EXHIBIT 10(c)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 18th day of September, 1997, by and among Weatherford Enterra U.S.,
Limited Partnership, a Louisiana limited partnership (the "Partnership"),
Weatherford U.S., Inc., a Delaware corporation ("Weatherford U.S." and, together
with the Partnership, the "Sellers"), and American Aero Cranes, L.L.C., a
Louisiana limited liability company (the "Buyer").
W I T N E S S E T H :
WHEREAS, Weatherford U.S. is the sole corporate general partner of the
Partnership;
WHEREAS, the Sellers desire to transfer to the Buyer the Business (as
hereinafter defined) and the properties, assets and 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 to the Buyer, free
and clear of all Liens, the Sellers' entire right, title and interest in, to and
under the Business, as a going concern, and all assets owned or used by the
Sellers in connection with 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 the Sellers (all of such assets,
properties, rights and business being hereinafter sometimes 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;
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(ii) all Inventories, including the Inventories set forth in Section
1.1(a)(ii) of the Disclosure Schedule;
(iii) all trade and other accounts and notes receivable relating to
the Business (the "Accounts Receivable"), including the Accounts
Receivable set forth in Section 1.1(a)(iii) of the Disclosure Schedule;
(iv) all Real Property, including the Real Property set forth in
Section 1.1(a)(iv) of the Disclosure Schedule;
(v) the Leasehold Interests, including the Leasehold Interests set
forth in Section 1.1(a)(v) of the Disclosure Schedule;
(vi) all Proprietary Information, including the Proprietary
Information set forth in Section 1.1(a)(vi) of the Disclosure Schedule;
(vii) subject to Section 1.1(b) hereof, the benefit of all unfilled or
outstanding purchase orders, sales contracts, other commitments,
contracts and engagements to which the Sellers are entitled on the
Closing Date and that relate to the Business (the "Entitlements");
(viii) all prepaid expenses and deposits made by the Sellers relating
to the Business;
(ix) any goodwill associated with the Business; and
(x) all Contracts and Other Agreements and all Documents and Other
Papers.
(b) the Sellers shall use their best efforts to obtain such consents of
third parties as are necessary for the assignment of the Transferred Assets. To
the extent that any of the Transferred Assets are not assignable by the terms
thereof or for which 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 any of the
Transferred Assets that are not assignable by the terms thereof or for which
consents to the assignment thereof cannot be obtained as provided herein is not
recognized by any third party, the Sellers shall, at the request of the Buyer,
enforce in a reasonable manner, at the cost of the Sellers and for the account
of the Buyer, any and all rights of the Sellers against such third party.
(c) The Sellers shall notify each Person that may have possession 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) hereof to the contrary
notwithstanding, there shall be excluded from the assets, properties, rights and
business
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to be transferred to the Buyer hereunder all assets of the Sellers that do not
relate to the Business and those assets of the Sellers listed or described in
Section 1.2 of Disclosure Schedule (collectively, the "Excluded Assets").
1.3 Closing. Subject to the conditions set forth in this Agreement, the
Closing shall take place at the offices of Fulbright & Xxxxxxxx L.L.P., located
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 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 at the Closing.
1.4 Purchase Price for the Assets.
(a) In consideration of the transfer to the Buyer of the Transferred
Assets, the Buyer shall (i) pay to the Sellers an amount in cash equal to the
Cash Purchase Price and (ii) assume (A) the payment obligations of the Sellers
with respect to all Trade Payables and Accrued Liabilities reflected on the
Final Balance Sheet, (B) 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, (C) any Damages suffered, incurred
or realized by the Sellers and their Affiliates arising from or relating to the
Non-Offered Employees not being offered employment by the Buyer and its
Affiliates and (D) all warranty obligations (other than Warranty Obligations)
with respect to the manufacture, sale or rental of products or the performance
of services in the conduct of the Business (collectively, the "Assumed
Liabilities"). The Cash Purchase Price and the Assumed Liabilities are herein
collectively referred to as the "Purchase Price".
(b) At the Closing, the Buyer shall deliver to the Sellers the Promissory
Note and an amount of cash (the "Closing Cash Payment") that, when added to the
Non-Adjusted Principal Amount, shall equal the Closing Purchase Price.
(c) The Non-Adjusted Principal Amount shall be:
(i) $812,500; plus
(ii) if there is an increase (the "Closing Inventories Increase") in
the Net Inventories from the Balance Sheet to the Closing Balance Sheet,
50% of the amount by which the Net Inventories on the Closing Balance
Sheet exceed the Net Inventories on the Balance Sheet; plus
(iii) if Accounts Payable on the Closing Balance Sheet exceed
$1,100,000, the amount by which Accounts Payable on the Closing Balance
Sheet exceed $1,100,000 (the "Closing Accounts Payable Difference"); plus
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(iv) if a positive amount, 12.5% of (A) the Closing Purchase
Price minus (B) the sum of (1) $6,500,000, (2) the Closing Inventories
Increase and (3) the Closing Accounts Payable Difference; minus
(v) if a positive amount, 12.5% of (A) the sum of (1) $6,500,000,
(2) the Closing Inventories Increase and (3) the Closing Accounts
Payable Difference minus (B) the Closing Purchase Price.
(d) The Closing Cash Payment shall be the difference between the Closing
Purchase Price and the Non-Adjusted Principal Amount.
(e) The Closing Cash Payment shall be payable by wire transfer of same
day funds. The Promissory Note (i) shall be in a principal amount equal to the
Adjusted Principal Amount, (ii) shall bear interest at the fixed rate of 6.23%
per annum, (iii) shall be secured by a second lien position on the Transferred
Assets and (iv) shall be payable (A) in annual payments of accrued interest on
each of the first through fifth anniversaries of the Closing Date and (B) in
equal annual principal payments, with accrued interest thereon, on each of the
sixth through eighth anniversaries of the Closing Date.
(f) Capitalized terms used in this Section 1.4 and in Section 1.5 hereof
and not otherwise defined herein shall refer to such items as reflected on the
Balance Sheet, the Closing Balance Sheet or the Final Balance Sheet, as
applicable.
1.5 Purchase Price Adjustment.
(a) Within 30 calendar days after the Closing Date, the Sellers shall
prepare and deliver to the Buyer a statement reflecting the Final Cash Payment
and the Adjusted Principal Amount, the sum of which shall equal the Cash
Purchase Price, and the calculation thereof (the "Final Statement"), prepared on
a basis consistent with the Closing Balance Sheet; provided, however, that for
purposes of determining the Cash Purchase Price and the calculation thereof, (i)
"Accrued Liabilities" on the Closing Balance Sheet and the Final Balance Sheet
shall not include accrued general liabilities and auto insurance, accrued
warranty expense with respect to the Warranty Obligations, payroll deduction,
accrued sick pay, accrued bonuses, accrued audit fees, Taxes and accrued Taxes,
(ii) the amount of the allowance for doubtful accounts deducted from accounts
receivable set forth on the Final Balance Sheet shall be determined on a basis
consistent with the Closing Balance Sheet, (iii) the amount of the allowance for
obsolete, damaged, missing, excess or slow-moving inventories deducted from
inventories set forth on the Final Balance Sheet shall be $415,000, (iv) the
amount of the accrual for Company-provided employee medical and dental expenses,
to the extent such expenses are within the Company's deductible, set forth on
the Final Balance Sheet shall be $35,000, (v) the amount of the accrual for
expressed or implied warranty obligations, including, when applicable, handling,
transportation and installation costs, set forth on the Final Balance Sheet
shall be $43,740 and (vi) the amount of the accrual for penalties related to
failure to meet committed delivery dates for crane units set forth on the Final
Balance Sheet shall be $397,350. The Buyer shall provide the Sellers reasonable
access to the books and records pertaining to the
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Business to enable them to prepare the Final Statement. The Sellers shall
provide the Buyer access to copies of all work papers and other relevant
documents to verify the entries contained in the Final Statement. The Buyer
shall have a period of 30 calendar days after delivery to them of the Final
Statement (the "Response Period") to review it and make any objections the Buyer
may have in writing to the Sellers. If written objections to the Final Statement
are delivered to the Sellers within the Response Period, then the Buyer and the
Sellers shall attempt to resolve the matter or matters in dispute. If no written
objections are made within the Response Period, the Final Cash Payment and the
Adjusted Principal Amount shall be compared to the Closing Cash Payment and the
Non-Adjusted Principal Amount and adjustments will be made according to Section
1.5(e) and Section 1.5(f) hereof.
(b) The Cash Purchase Price shall be an amount equal to $6,500,000 (i)
plus, if applicable, the amount by which the Book Value from the Final Balance
Sheet exceeds $10,541,600, or (ii) minus, if applicable, the amount by which
$10,541,600 exceeds the Book Value from the Final Balance Sheet.
(c) The Adjusted Principal Amount shall be:
(i) $812,500; plus
(ii) if there is an increase (the "Final Inventories Increase") in
the Net Inventories from the Balance Sheet to the Final Balance Sheet,
50% of the amount by which the Net Inventories on the Final Balance
Sheet exceed the Net Inventories on the Balance Sheet; plus
(iii) if Accounts Payable on the Final Balance Sheet exceed
$1,100,000, the amount by which Accounts Payable on the Final Balance
Sheet exceed $1,100,000 (the "Final Accounts Payable Difference"); plus
(iv) if a positive amount, an amount (the "Designated Amount") equal
to 12.5% of (A) the Cash Purchase Price minus (B) the sum of (1)
$6,500,000, (2) the Final Inventories Increase and (3) the Final
Accounts Payable Difference (the Designated Amount, when added to the
Final Inventories Increase and the Final Accounts Payable Difference,
referred to as the "Positive Adjustment Amount"); minus
(v) if a positive amount, an amount (the "Negative Adjustment
Amount") equal to 12.5% of (A) the sum of (1) $6,500,000, (2) the Final
Inventories Increase and (3) the Final Accounts Payable Difference minus
(B) the Cash Purchase Price.
(d) The Final Cash Payment shall be the difference between the Cash
Purchase Price and the Adjusted Principal Amount.
(e) If the Final Cash Payment is greater than the Closing Cash Payment,
the Buyer shall pay to the Sellers the difference between such amounts. If
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the Final Cash Payment is less than the Closing Cash Payment, the Sellers shall
pay to the Buyer the difference between such amounts.
(f) The Promissory Note shall provide an automatic retroactive
adjustment of the principal amount thereof in accordance with Section 1.5(c)
hereof.
(g) Subject to Section 1.5(h) hereof, within five calendar days after
the end of the Response Period, any cash payment required pursuant to Section
1.5(e) hereof shall be made by wire transfer.
(h) If disputes with respect to the Final Statement cannot be resolved
by the Buyer and the Sellers within 15 calendar days after the delivery of the
objections to the Final Statement, then the specific matters in dispute shall be
submitted to Xxxxxx Xxxxxxxx LLP or such other independent accounting firm as
may be approved by the Buyer and the Sellers, which firm shall render its
opinion as to such matters. Based on such opinion, such independent accounting
firm will then send to the Buyer and the Sellers its determination on the
specific matters in dispute, which determination shall be final and binding on
the parties hereto. Within five calendar days after delivery of such opinion to
the Buyer and the Sellers, the cash payment shall be made, as set forth in
Section 1.5(e) hereof. Each of the Buyer, on the one hand, and the Sellers, on
the other hand, shall bear one-half of the fees and other costs charged by such
independent accounting firm.
1.6 Liabilities Not Assumed by the Buyer. Except for the Assumed
Liabilities, the Sellers shall pay and discharge in due course all of their
liabilities, debts and obligations relating to the Transferred Assets or the
Business, whether known or unknown, now existing or hereafter arising,
contingent or liquidated, including, without limitation, any Tax liabilities of
the Sellers pertaining to the Transferred Assets or the Business for periods
prior to the Closing Date, any Debt Obligations and the liabilities and
obligations set forth in clauses (a) through (e) below (collectively, the
"Related Liabilities"), and the Buyer shall not assume, or in any way be liable
or responsible for, any of such Retained Liabilities. Without limiting the
generality of the foregoing, the Retained Liabilities shall include the
following:
(a) any liability or obligation of the Sellers arising out of or in
connection with the negotiation and preparation of this Agreement and the
consummation and performance of the transactions contemplated hereby, whether or
not such transactions are consummated;
(b) any liability or obligation for any and all Taxes of, or pertaining
or attributable to, (i) the Sellers for any period that ends on or before the
Closing Date, or (ii) the Business or the Transferred Assets for any period or
portion thereof that ends on or before the Closing Date;
(c) any liability (other than with respect to the Assumed Liabilities)
to which any of the parties may become subject as a result of the fact that the
transactions contemplated by this Agreement are being effected without
compliance with the bulk
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sale provisions of the Uniform Commercial Code as in effect in any state or any
similar statute as enacted in any jurisdiction;
(d) any liability or obligation of the Sellers arising out of or in
connection with the Sellers' obligations under Section 1.1(b) hereof; and
(e) all other liabilities and obligations, direct, indirect, contingent
or liquidated, not reflected on the Final Balance Sheet or arising prior to the
Closing and related to the conduct or operation of the Transferred Assets or the
Business on or prior to the Closing Date, including, but not limited to, the
Pre-Closing Obligations.
1.7 Prorations of Expenses and Certain Property Taxes.
(a) The Sellers 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 Date, to the Buyer's satisfaction. In the event that 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 Purchase Price on the Closing Date for the Sellers' pro
rata portion of such general property Taxes, and to the extent that such
proration may be inaccurate the Sellers, on the one hand, and the Buyer, on the
other hand, 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 Sellers, on the one hand, and the Buyer, on the other hand,
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. To the extent such amounts are estimated on the Closing Date and such
prorations are inaccurate, the Sellers, on the one hand, and the Buyer, on the
other hand, 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, on the one hand, and the Buyer, on the other hand, as of the Closing
Date.
1.8 Transfer Taxes and Recording Fees.
(a) Notwithstanding any provision of law imposing the burden of Transfer
Taxes (as hereinafter defined) on the Sellers or the Buyer, as the case may be,
any sales, use and other transfer Taxes imposed in connection with the
consummation of the transactions contemplated by this Agreement, other than
value-added taxes that will be reimbursed to Buyer (collectively, "Transfer
Taxes"), shall be borne equally by the Buyer, on the one hand, and the Sellers,
on the other hand. The Sellers and the Buyer agree to cooperate in good faith
with each other, and to use their commercially
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reasonable efforts, to minimize Transfer Taxes. Without limiting the generality
of the preceding sentence, (i) the appropriate party hereto shall promptly and
properly complete, execute and deliver to the other party resale, exemption
and/or similar certificates or other documentation necessary or appropriate
under any applicable law to claim and/or evidence that all or any portion of the
sale or transfer of the Transferred Assets under this Agreement is exempt from
or otherwise not subject to Transfer Taxes imposed under such applicable law and
(ii) each of the parties hereto shall consult and cooperate in good faith with
each other on a timely basis to effectively handle and contest any audit,
examination, investigation or administrative, court or other proceeding relating
to Transfer Taxes.
(b) 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.
(c) 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.
(d) If a party hereto shall fail to pay on a timely basis any amount for
which such party is responsible under this Section 18, the other party may pay
such amount to the appropriate Governmental Entity or Governmental Entities or
other appropriate third party or parties, and the party responsible for payment
of such amount shall promptly reimburse the other party for such amount so paid.
(e) The respective rights and obligations of the parties hereto under
the Section 1.8 shall survive the Closing without limitation.
1.9 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Transferred Assets by the Buyer and the Sellers within 60 days
following the Closing Date subject to the following:
(a) such allocation of the Purchase Price will be reflected in Form 8594
that will be filed by the Buyer and the Sellers in accordance with Section 1060
of the Code, with such adjustments as may be necessary pursuant to Section 1.5
hereof; and
(b) the Buyer and the Sellers 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.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as otherwise set forth in the Disclosure Schedule, the Sellers
jointly and severally represent and warrant to the Buyer as follows:
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2.1 Corporate Matters.
(a) The Partnership is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Louisiana. The
Partnership has partnership power and authority under all applicable laws,
ordinances and orders of public authorities to own, operate and lease its
properties and assets and to carry on its business in the manner currently
conducted in each jurisdiction in which it so conducts the Business. The
Partnership has all requisite partnership power and authority to enter into this
Agreement and to perform its obligations under this Agreement. Weatherford U.S.
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. Weatherford U.S. has corporate power and
authority under all applicable laws, ordinances and orders of public authorities
to own, operate and lease its properties and assets, to carry on its business in
the manner currently conducted and to act as a general partner of the
Partnership, and it is qualified to do business as a foreign corporation in each
jurisdiction in which it conducts the Business as general partner of the
Partnership, except where the failure to be so qualified would not have a
Material Adverse Effect. Weatherford U.S. has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations under this
Agreement.
(b) True, correct and complete copies of the Articles of Partnership in
Commendam of the Partnership and the Certificate of Incorporation and Bylaws of
Weatherford U.S. have been provided by the Sellers to the Buyer, and such
Articles of Partnership in Commendam, Certificate of Incorporation and Bylaws
are in full force and effect.
(c) Set forth in Section 2.1(c) of the Disclosure Schedule is a list of
assumed names under which the Partnership operates the Business.
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 all necessary partnership action on the part of
the Partnership and all necessary corporate action on the part of Weatherford
U.S. No further partnership action is necessary on the part of the Partnership
and no further corporate action is necessary on the part of Weatherford U.S. 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 is a legal, valid and binding obligation of the Sellers enforceable
against the Sellers 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 to the Buyer, the
consummation of the transactions contemplated hereby or thereby and the
compliance
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with the provisions hereof or thereof by the Sellers 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 give rise to any right of termination, cancellation
or acceleration, or loss of any right or benefit or both, under, any of
the Contracts and Other Agreements,
(ii) conflict with or violate the Articles of Partnership in
Commendam of the Partnership, or the Certificate of Incorporation or
Bylaws of Weatherford U.S.,
(iii) result in the creation or imposition of any Lien on any of the
Transferred Assets, or
(iv) 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 their properties
or assets,
other than conflicts, breaches, violations, terminations or conflicts that would
not materially and adversely affect the Business or the ability of the Sellers
to consummate the transactions provided for in this Agreement.
2.3 Approvals, Licenses and Authorizations.
(a) 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 to
authorize the execution, delivery and performance of this Agreement by the
Sellers or any other agreement contemplated hereby to be executed and delivered
by the Sellers 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 material 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 material violations are in existence or have been recorded with
respect to such licenses, permits or other authorizations and no proceeding is
pending or, to the best knowledge of the Sellers, threatened with respect to the
revocation or limitation of any of such licenses, permits or other
authorizations.
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2.4 Title to Properties.
(a) Either the Partnership or Weatherford U.S. owns each parcel of Real
Property, free and clear of any Liens, other than Permitted Liens.
(b) Either the Partnership or Weatherford U.S. is the lessee or has
succeeded to the rights of the lessee under all of the Leasehold Interests and
owns the Leasehold Interests free and clear of all Liens, except for Permitted
Liens. Each lease agreement evidencing a Leasehold Interest is in full force and
effect and affords the Sellers possession, subject to the provisions of the
lease agreement, of the subject matter of the lease agreement. The Sellers are
not in material default under the terms of any such lease agreement.
(c) All Equipment (excluding Equipment that did not have a gross book
value of $1,000 or more at their respective dates of acquisition by the
Partnership or Weatherford U.S.) as of August 31, 1997 is set forth in Section
1.1(a)(i) of the Disclosure Schedule. Either the Partnership or Weatherford U.S.
owns all Equipment free and clear of all Liens, except for Permitted Liens.
(d) All Inventories at August 31, 1997 are set forth in Section
1.1(a)(ii) of the Disclosure Schedule. Either the Partnership or Weatherford
U.S. owns all Inventories free and clear of all Liens, except for Permitted
Liens.
(e) The Accounts Receivable are owned by the Partnership free and clear
of all Liens. All of the Accounts Receivable, whether or not reflected in the
financial statements of the Sellers, represent transactions in the ordinary
course of business and are valid obligations arising from sales actually made or
services actually performed by the Sellers.
(f) Either the Partnership or Weatherford U.S. owns or possesses
licenses or other rights to use all rights to all Proprietary Rights necessary
for the conduct of the Business as currently conducted. On the Closing Date, the
Sellers will transfer or cause to be transferred all Proprietary Rights
necessary for the conduct of the Business as currently conducted. Set forth in
Section 1.1(a)(vi) of the Disclosure Schedule is a complete and accurate list of
all patents, trademarks and licenses pertaining to the Business that the Sellers
own or possess or otherwise have rights to use and all patents, trademarks and
licenses pertaining to the Business that the Sellers own or possess or otherwise
have rights to use. No licenses, sublicenses, covenants or agreements have been
granted or entered into by the Sellers in respect of the items listed in Section
1.1(a)(vi) of the Disclosure Schedule except as noted thereon. The Sellers have
not received any notice of infringement, misappropriation or conflict from any
other Person with respect to such Proprietary Rights and, to the Sellers'
knowledge, the conduct of the Business has not infringed, misappropriated or
otherwise conflicted with any Proprietary Rights of any such Person. All of the
Proprietary Rights that are owned by the Sellers are owned free and clear of all
Liens and all such Proprietary Rights will be transferred to the Buyer free and
clear of all Liens. All Proprietary Rights that are licensed by the Sellers from
third parties are licensed pursuant to valid and existing license agreements and
such interests are not subject to
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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 Rights and will not conflict with, constitute a
breach, violation or termination of, any agreement or understanding, whether
written or otherwise, relating to any Proprietary Rights necessary for the
conduct of the Business as currently conducted.
2.5 Contracts and Commitments.
(a) None of the Transferred Assets is subject to, and, except for the
Retained Liabilities, neither of the Sellers is a party to or bound by (in each
case, pertaining to the Business):
(i) any agreement, contract or commitment requiring the expenditure
or series of related expenditures of funds in excess of $25,000 (other
than purchase orders in the ordinary course of business for goods
necessary for the Partnership to complete then existing contracts or
purchase orders);
(ii) 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;
(iii) any Debt Obligations;
(iv) any management service, employment, consulting or other similar
type contract or agreement;
(v) any sales, distributorship or similar agreement relating to the
products sold or services provided by the Partnership;
(vi) any license, royalty or similar agreement; or
(vii) any agreement, contract or commitment relating to the sale,
design, manufacture or provision of products or services containing covenants
purporting to limit the line of business or geographic area in which the
Business may be conducted.
(b) The Sellers are not in breach of any provision of, or in default
(nor do the Sellers have 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 Contracts and Other Agreements that constitute a part of
the Transferred Assets, except for breaches or defaults that would not have a
Material Adverse Effect. All of the Contracts and Other Agreements are in full
force and effect. The Sellers are not aware of any pending or threatened
disputes with respect to any of the Contracts and Other Agreements.
12
(c) The enforceability of the Contracts and Other Agreements will not be
affected in any manner by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
2.6 No Litigation. There is no action, suit, claim, investigation or legal,
administrative, arbitration or other proceeding, or governmental investigation
or examination, or any change in any zoning or building ordinance pending or, to
the knowledge of the Sellers, threatened against or affecting the Business or
any of the Transferred Assets, at law or in equity, before or by any
Governmental Entity or that would challenge or have the effect of preventing or
delaying the transactions contemplated by this Agreement.
2.7 No Adverse Changes or Events. Since December 31, 1996, the Business has
been consistently operated only in the ordinary course, and there has not been:
(a) any adverse change in the financial condition, assets, liabilities
(contingent or otherwise) or results of operations of the Business except for
such changes that in the aggregate have not had a Material Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially adversely affecting the Transferred Assets or the
Business;
(c) any increase in the compensation or rate of compensation or
commissions or bonuses payable or to become payable by the Partnership to any
employee of the Partnership who is employed in connection with the Business that
is not consistent with past practice, any payment or accrual of, or commitment
with respect to, any bonus plan or severance arrangement that is not consistent
with past practice or any change or modification to any severance arrangement;
(d) any sale, assignment, transfer or other disposition or lapse of any
Proprietary Rights;
(e) any sale, transfer or other disposition of any properties or assets,
real, personal or mixed, tangible or intangible, material to the Business (other
than sales of Inventory in the ordinary course of business); or
(f) any change in the Sellers' method of accounting for financial, Tax
or other purposes.
2.8 Environmental Matters. The sole representations of the Sellers with
respect to environmental matters are set forth in this Section 2.8. To the
extent representations in other sections of this Agreement also could apply to
environmental matters, including, but not limited to, matters related to,
arising under or concerning Environmental Laws, such representations shall be
construed to exclude all environmental matters and to apply to matters other
than environmental matters.
(a) Except as would not have a Material Adverse Effect, neither of the
Sellers nor, to the knowledge of the Sellers, any prior owner or operator of the
Business
13
or the Transferred Assets has caused or allowed the generation, use, treatment,
storage or disposal of Hazardous Materials at any site or facility owned, leased
or operated by the Sellers and used in the Business except in accordance with
all applicable Environmental Laws.
(b) Except as would not have a Material Adverse Effect, the Sellers do
not own or lease any real property, improvements or related assets that form a
part of the Transferred Assets or the Business from or upon which there have
been any disposals or releases of Hazardous Materials.
(c) Except as would not have a Material Adverse Effect, the Sellers have
secured all Environmental Permits necessary to the conduct of the Business and
the Sellers are in compliance with such permits.
(d) To the knowledge of the Sellers, there are no proceedings, claims or
lawsuits related to or arising under any Environmental Law and related to the
Business or the Transferred Assets.
(e) The Sellers are not currently operating or required to be operating
the Business 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.
(f) The Sellers have made available, or will make available, to the
Buyer true and complete copies of any environmental reports, surveys, studies or
audits of the Real Property and Leasehold Interests in the possession of the
Sellers.
2.9 Condition of Assets. Except as expressly provided herein, the Inventory,
personal property and Equipment included in the Transferred Assets are being
sold, transferred and conveyed on an "AS IS, WHERE IS" condition, and the
Sellers make NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THEIR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR AS TO THEIR CONDITION.
2.10 Warranties and Product Liability. Except for (i) warranties implied by
law and (ii) warranties disclosed in Section 2.10 of the Disclosure Schedule,
the Partnership has not given or made any warranties in connection with the sale
or rental of goods or services pertaining to the Business on or prior to the
Closing Date, including, without limitation, warranties covering the customer's
consequential damages.
2.11 Finder's Fees. Except for fees payable by the Sellers to Xxxxxxx Xxxxx
& Co. and Xxxxxxx & Company International, neither the Sellers nor any Affiliate
of the Sellers 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 Sellers 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
14
party hereto may be obligated to pay such a fee or commission. The Sellers 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 to any Person on the basis of any act, statement, agreement
or commitment alleged to have been made by the Sellers or any Affiliate of the
Sellers with respect to any such fee, commission or expense.
2.12 Taxes. Except in each case where the failure to do any such thing would
not have a Material Adverse Effect, the Sellers have filed all federal, state,
local and foreign Tax and information returns applicable to the Business
required to be filed, have paid all Taxes applicable to the Business required to
be paid in respect of all periods for which returns have been filed, have
established an adequate accrual or reserve for the payment of all Taxes
applicable to the Business payable in respect of the period subsequent to the
periods covered by the most recent applicable Tax returns, have made all
necessary estimated Tax payments and have no liability for Taxes applicable to
the Business in excess of the amount so paid or accruals or reserves so
established in the applicable financial statements of the Sellers. The Sellers
are not delinquent in the payment of any Tax or in the filing of any Tax returns
applicable to the Business, and no deficiencies for any Tax applicable to the
Business have been claimed or assessed or, to the knowledge of the Sellers,
threatened or proposed, that have not been settled or paid. To the Sellers'
knowledge, no Tax returns of the Sellers applicable to the Business are
currently being audited.
2.13 Compliance with Laws. To the knowledge of the Sellers, the Sellers have
complied in all material respects with all applicable laws, ordinances and
regulations and all orders, writs, injunctions, awards, judgments and decrees,
applicable to the Business the violation of which would have Material Adverse
Effect, including, without limitation: (a) applicable federal, state and local
laws, ordinances and regulations, and all orders, writs, injunctions, awards,
judgments and decrees, pertaining to (i) the sale, licensing, leasing, ownership
or management of the Sellers' owned, leased or licensed real or personal
property, products and technical data that constitute Transferred Assets, (ii)
employment and employment practices, terms and conditions of employment, and
wages and hours relating to the Business, and (iii) safety, health, fire
prevention, building standards and zoning relating to the Transferred Assets or
the Business, (b) the Export Administration Act and regulations promulgated
thereunder and all other laws, regulations, orders, writs, injunctions,
judgments and decrees applicable to the export or re-export of controlled
commodities or technical data controlled under the Export Administration Act
insofar as such Act would pertain to the Business, (c) the Immigration Reform
and Control Act and (d) the Foreign Corrupt Practices Act.
2.14 Employees.
(a) Section 2.14(a) of the Disclosure Schedule sets forth as of the
date of this Agreement a list of all employment contracts and material
consulting agreements currently in effect between the Sellers and any employee
who is primarily engaged in the Business that is not terminable at will,
including agreements with the sole purpose of providing for the confidentiality
of proprietary information or assignment of inventions.
15
(b) The Sellers (i) to their knowledge, have not within the past five
years and are not now subject to a union organizing effort regarding the
Business, (ii) are not subject to any collective bargaining agreement with
respect to any of their employees engaged in the Business, (iii) are not subject
to any other contract, written or oral, with any trade or labor union,
employees' association or similar organization regarding the Business and (iv)
are not engaged in any material labor dispute regarding the Business.
(c) Section 2.14(c) of the Disclosure Schedule sets forth a list of all
pension, retirement, disability, medical, dental or other health plans, life
insurance or other death benefit plans, profit sharing, deferred compensation
agreements, stock, option, bonus or other incentive plans, vacation, sick,
holiday or other paid leave plans, severance plans or other similar employee
benefits plans maintained by the Sellers for employees engaged in the Business,
including, without limitation, all "employee benefit plans" as defined in
Section 3(3) of ERISA.
(d) Section 2.14(d) of the Disclosure Schedule sets forth as of the
date of this Agreement a list of all employees engaged in the Business. Section
2.14(d) of the Disclosure Schedule also sets forth the following information
with regarding to each such employee: (i) rate of compensation, (ii) most recent
bonus schedule and (iii) all other forms of compensation (including commissions)
paid to such employees in the past 12 months.
(e) Except as accrued on the Balance Sheet, the Sellers have paid all
amounts that as of December 31, 1996 were due and payable to or on account of
the employees engaged in the Business (including, without limitation, wages,
overtime pay, salaries, bonuses, commissions, vacation pay, sick pay and holiday
pay).
2.15 Insurance. All policies of insurance in force relating to the Business
or the Transferred Assets are described in Section 2.15 of the Disclosure
Schedule.
2.16 Financial Statements. The unaudited balance sheets and the unaudited
statements of income at and for the years ended December 31, 1996 and 1995 (the
"Annual Financial Statements") and the unaudited balance sheet and the unaudited
statement of income of the Business at and for the eight month period ended
August 31, 1997 (the "Stub-Period Financial Statements" and, together with the
Annual Financial Statements, the "Financial Statements") set forth in Section
2.16 of the Disclosure Schedule were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered by the Financial Statements, except for the exclusion of notes
thereto. The carrying values of the assets and liabilities stated in the
Financial Statements have been incorporated into the corresponding consolidated
financial statements of Xxxxxxxxxxx Enterra, Inc. and its subsidiaries, which
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered by the Financial
Statements, except, in the case of the Stub-Period Financial Statements, for the
exclusion of notes thereto. The Balance Sheet and the Closing Balance Sheet were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered thereby, except for the
exclusion of
16
notes thereto and the exclusion of certain accounts on the Closing Balance
Sheet. The Closing Balance Sheet has not been rendered untrue as representations
of the financial condition of the Business at August 31, 1997 by events
subsequent to such date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers as follows:
3.1 Corporate Matters. The Buyer is a limited liability company duly
incorporated, validly existing and in good standing under the laws of the State
of Louisiana. The Buyer has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations under this Agreement. This
Agreement, and all transactions contemplated hereby, have been duly authorized
and approved by all necessary corporate action on the part of the Buyer. No
further corporate action is necessary on the part of the Buyer to execute and
deliver this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Buyer and is a legal,
valid and binding obligation of the Buyer, enforceable against it 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,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, and the compliance with the provisions hereof,
by the Buyer will not violate any provision of, or constitute a default under,
any contract or other agreement to which the Buyer is a party or by which it is
bound, or conflict with its Articles of Organization and Operating Agreement,
other than violations, defaults or conflicts that would not materially and
adversely affect the ability of the Buyer to consummate the transactions
provided for in this Agreement.
3.2 Approvals 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 future will be, necessary on behalf
of the Buyer to authorize its execution, delivery and performance of this
Agreement or any other agreement contemplated hereby to be executed and
delivered by the Buyer 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.
3.3 Finder's Fees. Except for fees payable by the Buyer to IP Capital
Corporation, neither the Buyer nor any Affiliate of the Buyer 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
17
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 agrees to
indemnify and hold the Sellers 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.
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Delivery of Corporate Documents; Record Retention.
(a) The Sellers shall deliver to the Buyer all Documents and Other
Papers relating to the Transferred Assets, the Assumed Liabilities and the
current and proposed operations of the Business. The Sellers shall deliver to
the Buyer the historical books and records in the possession of the Sellers and
their Affiliates relating to the Business for the five year period ending on the
Closing Date.
(b) In the event and for so long as any party is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand asserted by a third party (including any Governmental
Entity) in connection with (i) any transaction contemplated by this Agreement or
(ii) any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act or transaction on or
prior to the Closing Date involving the Business or the Transferred Assets, each
of the other parties will to the extent reasonably practicable cooperate with
the contesting or defending party and its counsel in the contest or defense, and
provide such testimony and access to its books and records as shall be necessary
in connection with the contest or defense, all at the sole cost and expense of
the contesting or defending party (except to the extent the contesting or
defending party is entitled to indemnification therefor under Article 7 hereof);
provided, however, that nothing herein requires any party to retain any books
and records other than in the ordinary course of business; provided further, any
party hereto, before destroying any historical books and records that relate in
whole or in part to the Business or the Transferred Assets, shall give each such
other party reasonable notice of its intention to destroy such books and records
and an opportunity to make copies thereof at the sole expense of the party
destroying such copies. In addition, the Buyer agrees to provide the Sellers and
any Affiliate of the Sellers with reasonable access to any Documents and Other
Papers and any books and records delivered to the Buyer by the Sellers pursuant
to Section 4.1(a) hereof, as may be necessary for the preparation of any Tax
returns or financial statements or as may be necessary for any other legitimate
business purpose. Notwithstanding the foregoing, information as to which the
contesting or defending party may reasonably assert would waive a privilege need
not be disclosed.
18
4.2 Further Assurances. The Sellers 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
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.
4.3 Employee Matters.
(a) The Buyer agrees to offer employment to all of the employees (other
than the Excluded Employees) of the Partnership or Affiliates of the Partnership
who are engaged in the Business. The Buyer shall not offer employment to the
employees set forth on the list provided by the Buyer to the Sellers on
September 3, 1997 (the "Excluded Employees"), and shall not be responsible for
any severance benefits or other liabilities in respect of the Excluded
Employees. Any employees of the Partnership or Affiliates of the Partnership who
are engaged in the Business that the Buyer or one of its Affiliates in fact
employs immediately after the Closing Date shall hereinafter be referred to as
the "Transferred Employees". Any employees (other than Non-Offered Employees) of
the Partnership or Affiliates of the Partnership who are engaged in the Business
who are not employed by the Buyer or one of its Affiliates immediately after the
Closing Date shall hereinafter be referred to as the "Terminated Employees". 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 or its Affiliates' normal
policies, service with the Partnership or an Affiliate of the Partnership shall
be considered by the Buyer and its Affiliates as service with the Buyer and its
Affiliates. The term "Non-Offered Employee", as used in this Section 4.3, means
any employee (other than an Excluded Employee) of the Partnership or an
Affiliate of the Partnership who is engaged in the Business who was not offered
employment with the Buyer or one or more of its Affiliates.
(b) Any employee of the Partnership or an Affiliate of the Partnership
who is engaged in the Business and who on the Closing Date is on short-term
disability, long-term disability or worker's compensation shall remain on the
payroll or the responsibility of the Partnership until such employee ceases to
be on short-term disability, long-term disability or worker's compensation. At
the time that such employee ceases to be on short-term disability, long-term
disability or worker's compensation, such employee shall become for all purposes
a Transferred Employee.
(c) The Partnership shall be responsible for the severance obligations,
if any, with respect to the Terminated Employees. The Buyer agrees that if the
employment of any of the Transferred Employees with the Buyer or its Affiliates
is terminated by the Buyer within six months following the Closing Date other
than for cause, the Buyer will provide to such terminated Transferred Employee
the severance that such Transferred Employee would have received had the
Transferred Employee
19
been entitled to receive severance from the Partnership or any of its Affiliates
in accordance with the severance policy (including, as applicable, the
Xxxxxxxxxxx Enterra Special Severance Payment Plan) of the Sellers previously
provided to the Buyer, without giving effect to any provisions that eliminate
the severance payment obligations as a result of a purchaser of the Business
offering the Transferred Employee employment.
(d) The Buyer agrees to reimburse the Sellers for the severance payments
due any Non-Offered Employees that are made in accordance with the Sellers'
existing severance policy (including, as applicable, the Xxxxxxxxxxx Enterra
Special Severance Payment Plan) and for any medical or other obligations under
the Consolidated Omnibus Budget Reconciliation Act (COBRA) and other similar
obligations arising from the terminated employment of the Non-Offered Employees.
(e) In determining eligibility for and the amount of severance benefits
the Transferred Employees may become entitled to upon termination of employment
with the Buyer or one of its Affiliates after the Closing Date under the normal
severance policies of the Buyer (or other Affiliate of the Buyer that employees
the Transferred Employees), service with the Partnership or an Affiliate of the
Partnership shall be considered as service with the Buyer and its Affiliates.
(f) The Buyer agrees to provide to all Transferred Employees the
opportunity to participate in group health and other benefit plans maintained by
it for similarly situated employees. The Buyer agrees to waive any pre-existing
condition limitation for all Transferred Employees under the group health plan
maintained by it or its Affiliates.
(g) The Buyer shall be fully responsible for all liabilities related to
the termination by the Buyer of the employment of any of the Transferred
Employees within 90 days after the Closing Date or such other period that would
expose the Partnership to liabilities under the WARN Act as a result of the
premature termination by the Buyer of the employment of any of the Transferred
Employees.
4.4 Use of Corporate Names. All uses of the corporate names set forth in
Section 1.1(a)(vi) of the Disclosure Schedule, or any derivations thereof, are
being transferred to the Buyer hereunder as part of the Transferred Assets. The
Sellers agree that they will not take any action that could reasonably be
expected to adversely affect the Buyer's right to the use of such names or cause
confusion with respect to the Buyer's use of the such names. All goodwill with
respect to the use of the names will inure to the benefit of the Buyer, and the
Sellers will not have any rights to xxx or recover against any person with
respect to the use of such names.
4.5 Repurchase of Uncollected Accounts Receivable. The Buyer shall use its
best efforts to collect in full, consistent with the past practices of the
Business, all Accounts Receivable. If the Accounts Receivable outstanding at
the Closing shall not have been fully collected within 150 days following the
Closing Date in an amount equal to the outstanding unpaid amounts thereof at the
Closing, the Buyer may, from time to time, require the Sellers to purchase any
Accounts Receivable that have not been so
20
fully collected at a purchase price equal to the original outstanding amount of
such Accounts Receivable at the Closing less net collections thereon from the
Closing Date to the repurchase date; provided, however, that the Sellers shall
be required to repurchase such unpaid Accounts Receivable only to the extent
that the aggregate amount of such unpaid Accounts Receivable exceeds the
allowance for doubtful accounts deducted from accounts receivable set forth on
the Final Balance Sheet, and if such an excess exists, the Sellers shall only be
required to pay an amount for such unpaid Accounts Receivable equal to such
excess; provided, further, that the Buyer may not settle or compromise any
Accounts Receivable without the prior written consent of the Sellers. As a
condition to any such repurchase, the Buyer shall reconvey to the Sellers the
unpaid Accounts Receivable to be repurchased and shall provide the Sellers with
sufficient detail regarding such Accounts Receivable. The Buyer shall represent
and warrant that the Buyer has not transferred or conveyed such Accounts
Receivable to any other Person and that such Accounts Receivable are free and
clear of any Liens created by the Buyer (other than Liens in favor of the
Buyer's senior lender). Payment for the repurchase of any Accounts Receivable
shall be made within ten days following the transfer thereof to the Sellers. The
Buyer shall provide to the Sellers any documents or information reasonably
requested by the Sellers in connection with the Sellers' collection of any
Accounts Receivable repurchased from the Buyer.
4.6 Nondisclosure of Proprietary Information.
(a) The Sellers agree that, from and after the Closing Date, the Sellers
and their respective Affiliates shall 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 or utilize any of
the Proprietary Information for any purpose; provided, however, that this
restriction shall not apply to any Proprietary Information that (i) becomes
generally available to the public through no fault of the Sellers or (ii) the
Sellers are required by applicable law to disclose.
(b) The Sellers acknowledge that all documents and objects containing
or reflecting any Proprietary Information, whether developed by the Sellers or
by someone else for the Sellers or any of their respective Affiliates, will
after the Closing Date become the exclusive property of the Buyer and be
delivered to the Buyer.
4.7 Covenant Not to Compete.
(a) As an inducement to the Buyer to acquire the Business, each Seller
agrees that, effective as of the Closing Date and for a period of three years
(or, in Louisiana, two years) thereafter, it and its Affiliates shall not,
without the consent of the Buyer, directly or indirectly, engage in the
manufacture and service of pedestal-mounted, hydraulic cranes, or supply parts
and services in connection therewith, in any geographic area in Louisiana, the
Gulf Coast region, offshore of the Xxxx Xxxxx xxxxxx, Xxxxxxx, Xxxxxxxx or
Singapore in which the Sellers were conducting the Business as of the Closing
Date, provided, however, that, notwithstanding the foregoing, the Sellers and
their Affiliates shall not be prohibited from servicing pedestal-mounted,
hydraulic cranes owned by them, or supplying parts in connection therewith. Each
Seller acknowledges that this covenant not to compete is being
21
provided as an inducement to the Buyer to acquire the Business and the
Transferred Assets and that this Section 4.7 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 4.7 shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Section 4.7 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 4.7. If any provision of
this Section 4.7 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 4.7 but shall be confined in
its operation to the provision of this Section 4.7 directly involved in the
controversy in which such judgment shall have been rendered. In the event that
the provisions of this Section 4.7 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. The foregoing provisions of this Section 4.7 shall not prevent
the Sellers or any of their respective Affiliates from making any acquisition
(whether by way of assets, stock or otherwise) of, or retain any interest in, or
any investment in, in either case, whether directly or indirectly, any business,
entity or affiliated group of entities that on a consolidated basis during the
most recent fiscal quarter derived 25% or less of its gross revenues from the
manufacture and service of pedestal-mounted, hydraulic cranes so long as such
acquisition is pursuant to an agreement entered into on or after one year from
the Closing Date. The foregoing provisions shall also not prohibit any Person
who may in the future acquire 50% or more of the outstanding capital stock of
either Seller (or any successor thereto) from engaging in the manufacture and
service of pedestal-mounted, hydraulic cranes as long as such acquiring Person
was engaged in the manufacture and service of pedestal-mounted, hydraulic cranes
prior to such acquisition.
(b) The Sellers agree that, from and after the Closing Date, the Sellers
and their respective Affiliates shall not for a period of one year solicit any
Transferred Employees.
4.8 Warranty Obligations. Except with respect to the Buyer's agreement (set
forth below) to satisfy Warranty Obligations, subject to reimbursement by the
Sellers, the Buyer shall not assume, and the Sellers shall remain solely liable
for, all liabilities and obligations of the Sellers for Warranty Obligations,
except to the extent that the Buyer's failure after the Closing to properly
store and maintain the Inventories or the Buyer's gross negligence or willful
misconduct gives rise to the liability or obligation. From and after the
Closing, the Buyer shall have the exclusive responsibility of satisfying
Warranty Obligations on the Sellers' behalf; provided, however, that for any
Warranty Obligation that the Buyer reasonably believes will create a cost to the
Sellers of more than $5,000, or $50,000 when aggregated with other Warranty
Obligations, the Buyer shall give the Sellers not less than seven days notice
(unless a shorter period is required because of the customer's reasonable needs)
prior to beginning such warranty work, during which time period the Sellers may
object in good faith to such warranty work as not being a Warranty Obligation.
The Sellers shall pay the Buyer, within 30
22
days of being invoiced therefor, an amount equal to 85% of the Buyer's current
published list price (or, if there is no published list price, 110% of the
Buyer's current standard cost, or, if the Buyer has no current standard cost,
110% of the Buyer's actual out-of-pocket costs) for products used to satisfy
Warranty Obligations and, in the case of warranty service, 110% of the Buyer's
current standard cost (or, if the Buyer has no current standard cost, 110% of
the Buyer's actual out-of-pocket costs) for such work, including salaries and
benefits of employees actually performing the work and the amount of any
refunds. The Sellers shall have the right to review the calculation of any
actual out-of-pocket costs. The Buyer shall provide to the Sellers any documents
or information reasonably requested by the Sellers in connection with the
satisfaction of Warranty Obligations by the Buyer. For purposes of this Section
4.8, "Warranty Obligations" shall mean warranties given or made by the Sellers
on or prior to the Closing Date with respect to the manufacture, sale or rental
of products or the performance of services in the conduct of the Business to the
extent such manufacture or sale of products has been invoiced, or such rental
products or performance of services has been rendered, on or prior to the
Closing Date.
ARTICLE 5
BUYER'S CONDITIONS
The obligation of the Buyer to purchase the Transferred Assets and to
assume the Assumed Liabilities as contemplated hereby is, at the option of the
Buyer, 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 in writing;
provided, however, the Buyer's 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 existing on the Closing Date, and
such action shall not prejudice the Buyer's right to recover damages for any
such breach.
5.1 Good Standing. The Sellers shall have delivered to the Buyer
certificates issued by the Secretary of State of the State of Louisiana and the
Secretary of the State of the State of Delaware evidencing the good standing of
the Partnership and Weatherford U.S., respectively, in each case as of a date
not more than five calendar days prior to the Closing Date.
5.2 Instruments of Transfer. The Sellers shall have executed, acknowledged
and delivered to the Buyer such bills of sale, assignments (including but not
limited to assignments of the leases) and other instruments of transfer,
assignment and conveyance, in form and substance mutually agreeable, as shall be
necessary to vest in the Buyer all the right, title and interest in and to the
Transferred Assets.
5.3 No Litigation. No preliminary or permanent injunction or other order of
any 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
23
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 the Business or asserting that the sale of all or a
portion of the Transferred Assets or the Business would be unlawful.
5.4 Licenses, Consents and Approvals. 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.
5.5 Consents of Third Persons. A copy of those consents from Third Persons
that are listed in Section 2.3(a) of the Disclosure Schedule and that have been
received by the Sellers shall have been delivered to the Buyer.
5.6 Resolutions. The Buyer shall have received certified copies of
resolutions of the Board of Directors of Weatherford U.S. approving this
Agreement and the transactions contemplated hereby.
5.7 Opinions of Counsel to the Sellers. The Buyer shall have received
written opinions dated the Closing Date from counsel to the Sellers, in form and
substance reasonably satisfactory to the Buyer and its counsel.
5.8 Foreign Sales Offices. The Buyer and the Sellers or their Affiliates
shall have executed agreements relating to the Sellers' foreign sales offices
substantially in the forms of Exhibit 5.8(a), Exhibit 5.8(b) and Exhibit 5.8(c)
attached hereto.
5.9 Xxxxxxx Road Lease. The Buyer and the Sellers or their Affiliates shall
have executed and delivered a lease agreement relating to the Xxxxxxx Road
facility substantially in the form of Exhibit 5.9 attached hereto.
5.10 Documents with the Buyer's Senior Lender. The Buyer, the Sellers and
the Buyer's senior lender shall have negotiated and executed a mortgage and
security agreement and standstill and subordination agreements securing the
Promissory Note, on terms and conditions acceptable to the Buyer and its senior
lender.
ARTICLE 6
SELLERS' CONDITIONS
The obligation of the Sellers to transfer the Transferred Assets as
contemplated hereby is, at the option of the Sellers, 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 in writing; provided, however, the
Sellers' election to proceed with the closing of the transactions contemplated
hereby shall not be deemed a waiver of any breach of any representation,
warranty or covenant herein, whether or not known to the Sellers or existing on
the Closing Date, and such action shall not prejudice the Sellers' right to
recover damages for any breach.
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6.1 Good Standing. The Buyer shall have delivered to the Sellers a
certificate issued by the Secretary of State of the State of Louisiana
evidencing the good standing of the Buyer as of a date not more than five
calendar days prior to the Closing Date.
6.2 Receipt of the Transferred Assets. The Buyer shall have paid the
Closing Cash Payment and the Buyer shall have duly executed and delivered to the
Sellers an instrument acknowledging receipt of the Transferred Assets and
assumption of the Assumed Liabilities in form and substance mutually agreeable.
6.3 Licenses, Consents and Approvals. The Buyer shall have delivered to
the Sellers 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.
6.4 No Litigation. No preliminary or permanent injunction or other order
of any 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 Sellers or any of the Affiliates of the
Sellers 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.
6.5 Resolutions. The Sellers shall have received certified copies of
resolutions of the Board of Directors of the Buyer approving this Agreement and
the transactions contemplated hereby.
6.6 Opinion of Counsel to the Buyer. The Sellers shall have received a
written opinion dated the Closing Date from counsel to the Buyer, in form and
substance reasonably satisfactory to the Sellers and their counsel.
6.7 Foreign Sales Offices. The Buyer and the Sellers or their Affiliates
shall have executed agreements relating to the Sellers' foreign sales offices
substantially in the forms of Exhibit 5.8(a), Exhibit 5.8(b) and Exhibit 5.8(c)
attached hereto.
6.8 Xxxxxxx Road Lease. The Buyer and the Sellers or their Affiliates
shall have executed and delivered a lease agreement relating to the Xxxxxxx Road
facility substantially in the form of Exhibit 5.9 attached hereto.
6.9 Documents with the Buyer's Senior Lender. The Buyer, the Sellers and
the Buyer's senior lender shall have negotiated and executed a mortgage and
security agreement and standstill and subordination agreements securing the
Promissory Note, on terms and conditions acceptable to the Sellers.
6.10 The Buyer's Note. The Buyer shall have executed and delivered to
the Sellers a promissory note (the "Promissory Note") substantially in the form
of Exhibit 6.10 attached hereto.
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ARTICLE 7
IDENTIFICATION
7.1 Indemnification by the Sellers. Except as otherwise limited by this
Article 7 and by Article 8 hereof, the Sellers agree, jointly and severally, to
indemnify, defend and hold the Buyer and each of its 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 the Sellers in this Agreement; or
(b) any Retained Liability.
Notwithstanding the foregoing, the Sellers shall not be liable under clause (a)
of this Section 7.1 in respect to a misrepresentation or breach of warranty
unless and until the aggregate amount of any Buyer Losses for which the Buyer is
entitled to indemnification pursuant to such clause from all such Persons
exceeds $250,000 and then only for those Buyer Losses that in the aggregate
exceed $250,000; provided, however, (i) liability under clause (b) of this
Section 7.1 shall not be so limited and (ii) liability under clause (a) of this
Section 7.1 shall not exceed $1,400,000 except for Retained Liabilities, which
shall not be limited. Notwithstanding the foregoing, the Sellers shall not be
liable under this Section 7.1 or otherwise in respect to any alleged deficiency
in, or inadequacy or absence of, any Identified Reserve in any of the Financial
Statements, the Balance Sheet, the Closing Balance Sheet or the Final Balance
Sheet.
7.2 Indemnification by the Buyer. Except as otherwise limited by this
Article 7 and by Article 8 hereof, the Buyer agrees to indemnify, defend and
hold the Sellers and each of their officers, directors, employees, agents,
stockholders and controlling Persons and their 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:
(a) any misrepresentation, breach of warranty or breach of any
covenant or agreement made or undertaken by the Buyer in this Agreement; or
(b) any Assumed Liability.
7.3 Procedure. All claims for indemnification under this Article 7
shall be asserted and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor notice of
any matter that an Indemnitee has determined has given or could give rise to a
right of
26
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 7 with respect to Losses arising from claims of any third party that are
subject to the indemnification provided for in this Article 7 ("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.
(c) With respect to any Buyer Loss for which the Sellers are
required to indemnify and defend the Buyer pursuant to the terms of this
Agreement and that relates to environmental matters and requires any removal,
remedial, response, clean-up or other corrective action ("Remedial Action") to
address conditions that cause, contribute to or are associated with such Buyer
Loss, the Sellers may elect to implement and complete such Remedial Action,
which Remedial Action shall not be required to achieve cleanup standards that
are more stringent than those required under Environmental Laws existing as of
the Closing Date. The Sellers shall endeavor to plan, design, implement and
perform such Remedial Action without undue delay and in a manner consistent with
the operations and requirements of the Business. The Sellers shall provide the
Buyer with copies of all reports, plans and correspondence submitted to any
Governmental Entity with respect to such Remedial Action.
7.4 Limitation. No claim for indemnification under this Article 7 may be
asserted subsequent to the Survival Period; provided, however, that any claim
for indemnification under this Article 7 made during the Survival Period shall
be valid notwithstanding that the claim may not be resolved within the Survival
Period.
27
7.5 Payment. Payment of any amounts due pursuant to this Article 7 shall
be made within ten Business Days after notice is sent by the Indemnitee.
7.6 Failure to Pay Indemnification. If and to the extent the Indemnitee
shall make written demand upon the Indemnitor for indemnification pursuant to
this Article 7 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 rights
against the Indemnitor for indemnity, the remedies herein being cumulative and
in addition to all other rights and remedies of the Indemnitee.
7.7 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 7 shall be net of any insurance recovery by the Indemnitee on
account of such Losses from an unaffiliated party.
7.8 Release. In consideration for the agreement of the Sellers to
indemnify and defend the Buyer in the manner provided in this Agreement, the
Buyer hereby releases, acquits and forever discharges the Sellers from any
claim, demand or cause of action the Buyer may have against the Sellers,
including, but not limited to, any right of contribution or reimbursement
provided under any Environmental Law.
7.9 Express Negligence. THE FOREGOING INDEMNITIES SET FORTH IN THIS
ARTICLE 7 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 DEFAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.
ARTICLE 8
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
The several representations and warranties of the parties to this
Agreement shall survive the Closing Date and shall remain in full force and
effect for a period of (a) three years following the Closing Date, for the
representations and warranties set forth in Section 2.12 hereof, and (b) two
years following the Closing Date, for all other representations and warranties
(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 7
hereof may be made thereon) if a written notice asserting the claim shall have
been
28
duly given in accordance with Article 7 within the Survival Period with respect
to such matter. All covenants and agreements contained herein shall survive
without limitation. 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 that
such claim may not be resolved within the Survival Period.
ARTICLE 9
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 the Disclosure
Schedule:
9.1 "Accounts Receivable" shall have the meaning given such term in
Section 1.1(a)(iii) hereof.
9.2 "Accrued Liabilities" shall mean the "accrued liabilities" of the
Sellers to the extent accrued and reflected on the financial statements of the
Business, excluding intercompany liabilities, Taxes and accrued Taxes.
9.3 "Adjusted Principal Amount" shall mean the amount determined in
accordance with Section 1.5(c) hereof.
9.4 "Affiliate" shall mean, with respect to any Person, an individual or
entity that directly or indirectly, controls, is controlled by or is under
common control with such Person.
9.5 "Agreement" shall mean this Asset Purchase Agreement among the
Sellers and the Buyer, as amended from time to time by such parties.
9.6 "Annual Financial Statements" shall have the meaning given such term
in Section 2.16 hereof.
9.7 "Assumed Liabilities" shall have the meaning given such term in
Section 1.4(a) hereof.
9.8 "Balance Sheet" shall mean the unaudited balance sheet as of
December 31, 1996, prepared by the Sellers, set forth in Section 9.8 of the
Disclosure Schedule.
9.9 "Book Value" shall mean the dollar amount, as reflected on the
Closing Balance Sheet or the Final Balance Sheet, as the case may be, by which
(a) the total value of the Transferred Assets exceeds (b) the total value of the
Trade Payables and Accrued Liabilities.
29
9.10 "Business" shall mean the businesses and operations of American
Aero Cranes, a division of the Partnership that manufactures for sale or rental
pedestal-mounted, hydraulic cranes and provides parts and services in connection
therewith; provided, however, that "Business" shall not include the real estate,
facility and improvements located at 00000 Xxxxxxx Xxxx (XX 000), Xxxxxxx,
Xxxxx, other than the Real Property set forth in Section 1.1(a)(iv) of the
Disclosure Schedule and the improvements thereon.
9.11 "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.
9.12 "Buyer" shall have the meaning specified in the preamble.
9.13 "Buyer Losses" shall have the meaning given such term in Section
7.1 hereof.
9.14 "Cash Purchase Price" shall mean the amount determined in
accordance with Section 1.5(b) hereof.
9.15 "CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. (S)9601 et seq.
9.16 "Closing" shall mean the closing of the transactions contemplated
by this Agreement.
9.17 "Closing Accounts Payable Difference" shall have the meaning given
such term in Section 1.4(c)(iii) hereof.
9.18 "Closing Balance Sheet" shall mean the unaudited balance sheet of
the Business dated as of August 31, 1997, prepared by the Sellers, reflecting
the Transferred Assets and the Assumed Liabilities, set forth in Section 9.18 of
the Disclosure Schedule.
9.19 "Closing Cash Payment" shall have the meaning given such term in
Section 1.4(b) hereof.
9.20 "Closing Date" shall have the meaning given such term in Section
1.3 hereof.
9.21 "Closing Inventories Increase" shall have the meaning given such
term in Section 1.4(c)(ii) hereof.
9.22 "Closing Purchase Price" shall mean $6,500,000 (i) plus, if
applicable, the amount by which the Book Value from the Closing Balance Sheet
exceeds $10,541,600, or (ii) minus, if applicable, the amount by which
$10,541,600 exceeds the Book Value from the Closing Balance Sheet.
30
9.23 "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.
9.24 "Contracts and Other Agreements" shall mean all contracts,
agreements, understandings, indentures, notes, bonds, loans, instruments,
leases, mortgages, franchises, licenses, commitments or binding arrangements,
whether express or implied, oral or written, relating to the Business and to
which either of the Sellers is a party or bound or to which the properties or
assets of either of the Sellers are subject.
9.25 "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)).
9.26 "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 (other than the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business) pertaining to the Business.
9.27 "Designated Amount" shall have the meaning given such term in
Section 1.5(c)(iv) hereof.
9.28 "Disclosure Schedule" shall mean the disclosure schedule delivered
to the Buyer.
9.29 "Documents and Other Papers" shall mean and include any document,
agreement, instrument, certificate, writing, notice, consent, affidavit, letter,
telegram, telex, sale brochures and other related materials, statement, file,
computer disk, microfiche or other document in electronic format, schedule,
exhibit or any other paper or record whatsoever relating to the Business.
9.30 "Entitlements" shall have the meaning given such term in Section
1.1(a)(vii) hereof.
9.31 "Environmental Laws" shall mean all federal, state, or municipal
laws, rules, regulations, statutes, ordinances or orders of any Governmental
Entity relating to (a) the control of any potential pollutant or protection of
the air, water or land, (b) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation and (c) exposure to hazardous,
toxic or other substances alleged to be harmful. "Environmental Laws" shall
include, but not be limited to, the Clean Air Act, 42 U.S.C. (S)7401 et seq.,
the Resource Conservation Recovery Act, 42 X.X.X (X)0000 et seq., the Superfund
Amendments and Xxxxxxxxxxxxxxx Xxx, 00 X.X.X. (X)00000, et seq., the Toxic
Substances Control Act, 15 U.S.C. (S)2601 et seq., the Water Pollution Control
Act, 33 U.S.C. (S)1251 et seq., the Safe Drinking Water Act, 42 U.S.C. (S)300f
et seq. and CERCLA. The term "Environmental Laws" shall also include all state,
local and
31
municipal laws, rules, regulations, statutes, ordinances and orders dealing with
the same subject matter or promulgated by any governmental or quasi-governmental
agency thereunder or to carry out the purposes of any federal, state, local and
municipal law. "Environmental Laws" does not include the Occupational Safety and
Health Act or any other federal, state or local law, statute, ordinance,
regulation or order governing worker safety or workplace conditions.
9.32 "Environmental Permit" shall mean any permit, license, approval,
registration, identification number or other authorization with respect to the
Transferred Assets or the Business under any Applicable Environmental Law.
9.33 "Equipment" shall mean all machinery, transportation equipment,
tools, equipment, vehicles, furnishings and fixtures owned or leased by the
Sellers, or subject to a contract of purchase and sale, or lease commitment,
that are used in the Business as operated by the Partnership.
9.34 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
9.35 "Excluded Assets" shall have the meaning given such term in
Section 1.2 hereof.
9.36 "Excluded Employees" shall have the meaning given such term in
Section 4.3 hereof.
9.37 "Final Accounts Payable Difference" shall have the meaning given
such term in Section 1.5(c)(iii) hereof.
9.38 "Final Balance Sheet" shall mean an unaudited balance sheet of the
Business dated as of the Closing Date, prepared by the Sellers, reflecting the
Transferred Assets and Assumed Liabilities, prepared on a basis consistent with
the Closing Balance Sheet and used to prepare the Final Statement.
9.39 "Final Cash Payment" shall have the meaning given such term in
Section 1.5(d) hereof.
9.40 "Final Inventories Increase" shall have the meaning given such term
in Section 1.5(c)(ii) hereof.
9.41 "Final Statement" shall have the meaning given such term in Section
1.5(a) hereof.
9.42 "Financial Statements" shall have the meaning given such term in
Section 2.16 hereof.
9.43 "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
32
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
9.44 "Hazardous Materials" shall mean any (a) petroleum or petroleum
products, (b) hazardous substances as defined by (S) 101(14) of CERCLA and (c)
any other chemical, substance or waste that is regulated by any Governmental
Entity under any Environmental Law.
9.45 "Identified Reserves" shall mean (i) allowance for doubtful
accounts deducted from accounts receivable (including, without limitation, any
"Allowance for Accounts Receivable" as referenced in account number 113110 on a
balance sheet), (ii) allowance for obsolete, damaged, missing, excess or
slow-moving inventories deducted from inventories (including, without
limitation, any "Raw Materials Inventory Allowance", "Work in Process Inventory
Allowance" or "Finished Goods Inventory Allowance" as referenced in account
number 116001, 116003 or 116004, respectively, on a balance sheet), (iii)
accrual for Company-provided employee medical and dental expenses, to the extent
such expenses are within the Company's deductible, (iv) accrual for expressed or
implied warranty obligations, including, when applicable, handling,
transportation and installation costs (including, without limitation, any
"Accrued Warranties" as referenced in account number 222009 on a balance
sheet), and (v) accrual for penalties related to failure to meet committed
delivery dates for crane units (including, without limitation, any "Accrued Late
Penalties" as referenced in account number 210015 on a balance sheet).
9.46 "Indemnitee" shall mean the Person or Persons indemnified or
entitled, or claiming to be entitled to be indemnified, pursuant to the
provisions of Section 7.1 or Section 7.2 hereof, as the case may be.
9.47 "Indemnitor" shall mean the Person or Persons having the
obligation to indemnify pursuant to the provisions of Section 7.1 or Section 7.2
hereof, as the case may be.
9.48 "Inventories" shall mean all inventories of finished goods,
tooling inventory, work in progress and raw materials relating to the Business,
wherever situated.
9.49 "Leasehold Interests" shall mean the interests of the Sellers as
lessees in the real property that pertains to the Business.
9.50 "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.
9.51 "Losses" shall mean Seller Losses or Buyer Losses, as the case may
be.
9.52 "Material Adverse Effect" shall mean a single event, occurrence or
fact that, together with all other events, occurrences and facts that could
reasonably be expected to result in a loss to the Business, would have, or might
reasonably be
33
expected to have, a material adverse effect on the assets, business, operations
or financial condition of the Transferred Assets or the Business, or that would
constitute a criminal violation of law involving a felony.
9.53 "Negative Adjustment Amount" shall have the meaning given such
term in Section 1.5(c)(v) hereof.
9.54 "Non-Adjusted Principal Amount" shall mean the amount determined
in accordance with Section 1.4(c) hereof.
9.55 "Non-Offered Employees" shall have the meaning given such term in
Section 4.3(a) hereof.
9.56 "Partnership" shall have the meaning specified in the preamble.
9.57 "Permitted Liens" shall mean (a) Liens securing or relating to
liabilities or obligations that are to be assumed by the Buyer pursuant to this
Agreement, (b) Liens for current taxes and assessments not yet due, (c) inchoate
mechanic and materialmen Liens for construction in progress, (d) inchoate
workmen, repairmen, warehousemen and carriers Liens arising in the ordinary
course of business or (e) Liens created by the Buyer.
9.58 "Person" shall mean a corporation, an association, a partnership,
an organization, a business, an individual or a Governmental Entity.
9.59 "Positive Adjustment Amount" shall have the meaning given such
term in Section 1.5(c)(iv) hereof.
9.60 "Pre-Closing Obligations" shall mean all obligations of the
Sellers relating to the Business (including indemnification and other contingent
obligations) regarding (i) acts, events or omissions by any Person or
circumstances existing at or prior to the Closing Date, (ii) goods or services
provided to or for the benefit of the Sellers or any of the Affiliates of the
Sellers prior to the Closing Date, (iii) goods or services provided by or on
behalf of the Sellers or any of the Affiliates of the Sellers or licensees prior
to the Closing Date, (iv) any pending or threatened litigation or claims made or
threatened prior to the Closing Date, (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 Date and (vii) Debt
Obligations.
9.61 "Promissory Note" shall have the meaning given such term in
Section 6.10 hereof.
9.62 "Proprietary Information" shall mean collectively (a) Proprietary
Rights and (b) 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 that is not
generally known to the public, that (i) relates to financial information
regarding the Business, including, without limitation, (A) business plans and
(B) sales, financing, pricing and marketing procedures or
34
methods of the Sellers or (ii) relates to specific business matters concerning
the Business, including, without limitation, the identity of or other
information regarding sales personnel or customers of the Business.
9.63 "Proprietary Rights" means all patents, inventions, shop rights,
know how, trade secrets, designs, plans, manuals, computer software,
specifications, confidentiality agreements, confidential information and other
proprietary technology and similar information; all registered and unregistered
trademarks, service marks, logos, trade and corporate names (including the names
"American Aero", "American Aero Cranes" and all derivations thereof) and all
other trademark rights; all registered and unregistered copyrights; and all
registrations for, and applications for registration of, any of the foregoing,
that are used in the conduct of the Business.
9.64 "Purchase Price" shall have the meaning given such term in
Section 1.4(a) hereof.
9.65 "Real Property" shall mean the owned real property of the Sellers
pertaining to the Business.
9.66 "Remedial Action" shall have the meaning given such term in
Section 7.3(c) hereof.
9.67 "Response Period" shall have the meaning given such term in
Section 1.5(a) hereof.
9.68 "Retained Liabilities" shall have the meaning given such term in
Section 1.6 hereof.
9.69 "Sellers" shall have the meaning specified in the preamble.
9.70 "Seller Losses" shall have the meaning given such term in
Section 7.2 hereof.
9.71 "Stub-Period Financial Statements" shall have the meaning given
such term in Section 2.16 hereof.
9.72 "Survival Period" shall have the meaning given such term in
Article 8 hereof.
9.73 "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 kind whatsoever, together with any interest, 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.
35
9.74 "Terminated Employees" shall have the meaning given such term in
Section 4.3(a) hereof.
9.75 "Third Party Claims" shall have the meaning given such term in
Section 7.3(b) hereof.
9.76 "Trade Payables" shall mean those obligations of the Sellers
relating to the provision of goods and services to the Sellers for the conduct
of the Business in the ordinary course of business of the Sellers that relate to
the Transferred Assets and that are classified as Trade Payables in accordance
with generally accepted accounting principals as consistently applied by the
Sellers (including, without limitation, any "Accounts Payable" as referenced in
account numbers 210001, 210002, 210005 and 210999 on a balance sheet of the
Business).
9.77 "Transferred Assets" shall have the meaning given such term in
Section 1.1(a) hereof.
9.78 "Transferred Employees" shall have the meaning given such term in
Section 4.3(a) hereof.
9.79 "WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Sections 2101-2109.
9.80 "Warranty Obligations" shall have the meaning given such term in
Section 4.8 hereof.
9.81 "Weatherford U.S." shall have the meaning specified in the
preamble.
ARTICLE 10
MISCELLANEOUS
10.1 Public Announcements. Subject to applicable securities law or
stock exchange requirements, neither the Buyer, on the one hand, nor the
Sellers, on the other hand, shall, without the prior approval of the other
party, issue, or permit any of their respective partners, directors, officers,
employees, agents or Affiliates to issue, any press release or other public
announcement with respect to this Agreement or the transactions contemplated
hereby.
10.2 Expenses. The expense of obtaining a customary title policy
relating to the Real Property shall be borne by the Sellers, the expense of
obtaining customary surveys of the Real Property shall be borne by the Buyer and
the customary closing costs charged by the title company will be borne equally
by the Buyer, on the one hand, and the Sellers, on the other hand. Except as
otherwise set forth herein, 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
36
disbursements of legal counsel, accountants and consultants employed by such
party in connection with the transactions contemplated by this Agreement.
10.3 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 Partnership or Weatherford U.S., to:
Weatherford Enterra U.S., Limited Partnership
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: H. Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Copies to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
If to the Buyer, to:
American Aero Cranes, L.L.C.
000 Xx. Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: XxXxxxx X. Xxxxxxx, Xx.
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Copies to:
XXXXX and XXXXX, L.L.P.
0000 Xxx Xx. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Xx.
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
37
or to such other address or facsimile number and to the attention of such other
Person(s) as any 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.
10.4 Bulk Transfer Laws. The Sellers agree with the Buyer that the
provisions of any statute of any state or jurisdiction regulating bulk sales or
transfers do not apply to this Agreement.
10.5 Successors. This Agreement shall insure to the benefit of and be
binding upon the Buyer and the Sellers and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties hereto.
10.6 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, 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.
10.7 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Texas without giving
effect to choice of law principles.
10.8 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.
10.9 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.
10.10 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 to a third party is expressly given rights herein.
38
10.11 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.
10.12 Heading. 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.
10.13 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.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
SELLERS:
WEATHERFORD ENTERRA U.S., LIMITED PARTNERSHIP
BY WEATHERFORD U.S., INC., ITS GENERAL PARTNER
By: /s/ H. Xxxxxxx Xxxxxx
--------------------------------------------
Name: H. Xxxxxxx Xxxxxx
---------------------------------------
Title: Senior Vice President and Secretary
--------------------------------------
WEATHERFORD U.S., INC.
By: /s/ H. Xxxxxxx Xxxxxx
--------------------------------------------
Name: H. Xxxxxxx Xxxxxx
---------------------------------------
Title: Senior Vice President and Secretary
--------------------------------------
BUYER:
AMERICAN AERO CRANES, L.L.C.
BY IPC INDUSTRIES, INC., MANAGER
By: /s/ XxXxxxx X. Xxxxxxx, Xx.
--------------------------------------------
Name: XxXxxxx X. Xxxxxxx, Xx.
---------------------------------------
Title: Vice President
--------------------------------------
39
