EXHIBIT 4.24
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ASSET PURCHASE AGREEMENT
BY AND AMONG
CLEARWATER, INC.,
TRANSIT ENERGY SYSTEMS, INC.,
CLEARWATER SPECIALTY CHEMICAL COMPANY,
PRITECH INTERNATIONAL, INC.,
CWI INTERNATIONAL, INC.,
THE SHAREHOLDERS OF CWI INTERNATIONAL, INC.,
CLEARWATER INTERNATIONAL, L.L.C.
AND
XXXXXXXXXXX INTERNATIONAL LTD.
OCTOBER 23, 2002
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TABLE OF CONTENTS
Page
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ARTICLE 1
PURCHASE AND SALE OF ASSETS.......................................................................................1
1.1 Transferred Assets...............................................................................1
1.2 Excluded Assets..................................................................................2
1.3 Closing..........................................................................................2
1.4 Purchase Price for the Assets....................................................................3
1.5 Escrowed Shares..................................................................................3
1.6 Purchase Price Adjustment........................................................................4
1.7 Liabilities Not Assumed by the Buyer.............................................................6
1.8 Transfer Taxes; Recording Fees...................................................................6
1.9 Allocation of Purchase Price.....................................................................6
1.10 Prorations of Property Taxes and Certain Expenses................................................6
1.11 Adjustments for Changes in Capitalization........................................................7
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER AND THE SHAREHOLDERS.......................................................................7
2.1 Corporate and Shareholder Matters................................................................7
2.2 Validity of Agreement and Conflict with Other Instruments........................................8
2.3 Approvals, Licenses and Authorizations...........................................................8
2.4 Title to and Condition of Properties.............................................................9
2.5 Contracts and Commitments.......................................................................10
2.6 Financial Statements............................................................................11
2.7 No Adverse Change...............................................................................11
2.8 Taxes...........................................................................................11
2.9 Environmental Matters...........................................................................11
2.10 No Litigation...................................................................................12
2.11 Warranties and Product Liability................................................................13
2.12 Employee Matters................................................................................13
2.13 Finder's Fees...................................................................................14
2.14 Insurance.......................................................................................14
2.15 Securities Law Matters..........................................................................14
2.16 Absence of Certain Payments.....................................................................16
2.17 Absence of Certain Prohibited Activities........................................................16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND WEATHERFORD......................................................16
3.1 Corporate Matters...............................................................................16
3.2 Approvals, Licenses and Authorizations..........................................................16
3.3 Finder's Fees...................................................................................17
3.4 Authorization for the Weatherford Shares........................................................17
3.5 SEC Documents...................................................................................17
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ARTICLE 4
REGISTRATION RIGHTS..............................................................................................17
4.1 Registration Rights.............................................................................17
4.2 Procedure.......................................................................................18
4.3 Indemnification.................................................................................19
4.4 Termination.....................................................................................20
ARTICLE 5
ADDITIONAL AGREEMENTS............................................................................................20
5.1 Access to Information...........................................................................20
5.2 Conduct of the Business.........................................................................21
5.3 Negotiation with Others.........................................................................22
5.4 Information.....................................................................................22
5.5 Delivery of Business Documents..................................................................22
5.6 Further Assurances..............................................................................23
5.7 Nondisclosure of Proprietary Information........................................................23
5.8 Covenant Not to Compete With the Business.......................................................23
5.9 Use of Names....................................................................................24
5.10 Employee Matters................................................................................24
5.11 Continuation of Business by the Buyer...........................................................24
5.12 Title Policies..................................................................................25
ARTICLE 6
BUYER'S AND XXXXXXXXXXX'X CONDITIONS.............................................................................25
6.1 Representations, Warranties and Covenants.......................................................25
6.2 Good Standing...................................................................................25
6.3 Instruments of Transfer.........................................................................26
6.4 No Litigation...................................................................................26
6.5 Other Legal Matters.............................................................................26
6.6 Licenses, Consents and Approvals by the Sellers.................................................26
6.7 Consents of Third Persons.......................................................................26
6.8 Consents and Release of Liens...................................................................26
6.10 Resolutions.....................................................................................26
6.11 Employment Agreement............................................................................26
6.13 Stock Exchange Approval.........................................................................27
6.14 Approvals for Issuance of Weatherford Shares....................................................27
6.15 Assumed Trade Payables..........................................................................27
6.16 Third Party Debt................................................................................27
ARTICLE 7
SELLERS' AND SHAREHOLDERS' CONDITIONS............................................................................27
7.1 Representations and Warranties..................................................................27
7.2 No Litigation...................................................................................27
7.3 Licenses, Consents and Approvals................................................................28
7.4 Resolutions.....................................................................................28
7.5 Other Legal Matters.............................................................................28
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ARTICLE 8
INDEMNIFICATION..................................................................................................28
8.1 Indemnification by the Seller and the Shareholders..............................................28
8.2 Indemnification by the Buyer and Weatherford....................................................29
8.3 Procedure.......................................................................................29
8.4 Payment.........................................................................................29
8.5 Failure to Pay Indemnification..................................................................29
8.6 Adjustment of Liability.........................................................................30
8.7 Express Negligence..............................................................................30
8.8 Indemnification Limitations.....................................................................30
ARTICLE 9
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS..............................................................30
ARTICLE 10
TERMINATION......................................................................................................31
10.1 Termination.....................................................................................31
10.2 Liability Upon Termination......................................................................31
10.3 Notice of Termination...........................................................................31
ARTICLE 11
DEFINITIONS OF CERTAIN TERMS.....................................................................................32
ARTICLE 12
MISCELLANEOUS....................................................................................................38
12.1 Representative..................................................................................38
12.2 Expenses........................................................................................39
12.3 Notices.........................................................................................39
12.4 Arbitration.....................................................................................40
12.5 Successors......................................................................................40
12.6 Entire Agreement................................................................................40
12.7 Governing Law...................................................................................41
12.8 Waiver..........................................................................................41
12.9 Severability....................................................................................41
12.10 No Third Party Beneficiaries....................................................................41
12.11 Counterparts....................................................................................41
12.12 Headings........................................................................................41
12.13 Negotiated Transaction..........................................................................41
LIST OF DISCLOSURE SCHEDULES
Section 1.1(a)(i) - Equipment
Section 1.1(a)(ii) - Inventories
Section 1.1(a)(iii) - Accounts Receivable
Section 1.1(a)(iv) - Proprietary Information
Section 1.1(a)(v) - Real Property
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Section 1.1(a)(vi) - Entitlements
Section 1.2 - Excluded Assets
Section 1.4(b) - Weatherford Shares Allocation
Section 1.4(c) - Assumed Trade Payables
Section 1.4(d) - Third Party Debt
Section 1.4(e) - Assumed Liabilities
Section 1.9 - Purchase Price Allocations
Section 2.1 - Corporate and Shareholder Matters
Section 2.2(b) - Conflict with Other Instruments
Section 2.4(b) - Inventory Location
Section 2.5 - Contracts and Commitments
Section 2.6 - Financial Statements
Section 2.9(a) - Environmental Matters
Section 2.9(k) - Asbestos or PCB Presence
Section 2.11 - Product Warranties
Section 2.13 - Finder's Fees
Section 2.14 - Insurance
Section 11.54 - Permitted Liens
LIST OF OTHER SCHEDULES
Schedule 1.4(d) - Third Party Debt
Schedule 5.10 - Employees
Schedule 11.75 - Target Asset Value
LIST OF EXHIBITS
Exhibit A - Form of Employment Agreement
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ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into this 23rd day of October, 2002, by and among Clearwater, Inc., a
Pennsylvania corporation ("CWI"), Transit Energy Systems, Inc., a Delaware
corporation ("Transit"), Clearwater Specialty Chemical Company, a Nova Scotia
company ("CSCC"), PriTech International, Inc., a
Texas corporation ("PriTech"),
CWI International, Inc., a Delaware corporation and the ultimate parent of each
of the other Sellers ("CWII") (each of CWI, Transit, CSCC, PriTech and CWII, a
"Seller" and, collectively, the "Sellers"), the shareholders of CWII listed on
the signature pages hereto (the "CWII Shareholders", and together with CWII, the
"Shareholders"), Clearwater International, L.L.C., a Delaware limited liability
company, on its own behalf and on behalf of the Weatherford Affiliates
(collectively, the "Buyer"), and Xxxxxxxxxxx International Ltd., a Bermuda
exempted company ("Weatherford").
WITNESSETH:
WHEREAS, the Sellers desire to transfer to the Buyer the Business and
certain properties, assets and certain of the liabilities related to the
Business, and the Buyer desires to acquire such Business, properties and assets
and assume such liabilities, all upon the terms and subject to the conditions
set forth herein; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and agreements, all as more fully set forth below.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Transferred Assets.
(a) Subject to the terms and conditions of this Agreement and
in consideration of the obligations of the Buyer as provided herein, and except
as otherwise provided in Section 1.2 hereof, at the Closing, the Sellers shall
sell, assign, transfer, grant, bargain, deliver and convey, and CWII shall cause
to be sold, assigned, transferred, granted, bargained, delivered and conveyed,
to the Buyer, free and clear of all Liens, except Permitted Liens, the Sellers'
and their Affiliates' entire right, title and interest in, to and under the
Business, as a going concern, and all assets owned or used by the Sellers or
their Affiliates (other than Excluded Assets) in connection with, relating to or
arising out of the Business of every type and description, tangible and
intangible, wherever located and whether or not reflected on the books and
records of any Seller (all of such assets, properties, rights and business
collectively referred to as the "Transferred Assets"), including, but not
limited to:
(i) all Equipment, including the Equipment set forth
in Section 1.1(a)(i) of the Disclosure Schedule;
(ii) all Inventories, including the Inventories set
forth in Section 1.1(a)(ii) of the Disclosure Schedule;
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(iii) all cash, cash equivalents and Accounts
Receivable, including the Accounts Receivable set forth in
Section 1.1(a)(iii) of the Disclosure Schedule;
(iv) all Proprietary Information, including the
Proprietary Information set forth in Section 1.1(a)(iv) of the
Disclosure Schedule;
(v) all Real Property, including the Real Property
set forth in Section 1.1(a)(v) of the Disclosure Schedule;
(vi) subject to Section 1.1(b) hereof, the benefit of
all unfilled or outstanding purchase orders, sales or service
contracts, other commitments, contracts, engagements and
leases to which any Seller is entitled at the Closing and
which relate to the Business but excluding the Third Party
Debt (the "Entitlements"), all of which Entitlements are set
forth in Section 1.1(a)(vi) of the Disclosure Schedule;
(vii) all of the Sellers' rights, title and interests
in any permits, licenses, approvals, registrations, or other
authorizations, including Environmental Permits, issued by or
obtained from any Governmental Entity with respect to the
Business, other than permits, licenses, approvals,
registrations, or other authorizations related to the Excluded
Assets;
(viii) all prepaid expenses and deposits made by
Sellers and their Affiliates relating to the Business; and
(ix) any goodwill associated with the Business.
(b) The Sellers and each of the Shareholders shall use their
best efforts to obtain such consents of third parties as are necessary or
advisable for the assignment of the Transferred Assets. To the extent that any
of the Transferred Assets are not assignable by the terms thereof or consents to
the assignment thereof cannot be obtained as provided herein, the Transferred
Assets shall be held by the Sellers in trust for the Buyer and shall be
performed by the Buyer in the name of the Sellers and all benefits and
obligations derived thereunder shall be for the account of the Buyer; provided,
however, that where entitlement of the Buyer to such Transferred Assets
hereunder is not recognized by any third party, the Sellers and the Shareholders
shall, at the request of the Buyer, enforce in a reasonable manner, at the cost
of and for the account of the Buyer, any and all rights of each Seller against
such third party.
(c) Within three days of the Closing Date, the Sellers and the
Shareholders shall notify each Person which may have possession of any of the
Transferred Assets at the Closing Date, whether by consignment or otherwise, of
the transfer of such Transferred Assets to the Buyer.
1.2 Excluded Assets. Anything in Section 1.1(a) to the contrary
notwithstanding, there shall be excluded from the assets, properties, rights and
business to be transferred to the Buyer hereunder the leasehold interest of
Sellers and all Equipment, Inventory, Real Property, Entitlements, and other
assets owned or used by the Sellers or their Affiliates in connection with,
relating to or arising out of the Sellers' Business and operations conducted at
0000 Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxxxxxx including, without limitation,
those assets of the Sellers listed or described in Section 1.2 of the Disclosure
Schedule provided that any Proprietary Information which is used by Sellers in
such operations and which is being transferred under this Agreement shall not be
excluded (collectively, the "Excluded Assets").
1.3 Closing. Subject to the conditions set forth in this Agreement, the
closing shall take place at such time, date and place as the parties hereto
shall mutually agree upon in writing (the "Closing Date"). Failure to consummate
the transactions contemplated hereby on such date shall not result in a
termination of
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this Agreement or relieve any party hereto of any obligation hereunder. Title
to, ownership of, control over and risk of loss of the Transferred Assets shall
pass to the Buyer effective as of 5:00 p.m. Houston time on the Closing Date.
1.4 Purchase Price for the Assets. In consideration of the transfer to
the Buyer of the Transferred Assets, the Buyer shall, on the Closing Date, (a)
pay to CWI, as representative of all the Sellers, an aggregate amount equal to
$2,000,000 in immediately available funds by wire transfer to a bank account or
accounts to be designated by CWI (the "Cash Payment"), (b) cause Weatherford to
issue the Weatherford Shares to the Sellers in accordance with Section 1.4(b) of
the Disclosure Schedule, (c) assume the obligations of the Sellers to pay the
Trade Payables of the Business incurred in the ordinary course of the Business,
all of which are listed in Section 1.4(c) of the Disclosure Schedule (the
"Assumed Trade Payables"), (d) assume or pay off the obligations of the Sellers
under the express written terms of the Third Party Debt of the Business, all of
which debt is listed in Section 1.4(d) of the Disclosure Schedule, which shall
be updated and delivered by the Sellers to the Buyer as of and on the Closing
Date, (e) assume the liabilities and obligations of the Sellers' customers'
deposits in the aggregate amount set forth on Section 1.4(e) of the Disclosure
Schedule (the "Assumed Liabilities") and (f) assume the obligations of the
Sellers under the express written terms of the Entitlements to the extent and
only to the extent such obligations are not Pre-Closing Obligations (the
"Assumed Entitlements"), all of which Assumed Entitlements are listed in Section
1.1(a)(vi) of the Disclosure Schedule, which shall be updated and delivered by
the Sellers to the Buyer as of and on the Closing Date. The Cash Payment, the
Weatherford Shares, the Third Party Debt, the Assumed Trade Payables, the
Assumed Liabilities and the Assumed Entitlements are herein collectively
referred to as the "Purchase Price".
1.5 Escrowed Shares.
(a) The Escrowed Shares shall be issued in the name of Sellers
and shall be issued and outstanding for all purposes, including the right to
vote, the certificates of which shares shall be held in escrow by National City
Bank of Pennsylvania (the "Escrow Agent") from the Closing until 5:00 p.m.,
Houston,
Texas time, on the first anniversary of the Closing Date, as subject to
extension pursuant to Section 1.5(b) below (the "Escrow Term"). On the first
Business Day immediately following the expiration of the Escrow Term, the Escrow
Agent shall, as directed by Sellers or Sellers' Representative, release from
escrow and deliver to the Sellers the remaining balance of the account, if any,
including all Escrowed Shares, any cash and any investments held in escrow by
the Escrow Agent relating to dividends or distributions on, or proceeds from the
sale of, the Escrowed Shares and investments or interest earned on such cash and
investments remaining in escrow on such date, less such number of Escrowed
Shares and the amount of cash and investments as provided in Section 1.5(b).
(b) Notwithstanding anything to the contrary in this
Agreement, if on the expiration of the Escrow Term, any claims for
indemnification for Buyer Losses remain unresolved, the Escrow Agent may retain
in escrow a number of Escrowed Shares, any cash and any investments held in
escrow under the Escrow Agreement with an aggregate value equal to or less than
the amount of such unresolved claims for indemnification for Buyer Losses for so
long as such claims remain unresolved. For purposes of Sections 1.5(b) and
1.5(d), (i) the value of the Escrowed Shares shall be determined by multiplying
the number of Escrowed Shares by the Closing Date Value of the Weatherford
Shares, and any calculation of the number of the Escrowed Shares shall be
rounded up to the nearest whole share, and (ii) the value of all other
investments shall be the market value thereof as of the date such value is
determined.
(c) If the Sellers at any time or from time to time during the
Escrow Term desire to sell any of the Escrowed Shares or any of the other
investments held in the Escrow Account, they may do so; provided that (i) with
respect to any sale of Escrowed Shares, such sale is made pursuant to a
transaction registered under the Securities Act or the Sellers have provided to
Weatherford an opinion of counsel
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satisfactory to Weatherford that an exemption from such registration exists;
(ii) each sale is in compliance with all applicable securities laws; (iii) the
Sellers have delivered in writing irrevocable instructions to the broker,
underwriter, purchaser or other Person who will pay the consideration in respect
of such sale, with a copy to Weatherford, directing such Person to remit the
proceeds from such sale to the Escrow Agent to be held in escrow. Subject to
compliance with all applicable securities laws, Sellers may elect to invest the
proceeds from any sale of Escrowed Shares only in interest-bearing deposit
accounts or short-term U.S. Government Obligations such as Treasury Bills,
provided that all securities and proceeds resulting from such transactions shall
be held in escrow and shall be subject to this Section 1.5. It is the Sellers'
sole responsibility to seek the advice of their own representatives, advisors
and legal counsel to determine for themselves the advisability and legality of
entering into any such investments. The Sellers agree that neither the Buyer nor
Weatherford shall have any liability to the Sellers in connection with any such
investments.
(d) Whenever any number of Escrowed Shares or amount of cash
is to be withdrawn from the escrow by the Buyer pursuant to this Agreement, the
Escrow Agent shall (A) first withdraw cash, to the extent thereof, (B) the
remaining amount to be withdrawn, if any, shall next be withdrawn from
investments other than Escrowed Shares and cash, and such investments shall be
promptly liquidated by the Escrow Agent (at the Sellers' direction) to the
extent necessary to satisfy the rights of withdrawal of Buyer pursuant to this
Agreement, it being understood and agreed that it shall be deemed necessary to
liquidate any derivative securities relating to securities of Weatherford, and
(c) the remaining amount to be withdrawn, if any, shall be made from Sellers'
Escrowed Shares (based on the Closing Date Value).
(e) Any dividends or distributions paid or payable with
respect to the Escrowed Shares or any other securities or investments held in
escrow, cash proceeds resulting from any sale of the Escrowed Shares or any
other securities or investments pursuant to paragraph (c) of this Section 1.5
and any interest earned on any of those amounts shall be transferred to Escrow
Agent and held in escrow and shall be subject to the terms of this Section 1.5.
All cash deposited with the Escrow Agent shall earn interest at applicable rates
paid by the Escrow Agent from time to time to its best customers for deposits of
similar amount and tenor.
(f) Weatherford shall have the right to withdraw Escrowed
Shares by way of repurchase for an aggregate purchase price of $1.00,
investments (which must be reduced to cash) or cash or any combination of the
foregoing from the escrow to satisfy any payments required to be made to the
Buyer or Weatherford under Article 8; provided, that prior to any such
withdrawal, the Buyer or Weatherford shall have received from the Seller
Representative a certificate stating that the Buyer or Weatherford, as the case
may be, is entitled to receive a payment pursuant to Article 8 and stating the
dollar amount of such payment. If, however, the parties hereto agree that the
Buyer or Weatherford is entitled to receive a payment, but disagree as to the
amount of such payment, the Sellers agree that the Seller Representative shall
deliver such certificate authorizing the withdrawal of the amount not in
dispute. Notwithstanding the foregoing, no such certificate shall be required if
the Buyer or Weatherford delivers to the Seller Representative a copy of a
decision of an arbitration body selected and convened in accordance with Section
12.4 stating that the Buyer or Weatherford is entitled to indemnity pursuant to
this Agreement and stating the dollar amount of such indemnification.
1.6 Purchase Price Adjustment.
(a) The Buyer shall within 90 calendar days after the Closing
Date prepare or cause to be prepared a statement reflecting the Closing Date
Asset Value and the calculation thereof (the "Closing Statement") and shall
deliver such Closing Statement to the Representative. The Closing Statement
shall be prepared on a basis consistent with that used in calculating the Target
Asset Value. The Buyer shall provide the Representative with access to copies of
all work papers and other relevant documents to verify the information contained
in the Closing Statement. The Representative shall have a period of 30 calendar
days
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after delivery to him of the Closing Statement to review it and make any
objections in writing to the Buyer. If written objections to the Closing
Statement are delivered to the Buyer within such 30-day period, then the Buyer
and the Representative shall attempt to resolve the matter or matters in
dispute. If no written objections are made within the time period provided
above, the Closing Statement shall become final and binding on the parties
hereto and the Cash Payment shall be adjusted as described in clause (c) below.
(b) If disputes with respect to the Closing Statement cannot
be resolved by the Buyer and the Representative within 15 calendar days after
the delivery of the objections to the Closing Statement, then either party with
notice to the other party may submit the specific matters in dispute to
PriceWaterhouseCoopers LLP or such other recognized independent accounting firm
as may be approved by the Buyer and the Representative, which firm shall render
its opinion as to such matters. Based on such opinion, such accounting firm will
then send to the Buyer and the Representative its determination in writing on
the specific matters in dispute, including any resulting revisions to the
Closing Statement, which determination shall be final and binding on the parties
hereto. The Closing Statement, including revisions, if any, made by such
accounting firm, shall then become final and binding on the parties hereto and
the Purchase Price shall be adjusted as described in clause (c) below. The fees
and other costs charged by the independent accounting firm shall be borne by the
Buyer and the Sellers equally.
(c) At the time the Closing Statement becomes final and
binding on the parties hereto, the Purchase Price will be:
(i) reduced by the amount, if any, by which the
Target Asset Value exceeds the Closing Date Asset Value; and
(ii) increased by the amount, if any, by which the
Closing Date Asset Value exceeds the Target Asset Value.
If the Purchase Price is reduced pursuant to clause (i) above, the Sellers
shall, within five days of the date that the Closing Statement becomes final and
binding on the parties hereto, pay to the Buyer cash in an amount equal to such
reduction. If the Purchase Price is increased pursuant to clause (ii) above, the
Buyer shall, within five days of the date that the Closing Statement becomes
final and binding on the parties hereto, pay to the Sellers cash in an aggregate
amount equal to such increase.
(d) All payments made pursuant to this Section 1.6 shall be
paid in immediately available funds by wire transfer to a bank account or
accounts to be designated by the party to receive the payments. All payments
made pursuant to this Section 1.6 shall be deemed to be adjustments to the
Purchase Price effective on the date that the Closing Statement becomes final
and binding on the parties hereto.
(e) For purposes of preparing the Closing Statement, (i) there
shall be no increases in the net book value of any of the Transferred Assets by
virtue of any adjustments made after December 31, 2001 other than as set forth
in this clause (e), (ii) except as provided for in (v), increases or decreases
in the Transferred Assets shall reflect only increases or decreases resulting
from transactions in the ordinary course of the Business after December 31,
2001, (iii) there shall be no increases in the assets of the Business due to the
recognition of any non-cash increases in the Transferred Assets (including
translation adjustments), other than in the ordinary course of business, (iv)
there shall be no adjustments for extraordinary charges or expenses after
December 31, 2001, (v) the net book value of Inventories shall be reduced for
Inventories which are damaged, obsolete or otherwise not salable, (vi) the net
book value of Accounts Receivable shall be reduced by U.S. Accounts Receivable
which are older than 90 days and international Accounts Receivable which are
older than 120 days; provided, however, that any such Account Receivable, or any
portion thereof, actually collected prior to 90 days after the Closing Date
shall be included in the Closing Date Asset Value, (vii) there shall be no
adjustments for increases in intangibles, (viii) the net book value of Equipment
shall be
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reduced by the net book value of any Equipment which is not in good working
order or which is not in the Sellers' possession as of the Closing Date and (ix)
there shall be no increases in net book value of Equipment unless such Equipment
was acquired after December 31, 2001 with the consent of the Buyer.
1.7 Liabilities Not Assumed by the Buyer. Except for the Assumed Trade
Payables, the Third Party Debt, the Assumed Liabilities and the Assumed
Entitlements, the Seller and the Shareholders shall pay and discharge in due
course all liabilities, debts and obligations relating to the Sellers, the
Shareholders, the Transferred Assets or the Business, whether known or unknown,
now existing or hereafter arising, contingent or liquidated, including, without
limitation, (i) any Tax liabilities pertaining to any of the Sellers, the
Shareholders, the Transferred Assets or the Business for periods prior to and
including the Closing Date, (ii) any Debt Obligations of any Person, (iii) all
liabilities and obligations relating to any products manufactured, sold or
distributed or services provided by or on behalf of the Sellers or with respect
to any claims made pursuant to warranties to third Persons in connection with
products manufactured, sold or distributed or services provided by or on behalf
of the Sellers, the Shareholders or any Affiliate of the Sellers or the
Shareholders, (iv) all Pre- Closing Obligations, (v) all liabilities and
obligations of any Person arising prior to the Closing or related to the conduct
or operation of the Transferred Assets or the Business on or prior to the
Closing Date, (vi) all liabilities and obligations relating to the leasehold
property, or any activities or operations conducted on the leasehold property,
located at 0000 Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxxxxxx, and (vii) all
obligations, liabilities and expenses of the Sellers, the Shareholders or any
Affiliate of the Sellers or the Shareholders, including investment banking,
legal and accounting fees and expenses, relating to the transactions
contemplated herein (collectively, the "Retained Liabilities"), and the Buyer
shall not assume, or in any way be liable or responsible for, any of such
Retained Liabilities.
1.8 Transfer Taxes; Recording Fees. The Buyer and the Sellers
acknowledge and agree that any and all sales, use, value added, stamp, transfer
or other similar Taxes imposed as a result of the consummation of the
transactions contemplated by this Agreement shall be borne equally by the Buyer,
on the one hand, and the Sellers and the Shareholders, on the other hand,
including, without limitation, any liability to which any of the parties may
become subject as a result of the fact that the transactions contemplated by
this Agreement are effected without compliance with the bulk sales provisions of
the Uniform Commercial Code as in effect in any state or any similar statute as
enacted in any jurisdiction. The Buyer shall pay any and all recording, filing
or other fees relating to the conveyance or transfer of the Transferred Assets
from the Sellers to the Buyer. The Buyer shall deliver to the Sellers on the
Closing Date a certificate certifying that the Inventories are being purchased
for resale to the extent stated therein.
1.9 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Transferred Assets by the Buyer and the Representative within 90 days
following the Closing Date subject to the following: (i) such allocation will be
in accordance with the allocations set forth in Section 1.9 of the Disclosure
Schedule; (ii) such allocation of the Purchase Price will be reflected in Form
8594 that will be filed by the Buyer and the Seller in accordance with Section
1060 of the Code, with such adjustments as may be necessary pursuant to Section
1.6; and (iii) the Buyer and the Seller agree to treat and report in filings
under the Code (and, if necessary, to cause each of their respective Affiliates
to so treat and report) the transactions contemplated by this Agreement in a
manner consistent with one another. The Purchase Price and the Transferred
Assets will be allocated among the Buyer and the Xxxxxxxxxxx Affiliates as set
forth in Section 1.9 of the Disclosure Schedule.
1.10 Prorations of Property Taxes and Certain Expenses.
(a) The Sellers and each of the Shareholders warrant that the
Transferred Assets are not, and on the Closing Date will not be, subject to or
liable for any special assessments or similar types of impositions. Any general
property Tax assessed against or pertaining to the Transferred Assets for the
taxable period that includes the Closing Date shall be prorated between the
Buyer and the Sellers as of the Closing
6
Date. In the event the amount of any such general property Tax cannot be
ascertained as of the Closing Date, proration shall be made on the basis of the
preceding year, the Buyer shall receive a credit against the Cash Payment for
the Sellers' pro rata portion of such general property Taxes, and to the extent
that such proration may be inaccurate, the Sellers and the Buyer agree to make
such payment to the other after the tax statements have been received as is
necessary to allocate such general property Tax properly between the Seller and
the Buyer as of the Closing Date.
(b) Except as otherwise provided in this Agreement, the
Sellers and the Buyer agree that amounts payable with respect to utility charges
and other items of expense attributable to the conduct of the Business shall be
prorated as of the Closing Date to the extent the charges and expenses cannot be
identified as to the party that received the benefits to which such charges and
expenses relate. The Buyer shall receive a credit against the Cash Payment for
the Seller's pro rata portion of such charges and expenses. To the extent such
amounts are estimated on the Closing Date and such prorations are inaccurate,
the Seller and the Buyer agree to make such payment to the other after such
amounts are correctly computed as is necessary to allocate such charges properly
between the Sellers and the Buyer as of the Closing Date.
(c) The Sellers shall receive a credit, to be paid at Closing,
for the amount of prepaid expenses and deposits relating to the Entitlements, to
the extent and only to the extent that such prepaid expenses and deposits are
Transferred Assets and are not reflected on the Financial Statements. In
addition, the Sellers shall receive a credit on the final Closing Statement in
the amount of any prepaids collected by the Buyer within 90 calendar days after
the Closing Date in excess of their Closing Date Asset Value.
1.11 Adjustments for Changes in Capitalization. For purposes of this
Article 1, references to the Common Stock and Xxxxxxxxxxx Shares shall include
any stock, securities, cash or other property into which the Common Stock has
been converted or that may be received by a shareholder who held a share of
Common Stock on the Closing Date in respect of such share and all references to
the market value of the Common Stock as of any date shall mean the sum of the
market value of Common Stock and such other stock, securities, cash or other
property that may be received by a holder of Common Stock in respect of a share
of Common Stock as of the date of the Closing. The determination of the value of
any security shall be based on the closing sale price of that security on the
principal stock exchange on which it is listed if that security is traded on a
national securities exchange. If the principal market in which a security is
traded is an automated trading system, such as NASDAQ, the market value on any
day shall be the average of the high and low bid price for that security on that
day. If any other security or property is received, its value shall be
determined by agreement by a nationally recognized investment banking firm
selected in good faith by Xxxxxxxxxxx. In the event of a reclassification of the
Common Stock into a greater or lesser number of shares of Common Stock, all
references to numbers of shares of Common Stock and all market prices for the
Common Stock shall be appropriately adjusted to reflect such reclassification.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER AND THE SHAREHOLDERS
The Sellers and each of the Shareholders hereby jointly and severally
represent and warrant to the Buyer and Xxxxxxxxxxx and covenant and agree as
follows:
2.1 Corporate and Shareholder Matters. Each of the Sellers and CWII is
a corporation duly incorporated, validly existing and in good standing under the
laws of their respective jurisdiction of incorporation or formation. Each of the
Sellers and CWII is duly authorized, qualified and licensed and has all
requisite power and authority under all applicable laws, ordinances and orders
of public authorities to own, operate and
7
lease its properties and assets and to carry on its business in the places and
in the manner currently conducted. The Sellers are qualified to transact
business as a foreign corporation and are in good standing in the jurisdictions,
if any, specified in Section 2.1 of the Disclosure Schedule, and there is no
other jurisdiction in which the nature and extent of the Business or the
character of the Sellers' assets makes such qualification necessary. Each of the
Sellers and CWII has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations under this Agreement. Each of the
CWII Shareholders has all requisite legal capacity, power and authority to enter
into this Agreement and to perform his obligations under this Agreement. Other
than Permitted Liens, CWII owns beneficially and of record all of the issued and
outstanding stock of CWI, Transit and PriTech and Transit owns beneficially and
of record all of the issued and outstanding stock of CSCC free and clear of all
Liens. Other than Permitted Liens, the CWII Shareholders collectively own
beneficially and of record all of the issued and outstanding stock of CWII free
and clear of all Liens.
2.2 Validity of Agreement and Conflict with Other Instruments.
(a) This Agreement, and all transactions contemplated hereby,
have been duly authorized and approved by the boards of directors and the
shareholders of each of the Sellers and CWII. No further corporate action is
necessary on the part of any of the Sellers or CWII to execute and deliver this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Sellers and each of the Shareholders
and is a legal, valid and binding obligation of the Sellers and each of the
Shareholders enforceable against them in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies.
(b) The execution, delivery and performance of this Agreement
and the other agreements and documents to be delivered by the Sellers and each
of the Shareholders to the Buyer, the consummation of the transactions
contemplated hereby or thereby, and the compliance with the provisions hereof or
thereof, by the Sellers and each of the Shareholders will not, with or without
the passage of time or the giving of notice or both: (i) conflict with,
constitute a breach, violation or termination of any provision of, or, subject
to the receipt of all required third-party consents set forth in Section 2.2(b)
of the Disclosure Schedule (the "Required Consents"), give rise to any right of
termination, cancellation or acceleration, or loss of any right or benefit or
both, under, any of the Entitlements to which the Sellers are a party or by
which they are bound; (ii) conflict with or violate the certificate of
incorporation or by-laws of any of the Sellers or CWII; (iii) result in the
creation or imposition of any Lien on any of the Transferred Assets; (iv) except
as set forth in Section 2.2(b) of the Disclosure Schedule, result in an
acceleration or increase of any amounts due with respect to any of the Assumed
Liabilities, the Third Party Debt, the Assumed Entitlements or the Assumed Trade
Payables; (v) violate any law, statute, ordinance, regulation, judgment, writ,
injunction, rule, decree, order or any other restriction of any kind or
character applicable to the Sellers or any of the Shareholders or any of their
respective properties or assets; or (vi) conflict with, constitute a breach,
violation or termination of any agreement or understanding, whether written or
otherwise, to which any of the Sellers or any of the Shareholders is a party or
by which they or he is bound.
2.3 Approvals, Licenses and Authorizations.
(a) Except for the receipt of all Required Consents, no order,
license, consent, waiver, authorization or approval of, or exemption by, or the
giving of notice to, or the registration with, or the taking of any other action
in respect of, any Person not a party to this Agreement, including any
Governmental Entity, and no filing, recording, publication or registration in
any public office or any other place is now, or under existing law in the future
will be, necessary on behalf of the Sellers or any of the Shareholders to
authorize the execution, delivery and performance of this Agreement or any other
agreement contemplated hereby to be
8
executed and delivered by the Sellers or any of the Shareholders and the
consummation of the transactions contemplated hereby or thereby (including, but
not limited to, assignment of the Transferred Assets), or to effect the
legality, validity, binding effect or enforceability thereof.
(b) All licenses, permits, concessions, warrants, franchises
and other governmental authorizations and approvals of all Governmental Entities
required or necessary for the Sellers to carry on the Business in the places and
in the manner currently conducted have been duly obtained and are in full force
and effect. No violations have been recorded or, to the knowledge of the Sellers
and each of the Shareholders, are in existence with respect to such licenses,
permits or other authorizations and no proceeding is pending or, to the best
knowledge of the Sellers and each of the Shareholders, threatened with respect
to the revocation or limitation of any of such licenses, permits or other
authorizations. The Sellers have complied in all material respects with all
laws, rules, regulations and orders applicable to the Business, and all rules,
regulations and orders respecting the provision of services by the Sellers.
2.4 Title to and Condition of Properties.
(a) The Sellers have good and marketable title to all
Equipment free and clear of all Liens, except Permitted Liens. All of the
Equipment is in the Sellers' possession and control.
(b) The Sellers have good and marketable title to all
Inventories free and clear of all Liens, except Permitted Liens. All Inventories
are in the Sellers' possession and control except as set forth on Section 2.4(b)
of the Disclosure Schedule.
(c) The Accounts Receivable are owned by the Sellers free and
clear of all Liens, except Permitted Liens. All Accounts Receivable were
generated in the ordinary course of business and Accounts Receivable of U.S.
customers are believed to be collectable within 90 days following the Closing
Date and all Accounts Receivable of international customers are believed to be
collectable within 120 days following the Closing Date, subject to any
applicable reserves included on the Financial Statements.
(d)(i) The Sellers own, free and clear of all Liens, other
than Permitted Liens, or possess licenses or other rights to use all rights to
all Proprietary Information necessary for the conduct of the Business as
currently conducted. At the Closing, the Sellers and the Shareholders will
transfer or cause to be transferred all Proprietary Information necessary for
the conduct of the Business as currently conducted. Set forth in Section
1.1(a)(iv) of the Disclosure Schedule is a complete and accurate list of all
patents, trademarks and licenses the Sellers own or possess or otherwise has
rights to use and that pertain to the Business. All Proprietary Information that
is licensed by the Sellers from third parties is licensed pursuant to valid and
existing license agreements and such interests are not subject to any Liens
other than those under the applicable license agreements. The consummation of
the transactions contemplated by this Agreement will not result in the loss of
any Proprietary Information and will not conflict with, constitute a breach,
violation or termination of any agreement or understanding, whether written or
otherwise, relating to any Proprietary Information necessary for the conduct of
the Business as currently conducted.
(ii) No licenses, sublicenses, covenants or agreements have
been granted or entered into by any of the Sellers or any of the Shareholders in
respect of the items listed in Section 1.1(a)(iv) of the Disclosure Schedule
except as noted thereon. None of the Sellers or any of the Shareholders has
received any notice of infringement, misappropriation or conflict from any other
Person with respect to such Proprietary Information and the conduct of the
Business has not infringed, misappropriated or otherwise conflicted with any
Proprietary Information of any such Person. The Sellers have not given any
indemnification for patent, trademark, service xxxx or copyright infringements
except to licensees or customers in the ordinary course of business. All of the
Proprietary Information that is owned by the Sellers is owned free and clear of
all
9
Liens, and all such Proprietary Information will be transferred to the Buyer
free and clear of all Liens, including any claims by any claimed or alleged
co-inventors or co-owners.
(e) All Real Property is set forth in Section 1.1(a)(v) of the
Disclosure Schedule. The Sellers have good and marketable title to, or valid and
subsisting leasehold interests in, all Real Property and all improvements
thereon, free and clear of any Liens. All leases of Real Property leased for the
use or benefit of the Sellers and to which it is a party, and all amendments and
modifications thereof, are in full force and effect and there exists no default
under the leases by any of the Sellers, nor any event that with notice or lapse
of time or both would constitute a default thereunder by any Seller.
(f) The Transferred Assets include all assets owned by the
Sellers or used in connection with or relating to the Business of every type and
description, tangible and intangible, wherever located and whether or not
reflected on the books and records of the Sellers (but not including Excluded
Assets). To the extent that any of the Transferred Assets are not in the
possession (actual or constructive) of the Sellers, the Sellers and the
Shareholders shall cause the holder thereof to transfer and assign such assets
to the Buyer at the Closing other than Consigned Inventory which shall remain in
the possession of Sellers' customers.
2.5 Contracts and Commitments.
(a) Except as set forth in Section 2.5 of the Disclosure
Schedule, none of the Transferred Assets is subject to and the Sellers are not a
party to or bound by: (i) any agreement, contract or commitment requiring the
expenditure or series of related expenditures of funds in excess of $10,000
(other than purchase orders in the ordinary course of business for goods
necessary for the Seller to complete then existing contracts or purchase
orders); (ii) any agreement, contract or commitment requiring the payment for
goods or services whether or not such goods or services are actually provided or
the provision of goods or services at a price less than the Seller's cost of
producing such goods or providing such services; (iii) any loan or advance to,
or investment in, any Person or any agreement, contract, commitment or
understanding relating to the making of any such loan, advance or investment;
(iv) any Debt Obligations; (v) any management service, employment, consulting or
other similar type contract or agreement; (vi) any agreement, contract or
commitment that, by its terms, would limit the freedom of the Buyer or any of
its Affiliates following the Closing Date to engage in any line of business, to
own, operate, sell, transfer, pledge or otherwise dispose of or encumber any of
the Transferred Assets or to compete with any Person or to engage in any
business or activity in any geographic area; (vii) any agreement, lease,
contract or commitment or series of related agreements, leases, contracts or
commitments not entered into in the ordinary course of business or, except for
agreements to purchase or sell goods and services entered into in the ordinary
course of business of the Sellers, not cancelable by the respective Seller
without penalty to the Seller within 30 calendar days; (viii) any agreement or
contract obligating the Seller or that would obligate or require any subsequent
owner of the Business or any of the Transferred Assets to provide for
indemnification or contribution with respect to any matter; (ix) any sales,
distributorship or similar agreement relating to the products sold or services
provided by the Sellers; or (x) any license, royalty or similar agreement.
(b) None of the Sellers is in breach of any provision of, or
in default (and neither the Sellers nor any of the Shareholders has any
knowledge of any event or circumstance that with notice, or lapse of time or
both, would constitute an event of default) under the terms of any of the
Entitlements that constitute a part of the Transferred Assets, except for such
breaches or defaults that would not materially and adversely affect any of the
Sellers, the Business or the Transferred Assets. All of the Entitlements that
constitute a part of the Transferred Assets are in full force and effect. None
of the Sellers nor any of the Shareholders is aware of any pending or threatened
disputes with respect to any of the Entitlements. The enforceability of the
Entitlements that constitute a part of the Transferred Assets will not be
affected in any manner by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, subject to obtaining any
Required Consents.
10
2.6 Financial Statements. Attached as Section 2.6 of the Disclosure
Schedule are true, correct and complete copies of (i) the unaudited balance
sheets of each of the Sellers as of March 31, 2002 and June 30, 2002, and (ii)
the unaudited statement of income of the Seller for the quarters ended March 31,
2002 and June 30, 2002 (collectively, the "Financial Statements"). The Financial
Statements (i) fairly present the financial position of the Seller as of their
respective dates and the results of operations of the Business for the periods
indicated therein, (ii) have been prepared in accordance with accounting
principles generally accepted in the United States ("GAAP") applied on a
consistent basis throughout the periods covered by the Financial Statements and
(iii) have not been rendered untrue, incomplete or unfair as representations of
the financial condition of the Transferred Assets or the Business by events
subsequent to the date of the Financial Statements. The unaudited balance sheets
of the Seller as of June 30, 2002, are the most recently available balance
sheets of the Seller.
2.7 No Adverse Change. Since June 30, 2002, (a) no material business
segment of the Business has been adversely affected in any material way as the
result of any fire, explosion, accident, riot, civil or labor disturbance,
strike, boycott, lockout, flood, drought, storm, earthquake, embargo or other
casualty or act of God or the public enemy, and (b) there has been no material
adverse change in the condition of any material business segment of the Business
or in the condition of the assets of the Sellers nor has any event or condition
occurred that could reasonably result in such a material and adverse change.
2.8 Taxes.
(a) All Tax Returns that are required to be filed (taking into
account all extensions) on or before the Closing Date for, by, on behalf of or
with respect to each of the Sellers, including, but not limited to, those
relating to the Business, the Transferred Assets, the Assumed Liabilities, the
Third Party Debt, the Assumed Entitlements and Assumed Trade Payables, and those
which include or should include the Sellers, the Transferred Assets, the Assumed
Liabilities, the Third Party Debt, the Assumed Entitlements or the Assumed Trade
Payables, have been or will be timely filed with the appropriate foreign,
federal, state and local authorities on or before the Closing Date, and all
Taxes shown to be due and payable on such Tax Returns or related to such Tax
Returns have been or will be timely paid in full on or before the Closing Date.
(b) None of such Tax Returns are now under audit or
examination by any foreign, federal, state or local authority and there are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment or collection of any Tax or deficiency of any
nature against any of the Sellers, the Business or the Transferred Assets, or
with respect to any such Tax Return, or any suits or other actions, proceedings,
investigations or claims now pending or threatened against any of the Sellers,
the Business or the Transferred Assets with respect to any Tax, or any matters
under discussion with any foreign, federal, state or local authority relating to
any Tax, or any claims for any additional Tax asserted by any such authority.
2.9 Environmental Matters.
(a) Except as set forth in Section 2.9(a) of the Disclosure
Schedule, none of the Sellers nor, to the knowledge of the Sellers and each of
the Shareholders, any other Person has caused or allowed the generation, use,
treatment, storage, or disposal of Hazardous Materials at any site or facility
owned, leased or operated by any of the Sellers except to the extent the same
will not, under current laws, result in any liability, contingent or otherwise,
to the Buyer or its Affiliates.
(b) Except as set forth in Section 2.9(b) of the Disclosure
Schedule, none of the Sellers either owns or leases nor has previously owned or
leased any real property, improvements or related assets that have been subject
to the release of any Hazardous Materials by the Sellers or, to the knowledge of
the Sellers, by any other Person.
11
(c) Except as set forth in Section 2.9(c) of the Disclosure
Schedule, each of the Sellers has secured all Environmental Permits necessary to
the conduct of the Business, all such Environmental Permits are subsisting and
in good standing, each of the respective Sellers is in compliance with such
permits and all Environmental Permits that constitute a part of the Transferred
Assets can be transferred to the Buyer in a manner that allows the Buyer to
continue to operate the Business after Closing in compliance with Environmental
Laws.
(d) None of the Sellers nor any of the Shareholders has
received any notice, nor is any Seller or any of the Shareholders aware, of any
proposal to amend, revoke or replace any Environmental Permit, or requiring the
issuance of any additional Environmental Permit, relating to the Transferred
Assets or the Business.
(e) Except as set forth in Section 2.9(e) of the Disclosure
Schedule, none of the Sellers nor any of the Shareholders has received inquiry
or notice nor does any Seller or any of the Shareholders have any reason to
suspect or believe that any Seller or any of the Shareholders will receive
inquiry or notice of any actual or potential proceedings, claims, lawsuits or
losses related to or arising under any Environmental Law and relating to a
Seller.
(f) None of the Sellers is currently operating or required to
be operating under any compliance order, schedule, decree or agreement, any
consent decree, order or agreement, or corrective action decree, order or
agreement issued or entered into under any Environmental Law.
(g) To the best knowledge of each of the Sellers and each of
the Shareholders, each Seller is in material compliance in all respects with all
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements and obligations established under Environmental Laws.
(h) There are no underground storage tanks located on any of
the Transferred Assets.
(i) None of the Transferred Assets is encumbered by a Lien
arising or imposed under Environmental Laws.
(j) No notice or other filing, consent or approval is required
under any Environmental Law as a prerequisite to the transfer of the Business
and the Transferred Assets to the Buyer.
(k) Except as set forth in Section 2.9(k) of the Disclosure
Schedule, to the best knowledge of each of the Sellers and the Shareholders, no
asbestos, asbestos containing materials or polychlorinated biphenyls are present
on any of the Transferred Assets.
(l) There are no Environmental Liabilities arising from or
related to the Transferred Assets or the Business that any Seller has agreed to,
assumed or retained, by contract or otherwise.
(m) The Sellers and the Shareholders have provided the Buyer
with copies of all environmental audits, assessments or other evaluations of the
Business or any of the Transferred Assets that are in the possession of any
Seller or any of the Shareholders or any of their respective Affiliates,
consultants, agents or representatives or are subject to their control.
2.10 No Litigation. Except as set forth in Section 2.10 of the
Disclosure Schedule, there is no action, suit, claim, judgment, investigation or
legal, administrative, arbitration or other proceeding, or governmental
investigation or examination, pending or, to the knowledge of each of the
Sellers and each of the Shareholders, threatened against or affecting a Seller,
the Business or any of the Transferred Assets, at law or in equity, before or by
any Governmental Entity and, to the best knowledge of each of the Sellers and
each of the
12
Shareholders, no basis exists for any such action, suit, claim, investigation or
proceeding. To the knowledge of the Seller and each of the Shareholders, there
is no change in any zoning or building ordinance pending or threatened against
or affecting the Seller, the Business or any of the Transferred Assets.
2.11 Warranties and Product Liability.
(a) Except for (i) warranties implied by law and (ii)
warranties disclosed in Section 2.11 of the Disclosure Schedule, none of the
Sellers have given or made any warranties in connection with the sale or rental
of goods or services on or prior to the Closing, including, without limitation,
warranties covering the customer's consequential damages. None of the Sellers or
any of the Shareholders is aware of any state of facts or the occurrence of any
event forming the basis of any present claim against the Seller with respect to
warranties relating to products manufactured, sold or distributed by the Seller
or services performed by or on behalf of the Seller on or prior to the Closing.
(b) To the knowledge of each of the Sellers and each of the
Shareholders, there is no state of facts or any event forming the basis of any
present claim against a Seller, the Business or the Transferred Assets not fully
covered by insurance, except for deductibles and self-insurance retentions, for
personal injury or property damage alleged to be caused by products shipped or
services rendered by or on behalf of the Sellers.
2.12 Employee Matters.
(a) Section 2.12 of the Disclosure Schedule contains a true,
complete and accurate list of each person employed by the Sellers, together with
such individual's title or job description and date of hire by such Seller, and,
for each employee of a Seller who is compensated on a salaried basis, such
individual's salary, the last date of increase of his salary, and his incentive
compensation arrangements with Seller.
(b) Except as and to the extent set forth on Section 2.12 of
the Disclosure Schedule, (i) there is no labor strike, work stoppage, lockout or
material dispute or material slowdown pending or, to the best knowledge of each
of the Sellers and each of the Shareholders, threatened against a Seller, and
there has not been any such action during the last three years, (ii) no Seller
is a party to or bound by any (A) collective bargaining or similar agreement
with any labor organization or (B) written work rules or practices agreed to
with any labor organization or employee association applicable to employees of a
Seller, (iii) no employee of any Seller is represented by any labor organization
and, to the best knowledge of each of the Sellers and each of the Shareholders,
there are no current union organizing activities among the employees of the
Sellers, and (iv) there are no material written personnel policies, rules or
procedures applicable to employees of the Sellers.
(c) During the last four years, no Seller has effectuated (i)
a "plant closing" (as defined in the Worker Adjustment Retraining Notification
Act of 1988 (the "WARN Act")) affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of a
Seller, or (ii) a "mass layoff" (as defined in the WARN Act) affecting any site
of employment or facility of a Seller; and no Seller has been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law. Except as and
to the extent set forth on Section 2.12 of the Disclosure Schedule, none of the
Sellers' employees has suffered an "employment loss" (as defined in the WARN
Act) during the past six months.
(d) To the extent applicable, all of Sellers' Benefit Plans
have been operated in compliance with COBRA.
13
(e) Except as set forth in Section 2.12(e) of the Disclosure
Schedule, none of the Sellers nor any ERISA Affiliates currently sponsor,
maintain or contribute to, or during the last six years has sponsored,
maintained or contributed to, any pension plan (within the meaning of Section
3(2) of ERISA).
(f) No employee pension benefit plan as defined in Section
3(2) of ERISA that is maintained or contributed to by a Seller or any ERISA
Affiliate thereof had an accumulated funding deficiency as defined in Section
302 of ERISA and Section 412 of the Code, whether or not waived, as of the last
day of the most recent fiscal year of the plan ending on or prior to the
Closing.
(g) None of the Sellers nor any Person that was at any time
during the six-year period ending on the date of this Agreement an ERISA
Affiliate has ever maintained, had an obligation to contribute to, contributed
to, or incurred any liability with respect to a multiemployer plan, as defined
in Section 3(37) of ERISA, or a plan described in Section 4063(a) of ERISA.
2.13 Finder's Fees. Except as set forth on Section 2.13 of the
Disclosure Schedule, none of the Sellers or any of the Shareholders or any of
their respective Affiliates has employed or retained any investment banker,
broker, agent, finder or other party, or incurred any obligation for brokerage
fees, finder's fees or commissions, with respect to the sale by the Seller of
any of the Transferred Assets or with respect to the transactions contemplated
by this Agreement, or otherwise dealt with anyone purporting to act in the
capacity of a finder or broker with respect thereto whereby any party hereto may
be obligated to pay such a fee or commission. Each of the Sellers and each of
the Shareholders agree that they are responsible and liable for and will pay any
fees resulting from matters set forth on Section 2.13 of the Disclosure Schedule
and that any of such fees are not and will not be included in the accrued
liabilities on the Financial Statements. Each of the Sellers and each of the
Shareholders agree to indemnify and hold the Buyer and its Affiliates harmless
from and against any and all claims, liabilities or obligations with respect to
all fees, commissions or expenses asserted by any Person on the basis of any
act, statement, agreement or commitment alleged to have been made by any Seller
or any of the Shareholders or any Affiliate of any Seller or any of the
Shareholders with respect to any such fee, commission or expense.
2.14 Insurance. Section 2.14 of the Disclosure Schedule sets forth all
existing insurance policies held by the Sellers relating to the Business or the
Transferred Assets. Copies of all such policies have been provided to the Buyer.
Each such policy is in full force and effect and is with responsible insurance
carriers. There is no dispute with respect to such policies, and all claims
arising from events or circumstances occurring prior to the date hereof have
been paid in full or adequate reserves therefor are recorded in the Financial
Statements.
2.15 Securities Law Matters.
(a) Each of the Sellers and each of the Shareholders recognize
and understand that the Xxxxxxxxxxx Shares to be issued to the Seller (the
"securities") will not, except as expressly provided in Article 4, be registered
under the Securities Act, or under the securities laws of any state (the
"securities laws"). The securities are not being so registered in reliance upon
exemptions from the Securities Act and the securities laws which are predicated,
in part, on the representations, warranties and agreements of the Seller and the
Shareholders contained herein.
(b) Each of the Sellers and each of the Shareholders represent
and warrant that (i) each Seller has business knowledge and experience, such
experience being based on actual participation therein, (ii) each Seller is
capable of evaluating the merits and risks of an investment in the Xxxxxxxxxxx
Shares and the suitability thereof as an investment therefor, (iii) the
Xxxxxxxxxxx Shares to be acquired by the Sellers will be acquired solely for
investment and not with a view toward resale or redistribution in violation of
the securities laws, (iv) the Sellers include: CWI which is a corporation whose
principal corporate offices are in
14
Pennsylvania; Transit which is a corporation whose principal corporate offices
are in Pennsylvania; PriTech which is a corporation whose principal corporate
offices are in Pennsylvania; and CSCC which is an unlimited liability company
whose principal corporate offices are in Pennsylvania and CWII which is a
corporation whose principal corporate offices are in Pennsylvania,(v) in
connection with the transactions contemplated hereby, no assurances have been
made concerning the future results of the Buyer or Xxxxxxxxxxx or as to the
value of the Weatherford Shares and (vi) each Seller is an "accredited investor"
within the meaning of Regulation D promulgated by the Commission pursuant to the
Securities Act. Each Seller understands that neither Xxxxxxxxxxx nor the Buyer
is under any obligation to file a registration statement or to take any other
action under the securities laws with respect to any such securities except as
expressly set forth in Article 4 hereof.
(c) Each of the Sellers and each of the Shareholders have
consulted with their own counsel in regard to the securities laws and are fully
aware (i) of the circumstances under which a Seller is required to hold the
securities, (ii) of the limitations on the transfer or disposition of the
securities, (iii) that the securities must be held indefinitely unless the
transfer thereof is registered under the securities laws or an exemption from
registration is available and (iv) that no exemption from registration is likely
to become available for at least one year from the date of acquisition of the
securities. Each of the Sellers and each of the Shareholders have been advised
by their counsel as to the provisions of Rules 144 and 145 as promulgated by the
Commission under the Securities Act and have been advised of the applicable
limitations thereof. Each of the Sellers and each of the Shareholders
acknowledge that Xxxxxxxxxxx and the Buyer are relying upon the truth and
accuracy of the representations and warranties in this Section 2.15 by each
Seller and each of the Shareholders in consummating the transactions
contemplated by this Agreement without registering the securities under the
securities laws.
(d) Each of the Sellers and each of the Shareholders have been
furnished with the SEC Documents. Each of the Sellers and each of the
Shareholders have been furnished with a summary description of the terms of this
Agreement, the Xxxxxxxxxxx Shares and Xxxxxxxxxxx, and the Buyer and Xxxxxxxxxxx
have made available to the Sellers and each of the Shareholders the opportunity
to ask questions and receive answers concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain any additional
information which they possess or could reasonably acquire for the purpose of
verifying the accuracy of information furnished to the Sellers and the
Shareholders as set forth herein or for the purpose of considering the
transactions contemplated hereby. Xxxxxxxxxxx has offered to make available to
the Sellers and each of the Shareholders upon request at any time all exhibits
filed by Xxxxxxxxxxx with the Commission as part of any of the reports filed
therewith.
(e) Each of the Sellers and each of the Shareholders agree
that the certificates representing the Xxxxxxxxxxx Shares will be imprinted with
the following legend, the terms of which are specifically agreed to:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON EXEMPTIONS
FROM REGISTRATION REQUIREMENTS. WITHOUT SUCH REGISTRATION, SUCH SHARES
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT
UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH
SALE, PLEDGE, HYPOTHECATION OR TRANSFER OR THE SUBMISSION TO THE
COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER SHALL NOT
BE IN VIOLATION OF THE SECURITIES
15
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
Each of the Sellers and each of the Shareholders understand and agree that
appropriate stop transfer notations will be placed in the records of Xxxxxxxxxxx
and with its transfer agents in respect of the securities which are to be issued
to the Sellers. Xxxxxxxxxxx agrees that any Xxxxxxxxxxx Shares sold pursuant to
an effective registration statement, including a registration statement filed
pursuant to Article 4 hereof, shall have the above legend removed to permit the
closing of the sale within three Business Days of written notice of the sale and
certification by a Seller that the sale was made pursuant to the plan of
distribution described in the registration statement and the prospectus delivery
requirements under the Securities Act were fully complied with in connection
with the sale.
2.16 Absence of Certain Payments. None of the Sellers or, to the
knowledge of the Shareholders, any Shareholder, any Affiliate of the Sellers, or
any officer, director, agent, employee of, or other person associated with or
acting on behalf of, any of the Sellers has, within the five years immediately
preceding the date of this Agreement, used any funds of any of the Sellers for
unlawful contributions or gifts to, or entertainment of, government officials or
other unlawful expenses related to political activity, or made direct or
indirect unlawful payments to government officials or employees or officers of
customers from funds of any of the Sellers, or established or maintained any
unlawful or unreported funds.
2.17 Absence of Certain Prohibited Activities. None of the Sellers has
conducted its respective business or operations or made any sales in connection
therewith in any manner that would violate any applicable law relating to
embargoes or anti-boycott matters.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND XXXXXXXXXXX
The Buyer and Xxxxxxxxxxx, jointly and severally, represent and warrant
to the Seller and the Shareholders as follows:
3.1 Corporate Matters. The Buyer is a limited liability company validly
existing and in good standing under the laws of Delaware. Weatherford is a
company validly existing and in good standing under the laws of Bermuda. Each of
Weatherford and the Buyer has all requisite power and authority to enter into
this Agreement and to perform its obligations under this Agreement. This
Agreement has been duly authorized, executed and delivered by each of
Xxxxxxxxxxx and the Buyer and is a legal, valid and binding obligation of each
of Xxxxxxxxxxx and the Buyer, enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies. The execution and delivery of this Agreement
by each of Xxxxxxxxxxx and the Buyer and the consummation of the transactions
contemplated hereby by Xxxxxxxxxxx and the Buyer will not violate any provision
of, or constitute a default under, any contract or other agreement to which
either of Xxxxxxxxxxx or the Buyer is a party or by which it is bound, or
conflict with its organizational documents, other than violations, defaults or
conflicts that would not materially and adversely affect the ability of
Xxxxxxxxxxx or the Buyer to consummate the transactions provided for in this
Agreement.
3.2 Approvals, Licenses and Authorizations. No order, license, consent,
waiver, authorization or approval of, or exemption by, or the giving of notice
to, or the registration with, or the taking of any other action in respect of,
any Person not a party to this Agreement, including any Governmental Entity, and
no filing, recording, publication or registration in any public office or any
other place is now, or under existing law in the
16
future will be, necessary on behalf of the Buyer or Xxxxxxxxxxx to authorize its
execution, delivery and performance of this Agreement or any other agreement
contemplated hereby to be executed and delivered by the Buyer or Xxxxxxxxxxx and
the consummation by the Buyer and Xxxxxxxxxxx of the transactions contemplated
hereby or thereby, or to effect the legality, validity, binding effect or
enforceability thereof.
3.3 Finder's Fees. Neither the Buyer, Xxxxxxxxxxx nor any of their
respective Affiliates has employed or retained any investment banker, broker,
agent, finder or other party, or incurred any obligation for brokerage fees,
finder's fees or commissions, with respect to the transactions contemplated by
this Agreement, or otherwise dealt with anyone purporting to act in the capacity
of a finder or broker with respect thereto whereby any party hereto may be
obligated to pay such a fee or a commission. The Buyer and Xxxxxxxxxxx, jointly
and severally, agree to indemnify and hold the Sellers and the Shareholders and
their Affiliates harmless from and against any and all claims, liabilities or
obligations with respect to all fees, commissions or expenses asserted by any
Person on the basis of any act, statement, agreement or commitment alleged to
have been made by the Buyer or any Affiliate of the Buyer with respect to any
such fee, commission or expense.
3.4 Authorization for the Xxxxxxxxxxx Shares. Xxxxxxxxxxx has taken, or
will have taken prior to Closing, all necessary action to permit it to issue the
Xxxxxxxxxxx Shares. The Xxxxxxxxxxx Shares issued pursuant to the terms of this
Agreement will be validly issued, fully paid and nonassessable and not subject
to preemptive rights. The Xxxxxxxxxxx Shares will be listed on the New York
Stock Exchange.
3.5 SEC Documents. Weatherford has made available to the Sellers and
each of the Shareholders all of the SEC Documents. The SEC Documents represent
each report filed by Xxxxxxxxxxx with the Commission since March 25, 2002. As of
their respective dates, the SEC Documents (i) were prepared in all material
respects in accordance with the applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
applicable to such documents and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading except for such statements, if any,
as have been modified by subsequent filing with the Commission prior to the date
hereof. The consolidated financial statements of Xxxxxxxxxxx included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of Xxxxxxxxxxx and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended.
ARTICLE 4
REGISTRATION RIGHTS
4.1 Registration Rights.
(a) Xxxxxxxxxxx will use its reasonable best efforts to
register under the Securities Act the Xxxxxxxxxxx Shares pursuant to a
non-underwritten offering having a period of distribution not to exceed one year
from the Closing Date. In furtherance of such obligation, Xxxxxxxxxxx shall
file, within 5 Business Days after the Closing Date, with the Commission a
registration statement on the appropriate form seeking the registration for
resale of the Xxxxxxxxxxx Shares (the "Registration Statement"), pursuant to a
non-underwritten offering in accordance with the plan of distribution described
therein. References in this
17
Article 4 to the Xxxxxxxxxxx Shares shall be deemed to include any shares of
Common Stock or other securities received by the Seller Group on account of any
share subdivision, bonus issue or amalgamation of Xxxxxxxxxxx.
(b) Notwithstanding anything to the contrary contained in this
Section 4.1, Xxxxxxxxxxx shall not be obligated to prepare and file the
Registration Statement pursuant to this Section 4.1, or prepare or file any
amendment or supplement thereto, at any time when Xxxxxxxxxxx reasonably
believes that the filing thereof, or the offering of securities pursuant
thereto, would adversely affect a pending or proposed public offering of
securities of Weatherford, an acquisition, amalgamation, merger,
recapitalization, consolidation, reorganization or similar transaction relating
to Xxxxxxxxxxx or negotiations, discussions or pending proposals with respect
thereto or require premature disclosure of information not otherwise required to
be disclosed to the potential detriment of Xxxxxxxxxxx.
(c) Notwithstanding anything to the contrary contained in this
Section 4.1, Xxxxxxxxxxx shall be permitted, on written notice to the Sellers,
to suspend the period of sale or distribution of the Xxxxxxxxxxx Shares at any
time when Xxxxxxxxxxx reasonably believes that the sale or distribution thereof
would adversely affect a pending or proposed public offering of securities of
Weatherford, an acquisition, amalgamation, merger, recapitalization,
consolidation, reorganization or similar transaction relating to Xxxxxxxxxxx or
negotiations, discussions or pending proposals with respect thereto or require
premature disclosure of information not otherwise required to be disclosed to
the potential detriment of Xxxxxxxxxxx.
(d) The filing of the Registration Statement, or any amendment
or supplement thereto, by Xxxxxxxxxxx may not be deferred pursuant to Section
4.1(b), and the sale and distribution of the Xxxxxxxxxxx Shares may not be
suspended pursuant to Section 4.1(c), for more than 60 days after the
abandonment or consummation (or the completion of the distribution of securities
in the case of a public offering) of any of the proposals or transactions
described therein or, in any event, for more than 120 days in any twelve-month
period.
(e) The Sellers agree and covenant to fully cooperate with and
assist Xxxxxxxxxxx and its counsel and representatives in connection with
Xxxxxxxxxxx'x obligations under this Article 4, including providing such
information as reasonably requested by Xxxxxxxxxxx in connection the preparation
of the Registration Statement and the resale of the Xxxxxxxxxxx Shares.
4.2 Procedure. Xxxxxxxxxxx will, subject to the provisions of Sections
4.1, 4.2 and 4.4 hereof:
(a) seek to cause the Registration Statement to become and
remain effective;
(b) as expeditiously as reasonably practicable, prepare and
file with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep the Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of the Xxxxxxxxxxx Shares
covered by the Registration Statement in accordance with the intended method of
distribution set forth therein;
(c) as expeditiously as reasonably practicable, furnish to the
Sellers such number of copies of prospectuses and preliminary prospectuses in
conformity with the requirements of the Securities Act, and such other documents
as the Seller Group may reasonably request, in order to facilitate the public
sale or other disposition of the Xxxxxxxxxxx Shares owned by the Seller Group;
provided, however, that the obligation of Xxxxxxxxxxx to deliver copies of
prospectuses or preliminary prospectuses to the Seller Group shall be subject to
the receipt by Xxxxxxxxxxx of reasonable assurances from the Seller Group that
they will comply with the applicable provisions of the Securities Act and of
such other securities laws as may be applicable in connection with any use by
each of them of any prospectuses or preliminary prospectuses;
18
(d) as expeditiously as practicable, use its best efforts to
register or qualify the Xxxxxxxxxxx Shares under such other securities laws of
such United States jurisdictions as the Seller Group shall reasonably request
(considering the nature and size of the offering) and do any and all other acts
and things which may be necessary or desirable to enable the Seller Group to
consummate the public sale or other disposition in such jurisdictions of the
Xxxxxxxxxxx Shares; provided, however, that Xxxxxxxxxxx shall not be required to
qualify to transact business as a foreign corporation in any jurisdiction in
which it would otherwise not be required to be so qualified or to take any
action which would subject it to general service of process in any jurisdiction
in which it is not then so subject;
(e) bear all Registration Expenses (as defined below) in
connection with the registration hereunder; provided, however, that all Selling
Expenses (as defined below) of the Xxxxxxxxxxx Shares and all fees and
disbursements of counsel for the Seller Group shall be borne by the Seller
Group. For purposes of this Section 4.2, expenses incurred by Xxxxxxxxxxx in
complying with this Agreement include (i) all registration and filing fees; (ii)
all printing expenses, (iii) all fees and disbursements of counsel for
Xxxxxxxxxxx, (iv) all blue sky fees and expenses, and (v) all fees and expenses
of accountants for Xxxxxxxxxxx are herein referred to as "Registration
Expenses". All brokerage and selling commissions and fees and expenses of
counsel for the Seller Group in connection with any such registration or resale
are herein referred to as "Selling Expenses"; and
(f) keep the registration pursuant to Section 4.1 hereof
effective for a period of up to one year following the Closing Date or such
shorter period of time until the transfer or sale of all the Xxxxxxxxxxx Shares
has been completed.
4.3 Indemnification.
(a) In the event of a registration of the Xxxxxxxxxxx Shares
under the Securities Act pursuant to this Agreement, Xxxxxxxxxxx will indemnify
and hold harmless the Seller Group and any other Person, if any, who controls
the Seller Group within the meaning of Section 15 of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which the
Seller Group or such controlling Person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities or
actions in respect thereof arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained, on the effective
date thereof, in the Registration Statement, any preliminary prospectus
distributed with the consent of Xxxxxxxxxxx or final prospectus contained
therein, or any amendment thereof or supplement thereto, including all documents
incorporated by reference therein, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will, unless Xxxxxxxxxxx assumes the defense as provided in Section 4.3(c),
promptly following request and receipt of reasonable supporting documents, such
as invoices, reimburse the Seller Group and each such controlling Person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that Xxxxxxxxxxx will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, such preliminary prospectus, such
final prospectus or such amendment or supplement, including all documents
incorporated by reference therein, in reliance upon and in conformity with
written information furnished to Weatherford by or on behalf of the Seller Group
or a controlling Person thereof specifically for use in the preparation thereof.
(b) In the event of any registration of the Weatherford Shares
under the Securities Act pursuant to this Agreement, the Sellers and the
Shareholders will jointly and severally indemnify and hold harmless Weatherford
and the Buyer and each Person, if any, who controls Weatherford or the Buyer
within the meaning of Section 15 of the Securities Act, each officer of
Weatherford who signs the Registration Statement, each director of Weatherford
and each Person who controls any underwriter (if any) within the
19
meaning of Section 15 of the Securities Act, against any and all such losses,
claims, damages, liabilities or actions which Weatherford or such officer,
director, underwriter (if any) or controlling Person may become subject under
the Securities Act or otherwise, and will reimburse Weatherford, each such
officer, director, underwriter (if any) and controlling Person for any legal or
any other expenses reasonably incurred by such party in connection with
investigating or defending any such loss, claim, damage, liability or action, if
(i) such loss, claim, damage, liability or action in respect thereof arises out
of or is based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any such prospectus, or
any amendment thereof or supplement thereto, or arises out of or is based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading and
such statement or omission of a material fact was made in reliance upon and in
conformity with information furnished to Weatherford by or on behalf of the
Seller Group specifically for use in connection with the preparation of the
Registration Statement or prospectus or (ii) such loss, claim, damage, liability
or action in respect thereof arises out of or is based upon the Seller Group's
failure to deliver any required prospectus or otherwise comply with applicable
laws regarding the same. In addition, as a condition to the inclusion of any
Weatherford Shares held by any other member of the Selling Group in any
registration of the Weatherford Shares under the Securities Act pursuant to this
Agreement, such Person shall agree to be bound by the indemnification
obligations set forth in this Article 4, but only with respect to information
provided by or on behalf of such Person.
(c) Promptly after receipt by any indemnified Person of notice
of any claim or commencement of any action in respect of which indemnity is to
be sought against an indemnifying Person pursuant to this Agreement, such
indemnified Person shall notify the indemnifying Person in writing of such claim
or of the commencement of such action, and, subject to provisions hereinafter
stated, in case any such action shall be brought against an indemnified Person
and such indemnifying Person shall have been notified of the same, such
indemnifying Person shall be entitled to participate therein, and, to the extent
it shall wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified Person, and after notice from the indemnifying
Person to such indemnified Person of its election to assume the defense thereof,
such indemnifying Person shall not be liable to such indemnified Person in
connection with the defense thereof; provided, however, if there exists or will
exist a conflict of interest which would make it inappropriate in the reasonable
judgment of the indemnified Person for the same counsel to represent both the
indemnified Person and such indemnifying Person then such indemnifying Person
shall be entitled to retain its own counsel at the expense of such indemnifying
Person; provided further, however, the indemnifying Person shall not be required
to pay for more than one separate counsel for all of the indemnified Persons in
addition to any local counsel. Payment of any amounts due pursuant to this
Section 4.3 shall be made within ten Business Days after notice is sent by the
indemnified Person.
4.4 Termination. If the holding period under Rule 144 or Rule 145 as
promulgated under the Securities Act or any successor or similar rule or statute
is reduced to permit the sale of the Weatherford Shares, the rights of the
Seller Group as to the registration provided for in this Agreement as to the
Weatherford Shares shall terminate immediately.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Access to Information.
(a) Until the Closing, each of the Sellers and each of the
Shareholders will furnish the Buyer and its employees, officers, accountants,
attorneys, agents, investment bankers and other authorized representatives with
all financial, operating and other data and information concerning the Business,
20
commitments and properties of the Sellers as the Buyer shall from time to time
reasonably request and will afford the Buyer and its employees, officers,
accountants, attorneys, agents, investment bankers and other authorized
representatives reasonable access to the Sellers' offices, properties, books,
records, contracts and documents and will be given the opportunity to ask
questions of, and receive answers from, representatives of the Sellers with
respect to the Transferred Assets. As part of its investigation, the Buyer shall
have the right (subject to any required consent from an owner of the Real
Property) to conduct environmental assessments of the Transferred Assets,
including soil and groundwater sampling, as it deems appropriate. No
investigations by the Buyer or its employees, representatives or agents shall
reduce or otherwise affect the obligation or liability of any of the Sellers or
any of the Shareholders with respect to any representations, warranties,
covenants or agreements made herein or in any exhibit, schedule or other
certificate, instrument, agreement or document, including the Disclosure
Schedule, executed and delivered in connection with this Agreement. Each of the
Sellers and each of the Shareholders will cooperate with the Buyer and its
employees, officers, accountants, attorneys, agents and other authorized
representatives in the preparation of any documents or other materials that may
be required by any Governmental Entity.
(b) Each party hereto agrees to hold in confidence all, and
not to disclose to others for any reason whatsoever, any non-public information
received by it or its representatives from the other parties hereto in
connection with the transactions contemplated by this Agreement except (i) as
required by law; (ii) for disclosure to officers, directors, employees and
representatives of such party as necessary in connection with the transactions
contemplated hereby or as necessary to the operation of such party's business;
and (iii) for information that becomes publicly available other than through
such party. If the transactions contemplated by this Agreement are not
consummated, each party hereto will return to the other parties hereto all
non-public documents and other material obtained from such other parties hereto,
and all copies, summaries and extracts thereof, or certify to such other party
hereto that such information has been destroyed.
5.2 Conduct of the Business. Each of the Sellers and each of the
Shareholders covenant and agree with the Buyer that from and after the date
hereof until the Closing, except as expressly authorized by this Agreement or as
expressly consented to in writing by the Buyer, the Sellers shall, and the
Shareholders shall cause the Sellers to:
(a) operate the Business and the Transferred Assets only in
the usual, regular and ordinary manner with a view to maintaining the
goodwill that the Sellers now enjoy and, to the extent consistent with
such operation, will use all reasonable efforts to preserve intact the
Seller's present business organization, keep available the services of
the Seller's employees and preserve the Sellers' relationships with its
customers, suppliers, jobbers, distributors and other Persons having
business relations with the Seller;
(b) use all reasonable efforts to maintain the Transferred
Assets in a state of repair, order and condition consistent with its
usual past practice;
(c) maintain the Sellers' books of account and records
relating to the Business in the usual, regular and ordinary manner, in
accordance with the Sellers' usual accounting practices applied on a
consistent basis;
(d) comply in all material respects with all statutes, laws,
orders and regulations applicable to the Sellers and to the Business;
(e) not sell, assign, transfer, lease or otherwise dispose of
any of the Transferred Assets except for dispositions of Inventories
for value in the usual and ordinary course of business;
21
(f) preserve and maintain all rights that the Sellers now
enjoy in and to the Proprietary Rights and not sell, assign, transfer,
lease or otherwise dispose of any Proprietary Rights other than to the
Buyer pursuant to the terms of this Agreement;
(g) not mortgage, pledge or otherwise create a security
interest in any of the Transferred Assets or permit there to be created
or exist any Liens thereon (other than Permitted Liens) that would not
be released upon the transfer of the Transferred Assets to the Buyer
pursuant to this Agreement;
(h) not enter into any contract, commitment, loan agreement,
promissory note, letter of credit or other third party financing
documentation or lease in relation to the Business or the Transferred
Assets that is out of the ordinary course of business;
(i) not amend or modify any of the Entitlements;
(j) not consent to the termination of any of the Entitlements
or waive any of the Seller's rights with respect thereto;
(k) not permit any insurance policy naming the Seller as a
beneficiary or a loss payee relating to the Business or the Transferred
Assets to be canceled or terminated or any of the coverage thereunder
to lapse unless simultaneously with such termination or cancellation
replacement policies providing substantially the same coverage are in
full force and effect;
(l) pay when due all accounts payable, all payments required
by any of the Entitlements and all Taxes other than Taxes that are
being contested in good faith and for which adequate reserves against
the Transferred Assets exist and which would not result in a Lien being
imposed on any of the Transferred Assets; and
(m) promptly notify the Buyer in writing if any of the Sellers
or any of the Shareholders becomes aware of any change that shall have
occurred or that shall have been threatened (or any development that
shall have occurred or that shall have been threatened involving a
prospective change) in the Business or the Transferred Assets that
would reasonably be expected to have a material or adverse effect on
the Business or the Transferred Assets whether or not occurring in the
ordinary course of business.
5.3 Negotiation with Others. Each of the Sellers and each of the
Shareholders agree that from the date hereof until the Closing Date or the
termination of this Agreement pursuant to Section 10.1, such Person will not,
directly or indirectly, solicit, encourage or negotiate with any Person not a
party hereto or not affiliated with a party hereto with respect to a merger,
amalgamation, consolidation, asset or stock purchase or any similar transaction
with the Seller.
5.4 Information. During the period from the date of this Agreement to
the Closing Date, the Buyer and the Sellers and each of the Shareholders will
promptly inform the others in writing of any claim, action or any proceeding
commenced against such party with respect to the transactions contemplated by
this Agreement or any assets or property of the Sellers or the Transferred
Assets.
5.5 Delivery of Business Documents. At Closing, the Sellers and the
Shareholders shall deliver to the Buyer all Documents and Other Papers relating
to the Transferred Assets and the current and proposed operations of the
Business, including, without limitation, all files relating to the Accounts
Receivable, Third Party Debt, the Assumed Trade Payables, the Assumed
Entitlements, copies of all insurance policies and all files relating thereto,
computer disks reflecting any books or records, documents or other papers, or
other
22
information or data relating to the operation of the Business or the Transferred
Assets stored on any electronic media, including computers. The Seller, however,
shall be entitled to retain the corporate minute books, stock books and tax
returns of the Seller and to have access to the books and records relating to
the Business to the extent such books and records are necessary for the
preparation of tax returns or other proper business purposes.
5.6 Further Assurances. Each of the Sellers and each of the
Shareholders shall execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered to the Buyer such bills of sale, assignments
(including but not limited to assignments of leases) and other instruments of
transfer, assignment and conveyance, in form and substance reasonably
satisfactory to counsel for the Buyer, as shall be necessary to vest in the
Buyer all the right, title and interest in and to the Transferred Assets free
and clear of all Liens (including the release of all Liens of record) and shall
use their best efforts to cause to be taken such other action as the Buyer
reasonably may require to more effectively implement and carry into effect the
transactions contemplated by this Agreement.
5.7 Nondisclosure of Proprietary Information.
(a) Each of the Sellers and each of the Shareholders agree
that, from and after the Closing, such Seller or Shareholder and such Person's
Affiliates shall (i) hold in confidence and will not directly or indirectly at
any time reveal, report, publish, disclose or transfer to any Person other than
the Buyer any of the Proprietary Information that is not generally known to the
public or utilize any of the Proprietary Information for any purpose and (ii)
not for a period of three years solicit or hire any employees of the various
Sellers who are subsequently employed by the Buyer or offered employment by the
Buyer.
(b) Each of the Sellers and each of the Shareholders
acknowledge that all Documents and Other Papers and objects containing or
reflecting any Proprietary Information, whether developed by such Seller or
Shareholder or by someone else for such Seller or Shareholder or any of such
Person's Affiliates, will after the Closing become the exclusive property of the
Buyer and be delivered to the Buyer.
(c) Because of the unique nature of the Proprietary
Information, each of the Sellers and each of the Shareholders understand and
agree that the breach or anticipated breach of the obligations under this
Section 5.7 will result in immediate and irreparable harm and injury to the
Buyer and its Affiliates, for which it will not have an adequate remedy at law,
and that the Buyer and its Affiliates and their successors and assigns shall be
entitled to relief in equity to enjoin such breach or anticipated breach and to
seek any and all other legal and equitable remedies to which they may be
entitled.
5.8 Covenant Not to Compete With the Business. As an inducement for the
Buyer to acquire the Business, each of the Sellers and each of the Shareholders
agree that, effective as of the Closing Date and for a period of five years
thereafter, none of the Sellers, the Shareholders nor any of their respective
Affiliates shall, without the consent of the Buyer, directly or indirectly,
develop, formulate, blend, manufacture, distribute, market, produce, sell or
provide specialty chemicals for use in the oilfield and gas services industry in
any geographical area of the world, or, except for the benefit of Buyer and its
Affiliates, assist any Person to do the same; provided, however, Buyer consents
to the loan in the principal amount of $75,000 made by a CWII Shareholder to
Bio-Science Corporation and the continuation of Sellers' operations at 0000
Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxxxxxx, through March 31, 2003 or such
earlier time by which Sellers may be able to wind up such operations. Each of
the Sellers and each of the Shareholders acknowledge that a remedy at law for
any breach or attempted breach of this Section 5.8 will be inadequate and
further agree that any breach of this Section 5.8 will result in irreparable
harm to the Business and the Buyer shall, in addition to any other remedy that
may be available to it, be entitled to specific performance and injunctive and
other equitable relief in case of any such breach or attempted breach. Each of
the Sellers and each of the Shareholders acknowledge that this covenant not to
compete is being provided as an inducement to the Buyer to acquire the Business
and the
23
Transferred Assets and that this Section 5.8 contains reasonable limitations as
to time, geographical area and scope of activity to be restrained that do not
impose a greater restraint than is necessary to protect the goodwill or other
business interest of the Buyer. Whenever possible, each provision of this
Section 5.8 shall be interpreted in such a manner as to be effective and valid
under applicable law but if any provision of this Section 5.8 shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Section 5.8. If any provision of
this Section 5.8 shall, for any reason, be judged by any court of competent
jurisdiction to be invalid or unenforceable, such judgment shall not affect,
impair or invalidate the remainder of this Section 5.8 but shall be confined in
its operation to the provision of this Section 5.8 directly involved in the
controversy in which such judgment shall have been rendered. In the event that
the provisions of this Section 5.8 should ever be deemed to exceed the time or
geographic limitations permitted by applicable laws, then such provision shall
be reformed to the maximum time or geographic limitations permitted by
applicable law.
5.9 Use of Names. All uses of the names "Clearwater, Inc.",
"Clearwater", "Clearwater Specialty Chemical Co.", "Transit Energy Systems,
Inc.", "Transit", "PriTech International, Inc." and "PriTech" or any derivations
thereof (collectively, the "Names") are being transferred to the Buyer hereunder
as part of the Transferred Assets; provided, however, that Buyer consents and
agrees to Sellers' continued use of the names "Clearwater" and Clearwater, Inc."
for the limited purpose of winding up its manufacturing operations at Neville
Island, Pennsylvania, for the five-month period immediately after Closing Date.
Each of the Sellers and each of the Shareholders agree not to take any action
which could reasonably be expected to adversely affect the Buyer's right to the
Names or cause confusion with respect to the Buyer's use of the Names. All
goodwill with respect to the use of the Names will inure to the benefit of the
Buyer, and none of the Sellers or any of the Shareholders will have any rights
to xxx or recover against any person with respect to the use of the Names.
Within five months after Closing, each Seller agrees to take all necessary
action to change the Seller's name to one bearing no resemblance to any of the
Names or any derivation thereof and will forever cease the use of such names.
5.10 Employee Matters
(a) The Buyer will, in its sole discretion, offer employment
to any or all of the employees of the Sellers listed on Schedule 5.10 hereof on
terms substantially similar to those offered by the Buyer to similarly situated
employees. Any such employees that the Buyer in fact employs immediately after
the Closing Date shall hereinafter be referred to as the "Transferred
Employees". All of the Sellers' employees who are not employed by the Buyer or
one of its Affiliates immediately after the Closing Date shall hereinafter be
referred to as the "Seller Retained Employees". The Sellers and the Shareholders
shall be responsible and liable for any and all severance obligations with
respect to the Seller Retained Employees, provided, however, that the Buyer
shall make COBRA coverage available to the Sellers' COBRA beneficiaries, at
Buyer's COBRA rates, from and after the date on which the Sellers terminate and
cease to provide a group health plan.
(b) The parties hereto do not intend to create any third-party
beneficiary rights respecting any employee of the Sellers as a result of the
provisions hereof and specifically hereby negate any such intention.
(c) In determining eligibility for and entitlement to vacation
and other normal benefits (excluding stock-based plans and incentive programs)
based on length of service by Transferred Employees under the Buyer's normal
policies, service with the Sellers shall be considered by the Buyer as service
with the Buyer.
5.11 Continuation of Business by the Buyer. Nothing in this Agreement,
in any exhibit or schedule thereto or in any agreement, instrument or other
document executed or delivered in connection with this
24
Agreement shall require the Buyer to continue the Business or to manage and
operate the Transferred Assets with any duty or standard or care to any of the
Sellers or any of the Shareholders. Each of the Sellers and each of the
Shareholders acknowledge and agree that the Buyer in its sole discretion may
continue, manage, modify or discontinue the operations, liquidate or otherwise
change or cease the operations of the Business and the Transferred Assets.
5.12 Title Policies. As soon as possible after Closing, Sellers shall
cause Xxxxxxx Title Guaranty Company (the "Title Company") to furnish to the
Buyer, at the Sellers' sole cost and expense, an Owner Policy of Title Insurance
covering the Elmendorf Property (the "Elmendorf Title Policy") which shall be in
the customary form prescribed by the
Texas State Board of Insurance. The
Elmendorf Title Policy may contain as exceptions those matters as shown on a
commitment of title insurance issued by the Title Company (the "Permitted
Exceptions"); provided, however, that (i) the standard exception for
restrictions shall be deleted except for any restrictions that are Permitted
Exceptions, (ii) the exception for rights of parties in possession shall be
deleted, (iii) the standard exception for taxes shall be limited to the year in
which the Closing occurs (if such taxes are not yet due and payable), (iv) all
arbitration provisions shall be deleted, (v) all matters set forth on Schedule C
of the Title Commitment shall be deleted, and (vi) the "survey exception" shall
be modified to read "shortages in area." For purposes of this Section 5.12,
"Elmendorf Property" shall mean the Real Property owned by CWI set forth in
Section 1.1(a)(v) of the Disclosure Schedule located in Xxx 0, Xxxxx 0, Xxxxxxx
Xxxx Xxxxxxx, Elmendorf,
Texas.
ARTICLE 6
BUYER'S AND XXXXXXXXXXX'X CONDITIONS
The obligation of the Buyer to purchase the Transferred Assets and to
assume the Assumed Trade Payables, the Third Party Debt, the Assumed Liabilities
and the Assumed Entitlements as contemplated hereby is, at the option of the
Buyer and Weatherford, subject to the satisfaction on or before the Closing Date
of the conditions set forth below, any of which may be waived by the Buyer and
Weatherford in writing; provided, however, the Buyer's and Xxxxxxxxxxx'x
election to proceed with the Closing shall not be deemed a waiver of any breach
of any representation, warranty or covenant herein, whether or not known to the
Buyer or Weatherford or existing on the Closing Date, and such action shall not
prejudice the Buyer's and Xxxxxxxxxxx'x right to recover damages for any such
breach.
6.1 Representations, Warranties and Covenants. The representations and
warranties of the Sellers and each of the Shareholders contained in this
Agreement shall be true, correct and complete in all respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made or given on and as of such date. Each and all of the
agreements and covenants of each of the Sellers and each of the Shareholders to
be performed or complied with by them on or before the Closing Date pursuant to
this Agreement shall have been performed or complied with in all respects. Each
Seller and each of the Shareholders shall have delivered to the Buyer a
certificate dated the Closing Date regarding the matters set forth in this
Section 6.1.
6.2 Good Standing. Each Seller shall have delivered to the Buyer
certificates issued by appropriate Governmental Entities evidencing the good
standing of such Seller, as of a date not more than five calendar days prior to
the Closing Date in its jurisdiction of formation or incorporation, and as of a
date not more than fifteen calendar days prior to the Closing Date in the
jurisdictions in which it is qualified to do business as a foreign corporation.
To the extent provided for under applicable law, each Seller shall also have
delivered to the Buyer certificates or other writings issued by appropriate
Governmental Entities evidencing that all applicable state income or franchise
Taxes of such Seller have been paid.
25
6.3 Instruments of Transfer. The Sellers shall have executed,
acknowledged and delivered to the Buyer such bills of sale, general warranty
deeds, assignments (including but not limited to assignments of the Real
Property leases and assignments of the Proprietary Information) and other
instruments of transfer, assignment and conveyance, as shall be necessary to
vest in the Buyer all right, title and interest in and to the Transferred
Assets.
6.4 No Litigation. No preliminary or permanent injunction or other
order of any court or other Governmental Entity shall be in effect nor shall
there be in effect any statute, rule, regulation or executive order promulgated
or enacted by any Governmental Entity that, in any such case, prevents the
consummation of the transactions contemplated by this Agreement. No suit,
action, claim, proceeding or investigation before any Governmental Entity shall
have been commenced or threatened by any Person other than the Buyer or any of
its Affiliates seeking to prevent the sale of the Transferred Assets or
asserting that the sale of all or a portion of the Transferred Assets would be
unlawful.
6.5 Other Legal Matters. All Exhibits, Schedules, certificates,
documents and legal matters in connection with this Agreement and the
transactions contemplated hereby shall be in substantially the forms required by
this Agreement.
6.6 Licenses, Consents and Approvals by the Sellers. All necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity shall have been obtained, made,
expired or lapsed and shall be in full force and effect. The Sellers shall have
delivered to the Buyer a copy of each of the licenses, consents, approvals and
other authorizations from Governmental Entities necessary or appropriate for the
Sellers to consummate the transactions contemplated by this Agreement.
6.7 Consents of Third Persons. All Required Consents shall have been
obtained on terms satisfactory to the Buyer and delivered to the Buyer.
6.8 Consents and Release of Liens. All Liens (other than Permitted
Liens, except to the extent such Permitted Liens relate to Debt Obligations of
the Sellers) on the Transferred Assets shall be released at Closing and
satisfactory evidence of the release of the Liens and the termination of any
financing statements relating thereto shall be provided to the Buyer at Closing.
6.9 No Material Adverse Event. The business and properties of the
Sellers shall not have been affected or threatened to be affected by any loss or
damage, whether or not covered by insurance, except to the extent that the same
would not have a material adverse effect on one or more of the Sellers, the
Business or the Transferred Assets.
6.10 Resolutions. The Sellers and CWII shall have delivered to the
Buyer certified copies of resolutions of the board of directors and the
shareholders of each Seller and the board of directors of CWII approving this
Agreement and the transactions contemplated hereby.
6.11 Employment Agreement. At the Closing, the Buyer shall enter into
an employment agreement with each of Xxxxx Xxxxx, Xxxx Xxxxxxx and Xxx Xxxxx in
the form attached hereto as Exhibits X-0, X-0 and A-3, respectively.
6.12 Repayment of Indebtedness. All Debt Obligations (excluding Third
Party Debt and except for a payment due to the estate of Xxxx X. Xxxxxx pursuant
to that certain Stock Purchase Agreement between Clearwater, Inc. and the Estate
of Xxxx X. Xxxxxx) and Intercompany Obligations of the Sellers
26
shall have been repaid in full, and the Sellers and the Shareholders shall have
delivered to the Buyer documentation satisfactory to the Buyer evidencing such
repayment and the release of all Liens and guarantees related thereto.
Notwithstanding the foregoing, the Sellers, at their option, may elect to have
all or a portion of the Cash Payment remitted at Closing directly to the Persons
to whom such Debt Obligations or Intercompany Obligations are owed by delivering
written notice of such election to the Buyer at least five Business Days prior
to Closing; provided, however, that if the Sellers make such election, the
Sellers and the Shareholders shall not be relieved from their obligation to
deliver to the Buyer at Closing documentation satisfactory to the Buyer
evidencing the repayment of all Debt Obligations and Intercompany Obligations
and the release of all Liens and guarantees related thereto; provided further,
however, that the aggregate amount of any such payments made by the Buyer and
the amount paid to the Seller at Closing shall not exceed $2,000,000.
6.13 Stock Exchange Approval. The New York Stock Exchange shall have
approved the listing of the Weatherford Shares.
6.14 Approvals for Issuance of Weatherford Shares. Weatherford shall
have received all consents, approvals and other authorizations from Governmental
Entities necessary or appropriate for Weatherford to issue the Weatherford
Shares.
6.15 Assumed Trade Payables. The Buyer shall have received a schedule
of the Assumed Trade Payables.
6.16 Third Party Debt. The Buyer shall have received a schedule of the
Third Party Debt.
ARTICLE 7
SELLERS' AND SHAREHOLDERS' CONDITIONS
The obligation of the Sellers to transfer the Transferred Assets as
contemplated hereby is, at the option of the Sellers and the Shareholders,
subject to the satisfaction on or before the Closing Date of the conditions set
forth below, any of which may be waived by the Sellers and the Shareholders in
writing; provided, however, the Sellers' and the Shareholders' election to
proceed with the Closing shall not be deemed a waiver of any breach of any
representation, warranty or covenant herein, whether or not known to the Sellers
or the Shareholders or existing on the Closing Date, and such action shall not
prejudice the Sellers' and the Shareholders' right to recover damages for any
breach.
7.1 Representations and Warranties. The representations and warranties
of the Buyer and Weatherford contained in this Agreement shall be true, correct
and complete in all respects on and as of the Closing Date with the same force
and effect as though such representations and warranties had been made or given
on and as of such date; each and all of the agreements and covenants of the
Buyer and Weatherford to be performed or complied with by them on or before the
Closing Date pursuant to this Agreement shall have been performed or complied
with in all respects; and the Buyer and Weatherford shall have delivered to the
Sellers a certificate signed by an authorized officer of each of Weatherford and
the Buyer, dated the Closing Date, regarding the matters set forth in this
Section 7.1.
7.2 No Litigation. No preliminary or permanent injunction or other
order of any Governmental Entity shall be in effect nor shall there be any
statute, rule, regulation or executive order promulgated or enacted by any
Governmental Entity that, in any such case, prevents the consummation of the
transactions contemplated by this Agreement. No suit, action, claim, proceeding
or investigation before any court or other Governmental Entity shall have been
commenced or threatened by any Person other than the Sellers, the
27
Shareholders or any of their respective Affiliates seeking to prevent the sale
of the Transferred Assets or the Business or asserting that the sale of all or a
portion of the Transferred Assets or the Business would be unlawful.
7.3 Licenses, Consents and Approvals. All necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity shall have been obtained, made, expired
or lapsed and shall be in full force and effect. The Buyer shall have delivered
to the Seller a copy of each of the licenses, consents, approvals and other
authorizations from Governmental Entities necessary or appropriate for the Buyer
to consummate the transactions contemplated by this Agreement.
7.4 Resolutions. The Buyer shall have delivered to the Sellers
certified copies of resolutions of the boards of directors of each of
Weatherford and the Buyer approving this Agreement and the transactions
contemplated hereby.
7.5 Other Legal Matters. All exhibits, schedules, certificates,
documents and legal matters in connection with this Agreement and the
transactions contemplated hereby shall be in the forms required by this
Agreement.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by the Seller and the Shareholders. Except as
otherwise limited by this Article 8 and Article 9 hereof, each of the Sellers
and each of the Shareholders, jointly and severally, agree to indemnify, defend
and hold the Buyer and Weatherford, each of their respective Affiliates and each
of their respective officers, directors, employees, agents, stockholders and
controlling Persons and their respective successors and assigns harmless from
and against and in respect of Damages actually suffered, incurred or realized by
such party (collectively, "Buyer Losses"), arising out of or resulting from or
relating to:
(a) any misrepresentation, breach of warranty or breach of any
covenant or agreement made or undertaken by any of the Sellers or any of the
Shareholders in this Agreement or any misrepresentation in or omission from any
other agreement, certificate, exhibit or writing delivered to the Buyer or
Weatherford pursuant to this Agreement, including the Disclosure Schedule;
(b) any Environmental Liability arising from or attributable
to (i) any condition, event, circumstance, activity, practice, incident, action
or omission existing or occurring prior to the Closing Date and related in any
way to the Transferred Assets or the Business, or (ii) the use, storage,
disposal or treatment, or the transportation for storage, disposal or treatment,
of Hazardous Materials prior to the Closing Date and related in any way to the
Transferred Assets or the Business; or
(c) any Retained Liability.
For purposes of determining the Buyer's and Xxxxxxxxxxx'x right to
indemnification for a misrepresentation or breach of warranty made by any of the
Sellers or any of the Shareholders in this Agreement, all such representations
and warranties that have been made subject to a materiality qualification shall
be deemed to have been made without that qualification.
28
8.2 Indemnification by the Buyer and Weatherford. Except as otherwise
limited by this Article 8 and Article 9 hereof, the Buyer and Weatherford,
jointly and severally, agree to indemnify, defend and hold the Sellers and the
Shareholders and each of their respective officers, directors, employees,
agents, shareholders and controlling Persons and successors and assigns harmless
from and against and in respect of Damages actually suffered, incurred or
realized by such party (collectively, "Seller Losses"), arising out of or
resulting from or relating to (a) any misrepresentation, breach of warranty or
breach of any covenant or agreement made or undertaken by the Buyer or
Weatherford in this Agreement or any misrepresentation in or omission from any
other agreement, certificate, exhibit or writing delivered to the Sellers or the
Shareholders pursuant to this Agreement, (b) any Assumed Liability, (c) any
Assumed Trade Payable or (d) any Assumed Entitlement.
8.3 Procedure. All claims for indemnification under this Article 8
shall be asserted and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor notice of
any matter which an Indemnitee has determined has given or could give rise to a
right of indemnification under this Agreement, stating the amount of the Losses,
if known, and method of computation thereof, all with reasonable particularity,
and stating with particularity the nature of such matter. Failure to provide
such notice shall not affect the right of the Indemnitee to indemnification
except to the extent such failure shall have resulted in liability to the
Indemnitor that could have been actually avoided had such notice been provided
within such required time period.
(b) The obligations and liabilities of an Indemnitor under
this Article 8 with respect to Losses arising from claims of any third party
that are subject to the indemnification provided for in this Article 8 ("Third
Party Claims") shall be governed by and contingent upon the following additional
terms and conditions: if an Indemnitee shall receive notice of any Third Party
Claim, the Indemnitee shall give the Indemnitor prompt notice of such Third
Party Claim and the Indemnitor may, at its option, assume and control the
defense of such Third Party Claim at the Indemnitor's expense and through
counsel of the Indemnitor's choice reasonably acceptable to Indemnitee. In the
event the Indemnitor assumes the defense against any such Third Party Claim as
provided above, the Indemnitee shall have the right to participate at its own
expense in the defense of such asserted liability, shall cooperate with the
Indemnitor in such defense and will attempt to make available on a reasonable
basis to the Indemnitor all witnesses, pertinent records, materials and
information in its possession or under its control relating thereto as is
reasonably required by the Indemnitor. In the event the Indemnitor does not
elect to conduct the defense against any such Third Party Claim, the Indemnitor
shall pay all reasonable costs and expenses of such defense as incurred and
shall cooperate with the Indemnitee (and be entitled to participate) in such
defense and attempt to make available to it on a reasonable basis all such
witnesses, records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnitee. Except for
the settlement of a Third Party Claim that involves the payment of money only
and for which the Indemnitee is totally indemnified by the Indemnitor, no Third
Party Claim may be settled without the written consent of the Indemnitee.
8.4 Payment. Payment of any amounts due pursuant to this Article 8
shall be made in immediately available funds by wire transfer to a bank account
or accounts to be designated by the Indemnitee within ten Business Days after
notice is sent by the Indemnitee.
8.5 Failure to Pay Indemnification. If and to the extent the Indemnitee
shall make written demand upon the Indemnitor for indemnification pursuant to
this Article 8 and the Indemnitor shall refuse or fail to pay in full within ten
Business Days of such written demand the amounts demanded pursuant hereto and in
accordance herewith, then the Indemnitee may utilize any legal or equitable
remedy to collect from the Indemnitor the amount of its Losses. Nothing
contained herein is intended to limit or constrain the Indemnitee's
29
rights against the Indemnitor for indemnity, the remedies herein being
cumulative and in addition to all other rights and remedies of the Indemnitee.
8.6 Adjustment of Liability. The amount which an Indemnitee shall be
entitled to receive from an Indemnitor with respect to any indemnifiable Losses
under this Article 8 shall be net of any insurance recovery by the Indemnitee on
account of such Losses from an unaffiliated party.
8.7 Express Negligence. THE INDEMNITIES SET FORTH IN THIS ARTICLE 8 ARE
INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS
TERMS AND SCOPE THEREOF NOTWITHSTANDING
TEXAS' EXPRESS NEGLIGENCE RULE OR ANY
SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF
THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR
OTHER FAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.
8.8 Indemnification Limitations.
(a) The Sellers and the Shareholders shall not be liable under
Section 8.1(a) in respect of a misrepresentation or breach of warranty until the
aggregate amount of any Buyer Losses for which the Buyer is entitled to
indemnification pursuant to such clause exceeds $100,000; provided, however, the
Sellers' and the Shareholders' liability under Section 8.1(a) shall not be so
limited if such Buyer Losses arise from a breach of any of the representations
set forth in Sections 2.1, 2.2, 2.4, 2.9, 2.13, or 2.15.
(b) The aggregate liability of the Sellers and Shareholders
under Section 8.1(a) for Buyer Losses arising from a breach of any
representation or warranty other than those set forth in Sections 2.1, 2.2, 2.4,
2.9, 2.13 and 2.15 shall not exceed $30,569,937.
(c) The liability of the Sellers and the Shareholders for
Buyer Losses arising from any Retained Liability, Environmental Liability under
Section 8.1(b), breach of any covenants or agreements, or breach of any of the
representations set forth in Sections 2.1, 2.2, 2.4, 2.9, 2.13, and 2.15 shall
not be subject to either the $100,000 deductible set forth in Section 8.8(a) or
the maximum limit contained in Section 8.8(b).
ARTICLE 9
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
All statements of fact contained in any written statement (including
financial statements), certificate, instrument or document delivered by or on
behalf of any of the Sellers or any of the Shareholders pursuant to this
Agreement or that form a part of this Agreement, the Disclosure Schedule or the
closing documents shall be deemed representations and warranties of the Sellers
and the Shareholders. The several representations and warranties of the parties
to this Agreement shall survive the Closing Date for a period of two years from
the Closing Date (except that the representations and warranties set forth in
Sections 2.1, 2.2, 2.4, 2.9, 2.13, 2.15, 3.1, 3.3 and 3.4 shall survive the
Closing Date without limitation) (the period during which the representations
and warranties shall survive being referred to herein with respect to such
representations and warranties as the "Survival Period"), and shall be effective
with respect to any inaccuracy therein or breach thereof (and a claim for
indemnification under Article 8 hereof may be made thereon) if a written notice
asserting the claim shall have been given within the Survival Period with
respect to such matter. Any claim for indemnification made during the Survival
Period shall be valid and the representations and warranties relating thereto
shall remain in effect for purposes of such indemnification notwithstanding such
claim may not
30
be resolved within the Survival Period. The agreements and covenants set forth
herein and the Sellers' and the Shareholders' obligations to indemnify the Buyer
with respect to Environmental Liabilities under Section 8.1(b) and Retained
Liabilities under Section 8.1(c) shall survive without limitation. All
representations, warranties, covenants and agreements made by the parties shall
not be affected by any investigation heretofore or hereafter made by and on
behalf of either of them and shall not be deemed merged into any instruments or
agreements delivered in connection with this Agreement or otherwise in
connection with the transactions contemplated hereby. THE DISCLOSURE OF ANY ITEM
IN ANY EXHIBIT, SCHEDULE OR OTHER CERTIFICATE, INSTRUMENT, AGREEMENT OR
DOCUMENT, INCLUDING THE DISCLOSURE SCHEDULE, SHALL NOT RELIEVE THE SELLERS OR
THE SHAREHOLDERS OF ANY OBLIGATION HEREUNDER TO INDEMNIFY THE BUYER FOR ANY
BUYER LOSSES RESULTING FROM OR ARISING OUT OF ANY SUCH ITEM AND SHALL NOT AFFECT
THE CLASSIFICATION OF ANY SUCH ITEM AS A RETAINED LIABILITY.
ARTICLE 10
TERMINATION
10.1 Termination. The obligation to close the transactions contemplated
by this Agreement may be terminated by:
(a) mutual agreement of the Buyer, Weatherford, the Sellers
and the Shareholders;
(b) the Buyer and Weatherford, if a material default shall be
made in the observance or in the due and timely performance by any of the
Sellers or any of the Shareholders of any agreements and covenants of the
Sellers and the Shareholders herein contained, or if there shall have been a
breach by any of the Sellers or any of the Shareholders of any of the warranties
and representations of the Sellers and the Shareholders herein contained, and
such default or breach has not been cured or has not been waived;
(c) the Sellers and the Shareholders, if a material default
shall be made by the Buyer or Weatherford in the observance or in the due and
timely performance by the Buyer or Weatherford of any agreements and covenants
of the Buyer and Weatherford herein contained, or if there shall have been a
breach by the Buyer or Weatherford of any of the warranties and representations
of the Buyer and Weatherford herein contained, and such default or breach has
not been cured or has not been waived; or
(d) the Buyer and Weatherford or the Sellers and the
Shareholders (provided the terminating parties have not materially breached any
of their agreements, covenants or representations and warranties) if the Closing
shall not have occurred on or before October 31, 2002.
10.2 Liability Upon Termination. If the obligation to close the
transactions contemplated by this Agreement is terminated pursuant to any
provision of Section 10.1, then this Agreement shall forthwith become void and
there shall not be any liability or obligation with respect to the terminated
provisions of this Agreement on the part of the Seller, the Shareholders, the
Buyer or Weatherford except and to the extent such termination results from the
willful breach by a party of any of its representations, warranties or
agreements hereunder and except that the termination of this Agreement shall not
relieve any party of its obligations under Section 5.1(b), Article 8 (but only
to the extent it applies to breaches of the warranties made in Section 2.13 and
Section 3.3), Section 12.2 and Section 12.7.
10.3 Notice of Termination. The parties hereto may exercise their
respective rights of termination under Section 10.1 only by delivering written
notice to that effect to the other party or parties, and such notice is received
on or before the Closing Date.
31
ARTICLE 11
DEFINITIONS OF CERTAIN TERMS
In addition to terms defined elsewhere in this Agreement, the following
terms shall have the meanings assigned to them herein, unless the context
otherwise indicates, both for purposes of this Agreement and all exhibits hereto
and the Disclosure Schedule:
11.1 "Accounts Receivable" shall mean all accounts and notes receivable
relating to the Business.
11.2 "Adjusted Equity Value" shall mean (a) if the Average Share Price
is less than or equal to $35, the Equity Value multiplied by 87.5%, (b) if the
Average Share Price is greater than or equal to $45, the Equity Value multiplied
by 112.5%, and (c) if the Average Share Price is greater than $35 and less than
$45, the Equity Value.
11.3 "Affiliate" shall mean, with respect to any specified Person, a
Person that, directly or indirectly, controls, is controlled by or is under
common control with such specified Person.
11.4 "Agreement" shall mean this
Asset Purchase Agreement among the
Sellers, the Shareholders, the Buyer and Weatherford, as amended from time to
time by the parties hereto, including the exhibits hereto and the Disclosure
Schedule.
11.5 "Assumed Entitlements" shall have the meaning given such term in
Section 1.4(f) hereof.
11.6 "Assumed Liabilities" shall have the meaning given such term in
Section 1.4(e) hereof.
11.7 "Assumed Trade Payables" shall have the meaning given such term in
Section 1.4(c) hereof.
11.8 "Average Share Price" shall mean the average of the closing sales
price of Common Stock as reported by the New York Stock Exchange for each of the
ten consecutive trading days ending on the second trading day immediately
preceding the Closing Date.
11.9 "Business" shall mean the formulation, blending, design,
production, manufacture, sale, distribution and provision of specialty chemicals
for use in the oilfield and gas services industry and the provision of services
and engineering activities related thereto as conducted or proposed to be
conducted by the Sellers.
11.10 "Business Day" shall mean any day other than a Saturday, Sunday
or other day on which commercial banks in Houston,
Texas are authorized by law
to close.
11.11 "Buyer" shall mean Clearwater International, L.L.C., a limited
liability company, or one or more of its designees.
11.12 "Buyer Losses" shall have the meaning given such term in Section
8.1 hereof.
11.13 "Cash Payment" shall have the meaning given such term in Section
1.4 hereof.
11.14 "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq.
32
11.15 "Closing" shall mean the transfer by the Sellers to the Buyer of
the Transferred Assets and the tender by the Buyer to the Sellers of the
Purchase Price.
11.16 "Closing Date" shall have the meaning given such term in Section
1.3 hereof.
11.17 "Closing Date Asset Value" shall mean the aggregate net book
value attributable to the Transferred Assets as of the Closing Date, less
Assumed Trade Payables, Assumed Entitlements and Assumed Liabilities (excluding
Third Party Debt), in each case as reflected on the Closing Statement.
11.18 "Closing Date Value of the Weatherford Shares" shall mean (a) if
the Average Share Price is less than or equal to $35, the Average Share Price;
or (b) if the Average Share Price is greater than or equal to $45, the Average
Share Price, or (c) if the Average Share Price is greater than $35 and less than
$45, $40.
11.19 "Closing Statement" shall have the meaning given such term in
Section 1.6(a) hereof.
11.20 "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended from time to time.
11.21 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or similar provisions of legislation replacing such law from
time to time.
11.22 "Commission" shall mean the United States Securities and Exchange
Commission.
11.23 "Common Stock" shall mean the common shares, par value $1.00 per
share, of Weatherford, or such other securities into which such shares have
become exchangeable or convertible.
11.24 "Consigned Inventory" shall mean all Inventory of Sellers
physically located on the premises of Sellers' customers' plants for such
customers' use on a consignment basis, the aggregate value of which is less than
or equal to $860,000 at any given time.
11.25 "CWII" shall mean CWI International, Inc., a Delaware
corporation.
11.26 "CWII Shareholders" shall mean Xxxxx X. Xxxxx, Xxxxx X. Xxxxxx
and Xxxx Xxxxxxx, collectively.
11.27 "Damages" shall mean any and all liabilities, losses, damages,
demands, assessments, claims, costs and expenses (including interest, awards,
judgments, penalties, settlements, fines, costs of remediation, diminutions in
value, costs and expenses incurred in connection with investigating and
defending any claims or causes of action (including, without limitation,
attorneys' fees and expenses and all fees and expenses of consultants and other
professionals)).
11.28 "Debt Obligations" shall mean any contract, agreement, indenture,
note or other instrument relating to the borrowing of money or any guarantee or
other contingent liability in respect of any indebtedness or obligation of any
Person, including, without limitation, the carry value of all capital leases and
all non- current liabilities, including deferred income taxes (other than the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business and excluding the Third Party Debt).
11.29 "Disclosure Schedule" shall mean the disclosure schedule of even
date delivered to the Buyer and Weatherford. The Disclosure Schedule is a part
of this Agreement.
33
11.30 "Documents and Other Papers" shall mean and include any document,
agreement, instrument, certificate, writing, notice, consent, affidavit, letter,
telegram, telex, statement, file, computer disk, microfiche or other document in
electronic format, schedule, exhibit or any other paper or record whatsoever.
11.31 "Entitlements" shall have the meaning given such term in Section
1.1(a)(vi) hereof.
11.32 "Environmental Laws" shall mean all national, federal, state,
provincial, municipal or local laws, rules, regulations, statutes, ordinances or
orders of any Governmental Entity relating to (a) the control of any potential
pollutant or protection of the air, water or land, (b) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal or transportation and
(c) the regulation of or exposure to hazardous, toxic or other substances
alleged to be harmful.
11.33 "Environmental Liabilities" shall mean any and all Damages
(including any remedial, removal, response, abatement, clean-up, investigation
and/or monitoring costs and associated legal costs) incurred or imposed (a)
pursuant to any agreement, order, notice of responsibility, directive (including
directives embodied in Environmental Laws), injunctions, judgment or similar
documents (including settlements) arising out of, in connection with, or under
Environmental Laws, or (b) pursuant to any claim by a Governmental Entity or any
other Person for personal injury, property damage, damage to natural resources,
remediation, or payment or reimbursement of response costs incurred or expended
by such Governmental Entity or other Person pursuant to common law or statute
and related to the use or release of Hazardous Materials.
11.34 "Environmental Permits" shall mean any permit, license, approval,
registration, identification number or other authorization with respect to the
Seller under any Environmental Law.
11.35 "Equipment" shall mean all machinery, transportation equipment,
tools, equipment, furnishings and fixtures owned, leased or subject to a
contract of purchase and sale or lease commitment that is owned or used by the
Sellers or their Affiliates, other than Excluded Assets, in connection with,
relating to or arising out of the Business.
11.36 "Equity Value" shall be equal to $30,569,937, less the Cash
Payment, less Third Party Debt.
11.37 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
11.38 "ERISA Affiliate" shall mean any Person that is treated as a
single employer together with one or more of the Sellers under Section 414 of
the Code.
11.39 "Escrow Agent" shall have the meaning given such term in Section
1.5(a) hereof.
11.40 "Escrow Term" shall have the meaning given such term in Section
1.5(a) hereof.
11.41 "Escrowed Shares" initially shall mean a number of the
Weatherford Shares determined by dividing $5,000,000 by the Closing Date Value
of the Weatherford Shares.
11.42 "Excluded Assets" shall have the meaning given such term in
Section 1.2 hereof.
11.43 "Financial Statements" shall have the meaning given such term in
Section 2.6 hereof.
11.44 "GAAP" shall have the meaning given such term in Section 2.6
hereof.
34
11.45 "Governmental Entity" shall mean any arbitrator, court,
administrative or regulatory agency, commission, department, board or bureau or
body or other government or authority or instrumentality or any entity or Person
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
11.46 "Hazardous Materials" shall mean (a) any substance or material
that is listed, defined or otherwise designated as a "hazardous substance" under
Section 101(14) of CERCLA, (b) any petroleum or petroleum products, (c)
radioactive materials, urea formaldehyde, asbestos and PCBs and (d) any other
chemical, substance or waste that is regulated by any Governmental Entity under
any Environmental Law.
11.47 "Indemnitee" shall mean the Person or Persons indemnified, or
entitled, or claiming to be entitled to be indemnified, pursuant to the
provisions of Section 8.1 or Section 8.2 hereof, as the case may be.
11.48 "Intercompany Obligation" means any obligation, fixed or
contingent, of the Sellers or the Shareholders to any officer, director,
shareholder or Affiliate of any of the Sellers or the Shareholders or of such
officer, director, shareholder or Affiliate to any of the Sellers or the
Shareholders, including without limitation any Debt Obligation owed to or with
any such Person.
11.49 "Indemnitor" shall mean the Person or Persons having the
obligation to indemnify pursuant to the provisions of Section 8.1 or Section 8.2
hereof, as the case may be.
11.50 "Inventories" shall mean all inventories of finished goods,
tooling inventory, work in progress and raw materials relating to the Business,
wherever situated.
11.51 "Lien" shall mean any lien, pledge, claim, charge, security
interest or other encumbrance, option, defect or other rights of any third
Person of any nature whatsoever.
11.52 "Losses" shall mean Seller Losses or Buyer Losses, as the case
may be.
11.53 "Names" shall have the meaning given such term in Section 5.9
hereof.
11.54 "Permitted Liens" shall mean (i) Liens set forth in Section 11.54
of the Disclosure Schedule securing any of the Assumed Entitlements, (ii)
inchoate mechanic or materialmen Liens for construction in progress, (iii)
inchoate workmen, repairmen, warehousemen and carriers Liens arising in the
ordinary course of business, (iv) encumbrances consisting of zoning restrictions
on the use of the Real Property, none of which materially impairs the use of
such property and (v) Liens currently securing Debt Obligations of the Seller,
which Liens will be satisfied and released of the Closing Date; provided,
however, that the Liens described in clauses (ii) and (iii) shall not be
considered Permitted Liens as of the Closing Date.
11.55 "Person" shall mean a corporation, an association, a partnership,
an organization, a business, an individual or a Governmental Entity.
11.56 "Pre-Closing Obligations" shall mean all liabilities, debts and
obligations of any of the Sellers or any of the Shareholders (including
indemnification and other contingent obligations) relating to (i) acts, events
or omissions by any Person or circumstances existing at or prior to the Closing,
(ii) goods or services provided to or for the benefit of the Sellers or any of
their Affiliates prior to the Closing, (iii) goods or services manufactured or
provided by or on behalf of the Sellers or any of their Affiliates or licensees
prior to the Closing, (iv) any pending or threatened litigation, claims or
disputes made or threatened prior to the Closing, (v) any Retained Liabilities,
(vi) the conduct of the Business, the ownership or operation of the Transferred
Assets or any benefit realized by the Sellers prior to the Closing, (vii) any
Excluded Assets, (viii) Debt Obligations of the Sellers, other than the Assumed
Liabilities which shall be assumed by the Buyer on the
35
Closing Date, (ix) the employees of the Sellers under any contracts, agreements,
arrangements or understandings with such employees entered into or existing at
or prior to the Closing and all other obligations of the Sellers or any of their
Affiliates with respect to their employees at or prior to the Closing, (x) any
obligations with respect to the Seller Retained Employees, (xi) use of the
Proprietary Information, (xii) Taxes, (xiii) any obligations under any contracts
or agreements that were required to be listed in Section 2.5 of the Disclosure
Schedule but were not and (xiv) any liabilities that were not fully accrued for
and reflected on the Closing Statement.
11.57 "Proprietary Information" shall mean collectively (a) the items
set forth in Section 1.1(a)(iv) of the Disclosure Schedule, (b) Proprietary
Rights and (c) any and all other information and material proprietary to the
Sellers, owned, possessed or used by the Sellers, whether or not such
information is embodied in writing or other physical form, and which is not
generally known to the public, that (i) relates to financial information
regarding the Sellers or the Business, including, without limitation, (y)
business plans and (z) sales, financing, pricing and marketing procedures or
methods of the Sellers or (ii) relates to specific business matters concerning
the Sellers, including, without limitation, the identity of or other information
regarding sales personnel or customers of the Sellers.
11.58 "Proprietary Rights" shall mean all rights to the Names and any
derivations thereof, and all patents, including the patents set forth on Section
1.1(a)(iv) of the Disclosure Schedule, any patent rights, inventions, shop
rights, know how, trade secrets, designs, drawings, art work, plans, prints,
manuals, models, design registrations, inventor's certificates, technical
information and data, copyrightable works, lists of materials, patterns, molds,
records, diagrams, formulae, product design standards, tools, die, jigs, models,
prototypes, product information literature, computer files, computer software,
hard copy files, catalogs, specifications, confidentiality agreements,
confidential information and other proprietary technology and similar
information; all registered and unregistered trademarks, service marks, logos,
trade names and all other trademark rights; all registered and unregistered
copyrights; and all registrations for, and applications for registration of, any
of the foregoing, in connection with, relating to or arising out of the
Business.
11.59 "Purchase Price" shall have the meaning given such term in
Section 1.4 hereof.
11.60 "Real Property" shall mean all real property, or any interest
therein, that is owned, leased or used by any of the Sellers or their Affiliates
in connection with, relating to or arising out of the Business.
11.61 "Registration Expenses" shall have the meaning given such term in
Section 4.2(e) hereof.
11.62 "Registration Statement" shall have the meaning given such term
in Section 4.1(a) hereof.
11.63 "Representative" shall have the meaning given such term in
Section 12.1 hereof.
11.64 "Required Consents" shall have the meaning given such term in
Section 2.2(b) hereof.
11.65 "Retained Liabilities" shall have the meaning given such term in
Section 1.7 hereof.
11.66 "SEC Documents" shall mean Xxxxxxxxxxx International, Inc.'s (a)
Annual Report on Form 10-K for the year ended December 31, 2001, (b) Quarterly
Reports on Form 10-Q for the quarter ended March 31, 2002, (c) Current Reports
on Form 8-K dated February 1, 2002, March 4, 2002, April 5, 2002, April 24,
2002, and June 27, 2002, and (d) proxy statement with respect to the Annual
Meeting of Stockholders held on June 26, 2002, and proxy statement/prospectus
with respect to a Special Meeting of Stockholders held on June 26, 2002, and
Xxxxxxxxxxx International Ltd.'s (x) Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002, (y) Registration Statement on Form 8-A, filed on
June 27, 2002, and Post-Effective Amendment
36
No. 1 to Form S-3 filed on July 5, 2002 and (z) Current Reports on Form 8-K
dated June 27, 2002, July 22, 2002, August 9, 2002 and October 9, 2002.
11.67 "Securities Act" shall mean the Securities Act of 1933, as
amended.
11.68 "Seller Benefit Plan" shall mean (a) any employee welfare benefit
plan or employee pension benefit plan as defined in Sections 3(1) and 3(2) of
ERISA, including, but not limited to, a plan that provides retirement income or
results in deferrals of income by employees for periods extending to their
terminations of employment or beyond, and a plan that provides medical, surgical
or hospital care benefits or benefits in the event of sickness, accident,
disability, death or unemployment and (b) any other material employee benefit
agreement or arrangement that is not an ERISA plan, including without
limitation, any deferred compensation plan, incentive plan, bonus plan or
arrangement, stock option plan, stock purchase plan, stock award plan, golden
parachute agreement, severance pay plan, dependent care plan, cafeteria plan,
employee assistance program, scholarship program, employment contract, retention
incentive agreement, noncompetition agreement, consulting agreement,
confidentiality agreement, vacation policy, or other similar plan or agreement
or arrangement that has been sponsored, maintained or adopted by the Seller at
any time during the past three years, or has been approved by the Sellers before
this date but is not yet effective, for the benefit of directors, officers,
employees or former employees (or their beneficiaries) of the Sellers.
11.69 "Seller Group" shall mean (a) the Sellers, (b) any of the CWII
Shareholders who receives any of the Weatherford Shares from the Sellers in a
distribution permitted under the Securities Act and (C)) all or any of the
following Persons to whom Sellers transfer any of the Weatherford Shares:
Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxxx, Xxx X. Xxxxxx, the Estate of Xxxx X. Xxxxxx,
Xxxxxx X. Xxxxxx or Xxxxxx X. Xxxxxxxxxxx, provided that the Buyer and
Weatherford receive an opinion of counsel reasonably satisfactory to the Buyer
and Weatherford to the effect that registration under the Securities Act or any
applicable state securities laws is not required for such transfer and such
Persons shall have entered into an agreement reasonably acceptable to
Weatherford whereby they agree to be bound by the provisions of this Agreement
as it relates to the members of the Seller Group.
11.70 "Seller Losses" shall have the meaning given such term in Section
8.2 hereof.
11.71 "Seller Retained Employees" shall have the meaning given such
term in Section 5.10(a) hereof.
11.72 "Sellers" shall mean Clearwater, Inc., a Pennsylvania
corporation, Transit Energy Systems, Inc., a Delaware corporation, Clearwater
Specialty Chemical Company, a Nova Scotia company, PriTech International, Inc.,
a
Texas corporation, CWI International, Inc., a Delaware corporation and the
ultimate parent of each of the Sellers.
11.73 "Selling Expenses" shall have the meaning given such term in
Section 4.2(e) hereof.
11.74 "Shareholders" shall mean CWII and the CWII Shareholders,
collectively.
11.75 "Target Asset Value" shall mean $19,791,147, as indicated on the
calculation set forth in Schedule 11.75 hereof.
11.76 "Taxes" shall mean all federal, state, local, foreign and other
taxes, charges, fees, duties, levies, imposts, customs or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, profit share, license,
lease, service, service use, value added, withholding, payroll, employment,
excise, estimated, severance, stamp, occupation, premium, property, windfall
profits, or other taxes, fees, assessments, customs, duties, levies, imposts, or
charges of any
37
kind whatsoever, together with any interests, penalties, additions to tax, fines
or other additional amounts imposed thereon or related thereto, and the term
"Tax" means any one of the foregoing Taxes.
11.77 "Tax Returns" shall mean all returns, declarations, reports,
statements and other documents of, relating to, or required to be filed in
respect of, any and all Taxes, and the term "Tax Return" means any one of the
foregoing Tax Returns.
11.78 "Third Party Claims" shall have the meaning given such term in
Section 8.3(b) hereof.
11.79 "Third Party Debt" shall mean principal, interest, fees and
expenses payable with respect to the indebtedness under the specific debt
obligations owed by any one or all of the Sellers to third parties listed on
Schedule 1.4(d) hereof.
11.80 "Trade Payables" shall mean those obligations of the Seller
relating to the provision of goods and services to the Seller for the conduct of
the Business in the ordinary course of business of the Seller that relate to the
Transferred Assets and that are classified as Trade Payables in accordance with
GAAP.
11.81 "Transferred Assets" shall have the meaning given such term in
Section 1.1(a) hereof.
11.82 "US$", "dollar" or "$" shall mean United States dollars.
11.83 "Value of the Escrowed Shares" shall mean the total number of
Escrowed Shares held by the Escrow Agent pursuant to Section 1.5, multiplied by
the Closing Date Value of the Weatherford Shares.
11.84 "Weatherford" shall mean Xxxxxxxxxxx International Ltd., a
Bermuda exempted company.
11.85 "Weatherford Affiliates" shall mean (a) Xxxxxxxxxxx Canada
Partnership, a general partnership established under the laws of Alberta, with
respect to the assets and liabilities of CSCC located in Canada, (b) WEUS
Holding, Inc., a Delaware corporation, with respect to the assets of CWI located
in Russia.
11.86 "Weatherford Shares" shall mean the number of shares of Common
Stock (or any other securities into which or for which the shares of Common
Stock shall have been converted or exchanged by reason of reorganization,
reclassification, merger, amalgamation, consolidation, business combination or
similar transaction) equal to (a) the Adjusted Equity Value divided by (b) the
Closing Date Value of the Weatherford Shares.
ARTICLE 12
MISCELLANEOUS
12.1 Representative. Each of the Sellers, the Seller Group and each of
the Shareholders hereby irrevocably appoint Xxxxx X. Xxxxx or, in the event Xx.
Xxxxx is unavailable for any reason, Xxxxxxx X. Xxxxx as his alternate to be the
representative (the "Representative") of the Sellers and the Shareholders
following the Closing Date in any matter arising out of this Agreement. For any
matter in which the Buyer is entitled to rely on or otherwise deal with the
Sellers, the Seller Group or any of the Shareholders, the Buyer shall be
entitled to communicate solely with the Representative and shall be entitled to
rely on any such communications as being the desire and will of the Sellers and
the Shareholders. Notice delivered to the Representative in accordance with
Section 12.4 hereof shall be deemed notice to each of the Sellers and each of
the Shareholders.
38
12.2 Expenses. Except as otherwise set forth herein, and whether or not
the transactions contemplated by this Agreement shall be consummated, each party
agrees to pay, without right of reimbursement from any other party, the costs
incurred by such party incident to the preparation and execution of this
Agreement and performance of its obligations hereunder, including without
limitation the fees and disbursements of legal counsel, accountants and
consultants employed by such party in connection with the transactions
contemplated by this Agreement.
12.3 Notices. All notices, requests, consents, directions and other
instruments and communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered in person, by courier, by overnight delivery service with proof of
delivery or by prepaid registered or certified United States first-class mail,
return receipt requested, addressed to the respective party at the address set
forth below, or if sent by facsimile or other similar form of communication
(with receipt confirmed) to the respective party at the facsimile number set
forth below:
If to the Seller, the Shareholders or the Representative, to:
CWI International, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
and
Xxxxx X. Xxxxx
000 Xxxxxxx Xxxx
XxXxxxxx, XX 00000
and
Xxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
and
Xxxx Xxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Copies to:
Houston Xxxxxxxx, P.C.
00xx Xxxxx, Xxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
39
If to the Buyer or Weatherford, to:
Weatherford U.S., L.P.
000 Xxxx Xxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
or to such other address or facsimile number and to the attention of such other
Person(s) as either party may designate by written notice. Any notice mailed
shall be deemed to have been given and received on the third Business Day
following the day of mailing.
12.4 Arbitration. Except as otherwise provided herein, in the event
there shall exist any dispute or controversy with respect to this Agreement or
any matter relating hereto or the transactions contemplated hereby, including,
but not limited to Article 8, the parties hereto agree to seek to resolve such
dispute or controversy by mutual agreement. If the parties hereto are unable to
resolve such dispute or controversy by agreement within 60 days following notice
by any party hereto of the nature of such dispute or controversy setting forth
in reasonable detail the circumstances and basis of such dispute or controversy,
the parties agree that such dispute or controversy be resolved by binding
arbitration pursuant to the provisions of this Section 12.4 and in accordance
with the then current Commercial Arbitration Rules of the American Arbitration
Association. All arbitration proceedings shall be held in Houston,
Texas. If a
party elects to submit such matter to arbitration, such party shall provide
notice to the other party of its election to do so, which notice shall name one
arbitrator. Within 10 days after the receipt of such notice, the other party
shall provide written notice to the electing party naming a second arbitrator.
The two arbitrators so appointed shall name a third arbitrator, or failing to do
so, a third arbitrator shall be appointed pursuant to the Commercial Arbitration
Rules of the American Arbitration Association. Each arbitrator selected to act
hereunder shall be qualified by education and experience to pass on the
particular question in dispute and shall be independent and not affiliated with
any of the parties hereto. The arbitrators shall resolve all disputes in
controversy in accordance with
Texas substantive law. All statutes of
limitations that would otherwise be applicable shall apply to any arbitration
proceeding. The arbitrators appointed pursuant to this Section 12.4 shall
promptly hear and determine (after due notice and hearing and giving the parties
reasonable opportunity to be heard) the questions submitted, and shall render
their decision within 60 days after appointment of the third arbitrator or as
soon as practical thereafter. If within such period a decision is not rendered
by the board or a majority thereof, new arbitrators may be named and shall act
hereunder at the election of either party in like manner as if none had
previously been named. The decision of the arbitrators, or a majority thereof,
made in writing, shall absent manifest error be final and binding upon the
parties hereto as to the questions submitted, and each party shall abide by such
decision.
12.5 Successors. Except as specifically contemplated by this Agreement,
no party hereto shall assign this Agreement or any part hereof without the prior
written consent of the other parties; provided, however, the Buyer may assign
its rights and obligations in this Agreement to an Affiliate of the Buyer, and
in the event of dissolution of CWII, CWII may assign its rights and obligations
in this Agreement to the members of the Seller Group. This Agreement shall inure
to the benefit of, be binding upon and be enforceable by the parties hereto and
their respective successors and assigns.
12.6 Entire Agreement. This Agreement and the exhibits hereto and the
Disclosure Schedule constitute the entire agreement and understanding between
the parties relating to the subject matter hereof and thereof and supersedes all
prior representations, endorsements, premises, agreements, memoranda
communications, negotiations, discussions, understandings and arrangements,
whether oral, written or inferred,
40
between the parties relating to the subject matter hereof. This Agreement may
not be modified, amended, rescinded, canceled, altered or supplemented, in whole
or in part, except upon the execution and delivery of a written instrument
executed by a duly authorized representative of each of the parties hereto.
12.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
TEXAS WITHOUT
GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES.
12.8 Waiver. The waiver of any breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other breach of
the same or any other term or condition.
12.9 Severability. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.10 No Third Party Beneficiaries. Any agreement contained, expressed
or implied in this Agreement shall be only for the benefit of the parties hereto
and their respective legal representatives, successors and assigns, and such
agreements shall not inure to the benefit of the obligees of any indebtedness of
any party hereto, it being the intention of the parties hereto that no Person
shall be deemed a third party beneficiary of this Agreement, except to the
extent a third party is expressly given rights herein.
12.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.12 Headings. Each statement set forth in the Disclosure Schedule
with respect to a particular section herein shall be deemed made solely with
respect to such section and not with respect to any other section hereof unless
specifically set forth in the Disclosure Schedule as also being made with
respect to such other section. The headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference only and shall in no
way restrict or otherwise modify any of the terms or provisions hereof or affect
in any way the meaning or interpretation of this Agreement.
12.13 Negotiated Transaction. The provisions of this Agreement were
negotiated by the parties hereto, and this Agreement shall be deemed to have
been drafted by all of the parties hereto.
41
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
SELLERS:
CLEARWATER, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------------
Title: President
-----------------------------------
TRANSIT ENERGY SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------------
Title: President
-----------------------------------
PRITECH INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------------
Title: President
-----------------------------------
CLEARWATER SPECIALTY CHEMICAL CO.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------------
Title: President
-----------------------------------
SHAREHOLDERS:
CWI INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------------
Title: President
-----------------------------------
/s/ Xxxxx X. Xxxxx
-----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxxx
-----------------------------------------
Xxxx Xxxxxxx
42
BUYER:
CLEARWATER INTERNATIONAL, L.L.C.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: Senior Vice President and
Secretary
-----------------------------------
WEATHERFORD:
XXXXXXXXXXX INTERNATIONAL LTD.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: Senior Vice President, General
Counsel & Secretary
-----------------------------------
43
