compliance with its terms and all applicable Laws (including,
where applicable, ERISA and the Code), including, without limitation, any
requirements regarding funding. No Plan has a trust or corporation
associated with it that is described in Code Section 501(c)(9).
(c) Section 4.14(c) of the Company Disclosure Schedule contains an
accurate and complete list of all Company Plans, including a complete and
accurate description of all Company Plans that are not in writing. Except
as set forth in Section 4.14 of the Company Disclosure Except, neither
Company nor any of its Subsidiaries has made any commitment, whether formal
or informal, and whether legally binding or not, to create or have
liability under any additional Plan, policy or arrangement, or to modify
any existing Company Plan. Neither the Company nor any Company Controlled
Group Member has ever maintained or contributed to any plan (i) that is
subject to Title IV of Section 302 of ERISA or (ii) to which Section 412 of
the Code applies.
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(d) With respect to each Company Plan, the Company has heretofore
delivered to SCSI true, correct and complete copies of (i) each such Plan,
(including any amendments to any such Plans, any related trusts, ancillary
documents, summary plan descriptions, written descriptions of any such
Plans that are not in writing, insurance policies, investment management
agreements or annuity contracts, and any rules or regulations created for
use with any such Plans); (ii) the most recent IRS determination letter, if
any, with respect to each of such Plans; and (iii) the Form 5500 (including
all schedules and attachments), if any, filed with respect to each of such
Plans for the most recent two (2) years.
(e) None of the Company Plans or any trusts relating thereto have
engaged in any transaction in connection with which Company or any of its
Subsidiaries or any fiduciaries of any Company Plans or related trusts is
or could be subject either to a civil penalty or other liability under
Sections 502(i), 406 or 409 of ERISA or a tax imposed by Section 4975 of
the Code, and no event has occurred and no condition exists with respect to
the Company Plans that could subject Company or any of its Subsidiaries to
any other tax or penalty under the Code or civil penalty or other liability
under ERISA or other laws.
(f) No litigation or administrative or other proceeding, audit, claim,
investigation or other matter (other than routine claims for benefits) is
pending or threatened involving any Company Plan.
(g) Except as set forth in Section 4.14 of the Company Disclosure
Schedule, as of the Closing Date all payments (including, without
limitation, contributions and premiums) required to have been made to or in
connection with Company Plans, by their terms or under ERISA or the Code,
with respect to any period prior to such date shall have been timely made
in full.
(h) To the extent applicable, each Company Plan or related trust which
is intended to meet the requirements of Section 401(a) or 501(a) of the
Code meets such requirements. Except as set forth in Section 4.14 of the
Company Disclosure Schedule, with respect to each Company Plan which is
intended to meet the requirements of Section 401(a) of the Code, a
favorable determination letter has been received from the IRS as to its
qualification under such Code Section (including the amendments to the Code
made by the Tax Reform Act of 1986 and all subsequent legislation on which
a determination letter may be obtained), and each such letter is current
and is in full force and effect.
(i) No Company Plan is subject to Title IV of ERISA or is a defined
benefit plan.
(j) Except as provided by Section 4980B of the Code or Part 6 of Title
I of ERISA, there are no health, medical or other welfare benefits or
insurance under the Company Plans for current or future retirees or other
former employees.
(k) Neither the Company nor any of its Subsidiaries has any current or
future liability with respect to any Company Controlled Group Plan other
than the Company Plans.
(l) Except as set forth in Section 4.14 of the Company Disclosure
Schedule, the assets of the Company Plans do not include any "employer
securities" or "employer real property" as such terms are defined in
Section 407 of ERISA. No debt has been incurred by any of the Company
Plans, other than liabilities for the payment of benefits or insurance
premiums.
(m) Except as set forth in Section 4.14(b) of the Company Disclosure
Schedule, and except as expressly provided in Section 2.3 of this
Agreement, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee, officer,
director or independent contractor of Company or any of its Subsidiaries to
severance pay, unemployment compensation or any other payment; (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such person; (iii) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code
for which an exemption is not available; or (iv) in any way result in any
additional liability with respect to any Company Plan.
4.15 Contracts. None of the Company or its Subsidiaries or, to the
knowledge of the Company or any of the Subsidiaries, any other party thereto is
in violation of or in default in respect of, nor has there occurred an event or
condition that with the passage of time or giving of notice (or both) would
constitute a default by the Company or its Subsidiaries under, any contract,
agreement, guarantee, lease or executory commitment
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(each a "Contract") to which any of them is a party, except such violations or
defaults under such Contracts that, in the aggregate, would not have a material
adverse effect on the Company.
4.16 Labor Relations. There is no unfair labor practice complaint against
the Company or any Subsidiaries pending before the National Labor Relations
Board ("NLRB") and there is no labor strike, dispute, slowdown or stoppage, or
any union organizing campaign, actually pending or, to the knowledge of the
Company, threatened against or involving the Company or any Subsidiaries, except
for any such proceedings that would not have a material adverse effect on the
Company. Except as disclosed in Section 4.16 of the Company Disclosure Schedule,
neither the Company nor any Subsidiary is a party to, or bound by, any
collective bargaining agreement, Contract or other agreement or understanding
with a labor union or labor organization. To the knowledge of the Company, there
are no organizational efforts with respect to the formation of a collective
bargaining unit presently being made or threatened involving employees of the
Company or any Subsidiary.
4.17 Permits. The Company and each Subsidiary is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders (collectively,
"Permits") necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted, except for any such Permits the
failure of which to possess, in the aggregate, would not reasonably be expected
to have a material adverse effect on the Company.
4.18 Environmental Matters.
(a) As used herein, the term "Environmental Laws" means all Applicable
Laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, coastal waters,
groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes, including petroleum, petroleum based or
petroleum-derived products (collectively, "Hazardous Materials") into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all applicable authorizations, codes,
decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, Permits, plans or regulations issued,
entered, promulgated or approved thereunder to the extent applicable to the
specific operations of the Company.
(b) Except as set forth in the Company SEC Documents filed with the
Commission prior to the date hereof, there are, with respect to the
Company, each Subsidiary or any predecessor thereof, no past or present
violations of Environmental Laws, releases of any Hazardous Materials into
the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations that may give rise to any common law
environmental liability or any liability under Environmental Laws other
than those that, in the aggregate, would not reasonably be expected to have
a material adverse effect on the Company, and the Company has not received
any notice with respect to any of the foregoing, nor is any Action pending
or threatened in connection with any of the foregoing that, if adversely
determined, could reasonably be expected to have a material adverse effect
on the Company or any of the Subsidiaries. The Company has obtained and is
in compliance with all necessary permits or authorizations required under
Environmental Laws.
(c) Except as set forth in the Company SEC Documents filed with the
Commission prior to the date hereof, (i) no Hazardous Materials are
contained on or about any real or personal property, facilities or
equipment currently owned, leased or used by the Company or any of the
Subsidiaries and (ii) no Hazardous Materials were released on or about any
real or personal property, facilities or equipment previously owned, leased
or used by the Company or any Subsidiary during the period the property was
so owned, leased or used, other than those that, in the aggregate, would
not reasonably be expected to have a material adverse effect on the Company
or any of the Subsidiaries.
(d) To the knowledge of the Company, there has been no release of
Hazardous Materials at any disposal or treatment facility which received
Hazardous Materials generated by the Company, its
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subsidiaries or predecessors in interest other than those that, in the
aggregate, would not reasonably be expected to have a material adverse
effect on the Company.
(e) No environmental claims have been asserted against the Company or,
to the knowledge of the Company, any subsidiary or predecessor in interest,
nor does the Company have knowledge or notice of any threatened or pending
environmental claim against the Company, its subsidiaries or predecessors
in interest, which is reasonably likely to result in environmental
liabilities that have a material adverse effect on the Company.
(f) The Company represents that it has delivered to the SCS Parties
true and complete copies of all environmental reports, studies,
investigations or correspondence regarding any environmental liability of
the Company, its subsidiaries or predecessors in interest, or any
environmental conditions at any of the properties which are, or were
previously owned, leased or used by the Company or its Subsidiaries.
4.19 Year 2000 Readiness. Except as set forth in Section 4.19 of the
Company Disclosure Schedule, the information technology currently used in the
operations of the Company (whether or not owned or operated by the Company)
processes date and time data (including, without limitation, calculating,
comparing and sequencing) from, into and between the twentieth and twenty-first
centuries, and through the years 1999 and 2000 including leap years, accurately,
continuously, without material degradation in performance and without requiring
material intervention or modification.
ARTICLE V
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the period from and
after the execution of this Agreement:
5.1 General Covenants.
(a) General. Each of the parties shall use its reasonable best efforts
to take all action and to do all things necessary, proper or advisable to
consummate the Merger and the transactions contemplated by this Agreement
as promptly as possible (including, without limitation, using its
reasonable best efforts to cause the conditions set forth in Article VI for
which they are responsible to be satisfied as soon as reasonably
practicable and to prepare, execute and deliver such further instruments
and take or cause to be taken such other and further action as any other
party hereto shall reasonably request).
(b) Governmental Matters. Each of the parties shall use its reasonable
best efforts to take any action that may be necessary, proper or advisable
in connection with any other notices to, filings with, and authorizations,
consents and approvals of any Governmental Authority that it may be
required to give, make or obtain.
(c) Public Announcements. At all times prior to the earlier of the
Effective Time or termination of this Agreement pursuant to Section 7.1,
none of the SCS Parties, Company or any of their affiliates shall issue any
press release or make any other public statement or disclosure concerning
this Agreement or the Merger without first obtaining the written consent of
SCSI if the disclosure is to be made by the Company or any of its
affiliates, or of the Company if the disclosure is to be made by SCSI or
any of its affiliates, as to the contents, the manner of presentation and
the publication thereof; provided, however, that notwithstanding the
foregoing, the SCS Parties, Company or any of their affiliates may make any
disclosure required by applicable law (as determined by the disclosing
party's outside counsel as reflected in a legal opinion, a copy of which
shall be furnished promptly to the other parties hereto), provided that
such disclosing party shall use its reasonable best efforts to first notify
the other parties in writing of the proposed disclosure and provide the
other parties with reasonable opportunity to comment on such disclosure.
(d) Access to Information. Subject to Applicable Law, Company shall
(and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financial advisors and other
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representatives of the SCS Parties reasonable access during normal business
hours, during the period prior to the Effective Time, to all its
properties, books, Contracts, commitments and records and, during such
period, Company shall (and shall cause its Subsidiaries to) furnish
promptly to the SCS Parties all other information concerning its business,
properties and personnel as the SCS Parties shall reasonably request. The
parties will hold any such information that is non-public in confidence to
the extent required by, and in accordance with, the provisions of the
confidentiality agreement dated May 18, 1998 between SCSSA and Company (the
"Confidentiality Agreement"). Any investigation by the SCS Parties or
Company shall not affect the representations and warranties of the SCS
Parties or Company, as the case may be.
(e) Preparation of Proxy Statement. As promptly as practicable
following the date hereof, Company shall prepare and file with the
Commission preliminary proxy materials which shall constitute the Company's
Proxy Statement (such proxy statement, and any amendment or supplements
thereto, the "Proxy Statement"). Company agrees that none of the
information included or incorporated by reference in the Proxy Statement,
at the time of filing thereof and at the time of the Shareholders Meeting
(as defined below), will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Company shall not be
responsible for any untrue statement or omission made in reliance upon and
in conformity with written information provided by the SCS Parties
expressly for use in the Proxy Statement.
(f) Special Shareholders Meeting. The Company shall duly call, give
notice of, convene and hold a special meeting of its shareholders (the
"Shareholders Meeting"), to be held as promptly as practicable, for the
purpose of obtaining the Required Shareholder Vote to approve this
Agreement and the Merger. The Company's Board of Directors shall (i)
recommend that the Company Shareholders approve the Agreement and Merger,
and (ii) use best efforts to cause the Company to obtain such approval.
(g) Notification of Certain Matters. Each of the SCS Parties and the
Company shall give prompt notice to the other party of (i) the occurrence
or nonoccurrence of any event the occurrence or nonoccurrence of which
would cause any representation or warranty contained in this Agreement made
by such party to be untrue or inaccurate at or prior to the Effective Time,
and (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.1 shall not limit or otherwise affect the remedies available
hereunder to any party.
(h) Environmental Site Assessment. The SCS Parties shall have the
right to conduct an environmental site assessment (the "ESA") of properties
owned, leased or used by the Company at its own cost and expense by an
independent engineer or professional at any time between the date hereof
and the Effective Time and the Company shall with cooperate with and assist
the SCS Parties in such endeavor as reasonably requested by the SCS
Parties.
5.2 Covenants of the SCS Parties. During the period from the date of this
Agreement to the Effective Time or the earlier termination of this Agreement
pursuant to Section 7.1, the SCS Parties shall not, and the SCS Parties shall
cause each of their subsidiaries to not, except as otherwise expressly
contemplated by this Agreement and the transactions contemplated hereby, without
the prior written consent of the Company, conduct its business in a manner or,
subject to its fiduciary duties under Applicable Law, take, or cause to be
taken, any other action that would or might reasonably be expected to prevent or
materially delay the SCS Parties from consummating the transactions contemplated
by this Agreement (regardless of whether such action would otherwise be
permitted or not prohibited hereunder), including, without limitation, any
action that may materially limit or delay the ability of the SCS Parties to
consummate the transactions contemplated by this Agreement as a result of
antitrust or securities laws or other regulatory concerns.
5.3 Covenants of the Company.
(a) Conduct of the Company's and the Subsidiaries' Operations. During
the period from the date of this Agreement to the Effective Time, the
Company shall conduct its and its Subsidiaries' operations
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in the ordinary course of business except as expressly contemplated by this
Agreement and the transactions contemplated hereby, and shall use its
reasonable best efforts to maintain and preserve its business organization
and its material rights and franchises and to retain the services of its
officers and key employees and maintain relationships with customers,
suppliers and other third parties to the end that its goodwill and ongoing
business shall not be impaired in any material respect. Without limiting
the generality of the foregoing, during the period from the date of this
Agreement to the Effective Time or the earlier termination of this
Agreement pursuant to Section 7.1, neither the Company nor the Subsidiaries
shall, except as otherwise expressly contemplated by this Agreement and the
transactions contemplated hereby, without the prior written consent of
SCSI:
(i) take or effect any of the following actions with respect to its
securities: (A) adjust, split, combine or reclassify its capital stock,
(B) make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire any of its securities
(except in connection with the use of shares of capital stock of the
Company to pay the exercise price or tax withholding in connection with
stock-based employee benefit plans of the Company), (C) grant any person
any right or option to acquire any of its securities, (D) issue, deliver
or sell or agree to issue, deliver or sell any additional securities
(except pursuant to the exercise of outstanding options to purchase
Company Common Stock) or amend the terms of any of its securities, or
(E) enter into any agreement, understanding or arrangement with respect
to the sale or voting of its capital stock;
(ii) sell, transfer, lease, pledge, mortgage, encumber or otherwise
dispose of any of its property or assets that are material, in the
aggregate, except as contemplated by the Company's existing credit
facility with First NBC and the credit facility with Heller Financial
Leasing, Inc. described in the commitment letter of such firm to the
Company dated June 2, 1998 and excepting tax, materialmen's, workmen's
and other similar liens arising by action of law with respect to current
obligations of the Company;
(iii) make or propose to amend its Articles of Incorporation, its
By-laws or other organizational documents;
(iv) merge or consolidate with any other person or acquire a
material amount of assets or capital stock of any other person or enter
into any other business combination or confidentiality agreement with
any person, other than in connection with this Agreement and the
transactions contemplated hereby;
(v) except as permitted by Section 5.3(a)(ii), incur, create,
assume or otherwise become liable for indebtedness for borrowed money,
other than in the ordinary course of business consistent with past
practice, but in no event in excess of $100,000, or assume, guarantee,
endorse or otherwise as an accommodation become responsible or liable
for obligations of any other individual, corporation or other entity,
other than in the ordinary course of business consistent with past
practice;
(vi) enter into or modify any employment, severance, termination or
similar agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, or otherwise increase the
compensation or benefits provided to, any officer, director, consultant
or employee other than salary increases and bonuses and severance
payments granted to employees who are not officers or directors in the
ordinary course of business consistent with past practice, except as may
be required by Applicable Law, this Agreement, any applicable collective
bargaining agreement or a binding Contract in effect on the date of this
Agreement, or adopt any new employee benefit plan;
(vii) except as required to comply with changes in GAAP, change its
method of doing business or change any method or principle of accounting
in a manner that is inconsistent with past practice;
(viii) settle any Actions, whether now pending or hereafter made or
brought involving, in any Action or related series of Actions, that
individually or in the aggregate are in an amount in excess of
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$100,000, other than those listed in subparagraph 5.3(a)(viii) of
Section 4.6 of the Company Disclosure Schedule relating to Jones Act
claims;
(ix) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to, any material Contract (except
for Contracts for the sale or purchase of products or services and
negotiated with customers or suppliers in the ordinary course of the
Company's business and consistent with past practice) to which it is a
party or any confidentiality agreement to which it is a party;
(x) except as contemplated by the Company's Capital Expenditure
Budget for 1998 dated June 19, 1998, as previously furnished to SCSSA,
incur or commit to any capital expenditures, obligations or liabilities
in respect thereof, other than in the ordinary course of business
consistent with past practice, but in no event in excess of $50,000
individually or $250,000 in the aggregate;
(xi) subject to the first sentence of Section 5.3(b), conduct its
business in a manner or take, or cause to be taken, any other action
that would or might reasonably be expected to prevent or materially
delay the Company from consummating the transactions contemplated by
this Agreement (regardless of whether such action would otherwise be
permitted or not prohibited hereunder), including, without limitation,
any action that may materially limit or delay the ability of the Company
to consummate the transactions contemplated by this Agreement as a
result of antitrust or securities laws or other regulatory concerns;
(xii) fail to take such actions as are in its power and authority
that are necessary to render the fair price protection provisions (La.
Rev. Stat. sec.sec. 12:132-134) and the control share acquisition
provisions (La. Rev. Stat. sec.sec. 12:135-140.2) inapplicable to the
Merger; or
(xiii) agree to take any action prohibited by the foregoing.
(b) No Solicitation. The Company agrees that, during the term of this
Agreement, it will not negotiate with any person other than the SCS Parties
with respect to the acquisition of the Company or its Subsidiaries and it
will not, and will not permit any of its officers, directors, employees,
affiliates, agents or representatives (including, without limitation,
investment bankers, attorneys and accountants) to (i) initiate contact
with, (ii) make, solicit or encourage any inquiries or proposals from,
(iii) enter into, or participate in, any discussions or negotiations with,
(iv) disclose, directly or indirectly, any information not customarily
disclosed concerning the business and properties of the Company or its
Subsidiaries to or (v) afford any access to the Company's or its
Subsidiaries properties, books and records to any person (other than the
SCS Parties or their respective directors, officers, employees, agents and
representatives) in connection with any possible proposal relating to (A)
the disposition of its respective businesses or all or substantially all of
its assets (except for disposition of assets in the ordinary course of
business consistent with past practice), (B) the acquisition of equity or
debt securities of the Company or its Subsidiaries or (C) the merger, share
exchange or business combination, or similar acquisition transaction of or
involving the Company or its Subsidiaries with any person other than the
SCS Parties (each or any combination of the foregoing a "Company Competing
Transaction"); provided that the Company may (x) furnish information
(subject to a confidentiality agreement in reasonably customary form) to,
and negotiate or otherwise engage in discussions with, any party who
delivers a written proposal for a Company Competing Transaction if and so
long as the Board of Directors of the Company determines in good faith,
based upon the written opinion of its outside legal counsel, that failing
to take such action would reasonably be expected to constitute a breach of
the fiduciary duties of the Board and (y) take a position with respect to
the Merger or a Company Competing Transaction, or amend or withdraw such
position, in compliance with Rule 14d-9 or Rule 14e-2 promulgated under the
Exchange Act with regard to a Company Competing Transaction. From and after
the execution of this Agreement, the Company and each of its Subsidiaries
will immediately notify SCSI orally, and subsequently confirm in writing,
all the relevant details relating to all inquiries and proposals which it
may receive relating to any such matters. Subject to the foregoing, the
Company will not, and will not permit any of its representatives or
Subsidiaries to enter, at any time, into or participate in any discussions
or negotiations
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regarding, or accept, any proposal for a Company Competing Transaction
received by them from a third party or that a third party expresses a
desire to communicate with them.
ARTICLE VI
CONDITIONS
6.1 Mutual Conditions. The obligations of the parties hereto to consummate
the Merger shall be subject to fulfillment of the following conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order or decree that prevents the consummation of the
Merger shall have been issued and remain in effect, and no statute, rule or
regulation shall have been enacted by any Governmental Authority that
prevents the consummation of the Merger.
(b) All material consents, approvals, Permits or authorizations
required to be obtained prior to the Effective Time from any Governmental
Authority in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby shall have
been obtained.
(c) This Agreement, the Merger and the transactions contemplated
hereby shall have been approved and adopted by (i) the Required Board Vote
and (ii) the Required Shareholder Vote at the Shareholders Meeting.
(d) There shall be no continuing or outstanding Action by any
Governmental Authority that seeks to prevent consummation of the Merger or
that seeks material damages in connection with the transactions
contemplated hereby.
6.2 Conditions to Obligations of the Company. The obligations of the
Company to consummate the Merger and the transactions contemplated hereby shall
be subject to the fulfillment of the following conditions unless waived by the
Company:
(a) The representations and warranties of each of the SCS Parties
shall be true and correct on the date hereof and on and as of the Closing
Date as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be
true and correct only as of the specified date), other than such breaches
of representations and warranties that would not have or that would not be
reasonably expected to have, in the aggregate, a material adverse effect on
the SCS Parties.
(b) Each of the SCS Parties shall have performed in all material
respects each obligation and agreement and shall have complied in all
material respects with each covenant to be performed and complied with by
it hereunder at or prior to the Effective Time.
6.3 Conditions to Obligations of the SCS Parties. The obligations of the
SCS Parties to consummate the Merger and the other transactions contemplated
hereby shall be subject to the fulfillment of the following conditions unless
waived by the SCS Parties:
(a) The representations and warranties of the Company shall be true
and correct on the date hereof and on and as of the Closing Date as though
made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which need be true and correct only
as of the specified date), other than such breaches of representations and
warranties that would not have or that would not be reasonably expected to
have, in the aggregate, a material adverse effect on the Company.
(b) The Company shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects
with each covenant to be performed and complied with by it hereunder at or
prior to the Effective Time.
(c) Between the date hereof and the Effective Date, (i) the Company
shall not have incurred any material liability, except in the ordinary
course of business consistent with past practice, (ii) there shall have
been no material adverse change to the financial position or prospects of
the Company, (iii) there
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shall have been no adverse federal, state or local legislative or
regulatory change affecting the services, products or business of the
Company which would reasonably be expected to have a material adverse
effect on the Company and (iv) none of the assets of the Company shall have
been damaged by fire, flood, casualty, act of God or the public enemy or
other cause (regardless of insurance coverage for such damage) which
damages may have a material adverse effect on the Company.
(d) All consents, waivers and approvals of third parties required in
connection with the transactions contemplated hereby shall have been
obtained.
(e) SCSI shall have received an opinion dated as of the Closing Date
of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
substantially in the form of Exhibit 6.3(e).
(f) George C. Yax shall have executed and delivered a Voting Agreement
in substantially the form of Exhibit 6.3(f).
(g) The Company shall have provided the SCS Parties with satisfactory
evidence of good title to all of its vessels.
(h) If requested by the SCS Parties on or before July 15, 1998, the
Company shall have delivered or caused to be delivered to the SCS Parties
(A) title policies (the "Title Policies") for each parcel of the Company's
owned or leased real property, showing fee simple title to the owned
properties in the name of the Company as of the Effective Time, subject
only to the following exceptions: (i) current real estate taxes not yet due
and payable as of the Effective Time and (ii) such other covenants,
conditions, easements and exceptions to title as the SCS Parties may
approve in writing and (B) an as built survey of each parcel of the
Company's owned or leased real property prepared by a registered land
surveyor or engineer, licensed in the State in which such property is
located, dated on or after the date hereof, and disclosing only such
encroachments, overlaps, boundary disputes or gaps or any other matter
effecting title or otherwise reasonably expected to interfere with the
continued use and enjoyment of such property in the manner in which it is
currently being used, as the SCS Parties may approve in writing.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval and adoption of this Agreement
by the Required Shareholder Vote:
(a) by mutual written consent of the SCS Parties and the Company;
(b) by either the SCS Parties or the Company if any permanent
injunction or other order or decree of a court or other competent
Governmental Authority preventing the consummation of the Merger shall have
become final and non-appealable;
(c) by either the SCS Parties or the Company if the Merger shall not
have been consummated before December 31, 1998, unless extended by the
Boards of Directors of both the SCS Parties and the Company (provided that
the right to terminate this Agreement under this Section 7.1(c) shall not
be available to any party whose failure to perform any material covenant or
obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date);
(d) by the SCS Parties or the Company if at the Shareholders Meeting
(including any adjournment or postponement thereof) the Required
Shareholder Vote to approve the Agreement, the Merger and the transactions
contemplated hereby shall not have been obtained;
(e) by the SCS Parties or the Company (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been a
material breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part of
the other party, which breach is not cured within 10 days following written
notice given by the terminating party to the party committing such breach,
or which
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breach, by its nature, cannot be cured prior to the Closing, but only if
such breach would constitute a failure of a condition contained in Section
6.2 or Section 6.3, as applicable;
(f) by the Company if the Board of Directors of the Company shall
determine to engage in a Company Competing Transaction and the Company
shall have delivered to the SCS Parties a written notice of the
determination by the Company Board of Directors to terminate this Agreement
pursuant to this Section 7.1(f); provided, however, that the Company may
not terminate this Agreement pursuant to this Section 7.1(f) unless (i)
five business days shall have elapsed after delivery to the SCS Parties of
the notice referred to above, (ii) at the end of such five business day
period the Company Board of Directors shall continue to believe that the
failure to engage in such Company Competing Transaction would reasonably be
expected to be a breach of the fiduciary duties of the Board of Directors
of the Company (after giving effect to any adjustment to the terms and
conditions of such transactions proposed by the SCS Parties in response to
such Company Competing Transaction) and (iii) at the time of such
termination, the Company shall have paid to the SCS Parties the Termination
Fee (as defined herein); or
(g) by the SCS Parties if (A) the Board of Directors of the Company
(i) shall not have recommended the Merger to the Company Shareholders, (ii)
shall have materially modified or rescinded its approval and recommendation
of the Agreement and the Merger to the Company Shareholders, (iii) shall
have modified or rescinded its approval of this Agreement or the Merger,
(iv) shall have entered into an acquisition, merger or similar agreement to
effect, or shall have effected, a Company Competing Transaction or (v)
shall have resolved to do any of the foregoing or (B)(i) a tender offer or
exchange offer for 20% or more of the outstanding capital stock of the
Company is commenced, and the Board of Directors of the Company shall have
failed to recommend against the shareholders of the Company tendering their
shares into such tender offer or exchange offer, or (ii) any person or
group of persons other than SCSSA or any of its affiliates acquires more
than 20% of the outstanding capital stock of the Company.
7.2 Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 7.1, this Agreement, except for the provisions of the second to
last sentence of Section 5.1(d) and the provisions of Section 7.2 and
Section 8.10, shall become void and have no effect, without any liability
on the part of any party or its directors, officers, employees or
shareholders. Notwithstanding the foregoing, nothing in this Section 7.2
shall relieve any party to this Agreement of liability for a breach of any
provision of this Agreement (other than Section 5.1(f) and Section
5.3(a)(iv)) prior to such termination.
(b) If this Agreement is terminated:
(i) by the SCS Parties or the Company pursuant to Section 7.1(d)
and either (x) the Company shall enter into a definitive agreement with
respect to a Company Competing Transaction within six months following
such termination and such Company Competing Transaction is thereafter
consummated or (y) a Company Competing Transaction is consummated within
six months following such termination (provided, however, that with
respect to this subparagraph (i), a Company Competing Transaction shall
be deemed to have occurred pursuant to Section 5.3(b)(B) only if a
person or group of persons shall have acquired equity securities or
securities convertible into equity securities comprising 20% or more of
the outstanding capital stock of the Company in an offering other than
an underwritten public offering); or
(ii) by the Company pursuant to Section 7.1(f) or by the SCS
Parties pursuant to Section 7.1(g);
then in any such case the Company will pay to the SCS Parties in cash by
wire transfer in immediately available funds to an account designated by
the SCS Parties a termination fee in an amount equal to three percent
(3%) of the amount equal to the product of (A) the sum of the total
number of issued and outstanding shares of Company Common Stock as of
the date of termination plus the total number of shares of Company
Common Stock issuable upon the exercise of outstanding options as of the
date of termination, multiplied by (B) U.S. $20.00 (the "Termination
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53
Fee"). Such payment shall be made (A) in the case of clause (i) above,
within one business day following the consummation of such Company
Competing Transaction and (B) in the case of clause (ii), no later than
immediately prior to such termination.
7.3 Amendment. This Agreement may be amended by the parties hereto, at any
time before or after approval and adoption of this Agreement by the Required
Shareholder Vote; provided, however, that after such approval and adoption, no
amendment shall be made which by Applicable Law requires further approval by the
Company Shareholders without such further approval. Notwithstanding the
foregoing, this Agreement may not be amended, modified, supplemented, canceled
or discharged, except by written instrument executed by all parties.
7.4 Extension; Waiver. At any time prior to the Effective Time, SCSI (with
respect to the Company) and the Company (with respect to the SCS Parties) may,
to the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of such party, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein; provided, however, that (x) no failure to exercise,
and no delay in exercising, any right, power or privilege under this Agreement
shall operate as a waiver, nor shall exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege, (y) no
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall any
waiver be implied from any course of dealing between the parties and (z) no
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts; and provided further
that any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument executed by such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties. The representations and
warranties made herein by the parties hereto shall not survive the Effective
Time. Notwithstanding the foregoing, this Section 8.1 shall not limit any
covenant or agreement of the parties hereto that by its terms contemplates
performance after the Effective Time or the termination of this Agreement.
8.2 Notices. All notices and other communications hereunder must be in
writing and will be deemed to have been duly given when (a) delivered personally
(with written confirmation of receipt), (b) sent by telecopier (with written
confirmation of receipt), provided that a copy is also mailed by registered
mail, return receipt requested or (c) when received by the addressee, if sent by
a nationally recognized overnight delivery service (receipt requested) to the
parties at the following addresses and telecopier numbers (or at such other
address or telecopier number as a party shall specify in accordance with the
foregoing provisions):
(a) if to the SCS Parties:
Stolt Comex Seaway S.A.
c/o Stolt Comex Seaway M.S. Ltd.
Bucksburn House
Howes Road
Bucksburn
Aberdeen AB21 9RQ
Scotland
Attention: Bernard Vossier
Telecopy No.: +44 (0) 1224 715129
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54
with a copy to:
Stolt Comex Seaway Inc.
1340 Poydras Street, Suite 2100
New Orleans, Louisiana 70112
Attention: Bruno Chabas
Telecopy No.: (504) 566-9383
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1900 Pennzoil Place South
711 Louisiana
Houston, Texas 77002
Attention: David S. Peterman
Telecopy No.: (713) 236-0822
(b) if to the Company:
Ceanic Corporation
900 Town & Country Lane
Suite 400
Houston, Texas 77024
Attention: Quinn Hebert
Telecopy No.: (713) 461-4731
with a copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P.
201 St. Charles Avenue
New Orleans, Louisiana 70170
Attention: Carl Hanemann
Telecopy No.: (504) 582-8012
8.3 Interpretation. When a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The headings and the table of contents
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. For the purposes of
this Agreement, a "material adverse effect" shall mean, as to any party, a
material adverse effect on the assets, liabilities, results of operations,
business or financial condition of such party and its subsidiaries, taken as a
whole, or on such party's ability to consummate the transactions contemplated
hereby.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
8.5 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) and the Confidentiality Agreement constitute the
entire agreement among the parties and supersede all prior agreements and
understandings by or among the parties, written and oral, with respect to the
subject matter hereof.
8.6 Third Party Beneficiaries. Excepting Sections 2.1(b), 2.2(b),
2.2(c)and 8.15, nothing in this Agreement, express or implied, is intended or
shall be construed to create any third party beneficiaries.
8.7 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to conflicts of
law principles.
8.8 Specific Performance. The transactions contemplated by this Agreement
are unique and monetary damages would not be an adequate remedy for a breach
hereof. Accordingly, each of the parties acknowledges
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55
and agrees that, in addition to all other remedies to which it may be entitled,
each of the parties hereto is entitled to a decree of specific performance,
provided that such party is not in material default hereunder.
8.9 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and permitted assigns.
8.10 Fees and Expenses. Whether or not the Merger is consummated, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses. As used
in this Agreement, "Expenses" includes all out-of-pocket expenses (including,
without limitation, all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates) incurred
by a party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby, including the preparation, printing, filing
and mailing of the Proxy Statement and the solicitation of shareholder approvals
and all other matters related to the transactions contemplated hereby.
8.11 Incorporation of Disclosure Schedules. The Company Disclosure
Schedule, the SCS Parties Disclosure Schedule and all other Schedules attached
hereto and referenced herein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
8.12 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.13 Subsidiaries and Affiliates. As used in this Agreement, the word
"subsidiary" when used with respect to any party means any corporation or other
organization, whether incorporated or unincorporated, of which such party
directly or indirectly owns or controls at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization, or any organization of which such party
is a general partner, and unless otherwise specified, the word "affiliate" has
the meaning ascribed thereto in the Investment Company Act of 1940, as amended.
8.14 Time of Essence. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
8.15 Post-Closing Agreement of SCS Parties. After the Effective Time, the
SCS Parties shall cause the Company to indemnify and hold harmless the persons
who prior to the Effective Time were officers and directors of the Company with
respect to any action or omission occurring or circumstances existing prior to
the Effective Time to the same extent that such persons would be entitled to be
indemnified pursuant to the Articles of Incorporation and Bylaws of the Company
as in effect immediately prior to the Effective time.
[Remainder of Page Intentionally Left Blank]
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56
IN WITNESS WHEREOF, the SCS Parties and the Company have signed this
Agreement as of the date first above written.
STOLT COMEX SEAWAY S.A., a
Luxembourg corporation
By: /s/ Bernard L. Vossier
------------------------------------
Name: Bernard L. Vossier
------------------------------------
Title: Chief Executive Officer
------------------------------------
STOLT COMEX SEAWAY INC., a Delaware
corporation
By: /s/ Paul Frikstad
------------------------------------
Name: Paul Frikstad
------------------------------------
Title: Chief Financial Officer
------------------------------------
CC ACQUISITION CORP., a Louisiana
corporation
By: /s/ Johan Rasmussen
------------------------------------
Name: Johan Rasmussen
------------------------------------
Title: Secretary/Treasurer
------------------------------------
CEANIC CORPORATION, a Louisiana
corporation
By: /s/ Kevin Peterson
------------------------------------
Name: Kevin Peterson
------------------------------------
Title: President and Chief Executive
Officer
---------------------------------
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GLOSSARY*
A
Action.................................. 12
affiliate............................... 30
Aggregate Consideration................. 3
Agreement............................... 1
Applicable Law.......................... 12
C
Certificate of Merger................... 2
Certificates............................ 4
Closing................................. 2
Closing Date............................ 2
Code.................................... 3
Commission.............................. 10
Company................................. 1
Company Certificate of Incorporation.... 2
Company Common Stock.................... 9
Company Competing Transaction........... 22
Company Controlled Group Member......... 13
Company Controlled Group Plan........... 13
Company Disclosure Schedule............. 8
Company Plans........................... 13
Company Preferred Stock................. 9
Company SEC Documents................... 11
Company Shareholders.................... 1
Confidentiality Agreement............... 18
Contract................................ 15
D
Dissenting Shares....................... 5
E
Effective Time.......................... 2
Environmental Laws...................... 16
ESA..................................... 19
Exchange Act............................ 10
Expenses................................ 30
G
GAAP.................................... 11
Governmental Authority.................. 7
H
Hazardous Materials..................... 16
HSR Act................................. 7
I
IRS..................................... 12
L
Louisiana Act........................... 2
Louisiana Secretary of State............ 2
M
material adverse effect................. 29
Merger.................................. 1
N
NLRB.................................... 15
P
Paying Agent............................ 4
Payment Fund............................ 4
Permits................................. 16
Plan.................................... 13
Proxy Statement......................... 18
R
Required Board Vote..................... 9
Required Shareholder Vote............... 9
S
SCS Parties............................. 1
SCS Parties Disclosure Schedule......... 6
SCSI.................................... 1
SCSSA................................... 1
Securities Act.......................... 10
Shareholders Meeting.................... 18
Subsidiaries............................ 8
subsidiary.............................. 30
Subsidiary.............................. 8
Surviving Corporation................... 2
T
tax..................................... 12
tax return.............................. 12
Termination Fee......................... 26
Title Policies.......................... 24
- ---------------
* This Glossary is for reference purposes only. All defined terms are set forth
in the Agreement, and the absence or presence of any term from or in this
Glossary is not indicative of such term's absence from or presence in the
Agreement.
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58
SCHEDULE 2.3
2.3 TREATMENT OF STOCK OPTIONS.
(a) Prior to the Effective Time, unless the SCS Parties otherwise agree,
Company and the SCS Parties shall amend the Company's various stock option plans
in effect on the date hereof (collectively, the "Company Plans") to (i) cause
each unexpired and unexercised option or right to purchase shares of Company
Common Stock granted (or subject to being granted on a contingent basis) under
the Company Plans to current or former directors, officers, employees,
consultants or independent contractors of the Company (each, a "Company Option")
to cease to represent the right to purchase Company Common Stock and to be
adjusted at the Effective Time to represent the right (an "Adjusted Option") to
purchase shares of SCS common stock with the conversion to be in a manner agreed
by the Company and the SCS Parties based on the average closing price of SCS
common stock on the Nasdaq National Market for the twenty trading days
immediately preceding the Closing Date, with the intent that the present
economic position of the Company Options be preserved (the "Conversion Ratio"),
(ii) cause, as of the Effective Time, the body or committee administering
Company Options to be the committee or other body administering the Stolt Comex
Seaway S.A. 1993 Stock Option Plan from time to time, (iii) provide that no
further grants shall be made under it and (iv) make such other appropriate
changes in the Company Plans as may be consistent with this Agreement. SCS will
assume, as of the Effective Time, the obligations of the Company under the
Company Plans, as such plans will have been amended as described in this Section
2.3, or take such other actions as are necessary or desirable to facilitate the
provisions of this subparagraph (a), including that shares of SCS common stock
purchased upon exercise of the Adjusted Options will be freely tradable under
all relevant securities laws. In connection with the issuance of Adjusted
Options, SCS shall (x) reserve for issuance the number of shares of SCS common
stock that will become subject to Adjusted Options pursuant to this Section 2.3
and (y) from and after the Effective Time, upon exercise of Adjusted Options,
make available for issuance all shares of SCS common stock covered thereby,
subject to the terms and conditions applicable thereto. Notwithstanding the
foregoing, in the event that after the date hereof and prior to the Effective
Time, the Company or SCS shall declare a stock dividend or other distribution
payable in shares of its common stock or securities convertible into shares of
its common stock, or effect a stock split, reclassification, combination or
other change with respect to its common stock, the Conversion Ratio shall be
adjusted to reflect such dividend, distribution, stock split, reclassification,
combination or other change.
(b) One-third ( 1/3) of all Company Options which remain unvested
immediately prior to the Effective Time shall as of the Effective Time be
accelerated and become immediately exercisable as Adjusted Options, and the
remaining two-thirds ( 2/3) of such unvested portion of the Company Options
shall remain unvested as Adjusted Options and subject to such other terms and
conditions as are the same as the Company Option immediately before the
Effective Time; provided, however, that (i) (A) if permitted, the vesting
schedule will be adjusted so that such unvested portion of the Adjusted Options
vest 25% each year over the four year period following the Closing Date or (B)
if not permitted, then such Adjusted Options will vest according to the current
vesting schedule provided for therein, and (ii) if permitted, the Adjusted
Option will be adjusted so that (A) if the optionholder's employment is
terminated for cause or the optionholder voluntarily terminates his employment,
then the unvested portion of such optionholder's Adjusted Option will be
immediately forfeited and (B) if the optionholder's employment is ever
terminated other than by the Company for cause, then all of the unvested portion
of such optionholder's option will accelerate and be immediately exercisable.
(c) Notwithstanding the foregoing, with respect to Kevin Peterson, Gordon
Cowe and Quinn Hebert, the Company shall enter into an agreement with each such
person and take such other actions as may be appropriate to amend his option
agreement to provide that the unvested portion of each option will accelerate
and be immediately exercisable during the first year following the Closing Date,
upon the termination of his employment with the Company for any reason
(including, without limitation, death or disability) other than the termination
by such person of his employment without Good Reason as defined below. "Good
Reason" will be defined in the amendments to Kevin Peterson's, Gordon Cowe's and
Quinn Hebert's agreements to include (i) the occurrence of a change of control,
as defined in Section 6(c)(5) of the SCSSA 1993 Stock Option Plan, as currently
in effect, and (ii) the matters corresponding to those set forth in the
Employment
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59
Agreement dated May 15, 1997 between Kevin C. Peterson and the Company. In
addition, "Good Reason" shall also mean, with respect to the agreement of Kevin
Peterson, the occurrence, without his consent, of (1) a substantial change in
the organization or reporting responsibility of the management of the Company,
or (2) requiring him to report to anyone other than the President or Chief
Executive Officer of SCSSA or the Board of Directors of Ceanic.
(d) The Company and the SCS Parties shall establish a mechanism to
facilitate the cashless exercise of the vested portion (including any such
portion which will be vested as of the Effective Time) of the Adjusted Options
by any optionholder who desires to do so.
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APPENDIX B
Morgan Keegan & Company, Inc.
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
901/524-4100 Telex 69-74324
WATS 800/366-7426
Members New York Stock Exchange, Inc.
June 25, 1998
Board of Directors
Ceanic Corporation
900 Town & Country Lane
Fourth Floor
Houston, TX 77024
Gentlemen:
We have acted as financial advisor to Ceanic Corporation (the "Company") in
connection with the proposed acquisition by Stolt Comex Seaway S.A. ("Stolt" or
the "Buyer") of all of the Company's outstanding shares (the "Transaction"). The
Transaction is described more fully in the Agreement and Plan of Merger. You
have requested our opinion as to whether the consideration to be received by the
Company's shareholders in connection with the Transaction is fair to such
shareholders from a financial point of view. Our opinion does not address the
relative merits of the Transaction and the other business strategies being
considered by the Company's Board of Directors, nor does it address the Board's
decision to proceed with the Transaction.
In connection with our review of the Transaction, and in arriving at our
opinion, we have, among other things:
(1) reviewed certain publicly available consolidated financial
statements of the Company and certain other relevant financial and
operating data of the Company made available to us from published sources
and by officers of the Company;
(2) reviewed certain internal financial and operating information,
including certain projections, relating to the Company prepared by the
management of the Company;
(3) discussed the business, financial condition and prospects of the
Company with certain officers of the Company;
(4) reviewed the financial terms of the Transaction;
(5) reviewed the financial terms, to the extent publicly available, of
certain similar transactions we deemed relevant;
(6) reviewed certain publicly available information relating to
certain companies we deemed appropriate in analyzing the Company;
(7) reviewed the trading history of the Company's Common Stock;
(8) reviewed a draft of the Agreement and Plan of Merger;
(9) performed such other analyses and examinations and considered such
other information, financial studies, analysis and investigations and
financial, economic and market data as deemed relevant.
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61
Ceanic Corporation
June 25, 1998
Page 2
We have not independently verified any of the information concerning the
Company considered by us in connection with our review of the Transaction and,
for purposes of the opinion set forth herein, we have assumed and relied upon
the accuracy and completeness of all such information. With respect to the
financial forecasts and projections made available to us and used in our
analysis, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of the Company as to the expected future financial performance of the
Company. We have not been engaged to assess the achievability of such
projections or assumptions. In addition, we have not conducted a physical
inspection or appraisal of any of the assets, properties, or facilities of the
Company nor have we been furnished with any such evaluation or appraisal. Our
opinion is necessarily based upon market, economic, financial and other
conditions as they exist on, and can be evaluated as of, the date of this
letter. Any change in such conditions would require a reevaluation of this
opinion.
In connection with our opinion, we have assumed that the Transaction will
be consummated on the terms and subject to the conditions described in the
Agreement and Plan of Merger. We also have assumed that all necessary
governmental and regulatory approvals and third-party consents will be obtained
on terms and conditions that will not have a material adverse effect on the
Company.
Morgan Keegan & Company, Inc., as part of its investment banking services,
is regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, corporate restructurings, strategic
alliances, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. We have acted as financial advisor to the Board of Directors of the
Company in connection with the Transaction and will receive a fee for our
services. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of the rendering of this opinion. In the ordinary course
of our business, we may trade in the debt and equity securities of the Company
and Buyer for our own account or for the accounts of our customers and,
accordingly, may at any time hold a long or short position in such securities.
We also acted as the lead managing underwriter for the Company's stock offering
on February 3, 1997.
This letter and the opinion stated herein are solely for the use of the
Company's Board of Directors and may not be reproduced, summarized, excerpted
from or otherwise publicly referred to in any manner without prior written
consent.
Based upon and subject to the foregoing and such other matters as we deem
relevant, we are of the opinion that as of the date hereof, the consideration to
be received by the Company's shareholders as set forth in the Agreement and Plan
of Merger is fair to the Company's shareholders from a financial point of view.
We hereby consent to the inclusion of the full text of our opinion and
summary thereof in any disclosure document or proxy statement relating to the
Transaction that the Company must file under the Securities Act of 1933, as
amended and distribute to its shareholders. This opinion is not intended to be
and does not constitute a recommendation to any shareholder of the Company as to
how such shareholder should vote with respect to the Transaction.
Sincerely,
/s/ MORGAN KEEGAN & COMPANY, INC.
MORGAN KEEGAN & COMPANY, INC.
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62
APPENDIX C
EXCERPT FROM SECTION 131 OF
THE LOUISIANA BUSINESS CORPORATION LAW
C. (1) . . . [A]ny shareholder electing to exercise such right of dissent
shall file with the corporation, prior to or at the meeting of shareholders at
which such proposed corporate action is submitted to a vote, a written objection
to such proposed corporate action, and shall vote his shares against such
action. If such proposed corporate action be taken by the required vote, but by
less than eighty percent of the total voting power, and the merger,
consolidation or sale, lease or exchange of assets authorized thereby be
effected, the corporation shall promptly thereafter give written notice thereof
to each shareholder who filed such written objection to, and voted his shares
against, such action, at such shareholder's last address on the corporation's
records.
. . . .
(2) Each such shareholder may, within twenty days after the mailing of such
notice to him, but not thereafter, file with the corporation a demand in writing
for the fair cash value of his shares as of the day before such vote was taken;
provided that he state in such demand the value demanded, and a post office
address to which the reply of the corporation may be sent, and at the same time
deposit in escrow in a chartered bank or trust company located in the parish of
the registered office of the corporation, the certificates representing his
shares, duly endorsed and transferred to the corporation upon the sole condition
that said certificates shall be delivered to the corporation upon payment of the
value of the shares determined in accordance with the provisions of this
Section. With his demand the shareholder shall deliver to the corporation, the
written acknowledgment of such bank or trust company that it so holds his
certificates of stock.
(3) Unless the objection, demand and acknowledgment be made and delivered
by the shareholder within the period limited in Paragraph (1) and (2), he shall
conclusively be presumed to have acquiesced in the corporate action proposed or
taken.
. . . .
D. If the corporation does not agree to the value so stated and demanded,
or does not agree that a payment is due, it shall, within twenty days after
receipt of such demand and acknowledgment, notify in writing the shareholder, at
the designated post office address, of its disagreement, and shall state in such
notice the value it will agree to pay if any payment should be held to be due;
otherwise it shall be liable for, and shall pay to the dissatisfied shareholder,
the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or as to whether any
payment is due, after compliance by the parties with the provisions of
subsections C and D of this section, the dissatisfied shareholder, within sixty
days after receipt of notice in writing of the corporation's disagreement, but
not thereafter, may file suit against the corporation, or the merged or
consolidated corporation, as the case may be, in the district court of the
parish in which the corporation or the merged or consolidated corporation, as
the case may be, has its registered office, praying the court to fix and decree
the fair cash value of the dissatisfied shareholder's shares as of the day
before such corporate action complained of was taken, and the court shall, on
such evidence as may be adduced in relation thereto, determine summarily whether
any payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may, within such
sixty-day period but not thereafter, intervene as a plaintiff in such suit filed
by another shareholder, and recover therein judgment against the corporation for
the fair cash value of his shares. No order or decree shall be made by the court
staying the proposed corporate action, and any such corporate action may be
carried to completion notwithstanding any such suit. Failure of the shareholder
to bring suit, or to intervene in such a suit, within sixty days after receipt
of notice of disagreement by the corporation shall conclusively bind the
shareholder (1) by the corporation's statement that no payment is due, or (2) if
the
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63
corporation does not contend that no payment is due, to accept the value of his
shares as fixed by the corporation in its notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become liable for
the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation, as the
case may be, shall, in its notice of disagreement, have offered to pay the
dissatisfied shareholder on demand an amount in cash deemed by it to be the fair
cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as the
case may be; otherwise the costs of the proceeding shall be taxed against such
shareholder.
H. Upon filing a demand for the value of his shares, the shareholder shall
cease to have any of the rights of a shareholder except the rights accorded by
this section. Such a demand may be withdrawn by the shareholder at any time
before the corporation gives notice of disagreement, as provided in subsection D
of this section. After such notice of disagreement is given, withdrawal of a
notice of election shall require the written consent of the corporation. If a
notice of election is withdrawn, or the proposed corporate action is abandoned
or rescinded, or a court shall determine that the shareholder is not entitled to
receive payment for his shares, or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares, his share certificates shall be returned to him (and, on his request,
new certificates shall be issued to him in exchange for the old ones endorsed to
the corporation), and he shall be reinstated to all his rights as a shareholder
as of the filing of his demand for value, including any intervening preemptive
rights, and the right to payment of any intervening dividend or other
distribution, or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim.
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- --------------------------------------------------------------------------------
PROXY
CEANIC CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Kevin C. Peterson and Quinn J.
Hebert, and either of them, as proxies (the "Proxies") of the
undersigned, with full power of substitution, and authorizes the
Proxies to represent the undersigned and to vote at the Ceanic
Corporation Special Meeting of Shareholders (the "Special
Meeting") to be held on August 17, 1998, or any adjournment
thereof, all shares of common stock, no par value per share, of
Ceanic Corporation held of record by the undersigned on July 15,
1998, as designated below:
1. The approval and adoption of an Agreement and Plan of Merger,
pursuant to which an indirect wholly-owned subsidiary of Stolt
Comex Seaway S.A. will merge with and into Ceanic Corporation,
and Ceanic Corporation will thereby become an indirect
wholly-owned subsidiary of Stolt Comex Seaway S.A.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion upon such other business as may properly
come before the Special Meeting.
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED. PLEASE REFER TO THE SPECIAL MEETING
PROXY STATEMENT FOR A DISCUSSION OF EACH OF THESE MATTERS. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. AS TO
ANY OTHER MATTER, THE PROXIES SHALL VOTE IN ACCORDANCE WITH THEIR
DISCRETION.
Dated:
---------------------, 1998
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Signature of Stockholder
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Signature, if held jointly
Please sign exactly as your
name appears on this Proxy
Card. When signing as
attorney, executor,
administrator, trustee,
guardian, corporation,
limited liability company
or partnership official,
please give your full title
as such and the full name
of the entity on behalf of
whom you are signing.
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE
ENCLOSED ENVELOPE.
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