MEMBERSHIP INTEREST PURCHASE AGREEMENT among the Sellers named herein, International Lift Systems, L.L.C. and Lufkin Industries, Inc. March 2, 2009 SELLER DISCLOSURE SCHEDULE
Execution
Copy
among
the
Sellers named herein,
International
Lift Systems, L.L.C.
and
Lufkin
Industries, Inc.
March
2, 2009
TABLE
OF CONTENTS
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ARTICLE
1 DEFINITIONS
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1.1
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Defined
Terms
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1.2
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References,
Construction and Titles
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ARTICLE
2 PURCHASE AND SALE
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2.1
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Agreement
to Sell and to Purchase
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2.2
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Consideration
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2.3
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Deliveries
at Closing
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ARTICLE
3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
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3.1
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Organization
and Standing
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3.2
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Authority;
Authorization; Enforceability
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3.3
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No
Conflicts or Violations
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3.4
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Consents
and Approvals
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3.5
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Title
to Interests
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3.6
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Liability
for Fees
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3.7
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Status
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3.8
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Retained
Control
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3.9
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Litigation
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ARTICLE
4 REPRESENTATIONS AND WARRANTIES OF THE SELLERS CONCERNING THE
COMPANY
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4.1
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Organizational
Matters; Company Subsidiaries
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4.2
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Capitalization
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4.3
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Authority;
Authorization; Enforceability
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4.4
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No
Conflicts or Violations
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4.5
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Consents
and Approvals
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4.6
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Financial
Statements
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4.7
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Absence
of Undisclosed Liabilities
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4.8
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Absence
of Certain Changes or Events
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4.9
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Title
to and Condition of Properties
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4.10
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Intellectual
Property
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4.11
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Licenses,
Permits and Governmental Approvals
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4.12
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Compliance
with Law
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4.13
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Material
Contracts
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4.14
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Labor
Matters
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4.15
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ERISA
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4.16
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Taxes
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4.17
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Litigation
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4.18
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Environmental
Matters
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4.19
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Insurance
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4.20
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Bank
Accounts
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4.21
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Customers
and Suppliers
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4.22
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FCPA
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4.23
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Liability
for Fees
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ARTICLE
5 REPRESENTATIONS AND WARRANTIES OF LUFKIN
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5.1
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Organizational
Matters
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5.2
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Authority;
Authorization; Enforceability
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5.3
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No
Conflicts or Violations
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5.4
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Consents
and Approvals
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5.5
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Liability
for Fees
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ARTICLE
6 ADDITIONAL AGREEMENTS
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6.1
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Further
Assurances
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6.2
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Covenant
Not to Compete With the Business
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6.3
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Release
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6.4
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Tax
Matters
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6.5
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Continuation
of Business by Lufkin
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6.6
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No
Public Announcement
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6.7
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Expenses
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6.8
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Member
Loans
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6.9
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Inventory
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ARTICLE
7 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS
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ARTICLE
8 INDEMNIFICATION
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8.1
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Indemnification
by the Sellers
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8.2
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Indemnification
by Lufkin
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8.3
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Limits
on Indemnification
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8.4
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Offset;
Adjustment of Letters of Credit; Payment
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8.5
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Procedure
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8.6
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Failure
to Pay Indemnification
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8.7
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Express
Negligence
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8.8
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Exclusive
Remedy
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8.9
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Tax
Treatment of Indemnity Payments
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ARTICLE
9 MISCELLANEOUS
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9.1
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Seller
Agent
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9.2
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Notices
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9.3
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Specific
Performance
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9.4
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Assignment
and Successors
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9.5
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Entire
Agreement; Amendment
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9.6
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Governing
Law
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9.7
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Waiver
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9.8
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Severability
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9.9
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No
Third-Party Beneficiaries
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9.10
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Arbitration
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9.11
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Counterparts
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SELLER
DISCLOSURE SCHEDULE
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Schedule
4.1(a)
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Company
Foreign Qualifications
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Schedule
4.1(b)
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Company
Subsidiaries, Joint Ventures, Etc.
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Schedule
4.2
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Company
Organizational Documents
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Schedule
4.6
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Company
Financial Statements
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Schedule
4.7
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Undisclosed
Liabilities
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Schedule
4.8
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Certain
Changes or Events
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Schedule
4.9(a)
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Owned
Real Property
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Schedule
4.9(b)
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Leased
Real Property
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Schedule
4.9(d)
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Sufficiency
of Property
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Schedule
4.10(a)
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Intellectual
Property
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Schedule
4.10(b)
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Intellectual
Property Agreements
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Schedule
4.10(c)
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Infringements
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Schedule
4.10(d)
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Corporate
Names
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Schedule
4.11
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Licenses,
Permits and Governmental Approvals
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|
Schedule
4.12
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Compliance
with Law
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Schedule
4.13(a)
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Material
Contracts
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Schedule
4.13(b)
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Validity
and Breaches
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Schedule
4.13(c)
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Enforceability
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Schedule
4.15(a)
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ERISA
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Schedule
4.15(j)
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Liability
for Taxes Under Benefit Plans
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Schedule
4.16(c)
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Taxes
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Schedule
4.16(d)
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Accrual
for Taxes
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|
Schedule
4.18
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Environmental
Matters
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Schedule
4.19(a)
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Insurance
Policies
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Schedule
4.19(b)
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Insurance
Claims
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Schedule
4.20
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Bank
Accounts
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ANNEXES
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Annex
1
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Sellers
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Annex
2
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Consideration
Payable at Closing
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Annex
3
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Seller
Holdback
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[Lufkin
will furnish supplementally to the Securities and Exchange Commission a copy of
the omitted annexes upon request.]
This MEMBERSHIP INTEREST PURCHASE
AGREEMENT (this “Agreement”) is made and
entered into as of March 2, 2009, effective March 1, 2009, by and among
INTERNATIONAL LIFT SYSTEMS, L.L.C., a Louisiana limited liability company (the
“Company”), each of the
SELLERS named on Annex 1 hereto
(each a “Seller,” and
collectively, the “Sellers”) and LUFKIN
INDUSTRIES, INC., a Texas corporation (the “Lufkin”). Each of
the Sellers, the Company and Lufkin is sometimes referred to herein as a “Party,” and they are sometimes
collectively referred to herein as the “Parties.”
R
E C I T A L S :
WHEREAS, the Sellers own 100%
of the membership interests in the Company (each an “Interest,” and collectively
the “Interests”);
and
WHEREAS, each of the
Sellers desires to
sell his or its Interest to Lufkin, and Lufkin desires to purchase the same, all
upon the terms and subject to the conditions set forth herein; and
WHEREAS, as a condition to
consummating the transactions contemplated by this Agreement, Lufkin wishes to
enter into employment agreements with each of Messrs. Xxxxxx Xxxxx, Xxxxxx
Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxxx Xxxxxx and Xxxxx Xxxxxxxx (each
an “Officer,” and
collectively, the “Officers”);
NOW, THEREFORE, in
consideration of the premises and the respective representations, warranties,
covenants and agreements contained herein, and other good and valuable
consideration, the legal sufficiency of which are herby acknowledged, the
Parties agree as follows, intending to be legally bound:
ARTICLE
1
DEFINITIONS
1.1 Defined
Terms
. As used in this
Agreement, all Annexes and Exhibits hereto and the Seller Disclosure Schedule,
capitalized terms shall have the meanings set forth below or set forth in the
sections of this Agreement referenced below:
“AAA” has the meaning given
such term in Section
9.10(a).
“AAA Rules” has the meaning
given such term in Section
9.10(a).
“Acceptable Bank” means any
bank or trust company selected by Lufkin that is organized under the laws of, or
is a foreign bank that is licensed to do business in, the United States or any
state thereof, that has capital, surplus and undivided profits of at least
$500,000,000 and that has outstanding unguaranteed and unsecured long-term
indebtedness which is rated “A” or better by Standard & Poor’s Ratings
Group, a division of XxXxxx-Xxxx, Inc., and “A3” or better by Xxxxx’x Investors
Service, Inc. (or an equivalent rating by another nationally recognized
statistical rating organization of similar standing if neither such corporation
is in the business of rating unsecured bank indebtedness).
“Affiliate” means, with respect
to any specified Person, any officer, director, Seller or any other Person that
directly or indirectly controls, is controlled by or is under common control
with such specified Person.
“Agreement” has the meaning
given such term in the preamble of this Agreement.
“Arbitration Notice” has the
meaning given such term in Section
9.10(b).
“Arbitrator” has the meaning
given such term in Section
9.10(c).
“Arbitrator List” has the
meaning given such term in Section
9.10(c).
“Bankruptcy Law” means any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law.
“Benefit Plan” means any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, dependent care, cafeteria, employee
assistance, scholarship or other plan, program, arrangement or understanding
(whether or not covered under Section 3(3) of ERISA and whether or not legally
binding), or any nonqualified deferred compensation plan (within the meaning of
Section 409A of the Code and the Treasury Regulations thereunder), maintained in
whole or in part, contributed to, or required to be contributed to by the
Company or any ERISA Affiliate for the benefit of any present or former officer,
employee, director or independent contractor of the Company or any ERISA
Affiliate within six years prior to the Closing Date.
“Business Day” means any day
other than a Saturday, Sunday or other day on which commercial banks in Houston,
Texas are authorized by Law to close.
“CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended.
“Claims” has the meaning given
such term in Section
8.5(b).
“Closing” has the meaning
given such term in Section 2.1(b).
“Closing Date” has the meaning
given such term in Section
2.1(b).
“Code” means the Internal
Revenue Code of 1986, as amended.
“Company” has the meaning given
such term in the preamble to this Agreement.
“Company Credit Facility” means
the Business Loan Agreement, dated December 20, 2007, entered into between the
Company and Capital One, National Association.
“Company Financial Statements”
has the meaning given such term in Section
4.6.
“Company Material Adverse
Effect” means a Material Adverse Effect on the Company.
“Company Material Contract” has
the meaning given such term in Section
4.13(a).
“Company’s Knowledge” means the
Knowledge of any Seller.
“Contract” means any agreement,
contract, obligation, promise or undertaking (whether written or oral and
whether express or implied) that is legally binding.
“Copyrights” has the meaning
given such term in Section
4.10(e)(ii).
“Debt Obligation” means any
contract, agreement, indenture, note or other instrument relating to the
borrowing of money, any capitalized lease obligation, any obligation properly
classified as indebtedness or debt under GAAP 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), and shall specifically include any loans or
advances to or from the Sellers or their respective Affiliates.
“Deductible” has the meaning
given such term in Section
8.3(b).
“Disputes” has the meaning
given such term in Section
9.10(a).
“EBITDA” has the meaning given
such term in the employment agreements, dated the Closing Date and effective the
Effective Date, between Lufkin and the Officers.
“Effective Date” means March 1,
2009.
“Encumbrances” has the meaning
given such term in Section
2.1(a).
“Environmental, Health and Safety
Laws” means all Laws relating to (a) emissions, discharges, releases or
threatened releases of Hazardous Materials into the environment, including into
ambient air, soil, sediments, land surface or subsurface, buildings or
facilities, surface water, groundwater, publicly-owned treatment works, or
septic systems, (b) emissions of greenhouse gasses, (c) the generation,
treatment, storage, disposal, use, handling, manufacturing, recycling,
transportation or shipment of Hazardous Materials, (d) occupational health and
safety or (e) the pollution of the environment, solid waste handling, treatment
or disposal, reclamation or remediation activities, or protection of
environmentally sensitive areas.
“Environmental Liabilities”
means any and all Losses (including remediation, removal, response, abatement,
clean-up, investigative and/or monitoring costs and any other related costs and
expenses) incurred or imposed (a) pursuant to any agreement, order, notice,
requirement, responsibility, directive (including directives embodied in
Environmental, Health and Safety Laws), injunction, judgment or similar document
(including a settlement) arising out of, in connection with or under
Environmental, Health and Safety Laws, or (b) pursuant to any claim by a
Governmental Entity or other Person for personal injury, property damage, damage
to natural resources, remediation or similar costs or expenses incurred or
asserted by such Governmental Entity or Person pursuant to Law and arising out
of or in connection with a release, as such term is defined in Environmental,
Health and Safety Laws, of Hazardous Materials.
“Environmental Permit” means
any permit, license, approval, registration, identification number or other
authorization with respect to the Company under any Environmental, Health and
Safety Law.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any entity that is
required to be aggregated with the Company or any Subsidiary of the Company
under Section 414 of the Code.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“GAAP” means United States
generally accepted accounting principles applied on a consistent
basis.
“Governmental Entity” means any
national, state or local government, any subdivision thereof, any arbitrator,
court, administrative or regulatory agency, commission, department, board,
bureau, body or other government authority or instrumentality, or any entity or
Person exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
“Hazardous Material” means (a)
any substance or material that is listed, defined or otherwise designated as a
hazardous substance under any Environmental, Health and Safety Law, (b)
petroleum and any petroleum product, (c) radioactive material (including any
naturally occurring radioactive material), urea formaldehyde,
asbestos-containing materials in any form or condition and polychlorinated
biphenyls in any form or condition, and (d) any other chemical, pollutant,
contaminant, material, substance or waste that is regulated by any Governmental
Entity under any Environmental, Health and Safety Law.
“Holdback Amount” has the
meaning given such term in Section
2.2(b)(i).
“Holdback Letters of Credit”
has the meaning given such term in Section
2.2(b)(i).
“Indemnitee” has the meaning
given such term in Section 8.3(e).
“Indemnitor” has the
meaning given such term in Section 8.5(a).
“Indemnity Period” has the
meaning given such term in Section
8.4(a).
“Initial Letter of Credit
Amount” means the initial face amount of the letter of credit issued to
each Seller, which amount shall be subject to adjustment as provided
herein.
“Insolvency Event” means (a)
Lufkin, any Significant Subsidiary of Lufkin or any group of Subsidiaries of
Lufkin that, if taken together (as of the date of Lufkin’s most recent audited
financial statements), would constitute a Significant Subsidiary of Lufkin,
pursuant to or within the meaning of Bankruptcy Law, shall (i) commence a
voluntary case, (ii) consent to the entry of an order for relief against it in
an involuntary case, (iii) make a general assignment for the benefit of its
creditors or (iv) generally fail to pay its debts as they come due, or (b) a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that remains unstayed and in effect for 60 consecutive days and that (i) is
for relief against Lufkin, any Significant Subsidiary of Lufkin or any group of
Subsidiaries of Lufkin that, if taken together (as of the date of Lufkin’s most
recent audited financial statements), would constitute a Significant Subsidiary
of Lufkin, in an involuntary case, (ii) appoints a custodian for Lufkin, any
Significant Subsidiary of Lufkin or any group of Subsidiaries of Lufkin that, if
taken together (as of the date of Lufkin’s most recent audited financial
statements), would constitute a Significant Subsidiary of Lufkin, or for all or
substantially all of the property of Lufkin, any Significant Subsidiary of
Lufkin or any group of Subsidiaries of Lufkin that, if taken together (as of the
date of Lufkin’s most recent audited financial statements), would constitute a
Significant Subsidiary of Lufkin or (iii) orders the liquidation of Lufkin, any
Significant Subsidiary of Lufkin or any group of Subsidiaries of Lufkin that, if
taken together (as of the date of Lufkin’s most recent audited financial
statements), would constitute a Significant Subsidiary of Lufkin.
“Intellectual Property” has the
meaning given such term in Section 4.10(e).
“Interest” and “Interests” have the meanings
given such terms in the recitals to this Agreement.
“Investors” means Messrs. Xxxxx
Xxxxxxx, Xxxxx Abide and Xxxxx Xxxxxxx, Xxx. Xxxxx Xxxxxxx, the DYW 2007 Grantor
Retained Annuity Trust and the WPW 2007 Grantor Retained Annuity
Trust.
“IRS” means the United States
Internal Revenue Service or any successor agency and, to the extent relevant,
the United States Department of the Treasury.
“Knowledge” – an individual
will be deemed to have “Knowledge” of a particular fact or other matter if (a)
such individual is actually aware of such fact or other matter or (b) a prudent
individual could be expected to discover or otherwise become aware of such fact
or other matter in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other
matter.
“Law” means any applicable
federal, state, municipal, local or foreign statute, code, law, ordinance, rule,
regulation, permit, consent, approval, license, order, judgment, writ,
injunction or decree enacted, adopted, issued or promulgated by any Governmental
Entity.
“License” and “Licenses” have the meanings
given to such terms in Section
4.11.
“Litigation” has the meaning
given to such term in Section
3.9.
“LOC Issuer” means the
Acceptable Bank that issues the letters of credit for the benefit of the Sellers
as described in Section
2.2(b).
“Losses” has the meaning
given to such term in Section 8.1(a).
“Lufkin” has the meaning given
such term in the preamble to this Agreement.
“Lufkin Indemnitees” has the
meaning given such term in Section
8.1(a).
“Lufkin Material Adverse Effect” means a Material
Adverse Effect on Lufkin and its subsidiaries, taken as a whole.
“Lufkin Subsidiary” means a
consolidated subsidiary of Lufkin.
“Marks” has the meaning given
to such term in Section
4.10(e)(iii).
“Material Adverse Effect”
means, with respect to any Person, a material adverse effect on the business,
operations, assets, properties, prospects or material customer relationships of
such Person.
“Member Loans” means those
certain loans made to the Company by Xxxxx Xxxxxxx in the principal amount of
$4,666,656.77 and by Xxxxx Xxxxxxx in the principal amount of $1,330,675.09, in
each case plus accrued interest.
“Officer” and “Officers” have the meanings
given such terms in the recitals to this Agreement.
“Operating Agreement” means the
Operating Agreement of the Company, effective July 7, 2003.
“Party” and “Parties” have the meanings
given to such terms in the preamble to this Agreement.
“Patents” has the meaning given
such term in Section
4.10(e)(i).
“PBGC” has the meaning given to
such term in Section
4.15(c).
“Pension Plans” has the meaning
given such term in Section
4.15(a).
“Permitted Encumbrances” means
(a) Encumbrances for Taxes, assessments or other governmental charges not yet
due and payable or which are being contested in good faith; (b) pledges or
deposits of money securing statutory obligations under workmen’s compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Encumbrances under ERISA); (c)(i) inchoate or unperfected
workers’, mechanics or similar liens arising in the ordinary course of business,
and (ii) xxxxxx and perfected workers’, mechanics or similar liens arising in
the ordinary course of business that are being contested in good faith and do
not exceed $50,000 in the aggregate at any one time, so long as such
Encumbrances attach only to equipment, fixtures and real estate; (d) carrier’s,
warehousemen’s, suppliers’ or other similar possessory liens arising in the
ordinary course of business and securing liabilities that are not yet due or, if
past due, are being contested in good faith and do not exceed $50,000 in the
aggregate at any time, so long as such Encumbrances attach only to inventory;
(e) zoning restrictions, easements, licenses or other restrictions on the use of
any real estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value or
marketability of such real estate; and (f) liens under the Company Credit
Facility and equipment financing liens incurred in the ordinary course of
business consistent with past practice.
“Person” means a natural
person, corporation, company, partnership, joint stock company, joint venture,
association, limited liability company, trust, bank, trust company, Governmental
Entity or other entity or organization.
“Restricted Area” has the
meaning given such term in Section
6.2(b).
“Restricted Period” has the
meaning given such term in Section
6.2(a).
“Seller” and “Sellers” have the meanings
given such terms in the preamble to this Agreement.
“Seller Agent” has the meaning
given such term in Section 9.1.
“Seller Disclosure Schedule” means the
disclosure schedules of even date herewith delivered to Lufkin by the
Sellers.
“Seller Indemnitees” has the
meaning given such term in Section
8.2.
“Significant Subsidiary” means
any Subsidiary that would be deemed a “significant subsidiary” within the
meaning of Rule 1-02 under Regulation S-X promulgated by the United States
Securities and Exchange Commission.
“Subsidiary” means, with
respect to any Person, any corporation or other Person of which securities or
other interests having the power to elect a majority of that corporation’s or
other Person’s board of directors or similar governing body, or otherwise having
the power to direct the business and policies of that corporation or other
Person (other than securities or other interests having such power only upon the
happening of a contingency that has not occurred), are held by such Person or
one or more of its Subsidiaries.
“Tax” and “Taxes” have the meanings given
such terms in Section
4.16.
“Tax Contest” has the meaning
given such term in Section
6.4(f).
“Tax Returns” has the meaning
given such term in Section
4.16.
“Transaction Documents” means
(a) this Agreement, (b) the Seller Disclosure Schedules and (c) the other
written agreements, documents, instruments and certificates executed pursuant to
or in connection with this Agreement or the consummation of the transactions
contemplated hereby, including, without limitation, each of the documents to be
delivered pursuant to Section 2.3, in each
case, as amended, modified or supplemented from time to time.
“Treasury Regulations” means
the regulations promulgated by the United States Treasury Department under the
Code.
“Welfare Plans” has the meaning
given such term in Section
4.15(a).
1.2 References, Construction and
Titles
(a) All
references in this Agreement to Annexes, Exhibits, Schedules, Articles,
Sections, subsections and other subdivisions refer to the corresponding Annexes,
Exhibits, Schedules, Articles, Sections, subsections and other subdivisions of
or to this Agreement, unless expressly provided otherwise. Titles appearing at
the beginning of any Article, Section, subsection or other subdivision of this
Agreement are for convenience only, do not constitute any part of this
Agreement, and shall be disregarded in construing the language hereof. The words
“this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of
similar import, refer to this Agreement as a whole and not to any particular
Article, Section, subsection or subdivision unless expressly so limited. The
words “this Article” and “this Section,” and words of similar import, refer only
to the Article or Section hereof in which such words occur.
(b) The word
“or” is not exclusive, and the word “including” (in its various forms) means
including without limitation. Pronouns in masculine, feminine or neuter genders
shall be construed to state and include any other gender, and words, terms and
titles (including terms defined herein) in the singular form shall be construed
to include the plural and vice versa, unless the context otherwise
requires.
(c) The
Parties have participated jointly in negotiating and drafting this Agreement. In
the event an ambiguity or a question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties, and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any provision(s) of this Agreement.
(d) Provisions
hereof referring to delivery of documents by one Party to another Party prior to
the date hereof shall be deemed to refer to either actual physical delivery of
such documents or the making of such documents available for review in a data
room or computer based virtual data room at least three Business Days prior to
the date hereof.
ARTICLE
2
PURCHASE AND
SALE
2.1 Agreement to Sell and to
Purchase
(a) On the
Closing Date, upon the terms and subject to the conditions contained herein,
each Seller shall transfer, sell, assign and convey to Lufkin, and Lufkin shall
purchase from each Seller, such Seller’s Interest, free and clear of any
pledges, restrictions on transfer, proxies and voting or other agreements,
liens, claims, charges, mortgages, security interests or other legal or
equitable encumbrances, limitation or restrictions of any nature whatsoever
(“Encumbrances”).
(b) Subject
to the conditions set forth in this Agreement, the closing of such sale and
purchase (the “Closing”)
shall take place at the offices of Xxxxxxx Xxxxx LLP located at 000 Xxxxxx Xx.,
Xxxxxxx, Xxxxx 00000 on the date of the execution hereof or at such other time,
date and place as the Parties 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 of any obligation hereunder. Title to, ownership of
and control over the Interests shall pass to Lufkin at the Closing.
2.2 Consideration
. In consideration
of the transfer to Lufkin of the Interests, Lufkin shall pay to the Sellers
$45,000,000 in cash and to the Investors an additional $5,000,000 in cash, in
each case payable as set forth in this Section
2.2.
(a) Consideration Payable at
Closing. At the Closing, Lufkin shall pay to each of the
Sellers the amount set forth opposite his or its name in Annex 2 hereto by
wire transfer of immediately available funds.
(b) Holdback and Letters of
Credit.
(i) The
amount set forth for each Seller in the column with the heading “Amount to be
Held Back” in Annex
3 hereto shall be held back from each such Seller (each a “Holdback Amount”), and at the
Closing, an irrevocable letter of credit issued by an Acceptable Bank in an
initial face amount equal to the amount set forth for each Seller in the column
with the heading “Initial Letter of Credit Amount” in Annex 3 hereto shall
be issued to each such Seller (such letters of credit, the “Holdback Letters of Credit”),
it being understood that the Initial Letter of Credit Amount for each Seller
shall be equal to the sum of (A) the amount held back from such Seller plus (B) an amount sufficient
to pay interest of 4% per year on (1) one-third of such amount for one year, (2)
one-third of such amount for two years and (3) one-third of such amount for
three years. Provided the requirements of Section 8.4(a) are
met, Lufkin may offset the amount of any Losses for which it may seek
indemnification pursuant to Section 8.1 against
the Holdback Amounts. The Initial Letter of Credit Amount shall be
subject to adjustment in accordance with the provisions of Sections 2.2(c)(ii)
and 8.4(b).
(ii) The
obligation of Lufkin to cause the issuance and maintenance of the Holdback
Letters of Credit shall terminate upon Lufkin’s payment of the final amounts
payable pursuant to Section
2.2(c).
(c) Release of Holdback
Amounts.
(i) Release of Holdback
Amounts.
(A) No later
than the third Business Day following the first anniversary of the Effective
Date, Lufkin shall pay to each Seller, by wire transfer of immediately available
funds, the sum of (1) the excess, if any, of one-third of his or its Holdback
Amount over the sum of (x) the amounts properly used
by Lufkin to offset any Losses for which it properly asserted a right to
indemnification pursuant to Section 8.1 prior to
such first anniversary, if any, plus (y) a reserve for properly
estimated Losses arising from or in connection with matters with respect to
which Lufkin properly asserted a right to indemnification pursuant to Section 8.1 prior to
such first anniversary but that were not resolved as of such first anniversary,
if any, plus (2) an
amount equal to interest of 4% per year on one-third of his or its Holdback
Amount for the period from the Effective Date through and including such payment
date (as adjusted for any amounts properly used by Lufkin to offset Losses or
establish reserves for Losses for which it properly asserted a right to
indemnification pursuant to Section 8.1 prior to
such first anniversary).
(B) No
later than the third Business Day following the second anniversary of the
Effective Date, Lufkin shall pay to each Seller, by wire transfer of immediately
available funds, the sum of (1) the excess, if any, of two-thirds of his or its
Holdback Amount over the sum of (x) the amounts properly used
by Lufkin to offset any Losses for which it properly asserted a right to
indemnification pursuant to Section 8.1 prior to
such second anniversary, if any, plus (y) a reserve for properly
estimated Losses arising from or in connection with matters with respect to
which Lufkin properly asserted a right to indemnification pursuant to Section 8.1 prior to
such second anniversary but that were not resolved as of such second
anniversary, if any, plus (2) an amount equal to
interest of 4% per year on one-third of his or its Holdback Amount for the
period from the Effective Date through and including such payment date (as
adjusted for any amounts properly used by Lufkin to offset Losses or establish
reserves for Losses for which it properly asserted a right to indemnification
pursuant to Section
8.1 prior to such second anniversary), less (3) any amount
previously paid pursuant to Section
2.2(c)(i)(A).
(C) No
later than the third Business Day following the third anniversary of the
Effective Date, Lufkin shall pay to each Seller, by wire transfer of immediately
available funds, the sum of (1) the excess, if any, of his or its Holdback
Amount over the sum of (x) the amounts properly used
by Lufkin to offset any Losses for which it properly asserted a right to
indemnification pursuant to Section 8.1 prior to
such third anniversary, if any, plus (y) a reserve for properly
estimated Losses arising from or in connection with matters with respect to
which Lufkin properly asserted a right to indemnification pursuant to Section 8.1 prior to
such third anniversary but that were not resolved as of such third anniversary,
if any, plus (2) an
amount equal to interest of 4% per year on one-third of his or its Holdback
Amount for the period from the Effective Date through and including such payment
date (as adjusted for any amounts properly used by Lufkin to offset Losses or
establish reserves for Losses for which it properly asserted a right to
indemnification pursuant to Section 8.1 prior to
such third anniversary), less
(3) any amount previously paid pursuant to Sections 2.2(c)(i)(A)
and 2.2(c)(i)(B).
(D) Amounts
held in reserve in excess of the amounts required to offset Losses shall be paid
to the Sellers, with interest of 4% per year for the period from the Effective
Date through and including the payment date, as soon as practicable following
final resolution of the matters with respect to which the Losses are
asserted.
(ii) Adjustment of Holdback Letters of
Credit Upon Release of Holdback Amounts. Upon any payment by
Lufkin pursuant to Section 2.2(c)(i),
Lufkin may, by notice to the LOC Issuer as provided in each Seller’s Holdback
Letter of Credit, instruct the LOC Issuer to either (i) cancel each Seller’s
existing Holdback Letter of Credit and issue a new Holdback Letter of Credit
with a face amount that has been reduced for such payment or (ii) amend each
Seller’s existing Holdback Letter of Credit to reduce the face amount of such
Holdback Letter of Credit to reflect such payment.
(iii) Draws on Holdback Letters of
Credit. In the event that Lufkin shall fail to pay to any
Seller when due any amount due to such Seller as set forth in this Section 2.2(c), such
Seller may, by notice to the LOC Issuer as provided in his or its Holdback
Letter of Credit, demand payment from the LOC Issuer of such
amount. In the event that an Insolvency Event shall occur, each
Seller may, by notice to the LOC Issuer as provided in his or its Holdback
Letter of Credit, demand payment of the full face amount of his or its Holdback
Letter of Credit. If any Holdback Letter of Credit with an expiry
date occurring prior to the third anniversary of the Effective Date is not
renewed or extended by the fifteenth day prior to such expiry date, the
applicable Seller may, by notice to the LOC Issuer as provided in his or its
Holdback Letter of Credit, demand payment of the full face amount of his or its
Holdback Letter of Credit. Lufkin may substitute for any existing
Holdback Letter of Credit a new Holdback Letter of Credit of equal face amount
issued by any Acceptable Bank. Lufkin shall have no obligation to
reinstate any amounts drawn under any Holdback Letter of Credit.
2.3 Deliveries at
Closing
. At
Closing:
(a) Each
Seller shall deliver the following to Lufkin:
(i) an
irrevocable membership interest transfer power with respect to his or its
Interest and such additional instruments of transfer of such Interest as Lufkin
may reasonably request to vest in Lufkin all the right, title and interest in
and to such Interest;
(ii) all other
instruments and documents as may be reasonably required to consummate the
transactions contemplated hereby; and
(iii) a
certificate of non-foreign status satisfying the requirements of Treasury
Regulations Section 1.1445-2(b).
(b) Each
Officer shall deliver his duly executed employment agreement to
Lufkin.
(c) The
Sellers, collectively, shall deliver the following to Lufkin:
(i) a copy of
each consent, approval, waiver or authorization of, or filing, registration or
qualification with, any Governmental Entity or any other Person necessary for
the consummation of the transactions contemplated by this
Agreement;
(ii) a written
instrument from McGladrey Capital Markets LLC acknowledging its receipt of any
and all fees and commissions payable to it by the Sellers or the Company with
respect to the transaction;
(iii) a written
instrument from the holders of the Member Loans acknowledging repayment of such
Member Loans;
(iv) written
instruments (A) certifying the compliance by the Sellers with the requirements
of the section of the Operating Agreement entitled “Withdrawal of Membership and
Transfer of Ownership” and (B) evidencing the waiver by the Company and the
Sellers of their respective rights to purchase the Interests set forth in such
section of the Operating Agreement;
(v) copies of
all documents and instruments, duly executed by the Company, necessary to lift
and/or release any Encumbrances relating to the Company Credit Agreement;
and
(vi) certificates
issued by appropriate Governmental Entities evidencing (A) the due organization,
valid existence and good standing of the Company, as of a date not more than
five calendar days prior to the Closing Date, in its jurisdiction of
organization and (B) the due registration or qualification of the Company as a
foreign limited liability company, as of a date not more than five calendar days
prior to the Closing Date, or such longer period as is reasonably practicable
under the circumstances, in each of the other jurisdictions specified in Schedule 4.1(a)
hereto.
(d) Lufkin
shall deliver:
(i) to each
Seller, by wire transfer of immediately available funds, the amount set forth
opposite such Seller’s name in Annex 2
hereto;
(ii) to each
Seller a Holdback Letter of Credit in the amount set forth for such Seller in
the column with the heading “Initial Letter of Credit Amount” in Annex 3
hereto;
(iii) to each
Officer his employment agreement, duly executed by Lufkin.
(iv) to the
Sellers a copy of each consent, approval, waiver or authorization of, or filing,
registration or qualification with, any Governmental Entity or any other Person
necessary for the consummation of the transactions contemplated by this
Agreement;
(v) to the
Sellers a certificate issued by the appropriate Governmental Entity evidencing
its due organization, valid existence and good standing, as of a date not more
than five calendar days prior to the Closing Date, in the State of
Texas;
(vi) to the
Sellers a certified copy of resolutions of the board of directors of Lufkin
approving this Agreement and the transactions contemplated hereby in a form
reasonably acceptable to the Sellers;
(vii) to the
Sellers all other instruments and documents as may be reasonably required to
consummate the transactions contemplated hereby.
ARTICLE
3
REPRESENTATIONS AND
WARRANTIES OF THE SELLERS
Each of
the Sellers, severally and not jointly, as to himself only and not as to any
other Seller, hereby represents and warrants to Lufkin as follows:
3.1 Organization and
Standing
. If
the Seller is not a natural person, the Seller is duly organized, validly
existing and in good standing under the laws of the state of its organization
and in such other jurisdictions as may be necessary for the consummation of the
transactions contemplated by this Agreement.
3.2 Authority; Authorization;
Enforceability
. The Seller has
all requisite power and authority to enter into this Agreement, to consummate
the transactions contemplated hereby and to perform his or its obligations
hereunder. If the Seller is not a natural person, the execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the performance of its obligations hereunder have been duly and
validly authorized by such Seller’s board of directors or similar body, the
board of directors of such Seller’s general partner or such Seller’s established
trust procedures, as the case may be, and no other proceeding on the part, or on
behalf, of such Seller is necessary for such execution, delivery, consummation
and performance. This Agreement has been duly authorized, executed
and delivered by the Seller, and constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors’ rights
generally or by general equitable principles.
3.3 No Conflicts or
Violations
. The execution,
delivery and performance of this Agreement by the Seller and the consummation of
the transactions contemplated hereby do not and will not (a) if the Seller is
not a natural person, violate or conflict with any provision of the articles of
incorporation, certificate of formation, certificate of limited partnership,
bylaws, limited liability company agreement, partnership agreement or other
organizational documents of the Seller; (b) violate any Law applicable to the
Seller; or (c) violate, result in a breach of, constitute (with due notice or
lapse of time or both) a default under, impair the Seller’s rights under, result
in the termination of or in a right of termination or cancellation of, or cause
any obligation, penalty or premium to accelerate, arise or accrue under any
contract, lease, credit or loan agreement, mortgage, security agreement,
indenture or other agreement or instrument to which the Seller is a party or by
which the Seller is bound.
3.4 Consents and
Approvals
. No consent,
approval, waiver or authorization of, or filing, registration or qualification
with, any Governmental Entity or any other Person (on the part of the Seller) is
required for the Seller to execute and deliver this Agreement, perform his or
its obligations hereunder or consummated the transactions contemplated hereby,
except for such consents, approvals, waivers or authorizations as have been
obtained or such filings, registrations or qualifications as have been accepted
as of the date hereof.
3.5 Title to
Interests
. The Seller owns, of record
and beneficially, the Interest shown next to his or its name on Annex 1 hereto free
and clear of any Encumbrances. The Seller has the full power and
legal right to cause such Interest to be sold, assigned, transferred and
conveyed to Lufkin, and at Closing, Lufkin will acquire good and indefeasible
title to such Interest free and clear of any and all Encumbrances.
3.6 Liability for
Fees
. Other than with
respect to McGladrey Capital Markets LLC (the fees of which shall be paid by the
Sellers and not by the Company or Lufkin), the Seller has not employed or
retained any investment banker, broker, agent, finder or other party, or
incurred any liability or obligation, contingent or otherwise, for brokers’ or
finders’ fees, advisory fees or commissions, with respect to the transactions
contemplated by this Agreement for which Lufkin or the Company shall have any
responsibility.
3.7 Status
. The Seller is not
a “foreign person” within the meaning of Section 1445 of the Code and (a) if the
Seller is an individual, he has reached the age of majority and is a United
States citizen or resident or (b) if the Seller is a trust, the undersigned
trustee and each co-trustee is United States citizen or resident of such age or
a corporation organized under the laws of the United States, and all trust
beneficiaries are United States citizens or residents of such age and United
States.
3.8 Retained
Control
. Immediately
following the Closing, the Seller shall not own or otherwise control any asset
or property necessary for the Company to conduct its business in substantially
the same manner it was conducted immediately prior to Closing.
3.9 Litigation
. No litigation,
action, suit claim, lawsuit, demand, investigation or proceeding before any
Governmental Entity or any mediator or arbitrator (or panel thereof)
(collectively, “Litigation”) is now pending
or, to the Knowledge of the Seller, threatened against the Seller or any
Affiliate of the Seller that could reasonably be expected to materially
impair or delay the ability of the Sellers to perform his or its obligations
under this Agreement or consummate the transactions contemplated
hereby.
ARTICLE
4
REPRESENTATIONS AND
WARRANTIES OF THE SELLERS
CONCERNING THE
COMPANY
Each of
the Sellers hereby jointly and severally represents and warrants to Lufkin as
follows:
4.1
Organizational
Matters; Company Subsidiaries
(a) The
Company (i) is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Louisiana; (ii) is duly
registered or qualified to conduct business and is in good standing in each
other jurisdiction set forth on Schedule 4.1(a)
hereto, and there is no other jurisdiction in which the Company’s ownership,
operation or lease of property or conduct of its business would require such
registration or qualification, except for any such failures to be so registered
or qualified as could not reasonably be expected to have a Company Material
Adverse Effect; and (iii) has the requisite power and authority and the
legal right to own and operate its properties, to lease the property it operates
under lease and to conduct its business as now, heretofore and proposed to be
conducted.
(b) Except as
set forth on Schedule
4.1(b) hereto, the Company (i) has no Subsidiaries, (ii) is not engaged
in any joint venture, partnership or similar arrangement with any other Person,
(iii) is not an Affiliate of any other Person and (iv) does not
otherwise hold any equity interest in any other Person or any note or other
contractual right exercisable or exchangeable for or convertible into any equity
interest in any other Person.
4.2 Capitalization
. Attached as Schedule 4.2
hereto are true and correct copies of the Articles of Organization and Operating
Agreement of the Company, as amended and in full force and effect on the date
hereof. The issued and outstanding Interests were duly authorized and
validly issued and are fully paid and non-assessable, and were not issued in
violation of any preemptive, preferential purchase or other similar rights of
any Person. The Company has no outstanding options, warrants,
convertible securities, calls, rights, commitments, preemptive rights,
agreements, arrangements or understandings of any character obligating the
Company (i) to issue, deliver or sell, or cause to be issued, delivered or
sold, additional Interests in the Company or any securities or obligations
convertible into or exchangeable for Interests in the Company or (ii) to
grant, extend or enter into any such option, warrant, convertible security,
call, right, commitment, preemptive right, agreement, arrangement or
understanding.
4.3 Authority;
Authorization;
Enforceability
. The Company is
member managed and has all requisite power and authority to enter into this
Agreement, to consummate the transactions contemplated hereby and to perform its
obligations hereunder. The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and the performance of
the Company’s obligations hereunder have been duly and validly authorized by the
Sellers on behalf of the Company and no other proceedings on the part, or on
behalf, of the Company are necessary for such execution, delivery, consummation
and performance. This Agreement has been duly authorized, executed
and delivered by the Company and is a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors’ rights generally or by
general equitable principles).
4.4
No
Conflicts or Violations
. The execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby do not and will not (a) violate or
conflict with any provision of its Articles of Organization, Operating Agreement
or other organizational documents; (b) violate any Law applicable to the
Company or any of its properties or assets; (c) violate, result in a breach
of, constitute (with due notice or lapse of time or both) a default under,
impair the Company’s rights under, result in the termination of or in a right of
termination or cancellation of, or cause any obligation, penalty or premium to
accelerate, arise or accrue under any contract, lease, credit or loan agreement,
mortgage, security agreement, indenture or other agreement or instrument to
which the Company is a party, by which it is bound or to which any of its
properties or assets is subject; (d) result in the creation of imposition
of any Encumbrance upon any of the properties or assets of the Company; or
(e) result in the cancellation, modification, revocation or suspension of
any License (as defined in Section 4.11) of the
Company (except in the case of clauses (b), (c), (d) and (e) above for any
such violations, conflicts, breaches, defaults, impairments, terminations,
accelerations, accruals, Encumbrances, cancellations, modifications, revocations
or suspensions that could not reasonably be expected to have a Company Material
Adverse Effect).
4.5 Consents
and Approvals
. No consent,
approval, waiver or authorization of, or filing, registration or qualification
with, any Governmental Entity or any other Person (on the part of the Company)
is required for the Company to execute and deliver this Agreement, perform its
obligations hereunder or consummate the transactions contemplated hereby, except
for such consents, approvals, waivers or authorizations as have been obtained or
such filings, registrations or qualifications as have been accepted as of the
date hereof.
4.6 Financial
Statements
. Attached as Schedule 4.6
hereto are true, correct and complete copies of (a) the unaudited
consolidated balance sheets, statements of income and statements of cash flows
of the Company as of and for the years ended December 31, 2006, 2007 and
2008 (collectively, the “Company Financial
Statements”). Except as set forth on Schedule 4.6 hereto,
the Company Financial Statements (x) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered;
(y) fairly present in all material respects the financial position of the
Company as of their respective dates and the results of operations of the
Company for the periods indicated therein; and (z) have not in any material
respect been rendered untrue, incomplete or unfair as representations of the
financial condition of the Company as of the respective dates of the Company
Financial Statements by events subsequent to the respective dates of the Company
Financial Statements.
4.7 Absence
of Undisclosed Liabilities
. Except as
disclosed on Schedule 4.7
hereto or on the unaudited Company Financial Statements as of December 31, 2008,
the Company has no indebtedness or liability, absolute or contingent, which is
not shown or provided for in the Company Financial Statements, other than
(a) liabilities incurred or accrued in the ordinary course of business
consistent with past practice since December 31, 2008 that do not exceed
$100,000 in the aggregate, or (b) liabilities of the Company that
individually or in the aggregate are not material to the Company and that are
not required by GAAP to be included in the Company Financial Statements; provided, however, that the
Sellers shall have no liability for a breach of this representation and warranty
to the extent that the specific facts or circumstances that give rise to any
liability are covered by another representation or warranty in this Agreement
that is qualified by “Knowledge of the Company” and by virtue of such
qualification there has not been a breach of that specific representation or
warranty as a result of such facts or circumstances.
4.8 Absence
of Certain Changes or Events
. Except as set
forth on Schedule 4.8
hereto, since December 31, 2007, the business of the Company has
been conducted in the ordinary course of business consistent with past
practices, and there has not been any (a) Company Material Adverse Effect, (b)
material change by the Company in any of its accounting methods, principles or
practices or any of its Tax methods, practices or elections, (c) any
declaration, setting aside or payment of any dividend or distribution in respect
of any Interest or other equity interest of the Company or any redemption,
purchase or other acquisition of any of its Interests or other equity interests
or (d) except in the ordinary course of business consistent with past practices,
any increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, option or other employee
benefit plan.
4.9 Title to
and Condition of Properties
(a) Schedule 4.9(a)
hereto sets forth a complete and accurate list of all of the real property owned
by the Company. Except as set forth on Schedule 4.9(a)
hereto, the Company has good and marketable title to all of such owned real
property, free and clear of all Encumbrances, except for Permitted
Encumbrances.
(b) Schedule 4.9(b)
hereto sets forth a complete and accurate list of all leases of real property to
which the Company is a party on the date hereof or by which it is presently
bound (whether as lessee or lessor). Except as set forth on Schedule 4.9(b)
hereto, (i) all of such leases are in full force and effect and are valid
and enforceable in accordance with their terms, (ii) there is not under any
such lease any default by the Company or, to the Company’s Knowledge, any other
Person, or any event that with notice or lapse of time or both would constitute
such a default and (iii) the Company is in possession of the real property
covered under each lease set forth on Schedule 4.9(b)
hereto in which it is a lessee.
(c) The
Company has good and marketable title to, or valid and subsisting leasehold
interests in, all of the personal property reflected on the Company Financial
Statements or used or useful in its business, free and clear of all
Encumbrances, except for Permitted Encumbrances.
(d) Except as
set forth on Schedule 4.9(d)
hereto, the Company owns or controls all of the assets, contracts, leases or
Licenses required to enable it to operate its business after the Effective Date
in the same manner as such business is presently conducted. Except as
set forth on Schedule 4.9(d)
hereto, the business of the Company as presently conducted is not dependent on
the right to use the assets or property of others.
4.10 Intellectual
Property
(a) Schedule 4.10(a)
hereto sets forth a true and complete list of all Intellectual Property used in
the business of the Company, and, for each item listed, a statement as to
whether such Intellectual Property is (i) wholly owned (in which such case
the owner shall be named), (ii) licensed from a third party (in which such
case the licensee and third-party licensor shall be named), or
(iii) licensed to third parties by the Company (in which such case the
third-party licensee shall be named).
(b) Schedule 4.10(b)
hereto sets forth a true and complete list of all agreements, whether in the
form of a development, license, assignment, confidentiality or other agreement,
relating to the Intellectual Property to which the Company is a party or by
which the Company is bound.
(c) Except as
set forth on Schedule 4.10(c)
hereto, (i) the Company owns all right, title and interest in
and to, or has a valid and enforceable license or other right to use lawfully,
all the Intellectual Property used by the Company in connection with its
business, free and clear of any Encumbrances or claims of third parties;
(ii) the Company has not infringed upon or otherwise violated the
Intellectual Property of any other Person; (iii) no action, hearing,
investigation, claim or demand is pending or, to the Company’s Knowledge, is
threatened which challenges the legality, validity, enforceability, use or
ownership of any underlying item of Intellectual Property; (iv) to the Company’s
Knowledge, no Person has infringed upon or otherwise violated the Intellectual
Property of the Company; (v) the consummation of the transactions
contemplated by this Agreement will not alter, impair or extinguish any
Intellectual Property of the Company; and (vi) to the Company’s Knowledge,
there are no agreements, judicial orders or settlement agreements which limit or
restrict the Company’s rights to use any Intellectual Property.
(d) The
Intellectual Property of the Company includes the corporate names “International
Lift Systems, L.L.C.” and any derivations thereof, including without limitation
the corporate names listed on Schedule 4.10(d)
hereto. All goodwill with respect to the use of such names will inure
to the benefit of Lufkin, and none of the Sellers shall have any right to xxx or
recover against any Person with respect to the use of such name.
(e) For
purposes hereof, “Intellectual
Property” shall mean all:
(i) letters
patent of the United States or of any other country, all registrations and
recordings thereof, and all applications for letters patent of the United States
or of any other country, including registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State thereof, or any other country or any political
subdivision thereof, and all reissues, continuations, continuations in part or
extensions thereof (collectively, “Patents”);
(ii) copyrights
(including all computer software, all documentation, source and object codes
with respect to such software and all licenses and leases of software) and
general intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any State thereof, or any other country or any political subdivision
thereof, and all reissues, extensions or renewals
thereof (collectively, “Copyrights”);
(iii) trademarks,
trade names, corporate names, business names, trade styles, service marks,
logos, slogans, domain names, other source or business identifiers, prints and
labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof, or any other country or any political
subdivision thereof, all reissues, extensions or renewals thereof, and all
goodwill associated with or symbolized by any of the foregoing (collectively,
“Marks”);
and
(iv) know-how,
unpatented inventions, trade secrets, secret formulas, processes, designs,
confidential and technical information, manufacturing, engineering and technical
drawings, product specifications and other proprietary rights necessary for the
business of the Company as now conducted and, to the Company’s Knowledge, as
presently proposed to be conducted.
4.11 Licenses, Permits and
Governmental Approvals
. Except as set
forth on Schedule 4.11
hereto, (a) the Company has all material consents, licenses, permits,
certificates, franchises, authorizations and approvals issued or granted by, and
has made all material registrations and filings with, any Governmental Entity as
are necessary for the conduct of its business as currently conducted (each a
“License” and,
collectively, the “Licenses”); (b) each
License has been issued to, and duly obtained and fully paid for by, the holder
thereof and is valid and in full force and effect, except for any such
invalidities or failures to be in full force and effect as could not reasonably
be expected to have a Company Material Adverse Effect; (c) to the Company’s
Knowledge, all such Licenses will be renewed in the ordinary course, and no
Governmental Authority has taken or, to the Company’s Knowledge, threatened to
take any action to terminate, cancel or modify any of such Licenses; and (d)
none of such Licenses will terminate or become terminable as a result of the
transactions contemplated by this Agreement. Notwithstanding anything
to the contrary in this Section 4.11, the
representations and warranties in this Section 4.11 shall
not apply to (x) any right to Intellectual Property (which shall be subject
to the representations and warranties set forth in Section 4.10) or
(y) any License required under applicable Environmental, Health and Safety
Law (which shall be subject to the representations and warranties set forth in
Section
4.18).
4.12 Compliance
with Law
. Except with
respect to Tax matters (which are addressed in Section 4.16),
Intellectual Property matters (which are addressed in Section 4.10) or
environmental, health and safety matters (which are addressed in Section 4.18), and
except as set forth on Schedule 4.12 hereto,
the operations of the Company are and have been conducted in material compliance
with all Laws of all Governmental Entities having jurisdiction over any of the
Company or its assets, properties and operations, and no claim of any material
violation of any Law is pending or, to the Company’s Knowledge,
threatened.
4.13 Material
Contracts
(a) Schedule 4.13(a)
hereto sets forth a true and complete list of the Contracts to which the Company
is a party, by which any of them is bound or otherwise relating or affecting any
of their assets, properties or operations, in each of the following categories
(each, a “Company Material
Contract”):
(i) each
partnership, limited liability company or joint venture agreement;
(ii) each
Contract (or group of related Contracts) for the purchase by the Company of
goods and/or services involving total annual payments in excess of $100,000 in
2007 or 2008;
(iii) each
Contract (or group of related Contracts) for the sale by the Company of goods
and/or services involving total annual revenues in excess of $100,000 in 2007 or
2008;
(iv) each
Contract (or group of related Contracts) relating to a Debt
Obligation;
(v) each
Contract relating to a 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;
(vi) each
Contract limiting or purporting to limit the ability of the Company to engage or
compete in any line of business with any person or in any geographic
area;
(vii) any
Contract with any member or any Affiliate of the Company (including any
Seller);
(viii) any labor
union, management service, employment, consulting or other similar type of
Contract;
(ix) any
Contract obligating the Company or that would obligate or require any subsequent
owner of the Company to provide for indemnification or contribution with respect
to any matter;
(x) any
sales, distributorship, agency or similar agreement relating to the products
sold or services provided by the Company;
(xi) any
license, royalty or similar Contract;
(xii) any
Contract (or group of related Contracts) not entered into in the ordinary course
of business consistent with past practices and not cancelable by the Company,
without penalty to the Company, within 30 calendar days; or
(xiii) any other
Contract that might reasonably be expected to be material to the Company or its
business.
Each of
the above, a “Company Material
Contract.”
(b) Except as
set forth on Schedule
4.13(b) hereto, (i) each such Contract is (A) in full force and
effect and is a valid and binding obligation of the Company and (B) to
Company’s Knowledge, a valid and binding obligation of each other party thereto,
(ii)(A) the Company is not in breach thereof or default thereunder (and no
event or circumstance has occurred that with notice or lapse of time, or both,
would constitute an event of default), (B) to the Company’s Knowledge, no
other party to any such Contract is in breach thereof or default thereunder and
(iii) there is no pending or, to Company’s Knowledge, threatened litigation
with respect to any such Contract.
(c) Except as
set forth on Schedule
4.13(c) hereto, the enforceability of the Contracts set forth on Schedule 4.13(a)
hereto will not be affected in any manner by the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, nor will
the counterparties thereto be subject to any additional rights or privileges
thereunder as a result thereof because of a “change of control” or
otherwise.
4.14 Labor
Matters
. As of the date
hereof, (a) there is no material labor dispute involving, or strike,
slowdown or work stoppage against, the Company, and no such dispute or action is
pending or, to the Company’s Knowledge, threatened; (b) the hours worked by
and payments made to employees of the Company comply with the Fair Labor
Standards Act and each other federal, state, local or foreign Law applicable to
such matters; (c) all payments due from the Company for employee health and
welfare insurance have been paid or accrued as a liability on the books of the
Company; (d) the Company is not a party to or bound by any collective
bargaining agreement, management agreement, consulting agreement, employment
agreement, bonus, equity compensation plan or agreement or any similar plan,
agreement or arrangement; (e) there is no organizing activity involving the
Company pending or, to the Company’s Knowledge, threatened by any labor union or
group of employees; (f) there are no representation proceedings pending or,
to the Company’s Knowledge, threatened with the National Labor Relations Board,
and no labor organization or group of employees of the Company has made a
pending demand for recognition; (g) the Company has not received any written
complaint of any unfair labor practice or other unlawful employment practice or
any written notice of any material violation of any Law with respect to the
employment of individuals by, or the employment practices, wages, hours, or
terms and conditions of employment of, the Company; and (h) there are no
material complaints or charges against the Company pending or, to the Company’s
Knowledge, threatened to be filed with any Governmental Entity or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by the Company of any
individual.
4.15 ERISA
. For purposes of this
Section 4.15,
unless otherwise indicated, all references to the “Company” shall include the
Company and each ERISA Affiliate of the Company.
(a) Schedule 4.15(a)
hereto contains a list of all Benefit Plans and a brief description of each,
which among things, identifies each “employee pension benefit plan” (as defined
in Section 3(2) of ERISA) (“Pension Plan”), and each
“employee welfare benefit plan” (as defined in Section 3(1) of ERISA) (“Welfare Plan”) as
such. The Company has made available to Lufkin true, complete and
correct copies of (i) each Benefit Plan, including, without limitation,
participating employer agreements (or, in the case of any unwritten Benefit
Plans, descriptions thereof), (ii) all of the annual reports on Form 5500
most recently filed with the IRS and the related summary annual report
distributed to participants with respect to each Benefit Plan (if any such
report was required), (iii) all minutes of meetings of any committee
established to administer any Benefit Plan other than minutes that would be
subject to privacy laws relating to disclosure of medical information,
(iv) the most recent actuarial report for each Benefit Plan for which an
actuarial report is required by ERISA or other applicable law, (v) all
summary plan descriptions for each Benefit Plan for which a summary plan
description is required by ERISA or other applicable Law and each summary of
material modifications prepared, as required by ERISA or other applicable law,
(vi) each trust agreement relating to any Benefit Plan, (vii) all
applications, including all attachments, submitted to the IRS by the Company for
IRS determination letters or rulings with respect to Benefit Plans and the IRS
determination letters or rulings issued as a result of such applications, and
all other material correspondence for the last six consecutive years prior to
the Closing Date with the IRS or the United States Department of Labor relating
to plan qualification, filing of required forms, or pending, contemplated and
announced plan audits, (viii) descriptions of all claims filed and pending
(other than for benefits in the normal course), lawsuits pending, grievances
pending and similar actions pending with respect to Benefit Plans of the
Company, (ix) a listing of all employees or former employees receiving long
term disability benefits under a Benefit Plan of the Company, (x) a listing of
all prior mergers, consolidations or transfers of Benefit Plan assets or
liabilities described in Section 414(l) of the Code or the regulations
thereunder that have occurred within the last six years prior to the Closing
Date, (xi) copies of all collective bargaining agreements (and any related
side letters of understanding) that relate to any Benefit Plans of the Company,
and (xii) a listing of all Company employees indicating date of birth, date
of commencement of service, job title or brief job description, the amount of
the employee’s salary and bonus, if applicable, the date of the last salary
increase for each salaried employee, any material commitments, arrangements,
promises or understandings with the employee as to salary or bonus, if
applicable, and any other contract or payment agreement between the Company and
the employee.
(b) The
Company does not sponsor, maintain, participate in or contribute to, and has not
at any time sponsored, maintained, participated in or contributed to (and been
required to contribute to), any (i) “multiemployer plan” as that term is
defined in Section 414(f) of the Code or Section 4001(a)(3) of ERISA;
(ii) foreign Benefit Plans; (iii) voluntary employee benefit
associations intended to be exempt from federal income tax under Section
501(c)(9) of the Code; (iv) Pension Plan that is or was subject to Title IV of
ERISA; (v) Pension Plan that is or was subject to Section 302 of ERISA or
Section 412 of the Code; or (vi) Benefit Plan other than a Pension Plan (which
provides for no welfare benefits) that provides compensation or benefits to any
former employee, officer, director or other service provider or any dependents
or beneficiaries of any of the foregoing, other than fully insured death
benefits or as required by Part 6 of Title I of ERISA or Section 4980B of the
Code or any similar Law. Neither the Company nor any Benefit Plan
maintains or contributes to any group annuity contract.
(c) Each
Pension Plan that is subject to Section 201, 301 or 401 of ERISA has been the
subject of a determination letter from the IRS to the effect that such Pension
Plan is qualified under Section 401(a) of the Code, as currently in effect, or
can still be submitted in a timely manner to the IRS for such a letter; no such
determination letter has been revoked nor, to the Company’s Knowledge, has
revocation of any such letter been threatened, nor has any such Pension Plan
been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or increase its costs; to the Company’s Knowledge, nothing has
occurred or failed to occur in connection with the adoption or maintenance of
such Pension Plan which would cause the loss of such qualification; and all
amendments required to be adopted before the Closing Date for any such Pension
Plan to continue to be so qualified have been timely adopted. Each
Pension Plan that is not subject to Section 201, 301 or 401 of ERISA has timely
filed the statement required by 29 CFR 2520.104-23. The Company has
paid all premiums (including any applicable interest, charges and penalties for
late payment) due the Pension Benefit Guaranty Corporation (the “PBGC”) with respect to each
Pension Plan for which premiums to the PBGC are required. No Pension
Plan in whole or in part ever maintained by the Company has been terminated or
partially terminated under circumstances which would result in liability to the
PBGC.
(d) Each of
the Benefit Plans which is sponsored by the Company or in which the Company
participates (i) is in compliance with all reporting and disclosure
requirements of Part 1 of Subtitle B of Title I of ERISA or other
applicable law, (ii) has had the appropriate required Form 5500 (or
equivalent annual report) timely filed with the appropriate governmental
authority for each year of its existence, (iii) has at all times complied
with the bonding requirements of Section 412 of ERISA or other applicable law,
(iv) has no issue pending (other than the payment of benefits in the normal
course) nor any issue resolved adversely to the Company which may subject the
Company to the payment of any material penalty, interest, tax or other
obligation, nor is there any basis for any imposition of any such liability, and
(v) has been maintained in all material respects with the requirements of
ERISA and the Code and other applicable Law (including all rules and regulations
issued thereunder) not otherwise covered hereunder so as not to give rise to any
liabilities to the Company.
(e) The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not give rise to any, or trigger any, change
of control, accelerated vesting, severance or other similar provisions in any
Benefit Plan.
(f) Each such
Pension Plan of the Company (including any such plan covering retirees or other
former employees) may be amended or terminated without liability (other than
with respect to pension benefits in the ordinary course) to the Company on or at
any time after the consummation of the transactions contemplated by this
Agreement without contravening the terms of such plan or any Law or agreement
that pertains to the Company.
(g) None of
the Company, the officers of the Company, the Benefit Plans (including the
Pension Plans) or any fiduciary of any Benefit Plan which are subject to ERISA,
or any trustee or administrator thereof, has engaged in a “prohibited
transaction” (as such term is defined in Section 406, 407 or 408 of ERISA or
Section 4975 of the Code) or any other breach of fiduciary responsibility that
could subject the Company or the officers of the Company to the tax or penalty
on prohibited transactions imposed by such Section 4975 or to any liability
under Section 502(i) or (1) of ERISA, or any other provision of ERISA, which
would have a Company Material Adverse Effect.
(h) With
respect to any Welfare Plan, (i) each such Welfare Plan that is a group
health plan, as such term is defined in Section 5000(b)(1) of the Code, has
complied at all times in form and in operation in all material respects with the
applicable requirements of Part 6 of Title I of ERISA and Section
4980B(f) of the Code and other applicable Law and (ii) each such Welfare
Plan (including any such plan covering retirees or other former employees) may
be amended (including, without limitation, to prospectively curtail or
discontinue benefits and/or impose or increase employee, retiree or other former
employee participant contribution requirements) or terminated without liability
(other than with respect to welfare benefits in the ordinary course) to the
Company on the consummation of the transactions contemplated by this Agreement
without contravening the terms of such plan or any Law or agreement that
pertains to the Company.
(i) All
contributions required by Law or by a collective bargaining or other agreement
to be made under the Benefit Plans with respect to all periods through the
Closing Date, including a pro rata share of contributions due for the current
plan year, will have been made by such date or provided for by adequate reserves
properly reflected on the books of the Company in accordance with
GAAP. No changes in contributions or benefit levels are scheduled to
occur other than in the ordinary course of business.
(j) Except as
set forth on Schedule
4.15(j) hereto, the Company has no liability for the Taxes of any other
Person pursuant to, or as a result of, any Benefit Plan.
(k) Without
the prior written consent of Lufkin, none of the Company, any officer of the
Company nor or any fiduciary of any Benefit Plan who is an employee of the
Company has made any legally binding written or oral representation to any
employee or any participant in any Benefit Plan concerning the transactions
contemplated by this Agreement or the effect such transactions will have on the
Benefit Plans that is inconsistent with the terms of such Benefit
Plans.
(l) There is
no amount or item of compensation under any agreement or arrangement to which
the Company is a party, including but not limited to any Benefit Plan, which
amount or item was or is, as of the Closing Date, includible in gross income for
Federal income tax purposes pursuant to Section 409A of the Code and the
Treasury Regulations and administrative guidance thereunder, and no such
inclusion would result from the operation and fulfillment of any agreement or
arrangement to which the Company is a party, including but not limited to any
Benefit Plan, in accordance with the terms thereof.
4.16 Taxes
. (a) The
Company has filed (or joined in the filing of) when due all Tax Returns required
by applicable Law to be filed with any Governmental Entity; (b) all such
Tax Returns were true, correct and complete in all material respects as of the
time of such filing; (c) all Taxes relating to periods ending on or before
the Closing Date owed by the Company (whether or not shown on any Tax Return) at
any time on or prior to the Closing Date, if required to have been paid, have
been timely paid (except for Taxes that are being contested in good faith in
appropriate proceedings and that are set forth on Schedule 4.16(c)
hereto); (d) except as set forth on Schedule 4.16(d)
hereto, any material liability of the Company for Taxes not yet due and payable,
or that is being contested in good faith in appropriate proceedings, has been
adequately provided for on the Company’s Financial Statements in accordance with
GAAP, and the amount of the liability of the Company for unpaid Taxes for all
periods (or portions thereof) ending on or before the Closing Date does not, in
the aggregate, exceed the amount of current liability accruals for Taxes
(excluding reserves for deferred Taxes net of any provision for net operating
losses) as such accruals are reflected in the Company Financial Statements,
except to the extent of Taxes arising out of operations and transactions in the
ordinary course of business of the Company since the date of such financial
statements in accordance with past practice, the accruals for which have been
made in a manner consistent with past practice; (e) there is no action,
suit, proceeding, investigation, audit or claim now pending against, or with
respect to, the Company in respect of any material Tax or Tax assessment, nor
has any claim for an additional material Tax or Tax assessment been asserted in
writing or, to the Company’s Knowledge, proposed by any Tax authority;
(f) no written claim has been made by any Governmental Entity in a
jurisdiction in which the Company does not currently file any Tax Returns that
it is or may be subject to Tax by such jurisdiction, nor to the Company’s
Knowledge has any such assertion been threatened or proposed in writing;
(g) the Company is not a party to any Tax sharing agreement or other
agreement, whether written or unwritten, providing for the payment of Taxes,
payment for Tax losses, entitlements to refunds or similar Tax matters;
(h) the Company has withheld and paid all material Taxes required to be
withheld by the Company in connection with any amounts paid or owing to any
employee, creditor, independent contractor or other third party; (i) none
of the Tax Returns of the Company is currently being audited by the IRS or any
other applicable Governmental Entity; (j) the Company has not executed or
filed with the IRS or any other Governmental Entity any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any Taxes; (k) the Company has no liability for the Taxes
of any other Person under Treasury Regulations Section 1.1502-6 (or any similar
provision of U.S. state, local or foreign Law), as a result of being a member of
any affiliated, combined, unitary or similar group for Tax purposes (other than
a group the common parent of which is the Company); (l) there are no
Encumbrances for Taxes (other than Encumbrances for current Taxes not yet due
and payable) upon the assets of the Company; (m) no closing agreement pursuant
to Section 7121 of the Code (or any similar provision under other Law) has been
entered into that is binding on the Company; (n) the Company is not subject to
any private letter ruling of the IRS or comparable rulings of other Governmental
Entities; (o) the Company has not engaged in any transaction or participated in
any commercial arrangement under which the income therefrom is reportable on a
deferred basis for U. S. federal or other applicable income Tax purposes under
Section 453 of the Code or otherwise; (p) the Company has not been a party to a
transaction that is or is substantially similar to a “reportable transaction,”
within the meaning of Treasury Regulations Section 1.6011-4(b), or any other
transaction requiring disclosure under analogous provisions of U. S. state,
local or foreign Tax law; (q) the Company has not engaged in any activity in a
state of the United States or political subdivision of a state of the United
States (which activity creates a taxable nexus or permanent establishment) where
Tax Returns have not been filed; (r) since inception, the Company has been taxed
as a partnership or a disregarded entity for federal income Tax purposes; (s)
neither the Company nor any Person on its behalf has granted to any Person any
power of attorney that is currently in force with respect to any Tax matter; and
(t) none of the assets of the Company is (i) property required to be treated as
owned by another Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Code, (ii) “tax-exempt use property” within the meaning of
Section 168(h)(1) of the Code, (iii) “tax-exempt financed property” within the
meaning of Section 168(h)(5) of the Code, (iv) “limited use property” within the
meaning of Revenue Procedure 2001-28, 2001-1 C.B. 1156, (v) subject to Section
168(g)(1)(A) of the Code or (vi) subject to a “Section 467 rental agreement” as
defined in Section 467 of the Code.
For
purposes of this Agreement, “Tax Returns” means all
returns, reports, exhibits, schedules, information statements and other
documents (including any additional or supporting material) filed or maintained,
or required to be filed or maintained, in connection with the calculation,
determination, assessment or collection of any Tax and includes any amended
returns required as a result of examination adjustments made by the IRS or other
Governmental Entity. For purposes of this Agreement, “Tax” or “Taxes” means any and all
federal, state, local, foreign and other taxes, levies, fees, imposts and duties
of whatever kind (including any interest, penalties or additions to the tax
imposed in connection therewith or with respect thereto), including, without
limitation, taxes imposed on, or measured by, income, franchise, profits or
gross receipts, and also ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding, employment,
social security, workers’ compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premium, windfall profits,
transfer and gains taxes and customs duties.
4.17 Litigation
. No Litigation is
now pending or, to the Company’s Knowledge, threatened against the Company that
could reasonably be expected to (a) have a Company Material Adverse Effect
or (b) materially impair or delay the ability of any of the Sellers or the
Company to perform their respective obligations under this Agreement or
consummate the transactions contemplated hereby. There is no
Litigation pending or, to the Company’s Knowledge, threatened, that seeks
damages in excess of $100,000 or injunctive relief against, or alleges criminal
misconduct of, the Company.
4.18 Environmental
Matters
. Except as set
forth on Schedule
4.18 hereto:
(a) the real
property listed on Schedules 4.9(a) and
4.9(b) hereto
is free of contamination from any Hazardous Material except for such
contamination that would not adversely impact the value or marketability of such
real property in any material respect and that would not result in liabilities
that could reasonably be expected to exceed $100,000;
(b) the
Company has not caused or allowed to occur any use, release, transportation,
storage, or disposal of Hazardous Materials on, at, in, under, above, to, from
or about any of its real properties except where such use, release,
transportation, storage or disposal would not adversely impact the value or
marketability of such real property in any material respect and would not result
in liabilities that could reasonably be expected to exceed
$100,000;
(c) the
Company is and has been in compliance with all Environmental, Health and Safety
Laws, except for such noncompliance that would not result in liabilities which
could reasonably be expected to exceed $100,000;
(d) the
Company has obtained, and is in compliance with, all Environmental Permits
required for the operation of its business as presently conducted or as proposed
to be conducted, except where the failure to so obtain or comply with such
Environmental Permits would not result in liabilities that could reasonably be
expected to exceed $100,000, and all such Environmental Permits are valid,
uncontested and in good standing;
(e) the
Company is not involved in operations, and to the Company’s Knowledge, there are
no facts, circumstances or conditions, including any use, release,
transportation, storage, or disposal of Hazardous Materials, that are likely to
result in any liabilities which could reasonably be expected to exceed $100,000,
and the Company has not permitted any current or former tenant or occupant of
its real property to engage in any such operations;
(f) there is
no Litigation arising under or related to any Environmental, Health and Safety
Laws, Environmental Permits or Hazardous Material pending or, to the Company’s
Knowledge, threatened that seeks damages, penalties, fines, costs or expenses in
excess of $100,000 or injunctive relief against, or that alleges criminal
misconduct by, the Company;
(g) the
Company has not received any notice of noncompliance with, violation of, or
liability or potential liability under any Environmental, Health and Safety Law
(including any notice identifying the addressee as a “potentially responsible
party” or requesting information under CERCLA or analogous state statutes) or
entered into or become subject to any consent decree or other agreement with any
Governmental Entity or any other Person relating to any Environmental, Health
and Safety Law or the cleanup of any Hazardous Material;
(h) to the
Company’s Knowledge, there are no past or present facts, circumstances or
conditions that are reasonably likely to result in (i) the Company’s incurring
costs, expenses, liabilities or obligations for cleanup, remediation, disposal
or corrective action under any Environmental, Health and Safety Law, (ii) claims
against the Company for personal injury, property damage or damage to natural
resources or (iii) fines, penalties or injunctive relief against the Company;
and
(i) The
Company has provided to Lufkin copies of all existing environmental reports,
reviews and audits relating to their real property and all other material
written information pertaining to actual or potential Environmental
Liabilities.
Notwithstanding
the foregoing, except as disclosed in Schedule 4.18
hereto, none of the matters addressed in clauses (a) through
(i) above,
individually or in the aggregate, could reasonably be expected to have a Company
Material Adverse Effect.
4.19 Insurance
. The Company is
insured by insurers of recognized financial responsibility against such losses
and risks, and in such amounts, as is prudent and customary in the business in
which it is engaged. Schedule 4.19(a)
hereto lists all insurance policies of any nature maintained for current
occurrences with respect to the Company, as well as a summary of the terms of
each such policy. All such policies are in full force and
effect. All premiums due on such policies have been paid, there is no
default under any provision of such policies, and no notice of cancellation or
termination or intent to cancel has been received by the Company with respect to
such policies. There is no dispute with respect to such
policies. To the Company’s Knowledge, no event relating specifically
to the Company (as opposed to events affecting the oilfield service industry in
general) has occurred that is reasonably likely to result in the Company’s being
unable to renew its existing coverage as and when such coverage expires, or to
obtain similar coverage from similar insurers, at a cost that would not have a
Company Material Adverse Effect. The Company has not been refused any
insurance coverage sought or applied for. Excluding policies that
have expired and been replaced in the ordinary course of business, no excess
liability or protection and indemnity insurance policy has been cancelled by the
insurer within one year prior to the date hereof. Schedule 4.19(b)
hereto sets forth a list of all pending claims (including with respect to
insurance obtained but not currently maintained) and the claims history for the
Company during the last five years (including with respect to insurance obtained
but not currently maintained).
4.20 Bank
Accounts
. Schedule 4.20 hereto
lists all banks and other financial institutions at which the Company maintains
deposit or other accounts or safe deposit boxes, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, the
complete account number therefor and the authorized signatories or persons
having access to such accounts.
4.21 Customers and
Suppliers
. There is no
actual nor, to the Company’s Knowledge, threatened termination or cancellation
of, or material adverse modification or change in, the business relationship of
the Company with any customer or group of customers whose purchases during the
year ended December 31, 2008 caused them to be ranked among the ten largest
customers of the Company, or the business relationship of the Company with any
supplier material to its operations.
4.22 FCPA
. None of the
Company or any of its managers, officers, members, agents, employees
or other representatives has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity, has made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds, has
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or has made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
4.23 Liability for
Fees
. Other than with
respect to McGladrey Capital Markets LLC (the fees of which shall be paid by the
Sellers and not by the Company or Lufkin), neither the Company nor any of its
Affiliates has employed or retained any investment banker, broker, agent, finder
or other party, or incurred any liability or obligation, contingent or
otherwise, for brokers’ or finders’ fees, advisory fees or commissions, with
respect to the transactions contemplated by this Agreement for which Lufkin or
the Company shall have any responsibility.»
ARTICLE
5
REPRESENTATIONS AND
WARRANTIES OF LUFKIN
Lufkin
hereby represents and warrants to the Sellers as follows:
5.1 Organizational
Matters
. Lufkin is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas and each other jurisdiction necessary for the consummation
of this Agreement.
5.2 Authority; Authorization;
Enforceability
. Lufkin has all
requisite power and authority to enter into this Agreement, to consummate the
transactions contemplated hereby and to perform its obligations
hereunder. The execution and delivery of this Agreement and the
performance of Lufkin’s obligations hereunder have been duly and validly
authorized by the board of directors of Lufkin and no other proceedings on the
part, or on behalf, of Lufkin are necessary to effect such execution, delivery,
consummation and performance. This Agreement has been duly
authorized, executed and delivered by Lufkin and is a legal, valid and binding
obligation of Lufkin, enforceable against Lufkin in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors’ rights generally or by
general equitable principles).
5.3 No
Conflicts or Violations
. The execution,
delivery and performance of this Agreement by Lufkin and the consummation of the
transactions contemplated hereby do not and will not (a) violate or
conflict with any provision of its articles of incorporation, bylaws or other
organizational documents; (b) violate any Law or any judgment, order,
decree, rule or regulation of any Governmental Entity applicable to it or any of
its properties or assets; or (c) violate, result in a breach of, constitute
(with due notice or lapse of time or both) a default under or cause any
obligation, penalty or premium to arise or accrue under any contract, lease,
credit or loan agreement, mortgage, security agreement, indenture or other
agreement or instrument to which it is a party, by which it is bound or to which
any of its properties or assets is subject (except in the case of clauses (b) and (c) above for any
such violations, breaches, defaults or accruals that could not reasonably be
expected to have a Lufkin Material Adverse Effect).
5.4 Consents
and Approvals
. No consent,
approval, waiver or authorization of, or filing, registration or qualification
with, any Governmental Entity or any other Person (on the part of Lufkin) is
required for Lufkin to execute and deliver this Agreement or to perform its
obligations hereunder, except for such consents, approvals, waivers or
authorizations as have been obtained or such filings, registrations or
qualifications as have been accepted as of the date hereof.
5.5 Liability for
Fees
. Lufkin has not
employed or retained any investment banker, broker, agent, finder or other
party, or incurred any liability or obligation, contingent or otherwise, for
brokers’ or finders’ fees, advisory fees or commissions, with respect to the
transactions contemplated by this Agreement for which any Seller shall have any
responsibility.
ARTICLE
6
ADDITIONAL
AGREEMENTS
6.1 Further
Assurances
. Each of the
Sellers shall execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered to Lufkin 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
Lufkin, as shall be necessary to vest in Lufkin all the right, title and
interest in and to the Interests free and clear of all Encumbrances and shall
use his or its best efforts to cause to be taken such other action as Lufkin may
require to more effectively implement and carry into effect the transactions
contemplated by this Agreement.
6.2 Covenant
Not to Compete With the Business
(a) For a
period of thirty-six (36) months immediately following the Closing Date (the
“Restricted Period”), no
Seller shall, either directly or indirectly, in the “Restricted Area”:
(i) accept
employment with, work for, or provide services to any person or entity that is
engaged in the business of the manufacture, installation, service and sales of
gas lift and plunger lift systems, packers and service tools without the
Company’s express written consent;
(ii) call
upon, solicit, recruit, divert or take away, or attempt to solicit, recruit,
divert or take away, any of the customers, prospective customers, investors,
prospective investors, business, vendors, or suppliers of the
Company;
(iii) solicit,
recruit or employ (whether as an employee, officer, director, agent, consultant
or independent contractor) any person who is or was at any time during the
preceding six (6) months an employee, officer or director of the Company;
or
(iv) take any
action to encourage or induce any employee, representative, officer or director
of the Company to cease their relationship with the Company for any
reason.
(b) For
purposes of this Agreement, the “Restricted Area” is and shall
be those states of the United States and those foreign nations in which the
Company has transacted business in the twenty-four (24) months preceding the
Closing Date.
(c) Each
Seller acknowledges and agrees that this non-competition and non-solicitation
obligation is both reasonable and necessary to protect Lufkin’s legitimate
business interests, including, without limitation, Lufkin’s legitimate interest
in protecting its investment in acquiring the Company. Each Seller
further acknowledges and agrees that the temporal term, geographic scope, and
activity scope of this non-competition and non-solicitation obligation is
reasonable and necessary, and should be fully enforced.
6.3 Release
(a) As of the
Closing Date, each of the Sellers does hereby for himself or itself and his or
its successors and assigns release, acquit and forever discharge Lufkin, the
Company, their respective Affiliates, the officers, directors, managers,
employees and agents thereof and their respective successors and assigns from of
any and all claims, demands, liabilities, responsibilities, disputes, causes of
action and obligations of every nature whatsoever, liquidated or unliquidated,
known or unknown, matured or unmatured, fixed or contingent, that such Seller or
its Affiliates now has, owns or holds or has at any time previously had, owned
or held against such parties, including, without limitation, all liabilities
created as a result of the negligence, gross negligence and willful acts of the
Company and its employees and agents, or under a theory of strict liability,
existing as of the Closing Date or relating to any action, omission or event
occurring on or prior to the Closing Date; provided, however, that any claims,
liabilities, debts or causes of action that may arise in the connection with the
failure of any of the Parties hereto to perform any of their obligations
hereunder or under any other agreement relating to the transactions contemplated
hereby or from any breaches by any of them of any representations or warranties
herein or in connection with any of such other agreements shall not be released
or discharged pursuant to this Agreement.
(b) Each of
the Sellers represents and warrants that he or it has not previously assigned or
transferred, or purported to assign or transfer, to any Person or entity
whatsoever all or any part of any claim, demand, liability, responsibility,
dispute, cause of action or obligation released herein. Each of the
Sellers covenants and agrees that such Seller will not assign or transfer to any
Person or entity whatsoever all or any part of the claim, demand, liability,
responsibility, dispute, cause of action or obligation released
herein. Each of the Sellers has read and understands all of the
provisions of this Section 6.3, and
he or it has been represented by legal counsel of his or its own choosing in
connection with the negotiation, execution and delivery of this
Agreement.
(c) The
release provided by the Sellers pursuant to this Section 6.3
shall apply notwithstanding that the matter for which release is provided may
relate to the ordinary, sole or contributory negligence, gross negligence,
willful misconduct or violation of Law by a released party, including Lufkin and
its Affiliates, officers, directors, employees and agents, and to liabilities
based on theories of strict liability, and shall be applicable whether or not
negligence of the released party is alleged or proven, it being the intention of
the Parties to release the released party from and against its ordinary, sole
and contributory negligence and gross negligence as well as liabilities based on
the willful actions or omissions of the released party and liabilities based on
theories of strict liability.
6.4 Tax
Matters
(a) The
Sellers shall prepare or cause to be prepared and file or cause to be filed,
subject to the review and reasonable approval of Lufkin, all Tax Returns for the
Company for all periods ending on or prior to the Effective Date that are
required to be filed after the Effective Date.
(b) Lufkin
shall prepare or cause to be prepared and file or cause to be filed any Tax
Returns of the Company for Tax periods which begin before the Effective Date and
end after the Effective Date. The Sellers shall pay to Lufkin, within
fifteen (15) days before the date on which Taxes are to be paid with respect to
such periods, an amount equal to the portion of such Taxes which relates to the
portion of such Tax period ending on the Effective Date. For purposes
of this Section 6.4(b), in the case of any Taxes that are imposed on a periodic
basis and are payable for a Tax period that includes (but does not end on) the
Effective Date, the portion of such Tax which relates to the portion of such Tax
period ending on the Effective Date shall (x) in the case of any Taxes other
than Taxes based upon or related to income, gains or receipts, be deemed to be
the amount of such Tax for the entire Tax period multiplied by a fraction the
numerator of which is the number of days in the Tax period ending on the
Effective Date and the denominator of which is the number of days in the entire
Tax period, and (y) in the case of any Tax based upon or related to income,
gains or receipts be deemed equal to the amount which would be payable if the
relevant Tax period ended on the Effective Date. Any credits relating
to a Tax period that begins before and ends after the Effective Date shall be
taken into account as though the relevant Tax period ended on the Effective
Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with reasonable prior practice
of the Company.
(c) To the
extent permitted by applicable Law, Lufkin or an Affiliate may carry back, or
cause or permit any Affiliate to carry back, for U. S. federal, state, local or
non-U. S. Tax purposes to any taxable year or period, or portion thereof, ending
on or before the Effective Date any operating losses, net operating losses,
capital losses, Tax credits or similar items arising in a taxable period (or
portion thereof) occurring on or after the Effective Date, except to the extent
that the Sellers would be materially adversely affected by such
carryback. To the extent that any liability for which, but for such
carryback, the Sellers would be liable under Article 8 is thereby reduced or
extinguished, the Sellers covenant to pay to Lufkin, an amount equivalent to the
liability that would otherwise have arisen under Article 8. Any
refunds of Taxes resulting from such carrybacks shall be for the benefit of
Lufkin and such Affiliate, and the Sellers shall have no entitlement
thereto.
(d) Treatment of
Purchase. For U.S. federal income tax purposes, the parties
agree to treat the purchase of the Interests by Lufkin as a purchase by Lufkin
of all of the Company’s assets, as provided in Revenue Ruling 99-6, 1999-1 C.B.
432 (Situation 2).
(e) Allocation of Purchase
Price. The consideration for the Interests (plus other
relevant items) paid to the Sellers under this Agreement shall be allocated
among the acquired assets of the Company in accordance with Section 1060 of the
Code and the Treasury Regulations thereunder (and any similar provision of
state, local or foreign Law, as appropriate), and the Parties shall cooperate
with each other in the preparation of such allocation. Lufkin and the
Sellers shall report and file Tax Returns (including, but not limited to, IRS
Form 8594) in all respect and for all purposes consistent with the agreed upon
allocation, and neither Lufkin nor the Sellers shall take any position that is
inconsistent with such allocation unless required to do so by Law.
(f) Tax
Contests. Lufkin shall inform the Sellers of the commencement
of any audit, examination or proceeding (“Tax Contest”) relating in
whole or in part to Taxes for which Lufkin may be entitled to indemnity from the
Sellers hereunder. With respect to any Tax Contest for which: (i) the
Sellers acknowledge in writing that the Sellers are liable under Article 8 for
all Losses relating thereto and (ii) Lufkin reasonably believes that the Sellers
will indemnify Lufkin for all such Losses, the Sellers shall be entitled to
control, in good faith, all proceedings taken in connection with such Tax Claim
with counsel satisfactory to Lufkin; provided, however, that (x) the
Sellers shall promptly notify Lufkin in writing of its intention to control such
Tax Contest, (y) in the case of a Tax Contest relating to Taxes of the Company
for a Tax period beginning before and ending after the Effective Date, the
Sellers and Lufkin shall jointly control all proceedings taken in connection
with any such Tax Contest and (z) if any Tax Contest could reasonably be
expected to have an adverse effect on Lufkin, the Company, or any of their
Affiliates in any Tax period beginning after the Effective Date, the Tax Contest
shall not be settled or resolved without Lufkin’s consent, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the
foregoing, if notice is given to the Sellers of the commencement of any Tax
Contest and the Sellers do not, within ten (10) Business Days after Lufkin’s
notice is given, give notice to Lufkin of its election to assume the defense
thereof (and in connection therewith, acknowledge in writing the indemnification
obligations hereunder of the Sellers), the Sellers shall be bound by any
determination made in such Tax Contest or any compromise or settlement thereof
effected by Lufkin. The failure of Lufkin to give reasonably prompt
notice of any Tax Contest shall not release, waive or otherwise affect the
Sellers’ obligations with respect thereto except to the extent that the Sellers
can demonstrate actual loss and prejudice as a result of such
failure. Lufkin and the Company shall use their reasonable efforts to
provide the Sellers with such assistance as may be reasonably requested by the
Sellers in connection with a Tax Contest controlled solely or jointly by the
Sellers.
(g) Transfer
Taxes. The Sellers and Lufkin shall each pay, and shall
indemnify the other from and against, 50% of all sales, use, transfer, stock
transfer, real property transfer and recording Taxes and other similar Taxes and
fees arising out of or in connection with the transactions effected pursuant to
this Agreement.
6.5 Continuation
of Business by Lufkin
. From the Closing
Date through December 31, 2013, unless otherwise agreed to by the Seller’s
Representative and Lufkin, Lufkin agrees:
(a) to
continue to operate the business conducted by the Company as of the date of this
Agreement; provided,
however, that the foregoing shall not be construed to require Lufkin to
continue the existence of the Company so long as its business is conducted by
Lufkin or a subsidiary of Lufkin;
(b) to cause
the Company (or the operating division or segment of Lufkin at that time
conducting the business conducted by the Company as of the date of this
Agreement) to be maintained as a separate, stand-alone operating division or
segment of Lufkin;
(c) to cause
each employee of the Company as of the date of this Agreement to devote
substantially all of his or her time to the business and operations of the
Company (or the operating division or segment of Lufkin at that time conducting
the business conducted by the Company as of the date of this Agreement); provided, however, that the
foregoing shall not be construed to require Lufkin to continue to employ any
person;
(d) to
maintain separate books and records for the Company (or the operating division
or segment of Lufkin at that time conducting the business conducted by the
Company as of the date of this Agreement), consistent with past practices, and
permit the Seller Agent to inspect such books and records upon reasonable
notice;
(e) except in
the ordinary course of business, not to sell or otherwise dispose of any of the
assets of the Company (or the operating division or segment of Lufkin at that
time conducting the business conducted by the Company as of the date of this
Agreement), other than worn out or obsolete inventory, equipment and other
assets;
(f) to
allocate overhead costs to the Company (or the operating division or segment of
Lufkin at that time conducting the business conducted by the Company as of the
date of this Agreement) reasonably and consistently with Lufkin’s practices;
and
(g) not to
take any action that has as its purpose the reduction of the EBITDA of the
Company (or the operating division or segment of Lufkin at that time conducting
the business conducted by the Company as of the date of this
Agreement).
6.6 No Public
Announcement
. None of Lufkin,
the Sellers or any of their respective Affiliates shall, without the written
approval of Lufkin or the Sellers, as the case may be, make any press release or
other public announcement concerning the transactions contemplated by this
Agreement, except as and to the extent that any such Person shall be so
obligated by Law or any rule or regulation of any securities exchange on which
such Person’s securities are listed for or admitted to trading, in which case
Lufkin or the Sellers, as the case may be, shall be advised and Lufkin and the
Sellers shall use their reasonable efforts to cause a mutually agreeable release
or announcement to be issued; provided, however, that the foregoing
shall not preclude communications or disclosures necessary to implement the
provisions of this Agreement (including communications or disclosures to lenders
or rating agencies or in connection with the receipt of any consents or
contractual notices) or to comply with applicable accounting, tax and disclosure
obligations of any Governmental Entity.
6.7 Expenses
. Except as
otherwise provided in this Agreement, Lufkin, the Company and each Seller shall
pay its or his costs and expenses incident to the negotiation and preparation of
this Agreement and its or his performance of and compliance with all agreements
and conditions contained herein on its or his part to be performed or complied
with, including fees, expenses and disbursements of legal counsel, investment
bankers and independent public accountants. In particular, it is
agreed that the legal fees of Xxxxx & Xxxxx, PLLC shall be paid by the
Sellers and not by the Company, and that the legal fees of Xxxxxxx Xxxxx LLP
shall not be included in the operating expenses of the Company (or the operating
division or segment of Lufkin at that time conducting the business conducted by
the Company as of the date of this Agreement) for the purposes of calculating
the EBITDA of the Company (or the operating division or segment of Lufkin at
that time conducting the business conducted by the Company as of the date of
this Agreement).
6.8 Member
Loans
. Concurrently with
the Closing, the Member Loans shall be repaid by the Sellers out of their
proceeds of the transactions contemplated by this Agreement.
6.9 Inventory
. Within 10 days of
the Closing Date, the Sellers shall deliver to Lufkin an inventory detail, by
location, of the Company as of February 28, 2008. Such inventory
detail shall show an aggregate value of the Company’s inventory as of such date
that is equal to the inventory value shown in the Company’s general ledger as of
such date, and shall be true, correct and complete in all material
respects.
ARTICLE
7
SURVIVAL OF REPRESENTATIONS,
WARRANTIES,
COVENANTS AND
AGREEMENTS
The
representations and warranties of the Sellers and Lufkin contained herein shall
survive the Closing until and through the date that is 18 months after the
Closing Date; provided,
however, that (a) the representations and warranties set forth in Sections 3.6, 4.23 and 5.5 (Liability for
Fees), Section
3.7 (Status), Section 3.8 (Retained
Control), Section
4.10 (Intellectual Property) and Section 4.18
(Environmental) shall survive until and through the date that is three years
after the Closing Date, (b) the representations and warranties set forth in
Section 4.16
(Taxes) shall survive until and through the date that is thirty days after the
expiration of the applicable statute of limitations (including extensions) for
each Tax and taxable year and (c) the representations and warranties set forth
in Sections
3.2, 4.3
and 5.2
(Authority; Authorization; Enforceability), Sections 3.3, 4.4 and 5.3 (No Conflicts or
Violations), Section
3.5 (Title to Interests) and Section 4.2
(Capitalization) shall survive indefinitely.
The
covenants and agreements in this Article 7 and in
Article 8 shall
survive the Closing and shall remain in full force and effect for such period as
is necessary to resolve any claim made with respect to any representation,
warranty, covenant or agreement contained herein during the survival period
thereof, and the covenants and agreements of Lufkin, the Company and each of the
Sellers contained in Section 2.2(c) and
Article 6
hereof shall survive the Closing for (x) the time period(s) set forth with
respect to such covenant or agreement, or (y) if no time period is specified,
without any contractual limitation on the period of survival.
ARTICLE
8
INDEMNIFICATION
8.1 Indemnification by the
Sellers
(a) Except as
otherwise limited by Article 7 and this
Article 8, the
Sellers, jointly and severally, agree to indemnify, defend and hold harmless
Lufkin, each of its Affiliates, each of their respective officers, directors,
employees, agents, equityholders and controlling Persons and each of their
respective successors and assigns (collectively, the “Lufkin Indemnitees”) from,
against and in respect of any 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)) actually
suffered, incurred or realized by any such party (collectively, “Losses”), arising out of,
resulting from or relating to any breach of any representation or warranty
(excluding the representations and warranties referenced in Section 8.1(b)), or
any breach of any covenant or agreement (excluding the covenants and agreements
referenced in Section
8.1(b)), made or undertaken by the Sellers or the Company in this
Agreement, or any misrepresentation or omission from any of the other
Transaction Documents.
(b) Notwithstanding
the forgoing Section
8.1(a), except as otherwise limited by Article 7 and this
Article 8, each
Seller, severally and not jointly, only as to himself and not as to any other
Seller, agrees to indemnify, defend and hold harmless the Lufkin Indemnitees
from, against and in respect of any Losses arising out of, resulting from or
relating to any breach by such Seller of any representation or warranty
contained in Article
3 or any breach by such Seller of any covenant or agreement contained in
Sections 6.1,
6.2, 6.3, 6.4(a), 6.6 and 6.7.
8.2 Indemnification by
Lufkin
. Except as
otherwise limited by Article 7 and this
Article 8,
Lufkin agrees to indemnify, defend and hold harmless the Sellers and each of
their respective successors and assigns (collectively, the “Seller Indemnitees”) from,
against and in respect of any Losses arising out of, resulting from or relating
to any breach of any representation or warranty, or any breach of any covenant
or agreement, made or undertaken by Lufkin in this Agreement, or any
misrepresentation in or omission from any other agreement, certificate or
document delivered to the Sellers pursuant to this Agreement.
8.3 Limits on
Indemnification
(a) Notwithstanding
anything in this Article 8 to the
contrary, no Party shall have any indemnification obligation hereunder to the
extent that a claim for indemnification is related to a representation, warranty
or covenant for which the survival period specified in Article 7 has expired
and is made after such expiration. For the avoidance of doubt, it is
understood and agreed that the expiration of the survival period with respect to
any particular representation, warranty or covenant shall have no effect upon a
claim for indemnification related to such representation, warranty or covenant
that was properly made prior to such expiration, and the Party making such claim
may pursue such claim as set forth in this Agreement until it is resolved or
abandoned.
(b) Notwithstanding
anything in this Article 8 to the
contrary, no Lufkin Indemnitee shall be entitled to indemnification from the
Sellers pursuant to Section 8.1(a) until
such time as the cumulative, aggregate amount of Losses suffered by such Lufkin
Indemnitee exceeds $150,000 (the “Deductible”), after which time
such Lufkin Indemnitee shall be entitled to indemnification for the full amount
of Losses in excess of the Deductible; provided, however, that the
Deductible shall not apply to (i) with respect to any particular Seller, any
claims based on the fraud, intentional misconduct or gross negligence of such
Seller or (ii) any claims based on any breach by the Sellers of any
representation or warranty contained in Section 4.2, 4.3 or 4.4 or of any of
their covenants or agreements contained herein.
(c) Notwithstanding
anything in this Article 8 to the
contrary, no Seller Indemnitee shall be entitled to indemnification from Lufkin
pursuant to Section
8.2 until such time as the cumulative, aggregate amount of Losses
suffered by such Seller Indemnitee exceeds the Deductible, after which time such
Seller Indemnitee shall be entitled to indemnification for the full amount of
Losses in excess of the Deductible; provided, however, that the
Deductible shall not apply to any claims based on fraud, intentional misconduct
or gross negligence or to any claims based on any breach by Lufkin of any
representation or warranty contained in Section 5.2 or 5.3 or of any of its
covenants or agreements contained herein.
(d) No Seller
shall be liable for indemnification obligations under Section 8.1(a) in the
aggregate in excess of an amount equal to the product of $25,000,000 multiplied
by the percentage membership interest set forth opposite the name of such Seller
on Annex 1
hereto; provided,
however, that the limitation set forth in this Section 8.3(d) shall
not apply to (i) with respect to any particular Seller, any claims based on the
fraud, intentional misconduct or gross negligence of such Seller or (ii) any
claims based on any breach by the Sellers of any representation or warranty
contained in Section
4.2, 4.3
or 4.4 or of
any of their covenants or agreements contained herein.
(e) For
purposes of calculating the aggregate amount of Losses claimed by a Party
entitled to receive indemnification hereunder (an “Indemnitee”), the amount of
each Loss shall be reduced by (i) any third-party insurance benefits which the
Indemnitee received in respect of or as a result of such Losses, less the
reasonable costs incurred by the Indemnitee to recover those insurance benefits
to the extent such costs are not otherwise recovered, and (ii) any Tax benefits
which the Indemnitee actually recognized and realized in respect of or as a
result of such Losses.
8.4 Offset; Adjustment of
Letters of Credit; Payment
(a) Lufkin
may offset any Loss for which it may seek indemnification pursuant to Section 8.1 as set
forth in this Section
8.4. During the period beginning on the Closing Date and
ending at 11:59 p.m., Central time, on the third anniversary of the Closing Date
(the “Indemnity
Period”), Lufkin may make a good faith claim for indemnification by
submitting to the Seller(s) the notice described in Section 8.5(a) and
may offset the amount of the Loss giving rise to such claim for indemnification
(or a reasonable estimate of the amount of such Loss). If the amount
of the Loss associated with any such claim is finally determined in accordance
with Section
8.4(f) during the Indemnity Period, Lufkin may offset the amount of such
Loss against the applicable Sellers’ Holdback Amounts. If the amount
of the Loss associated with any such claim is not finally determined in
accordance with Section 8.4(f) during
the Indemnity Period, Lufkin may establish a reserve for the estimated amount of
such Loss and offset the amount of such reserve against the applicable Sellers’
Holdback Amounts. From and after the Closing until such time as the
applicable Sellers’ Holdback Amounts shall have been exhausted, the sole source
of recovery that shall be available to any Lufkin Indemnitee with respect to
Losses as to which the applicable Sellers’ indemnification obligations pursuant
to Section 8.1
apply shall be through offset of the applicable Sellers’ Holdback
Amounts. From and after such time as the applicable Sellers’ Holdback
Amounts have been exhausted, any Lufkin Indemnitee shall be entitled to pursue
the applicable Sellers for recovery of such Losses as provided in this
Agreement.
(b) In the
event that Lufkin properly offsets all or any portion of the amount of a Loss or
all or any portion of the amount of the reserve for an estimated Loss against a
Seller’s Holdback Amount, and has provided such Seller with at least ten
Business Days’ advance written notice, Lufkin may, by notice to the LOC Issuer
as provided in such Seller’s Holdback Letter of Credit, instruct the LOC Issuer
to either (i) cancel such Seller’s existing Holdback Letter of Credit and issue
a new Holdback Letter of Credit with a face amount that has been reduced for
such offset or (ii) amend such Seller’s existing Holdback Letter of Credit to
reduce the face amount of such Holdback Letter of Credit for such
offset.
(c) The
responsibility for any indemnification obligation of the Sellers under Section 8.1(a) shall
be apportioned among the Sellers by multiplying the amount of the Loss by the
percentage membership interest set forth opposite the name of each Seller on
Annex 1
hereto.
(d) Any
indemnification obligation of any Seller in excess of his or its remaining
Holdback Amount, or that arises from a Loss with respect to which Lufkin
provides notice to such Seller subsequent to the end of the Indemnity Period,
shall be satisfied by payment to Lufkin by such Seller of the amount of such
excess, or the full amount of such Loss with respect to which Lufkin provides
notice to such Seller subsequent to the end of the Indemnity Period, by wire
transfer of immediately available funds within ten Business Days of receipt of
notice from Lufkin.
(e) Any
payment to the Sellers for any indemnification obligations of Lufkin under Section 8.2 shall be
apportioned among the Sellers by multiplying the amount of the aggregate Loss by
the percentage membership interest set forth opposite the name of each Seller on
Annex 1 hereto
and shall be paid by Lufkin by wire transfer of immediately available funds
within ten Business Days of receipt of notice from the Sellers.
(f) A Loss
arising out of an indemnification claim by Lufkin shall be deemed to be “finally
determined” when (A) in the case of a claim not involving a third party, (i) a
final, nonappealable decision has been rendered by an Arbitrator in accordance
with Section
9.10 or (ii) a final written settlement between the Parties involved has
been reached, or (B) in the case of a third party claim, (i) the applicable
Sellers have agreed in writing that they are liable for such Loss or (ii) a
final judgment against Lufkin or the applicable Sellers has been entered by a
court of competent jurisdiction. Lufkin may establish a reserve for a
Loss that has not been finally determined in accordance with this Section 8.4(f) only if the
applicable Sellers have agreed in writing that they are liable for such
Loss.
8.5 Procedure
. Subject to the
limitations set forth in Article 7 and this
Article 8, all
claims for indemnification under this Article 8 shall be
asserted and resolved as follows:
(a) An
Indemnitee shall promptly give a Party obligated to indemnify an Indemnitee
hereunder (an “Indemnitor”) notice of any
matter that an Indemnitee has determined has given or could give rise to a right
of indemnification under this Agreement, stating with reasonable particularity
the nature of such matter, the amount of the Loss, if known, and the method of
computation thereof. 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 or to the
extent such notice shall not have been sent within the time limitations set
forth in Article
7 hereof.
(b) The
obligations and liabilities of an Indemnitor under this Article 8 with
respect to Losses arising from claims or actions of any third party that are
subject to the indemnification provided for in this Article 8 (“Claims”) shall be governed by
and contingent upon the following additional terms and conditions. If
an Indemnitee shall receive notice of any Claim, the Indemnitee shall give the
Indemnitor prompt notice of such Claim and the Indemnitor may, at its option,
assume and control the defense of such Claim at the Indemnitor’s expense and
through counsel of the Indemnitor’s choice reasonably acceptable to the
Indemnitee. In the event the Indemnitor assumes the defense against
any such Claim as provided above, the Indemnitee shall have the right to
participate 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. The Indemnitee shall have the
right to employ separate counsel in any such action and participate in the
defense thereof; provided that the fees and
expenses of such separate counsel shall be at the expense of the Indemnitee
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Indemnitor, (ii) the named parties to any such
Claim (including any impleaded parties) include both the Indemnitee and the
Indemnitor, and (iii) the Indemnitee shall have been advised by such
counsel that there is one or more legal defenses available to it that are
different from or additional to those available to the Indemnitor. In
any such case, the Indemnitor shall not, in connection with any one action or
separate but substantially similar or related action in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
local counsel) for the Indemnitee. In the event the Indemnitor does
not elect to conduct the defense against any such 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 Claim that involves the payment of money only and for
which the Indemnitee is totally indemnified by the Indemnitor, no Claim may be
settled without the written consent of the Indemnitee, which shall not be
unreasonably withheld.
8.6 Failure to Pay
Indemnification
. If and to the
extent the Indemnitee shall make written demand upon the Indemnitor for
indemnification for which amounts are due and payable pursuant to this Article 8 and the
Indemnitor shall refuse or fail to pay in full within ten Business Days of such
written demand the amounts demanded pursuant hereto and in accordance herewith,
then the Indemnitee may utilize any legal or equitable remedy to collect from
the Indemnitor the amount of its Losses. Nothing contained herein is
intended to limit or constrain the Indemnitee’s rights against the Indemnitor
for indemnity, the remedies herein being cumulative and in addition to all other
rights and remedies of the Indemnitee.
8.7 Express
Negligence
. THE INDEMNITIES
SET FORTH IN THIS ARTICLE 8 ARE
INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS
TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS’ EXPRESS NEGLIGENCE RULE OR ANY
SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF
THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR
OTHER FAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.
8.8 Exclusive
Remedy
. FROM AND AFTER
THE CLOSING, IN THE ABSENCE OF FRAUD, INTENTIONAL MISREPRESENTATION OR GROSS
MISCONDUCT, THE REMEDIES OF THE PARTIES SPECIFICALLY PROVIDED FOR BY THIS ARTICLE 8 SHALL BE
THE SOLE AND EXCLUSIVE REMEDIES OF THE PARTIES FOR ALL MATTERS COVERED BY THIS
AGREEMENT; PROVIDED,
HOWEVER, THAT NOTHING HEREIN SHALL LIMIT A PARTY’S RIGHT TO SEEK SPECIFIC
PERFORMANCE OR INJUNCTIVE RELIEF IN CONNECTION WITH ANOTHER PARTY’S OBLIGATIONS
UNDER THIS AGREEMENT. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR
SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES,
LOST PROFITS, DIMINUTION IN VALUE, DAMAGE TO REPUTATION OR LOSS TO GOODWILL,
WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE, WHETHER ACTIVE, PASSIVE
OR CONCURRENT), STRICT LIABILITY OR OTHERWISE; PROVIDED, HOWEVER, THAT THIS
SECTION 8.8
SHALL NOT LIMIT A PARTY’S RIGHT TO RECOVERY UNDER THIS ARTICLE 8 FOR ANY
SUCH DAMAGES TO THE EXTENT SUCH PARTY IS REQUIRED TO PAY SUCH DAMAGES TO A THIRD
PARTY IN CONNECTION WITH A MATTER FOR WHICH SUCH PARTY IS OTHERWISE ENTITLED TO
INDEMNIFICATION UNDER THIS ARTICLE
8.
8.9 Tax Treatment of Indemnity
Payments
. Each Party, to
the extent permitted by applicable law, agrees to treat any payments made
pursuant to this Article 8 as
adjustments to the consideration payable for the Interests for all federal and
state income and franchise Tax purposes.
ARTICLE
9
MISCELLANEOUS
9.1 Seller
Agent
. Each of the
Sellers hereby irrevocably appoints Xxxxxx Xxxxx to be the representative (the
“Seller Agent”) of the
Sellers following the Closing Date in any matter arising out of this
Agreement. For any matter in which Lufkin is entitled to rely on or
otherwise deal with the Sellers, Lufkin shall be entitled to communicate solely
with the Seller Agent and shall be entitled to rely on any such communications
as being the desire and will of the Sellers. Notice delivered to the
Seller Agent in accordance with Section 9.2 shall be
deemed notice to all of the Sellers. For purposes of this Agreement,
each Seller, without any further action on its part, shall be deemed to have
consented to the appointment of the Seller Agent as the attorney-in-fact for and
on behalf of each such Seller, and for the taking by the Seller Agent of any and
all actions and the making of any decisions required or permitted to be taken by
such Seller under this Agreement. Accordingly, the Seller Agent has
unlimited authority and power to act on behalf of each Seller with respect to
this Agreement and the disposition, settlement or other handling of all
indemnification claims, amendments, waivers, and other rights or obligations
arising from and taken pursuant to this Agreement. The Sellers will
be bound by all actions taken by the Seller Agent in connection with this
Agreement, and Lufkin shall be entitled to rely on any action or decision of the
Seller Agent. The Seller Agent will not incur any liability with
respect to any action taken or allowed by it in reliance upon any notice,
direction, instruction, consent, statement or other document believed by it to
be genuine and to have been signed by the proper person (and shall have no
responsibility to determine the authenticity thereof), nor for any other action
or inaction, except its own willful misconduct, bad faith or gross
negligence. In all questions arising under this Agreement, the Seller
Agent may rely on the advice of counsel, and the Seller Agent will not be liable
to the Sellers for anything done, omitted or allowed in good faith by the Seller
Agent based on such advice. Notwithstanding the foregoing, (a) the
Seller Agent shall have none of the foregoing authority with respect to the
indemnification obligations of any other Seller arising pursuant to Section 8.1(b) and
Lufkin shall only be entitled to rely on the actions and decisions of the
applicable Seller and (b) Lufkin will not incur any liability to any Seller with
respect to any action taken or allowed by it in reliance upon any notice,
direction, instruction, consent, statement, in each case whether written or
oral, or other document provided by the Seller Agent, and no action or inaction
on the part of the Seller Agent shall relieve any Seller of its obligations to
Lufkin hereunder. If Xxxxxx Xxxxx shall become unable or unwilling to
serve as Seller Agent, a majority in interest of the Sellers (based on the
percentage membership interests set forth on Annex 1 hereto) shall
appoint another person to serve as Seller Agent.
9.2 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 (a) in person, (b) by
courier, (c) by overnight delivery service with proof of delivery,
(d) by prepaid registered or certified first-class mail, return receipt
requested or (e) by facsimile or other similar form of communication (with
receipt confirmed):
If to the
Sellers or the Seller Agent, to:
Xxxxxx
Xxxxx
00000
Xxxx Xxxxxx Xxxx
Xxxxxxxx
X
Xxxxxxx,
Xxxxx 00000
Facsimile:
(000) 000-0000
Confirm:
(000) 000-0000
With a
copy to:
Xxxxx
& Xxxxx, PLLC
0000
Xxxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attention:
Xxxxxxxx Xxxxx
Facsimile:
(000) 000-0000
Confirm:
(000) 000-0000
If to
Lufkin, to:
Lufkin
Industries, Inc.
000 Xxxxx
Xxxxxx
Xxxxxx,
XX 00000
Attention:
General Counsel
Facsimile:
(000) 000-0000
Confirm:
(000) 000-0000
With a
copy to:
Xxxxxxx
Xxxxx LLP
000
Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Attention:
Xxxx X’Xxxxx
Facsimile:
(000) 000-0000
Confirm: (000)
000-0000
or to
such other address or facsimile number and to the attention of such other Person
as any Party may designate by written notice given in accordance with the
provisions hereof. Any notice mailed shall be deemed to have been
given and received on the third Business Day following the day of
mailing.
9.3 Specific
Performance
. It is
specifically understood and agreed that any breach by the Sellers of the
provisions of this Agreement is likely to result in irreparable harm to Lufkin
and that an action at Law for damages alone will be an inadequate remedy for
such breach. Accordingly, in addition to any other remedy that may be
available to it, in the event of breach or threatened breach by any of the
Sellers of the provisions of this Agreement, including, without limitation,
Section 6.2,
Lufkin shall be entitled to enforce the specific performance of this Agreement
by the Sellers and to seek both temporary and permanent injunctive relief (to
the extent permitted by law), without the necessity of providing actual damages,
and such other relief as the court may allow.
9.4 Assignment and
Successors
. Except as
specifically contemplated by this Agreement, no Party hereto shall assign this
Agreement or any part hereof without the prior written consent of the other
Parties; provided,
however, that Lufkin may assign its rights and obligations in this
Agreement to an Affiliate of Lufkin, but Lufkin shall remain liable for its
duties and obligations hereunder. This Agreement shall inure to the
benefit of, be binding upon and be enforceable by the Parties and their
respective successors and assigns.
9.5 Entire Agreement;
Amendment
. This Agreement
and the Annexes, Exhibits and Schedules hereto constitute the entire agreement
and understanding among the Parties relating to the subject matter hereof and
thereof and supersede all prior representations, endorsements, premises,
agreements, memoranda communications, negotiations, discussions, understandings
and arrangements, whether oral, written or inferred, among the Parties relating
to the subject matter hereof. This Agreement (or any provision
hereof) 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 Lufkin and
the Company and by Sellers who, immediately prior to the Closing, owned at least
a majority of the outstanding membership interests in the Company.
9.6 Governing
Law
. This Agreement
shall be governed by and construed and interpreted in accordance with the
internal laws of the State of Texas, without regard to choice of law
rules.
9.7 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.
9.8 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.
9.9 No Third-Party
Beneficiaries
. Any agreement
contained, expressed or implied in this Agreement shall be only for the benefit
of the Parties 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, it being the intention of the Parties that no
Person shall be deemed a third-party beneficiary of this Agreement, except to
the extent a third party is expressly given rights herein.
9.10 Arbitration
(a) Except
for injunctive relief that a Party may seek in any court having jurisdiction,
the Parties shall first make a good faith effort to resolve any and all
disputes, controversies or claims (legal, equitable, tort, or statutory) between
any of the Parties that arise out of or relate to this Agreement or the other
agreements contemplated hereby (collectively, “Disputes”). If the
Parties, having negotiated in good faith for 30 days, shall be unable to resolve
a Dispute, the Parties shall next submit the Dispute to nonbinding
mediation. If the Parties are unable to resolve the Dispute in
mediation, then the Parties shall resolve the Dispute through binding
arbitration administered by the American Arbitration Association (“AAA”) in accordance with, to
the extent permitted by applicable law, the following, which shall have
controlling priority in the order listed: (i) the arbitration
provisions in this Agreement, (ii) the AAA Commercial Arbitration Rules (“AAA Rules”), (iii) the Federal
Arbitration Act (Title 9 of the United States Code); and (iv) to the extent (i),
(ii) or (iii) are inapplicable, unenforceable or invalid, the laws of the State
of Texas.
(b) Commencement of
Arbitration. An arbitration proceeding is commenced by one
Party serving a notice (an “Arbitration Notice”) on
another Party (with a copy to the AAA in accordance with the AAA Rules) in
accordance with the notice provisions set forth in Section 9.2. The
Arbitration Notice shall contain a reasonably detailed description of the
Dispute and the remedy sought.
(c) Selection of
Arbitrator. The arbitration shall be conducted by one (1)
neutral arbitrator whom the arbitration parties will choose, via the “alternate
strike” process set forth below, from an initial list the AAA provides of eleven
(11) persons whom the AAA deems meet the criteria of being a practicing attorney
with experience in the area of mergers and acquisitions of domestic oilfield
services companies (the “Arbitrator
List”). By 5:00 p.m. Houston, Texas time on the fifth Business
Day after receipt of the Arbitrator List from the AAA, the responding party
shall strike one arbitrator by faxed letter or email to the claiming party in
accordance with the notice provisions set forth in Section
9.2. By 5:00 p.m. Houston, Texas time the following Business
Day, the claiming party shall strike one arbitrator by faxed letter or email to
the responding party in accordance with the notice provisions set forth in Section
9.2. Thereafter, the arbitration parties shall continue
alternating in striking one arbitrator from the Arbitrator List each Business
Day by 5:00 p.m. Houston, Texas time until one person remains on the list, who
will be the arbitration parties’ chosen arbitrator for the arbitration (the
“Arbitrator”). If an
arbitration party fails to communicate a strike in a timely fashion, that strike
shall be forfeited and it shall be made by the other arbitration party by its
making two strikes by its deadline for its next strike. If the
arbitrator selected by this process cannot serve for any reason, then within
five Business Days of being notified the selected arbitrator cannot serve, the
arbitration parties will attempt to agree on an alternative method for selecting
an arbitrator. If no agreement is reached within such five Business
Days, the arbitration parties will request the AAA to issue a new list of eleven
(11) arbitrators and the striking process set forth herein will be repeated to
select the Arbitrator.
(d) Governing Law And
Rules. The Arbitrator is empowered to resolve Disputes by
summary rulings in accordance with the standards followed by Texas courts for
motions to dismiss or summary judgments. Except for claims brought
under federal law, in which event federal laws and federal common laws and
statute of limitations shall govern, all Disputes shall be governed by, and the
Arbitrator shall resolve all Disputes in accordance with, the internal laws of
the State of Texas (including the statutes of limitations governing under Texas
laws), without regard to choice of law rules. The Arbitrator may
grant any remedy or relief available under the applicable law that the
Arbitrator deems just and equitable or that the Arbitrator deems necessary to
make effective the award, provided that in no event may
the Arbitrator award special, incidental, consequential, punitive or exemplary
damages, and the Parties agree that they waive their right to all special,
incidental, consequential, punitive or exemplary damages that may arise from
circumstances giving rise to a
Dispute. The Arbitrator shall award pre- and post-decision interest
on all amounts awarded in accordance with pre- and post-judgment interest rules
and statutes of the State of Texas.
(e) Discovery. After
appointment of the Arbitrator, the arbitration parties may conduct discovery,
including taking of depositions and requesting production of documents, that is
directly relevant to the Dispute. The Arbitrator and AAA are
empowered to enforce this discovery provision and impose sanctions for or
provide protection against discovery abuses as the Arbitrator or AAA deem just
and necessary.
(f) Commencement of
Hearing. To the maximum extent possible, the arbitration
parties, the AAA and the Arbitrator shall take all action necessary to require
that an arbitration proceeding and hearing be concluded within 180 days of the
Arbitration Notice being filed with the AAA.
(g) Venue. Unless
the arbitration parties agree in writing otherwise, arbitration of Disputes
shall be conducted in Houston, Xxxxxx County, Texas.
(h) Decision. The
Arbitrator shall have thirty days from the conclusion of the hearing or any
post-hearing motions in which to render a decision. Unless the
arbitration parties agree in writing or on the record otherwise, the decision
shall be a written opinion and shall be in the form of a findings of fact and
conclusions of law setting forth the bases for the opinion reached.
(i) Fees and
Costs. The arbitration parties shall initially each pay 50% of
the costs of the arbitration proceedings; provided, however, that the
Arbitrator shall award the substantially prevailing arbitration party the
reasonable and necessary attorneys’ fees and expenses the substantially
prevailing arbitration party incurred in connection with resolving the Dispute,
and the Arbitrator shall assess all arbitration costs, including the
Arbitrator’s fees and costs, against the arbitration party not substantially
prevailing. If the Arbitrator deems that neither arbitration party
substantially prevailed on the Disputes submitted, the Arbitrator may decide
that each arbitration party shall bear its own attorneys’ fees and costs and
that each arbitration party shall pay equally the arbitration expenses and the
Arbitrator’s fees and expenses.
(j) Finality. All
decisions by the Arbitrator or AAA shall be binding on the arbitration parties
and shall not be subject to review or appeal. All Disputes decided
shall have res judicata
or collateral estoppel effect in accordance with governing law.
(k) Survival. The
arbitration provisions in this Section 9.10 shall
survive any termination, amendment or expiration of this Agreement and they
shall be effective and binding upon a Party and its successors and assigns
notwithstanding a bankruptcy filing.
(l) Confidentiality. Each
Party agrees that all Disputes and all matters conducted, decided or settled in
connection with arbitrating a Dispute, including discovery and the arbitration
hearing, shall be kept strictly confidential, except to the extent applicable
law, a Party’s legal obligations or a Party’s legal position asserted in such
arbitration requires disclosure of such information.
9.11 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, and shall become effective when one or more counterparts have been
signed by each of the Parties and delivered to the other Parties, whether such
delivery is by physical delivery or by means of a facsimile or portable document
format (pdf) transmission, it being understood that all Parties need no sign the
same counterpart.
[Signature page
follows]
IN
WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the
date first above written.
LUFKIN:
LUFKIN
INDUSTRIES, INC.
By: /s/ Xxxxxxxxxxx
X.
Xxxxx
Name: Xxxxxxxxxxx
X. Xxxxx
|
|
Title: Vice
President, Treasurer and Chief Financial
Officer
|
COMPANY:
INTERNATIONAL
LIFT SYSTEMS, L.L.C.
By: /s/ Xxxxxx Xxxxx
Xxxxx
Name: Xxxxxx
Xxxxx Xxxxx
Title: President
SELLERS:
XXXXX
XXXXXXX
/s/ Xxxxx
Xxxxxxx
Spouse
Acknowledgement
I, the
spouse of Xxxxx Xxxxxxx, have read and hereby approve the foregoing Agreement.
In consideration of Lufkin granting my spouse the consideration set forth in the
Agreement on the terms set forth in the Agreement, I hereby agree to be bound
irrevocably by the Agreement and further agree that any community property or
similar interest that I may have in my husband’s Interests shall hereby be
similarly bound. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment of or exercise of any right under the
Agreement.
/s/ Xxxxx
Xxxxxxx
Name: Xxxxx
Xxxxxxx
XXXXX
XXXXXXX
/s/ Xxxxx
Xxxxxxx
Spouse
Acknowledgement
I, the
spouse of Xxxxx Xxxxxxx, have read and hereby approve the foregoing Agreement.
In consideration of Lufkin granting my spouse the consideration set forth in the
Agreement on the terms set forth in the Agreement, I hereby agree to be bound
irrevocably by the Agreement and further agree that any community property or
similar interest that I may have in my wife’s Interests shall hereby be
similarly bound. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment of or exercise of any right under the
Agreement.
/s/ Xxxxx
Xxxxxxx
Name: Xxxxx
Xxxxxxx
DYW
2007 GRANTOR RETAINED ANNUITY TRUST
By: Xxxxx Xxxxxxx,
Trustee
/s/ Xxxxx
Xxxxxxx
WPW
2007 GRANTOR RETAINED ANNUITY TRUST
By: Xxxxx Xxxxxxx,
Trustee
/s/ Xxxxx
Xxxxxxx
XXXXX
ABIDE
/s/ Xxxxx
Abide
Spouse
Acknowledgement
I, the
spouse of Xxxxx Abide, have read and hereby approve the foregoing Agreement. In
consideration of Lufkin granting my spouse the consideration set forth in the
Agreement on the terms set forth in the Agreement, I hereby agree to be bound
irrevocably by the Agreement and further agree that any community property or
similar interest that I may have in my husband’s Interests shall hereby be
similarly bound. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment of or exercise of any right under the
Agreement.
/s/ Bonne R.
Abide
Name: Xxxxxx
X. Abide
XXXXX
XXXXXXX
/s/ Xxxxx
Xxxxxxx
Spouse
Acknowledgement
I, the
spouse of Xxxxx Xxxxxxx, have read and hereby approve the foregoing Agreement.
In consideration of Lufkin granting my spouse the consideration set forth in the
Agreement on the terms set forth in the Agreement, I hereby agree to be bound
irrevocably by the Agreement and further agree that any community property or
similar interest that I may have in my husband’s Interests shall hereby be
similarly bound. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment of or exercise of any right under the
Agreement.
/s/ Xxxx X.
Xxxxxxx
Name: Xxxx
X. Xxxxxxx
XXXXXX
XXXXX
/s/ Xxxxxx Xxxxx
Xxxxx
Spouse
Acknowledgement
I, the
spouse of Xxxxxx Xxxxx, have read and hereby approve the foregoing Agreement. In
consideration of Lufkin granting my spouse the consideration set forth in the
Agreement on the terms set forth in the Agreement, I hereby agree to be bound
irrevocably by the Agreement and further agree that any community property or
similar interest that I may have in my husband’s Interests shall hereby be
similarly bound. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment of or exercise of any right under the
Agreement.
/s/ Xxxxx
Xxxxx
Name: Xxxxx
Xxxxx
XXXXXX
XXXXXX
/s/ Xxxxxx
Xxxxxx
Spouse
Acknowledgement
I, the
spouse of Xxxxxx Xxxxxx, have read and hereby approve the foregoing Agreement.
In consideration of Lufkin granting my spouse the consideration set forth in the
Agreement on the terms set forth in the Agreement, I hereby agree to be bound
irrevocably by the Agreement and further agree that any community property or
similar interest that I may have in my husband’s Interests shall hereby be
similarly bound. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment of or exercise of any right under the
Agreement.
/s/ Xxxxx X.
Xxxxxx
Name: Xxxxx
X. Xxxxxx
XXXXXX
XXXXXXXXX
/s/ Xxxxxx
Xxxxxxxxx
Spouse
Acknowledgement
I, the
spouse of Xxxxxx Xxxxxxxxx, have read and hereby approve the foregoing
Agreement. In consideration of Lufkin granting my spouse the consideration set
forth in the Agreement on the terms set forth in the Agreement, I hereby agree
to be bound irrevocably by the Agreement and further agree that any community
property or similar interest that I may have in my husband’s Interests shall
hereby be similarly bound. I hereby appoint my spouse as my
attorney-in-fact with respect to any amendment of or exercise of any right under
the Agreement.
/s/ Xxxxxx X.
Xxxxxxxxx
Name: Xxxxxx
X. Xxxxxxxxx
XXXXX
XXXXXXXXX
/s/ Xxxxx
Xxxxxxxxx
Spouse
Acknowledgement
I, the
spouse of Xxxxx Xxxxxxxxx, have read and hereby approve the foregoing Agreement.
In consideration of Lufkin granting my spouse the consideration set forth in the
Agreement on the terms set forth in the Agreement, I hereby agree to be bound
irrevocably by the Agreement and further agree that any community property or
similar interest that I may have in my husband’s Interests shall hereby be
similarly bound. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment of or exercise of any right under the
Agreement.
/s/ Xxxxx X.
Xxxxxxxxx
Name: Xxxxx
X. Xxxxxxxxx
XXXXX
XXXXXX
/s/ Xxxxx
Xxxxxx
Spouse
Acknowledgement
I, the
spouse of Xxxxx Xxxxxx, have read and hereby approve the foregoing Agreement. In
consideration of Lufkin granting my spouse the consideration set forth in the
Agreement on the terms set forth in the Agreement, I hereby agree to be bound
irrevocably by the Agreement and further agree that any community property or
similar interest that I may have in my husband’s Interests shall hereby be
similarly bound. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment of or exercise of any right under the
Agreement.
/s/ Xxxxxx Xxx
Xxxxxx
Name: Xxxxxx
Xxx Xxxxxx
XXXXX
XXXXXXXX
/s/ Xxxxx
Xxxxxxxx
Spouse
Acknowledgement
I, the
spouse of Xxxxx Xxxxxxxx, have read and hereby approve the foregoing Agreement.
In consideration of Lufkin granting my spouse the consideration set forth in the
Agreement on the terms set forth in the Agreement, I hereby agree to be bound
irrevocably by the Agreement and further agree that any community property or
similar interest that I may have in my husband’s Interests shall hereby be
similarly bound. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment of or exercise of any right under the
Agreement.
/s/ Xxxxxx X.
Xxxxxxxx
Name: Xxxxxx
X. Xxxxxxxx
