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EXHIBIT 10.1
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AGREEMENT AND PLAN OF REORGANIZATION
AMONG
XXXXXXXX TOOL CO.,
THE SHAREHOLDERS OF
XXXXXXXX TOOL CO.,
THE SHAREHOLDERS OF
XXXXXXXX TOOL CO. (CANADA) INC. (FORMERLY, 000000 XXXXXXX LTD.),
XXXXXXXXXXX INTERNATIONAL, INC.
AND
XXXXXXXXXXX ACQUISITION, INC.
SEPTEMBER 14, 1999
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TABLE OF CONTENTS
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ARTICLE 1....................................................................1
THE MERGER AND RELATED MATTERS.........................................1
1.1 Merger....................................................1
1.2 Closing...................................................2
1.3 Conversion of Stock.......................................2
1.4 Exchange..................................................3
1.5 Cancellation of Treasury Stock............................3
1.6 Closing of Transfer Books.................................3
1.7 Reorganization............................................3
1.8 Liabilities Assumed by the Shareholders...................3
ARTICLE 2....................................................................3
REORGANIZATION OF XXXXXXXX CANADA......................................3
2.1 Exchange of Xxxxxxxx Canada Shares........................3
2.2 Closing...................................................3
2.3 Share Consideration.......................................4
2.4 Exchange..................................................4
2.5 Reorganization............................................4
ARTICLE 3....................................................................4
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.....................4
3.1 Organizational Matters....................................4
3.2 Validity of Agreement and Conflict with Other Instruments.6
3.3 Approvals, Licenses and Authorizations....................7
3.4 Title to and Condition of Properties......................7
3.5 Contracts and Commitments.................................8
3.6 Financial Statements......................................9
3.7 No Litigation............................................10
3.8 No Adverse Changes or Events.............................10
3.9 Environmental Matters....................................11
3.10 Warranties and Product Liability.........................12
3.11 Employee Matters.........................................12
3.12 Taxes and Governmental Returns and Reports...............15
3.13 Finder's Fees............................................19
3.14 Insurance................................................20
3.15 Securities Law Matters...................................20
ARTICLE 4...................................................................22
REPRESENTATIONS AND WARRANTIES OF WEATHERFORD.........................22
4.1 Corporate Matters........................................22
4.2 Capitalization...........................................23
4.3 Approvals, Licenses and Authorizations...................23
4.4 Finder's Fees............................................23
4.5 Authorization for the Weatherford Shares.................23
4.6 SEC Documents............................................23
4.7 Continuation of Company..................................24
ARTICLE 5...................................................................24
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REGISTRATION RIGHTS...................................................24
5.1 Registration Rights......................................24
5.2 Procedure................................................25
5.3 Indemnification..........................................26
5.4 Termination..............................................27
ARTICLE 6...................................................................27
ADDITIONAL AGREEMENTS.................................................27
6.1 Access to Information....................................27
6.2 Conduct of the Business..................................28
6.3 Negotiation with Others..................................30
6.4 Information..............................................30
6.5 Delivery of Documents....................................30
6.6 Further Assurances.......................................31
6.7 Nondisclosure of Proprietary Information.................31
6.8 Covenant Not to Compete With the Business................32
6.9 Use of Corporate Name....................................32
6.10 Release..................................................33
6.11 Payment of Obligations...................................33
6.12 HSR Filing...............................................34
6.13 Shareholder Approval; Voting.............................34
6.14 Right of First Refusal...................................34
ARTICLE 7...................................................................35
XXXXXXXXXXX'X AND SUB'S CONDITIONS....................................35
7.1 Representations, Warranties and Covenants................35
7.2 Good Standing............................................35
7.3 Certificates and Instruments of Transfer.................36
7.4 No Litigation............................................36
7.5 No Material Adverse Event................................36
7.6 Other Legal Matters......................................36
7.7 Licenses, Consents and Approvals.........................36
7.8 Consents of Third Persons................................36
7.9 Legal Opinions...........................................36
7.10 Shareholder Obligations..................................36
7.11 Liabilities..............................................37
7.12 Board Approvals..........................................37
7.13 Stock Exchange Approval..................................37
7.14 Approvals for Issuance of Weatherford Shares.............37
7.15 Resolutions..............................................37
7.16 Xxxxxxxx Technology Royalty Agreement....................37
7.17 Resignation of Directors and Officers....................37
7.18 Dissenters' Rights.......................................37
7.19 Xxxxxxxx Mexico..........................................37
7.20 Intellectual Property....................................37
7.21 Excluded Property........................................37
7.22 Shareholder Agreements...................................37
7.23 Revenue Canada Clearance Certificate.....................38
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ARTICLE 8...................................................................38
SHAREHOLDERS' CONDITIONS..............................................38
8.1 Representations, Warranties and Covenants................38
8.2 Purchase Price...........................................38
8.3 Licenses, Consents and Approvals.........................38
8.4 No Litigation............................................38
8.5 Other Legal Matters......................................38
8.6 Legal Opinions...........................................38
8.7 Xxxxxxxx Technology Royalty Agreement....................39
8.8 Stock Exchange Approval..................................39
8.9 Approvals for Issuance of Weatherford Shares.............39
8.10 Resolutions..............................................39
ARTICLE 9...................................................................39
INDEMNIFICATION.......................................................39
9.1 Indemnification by the Shareholders......................39
9.2 Indemnification by Weatherford...........................39
9.3 Procedure................................................40
9.4 Payment..................................................40
9.5 Failure to Pay Indemnification...........................40
9.6 Express Negligence.......................................41
9.7 Indemnification Limitations..............................41
9.8 Right of Offset..........................................41
9.9 Environmental Indemnification by Shareholders............41
ARTICLE 10..................................................................42
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS......................42
ARTICLE 11..................................................................42
TERMINATION...........................................................42
11.1 Termination..............................................42
11.2 Liability Upon Termination...............................43
11.3 Notice of Termination....................................43
ARTICLE 12..................................................................43
DEFINITIONS OF CERTAIN TERMS..........................................43
ARTICLE 13..................................................................51
MISCELLANEOUS.........................................................51
13.1 Shareholder Representative...............................51
13.2 Negotiated Transaction...................................51
13.3 Acknowledgment...........................................51
13.4 Spousal Consent..........................................51
13.5 Expenses.................................................51
13.6 Notices..................................................52
13.7 Specific Performance.....................................53
13.8 Assignment and Successors................................53
13.9 Confidentiality Agreement................................53
13.10 Entire Agreement.........................................53
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13.11 Governing Law............................................53
13.12 Waiver...................................................53
13.13 Severability.............................................53
13.14 No Third Party Beneficiaries.............................53
13.15 Counterparts.............................................54
13.16 Headings.................................................54
13.17 Arbitration..............................................54
13.18 Canadian Laws............................................54
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LIST OF DISCLOSURE SCHEDULE SECTIONS
Section 3.1(b) - Jurisdictions of Qualification and Good Standing
Section 3.1(c) - Xxxxxxxx U.S. Capital Stock
Section 3.1(d) - Xxxxxxxx Canada Capital Stock
Section 3.1(e) - Subsidiaries
Section 3.1(f) - Organizational Documents
Section 3.1(g) - Names
Section 3.2(c) - Violations; Conflicts
Section 3.3 - Licenses, Permits etc.
Section 3.4(a) - Transfer of Personal Property
Section 3.4(b) - Real Property
Section 3.4(c) - Intellectual Property
Section 3.4(d) - Xxxxxxxxx Agreements
Section 3.4(e) - Xxxxxxxxx Interests
Section 3.5(a) - Contracts and Commitments
Section 3.6 - Financial Statements
Section 3.7 - Litigation; Examination
Section 3.8 - Adverse Changes or Events
Section 3.9 - Environmental Matters
Section 3.10 - Product Warranties
Section 3.11 - Employee Benefits and Matters
Section 3.12 - Tax Matters
Section 3.14 - Insurance
Section 6.2(l) - Insurance Cancellations
Section 7.21 - Excluded Real Property
Section 12.42 - Known Environmental Losses
LIST OF EXHIBITS
Exhibit A - Articles of Merger
Exhibit B - Amended and Restated Bylaws
Exhibit C - Certificate of Merger
Exhibit D - Friday, Xxxxxxxx & Xxxxx, L.L.P. Opinion Matters
Exhibit E - Field Xxxxxxxx Perraton Opinion Matters
Exhibit F - Fulbright & Xxxxxxxx L.L.P. Opinion Matters
Exhibit G - Deloitte & Touche LLP Draft Report
Exhibit H - Waiver of Dissenters' Rights
Exhibit I - Xxxxxxxx Technology Royalty Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of September 14, 1999, among Xxxxxxxx Tool Co., an Arkansas
corporation ("Xxxxxxxx U.S."), the shareholders of Xxxxxxxx U.S. listed on the
signature pages hereto (collectively, the "U.S. Shareholders"), the shareholders
of Xxxxxxxx Tool Co. (Canada) Inc. (formerly, 000000 Xxxxxxx Ltd.), an Alberta,
Canada corporation ("Xxxxxxxx Canada", and together with Xxxxxxxx U.S., the
"Companies"), listed on the signature pages hereto (collectively, the "Canadian
Shareholders", and together with the U.S. Shareholders, the "Shareholders"),
Xxxxxxxxxxx International, Inc., a Delaware corporation ("Weatherford"), and
Xxxxxxxxxxx Acquisition, Inc., a Delaware corporation and wholly owned
subsidiary of Weatherford ("Sub").
W I T N E S S E T H :
WHEREAS, Weatherford is interested in acquiring Xxxxxxxx U.S. through a
merger of Sub with and into Xxxxxxxx U.S. pursuant to which the issued and
outstanding shares of common stock of Xxxxxxxx U.S. would be converted into
shares of Weatherford Common Stock, all upon the terms and subject to the
conditions set forth herein (the "Merger");
WHEREAS, it is intended that the Merger will constitute a reorganization
under Section 368(a)(1)(A) of the Code, in accordance with the provisions of
Section 368(a)(2)(E) of the Code, the regulations promulgated thereunder and any
comparable provision of applicable state law;
WHEREAS, the Canadian Shareholders desire to transfer to Weatherford all
of the outstanding shares (the "Xxxxxxxx Canada Shares") of Xxxxxxxx Canada
Common Stock and Weatherford desires to acquire the Xxxxxxxx Canada Shares in
exchange for the Share Consideration, all upon the terms and subject to the
conditions set forth herein;
WHEREAS, it is intended that the Exchange will constitute a reorganization
under Section 368(a)(1)(B) of the Code, the regulations promulgated thereunder
and any comparable provision of applicable state or provincial law; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and agreements, all as more fully set forth below;
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
THE MERGER AND RELATED MATTERS
1.1 Merger.
(a) Upon the terms and subject to the conditions of this Agreement,
including the simultaneous consummation of the transactions set forth in Article
2 hereof, Sub shall be merged with and into Xxxxxxxx U.S. in accordance with the
ABCA and the GCLD. Xxxxxxxx U.S. shall be the surviving corporation in the
Merger (the "Surviving Corporation"). The name of the Surviving Corporation
shall remain "Xxxxxxxx Tool Co." and the Surviving Corporation shall continue
its corporate existence under and be organized under and be governed by the ABCA
and possess all the rights and assets of Xxxxxxxx U.S. and Sub and be subject to
all of the liabilities and obligations of Xxxxxxxx U.S. and Sub in accordance
with the provisions of the ABCA. The Merger shall have the effects set forth in
the ABCA and the GCLD.
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(b) The Articles of Incorporation and the Bylaws of Xxxxxxxx U.S.,
in each case as amended and as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation and Bylaws, respectively, of the
Surviving Corporation until thereafter amended, except that the Articles of
Incorporation of Xxxxxxxx U.S. shall be amended and restated as provided in the
Articles of Merger attached as Exhibit A hereto and the Bylaws of Xxxxxxxx U.S.
shall be amended and restated as provided in the Amended and Restated Bylaws
attached as Exhibit B hereto.
(c) Immediately following the Effective Time, the authorized and
issued capital stock of the Surviving Corporation shall consist of 1,000 shares
of common stock, $1.00 par value per share.
(d) The directors and officers of Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation
and will hold office from the Effective Time until their respective successors
are duly elected or appointed and qualified in the manner provided in the Bylaws
of the Surviving Corporation, or as otherwise provided by the ABCA.
1.2 Closing. Subject to the provisions of Article 7 and Article 8
hereof, the closing of the Merger shall take place at the offices of Fulbright &
Xxxxxxxx L.L.P., located at 0000 XxXxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, at 9:00
a.m. on September 14, 1999, or if any of the conditions set forth in Article 7
or Article 8 hereof have not been satisfied, then as soon as practicable
thereafter, or at such other time and place or such other date as Weatherford,
Sub, the Shareholders and Xxxxxxxx U.S. shall agree, subject, however, to
Article 11 hereof (the "Closing Date"). Subject to Section 11.2 hereof, failure
to consummate the transactions contemplated hereby on such date shall not result
in a termination of this Agreement or relieve any party hereto of any obligation
hereunder. The Merger shall be effective when properly executed Articles of
Merger in substantially the form attached as Exhibit A hereto (together with any
other documents required by law to effectuate the Merger, including the Plan of
Merger attached to the Articles of Merger) shall have been filed with the
Secretary of State of the State of Arkansas in accordance with the provisions of
the ABCA, and a properly executed Certificate of Merger in substantially the
form attached as Exhibit C hereto (together with any other documents required by
law to effectuate the Merger) shall have been filed with the Secretary of State
of the State of Delaware in accordance with the provisions of the GCLD, which
filings shall be made as soon as practical on or after the Closing Date after
the conditions set forth in Article 7 and Article 8 hereof have been satisfied
or waived.
1.3 Conversion of Stock.
(a) Except as provided in this Section 1.3 or in Section 1.5 hereof,
at the Effective Time, by virtue of the Merger and without any action on the
part of any holder of any shares of Xxxxxxxx U.S. Common Stock or any holder of
any shares of Sub Common Stock, each share of Xxxxxxxx U.S. Common Stock
outstanding immediately prior to the Effective Time shall be converted into the
right to receive, upon the surrender of the certificates formerly representing
such shares pursuant to Section 1.4 hereof, a number of shares of Weatherford
Common Stock for each share of Xxxxxxxx U.S. Common Stock equal to (i)
$63,900,000 divided by (ii) the product of $36.50 multiplied by 1,600 (the
"Merger Conversion Rate"). The number of shares of Weatherford Common Stock
issued pursuant to this Section 1.3 is herein called the "Merger Consideration".
(b) No fractional shares of Weatherford Common Stock shall be issued
to any holder of Xxxxxxxx U.S. Common Stock in the Merger. To the extent the
application of the Merger Conversion Rate to all shares of Xxxxxxxx U.S. Common
Stock held by a U.S. Shareholder would result in a fractional number of shares
of Weatherford Common Stock being issued to such holder in the Merger, the
number of shares of Weatherford Common Stock issuable to such holder in respect
of all such shares in the Merger shall be rounded to the nearest whole number of
shares of Weatherford Common Stock.
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(c) Each share of Sub Common Stock outstanding immediately prior to
the Effective Time shall be converted into one share of stock in the Surviving
Corporation.
(d) As of and after the Effective Time, no holder of any certificate
that immediately prior to the Effective Time represented shares of Xxxxxxxx U.S.
Common Stock shall have any rights as a holder of Xxxxxxxx U.S. Common Stock
other than to receive the Merger Consideration.
(e) The Merger Conversion Rate is based on the assumption that 1,600
shares of Xxxxxxxx U.S. Common Stock will be issued and outstanding immediately
prior to the Effective Time and that there will be no options, warrants or other
rights to acquire shares of Xxxxxxxx U.S. Common Stock outstanding as of the
Effective Time. To the extent there are more than 1,600 shares of Xxxxxxxx U.S.
Common Stock issued and outstanding immediately prior to the Effective Time, or
any options, warrants or other rights to acquire shares of Xxxxxxxx U.S. Common
Stock outstanding immediately prior to the Effective Time, the Merger Conversion
Rate shall be reduced by multiplying the Merger Conversion Rate by a fraction
the numerator of which shall be 1,600 and the denominator of which shall be the
sum of the issued and outstanding shares of Xxxxxxxx U.S. Common Stock and the
number of shares of Xxxxxxxx U.S. Common Stock subject to outstanding options,
warrants or other rights to acquire shares of Xxxxxxxx U.S. Common Stock
immediately prior to the Effective Time.
1.4 Exchange. At the Closing, the certificates for Xxxxxxxx U.S. Common
Stock owned by each U.S. Shareholder shall be surrendered to the Surviving
Corporation. Until so surrendered, certificates for shares of Xxxxxxxx U.S.
Common Stock shall represent, after the Effective Time, solely the right to
receive the Merger Consideration. Share certificates representing the Xxxxxxxx
U.S. Common Stock that are surrendered to the Surviving Corporation shall be
canceled.
1.5 Cancellation of Treasury Stock. At the Effective Time, all shares of
Xxxxxxxx U.S. Common Stock that are owned directly or indirectly by Xxxxxxxx
U.S. as treasury stock shall be canceled without any consideration being payable
therefor.
1.6 Closing of Transfer Books. At the Effective Time, the share transfer
books of Xxxxxxxx U.S. shall be closed and no transfers of shares of Xxxxxxxx
U.S. Common Stock shall thereafter be made.
1.7 Reorganization. The parties intend for the Merger to constitute a
reorganization under Section 368(a)(1)(A) of the Code, in accordance with the
provisions of Section 368(a)(2)(E) of the Code, the regulations promulgated
thereunder and any comparable provision of applicable state law.
1.8 Liabilities Assumed by the Shareholders. Effective immediately prior
to the Closing, the Shareholders shall assume all of the Retained Liabilities.
ARTICLE 2
REORGANIZATION OF XXXXXXXX CANADA
2.1 Exchange of Xxxxxxxx Canada Shares. On the Closing Date, upon the
terms and subject to the conditions contained herein, the Canadian Shareholders
shall transfer, assign and convey to Weatherford the Xxxxxxxx Canada Shares,
free and clear of all Liens, in exchange for the Share Consideration (the
"Exchange").
2.2 Closing. Subject to the conditions set forth in this Agreement, the
closing of the Exchange is conditioned upon and shall occur contemporaneously
with the closing of the Merger. Subject to Section 11.2 hereof, failure to
consummate the transactions contemplated hereby on such date shall not result in
a termination of this Agreement or relieve any party hereto of any obligation
hereunder. Title to, ownership
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of and control over the Xxxxxxxx Canada Shares shall pass to Weatherford at the
Closing, and title to, ownership of and control over the Share Consideration
shall pass to the Canadian Shareholders at the Closing.
2.3 Share Consideration. In consideration of the transfer to Weatherford
of the Xxxxxxxx Canada Shares, on the Closing Date, Weatherford shall issue to
the Canadian Shareholders (in such proportions as designated by the Canadian
Shareholders at least three Business Days prior to the Closing Date) an
aggregate number of shares of Weatherford Common Stock equal to (i) $100,000
divided by (ii) $36.50. The number of shares of Weatherford Common Stock issued
pursuant to this Section 2.3 is herein called the "Share Consideration".
2.4 Exchange. At the Closing, the certificates for Xxxxxxxx Canada
Shares owned by each Canadian Shareholder shall be surrendered to the Surviving
Corporation in exchange for the Share Consideration.
2.5 Reorganization. The parties intend for the Exchange to constitute a
reorganization under Section 368(a)(1)(B) of the Code, the regulations
promulgated thereunder and any comparable provision of applicable state or
provincial law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder, severally and not jointly, with respect to matters
pertaining solely to such Shareholder, and each U.S. Shareholder, jointly and
severally, with respect to matters pertaining to Xxxxxxxx U.S. and its
Subsidiaries, and each Canadian Shareholder, jointly and severally, with respect
to matters pertaining to Xxxxxxxx Canada, hereby represents and warrants to
Weatherford and Sub as follows:
3.1 Organizational Matters.
(a) Xxxxxxxx U.S. is a corporation duly organized, validly existing
and in good standing under the laws of the State of Arkansas. Xxxxxxxx Canada is
a corporation duly organized, validly existing and in good standing under the
laws of the province of Alberta, Canada and is a private company under the
Securities Act (Alberta). Each Company is duly authorized, qualified and
licensed and has all requisite power and authority under all applicable laws,
ordinances and orders of public authorities to own, operate and lease its
properties and assets and to carry on its business in the places and in the
manner currently conducted.
(b) Each Company and each Subsidiary is qualified to transact
business as a foreign or extra-provincial corporation and is in good standing in
the jurisdictions, if any, specified in Section 3.1(b) of the Disclosure
Schedule, and, except as set forth in Section 3.1(b) of the Disclosure Schedule,
there is no other jurisdiction in which the nature and extent of its businesses
or the character of its assets makes such qualification necessary.
(c) The authorized capital of Xxxxxxxx U.S. consists of 15,000
shares of common stock, no par value, of which 1,600 shares are issued and
outstanding (the "Xxxxxxxx U.S. Common Stock"). All issued and outstanding
shares of capital stock of Xxxxxxxx U.S. are owned of record by the U.S.
Shareholders free and clear of all Liens in the amounts set forth in Section
3.1(c) of the Disclosure Schedule. Such shares have been duly authorized and
validly issued and are fully paid and nonassessable and were not issued in
violation of any preemptive, preferential purchase or other similar rights of
any Person. There are no outstanding options, warrants, convertible securities,
calls, rights, commitments, preemptive rights, agreements, arrangements or
understandings of any character obligating Xxxxxxxx U.S. (i) to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares in the
capital of Xxxxxxxx U.S. or any securities or obligations
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convertible into or exchangeable for such shares or (ii) to grant, extend or
enter into any such option, warrant, convertible security, call, right,
commitment, preemptive right, agreement, arrangement or understanding.
(d) The authorized capital of Xxxxxxxx Canada consists of an
unlimited number of Class A Shares, Class B Shares and Class C Shares, no par
value, of which 100 shares of Class A Shares are issued and outstanding (the
"Xxxxxxxx Canada Common Stock"). All issued and outstanding shares of capital
stock of Xxxxxxxx Canada are owned of record by the Canadian Shareholders free
and clear of all Liens in the amounts set forth in Section 3.1(d) of the
Disclosure Schedule. Such shares have been duly authorized and validly issued
and are fully paid and nonassessable and were not issued in violation of any
preemptive, preferential purchase or other similar rights of any Person. There
are no outstanding options, warrants, convertible securities, calls, rights,
commitments, preemptive rights, agreements, arrangements or understandings of
any character obligating Xxxxxxxx Canada (i) to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares in the capital of Xxxxxxxx
Canada or any securities or obligations convertible into or exchangeable for
such shares or (ii) to grant, extend or enter into any such option, warrant,
convertible security, call, right, commitment, preemptive right, agreement,
arrangement or understanding. Subject to obtaining the shareholders' resolutions
and the director's approval described in Section 7.15 hereof, the Canadian
Shareholders have the absolute right to transfer the Xxxxxxxx Canada Shares to
Weatherford. Upon the purchase of the Xxxxxxxx Canada Shares as contemplated by
this Agreement, Weatherford will obtain good and valid title to the Xxxxxxxx
Canada Shares free and clear of all Liens.
(e) All of the Subsidiaries and their respective ownership interests
are set forth in Section 3.1(e) of the Disclosure Schedule. Each Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization set forth in Section 3.1(e)
of the Disclosure Schedule, and is duly authorized, qualified and licensed and
has all requisite power and authority under all applicable laws, ordinances and
orders of public authorities to own, operate and lease its properties and assets
and to carry on its business in the places and in the manner currently
conducted. All of the outstanding shares in the capital of the Subsidiaries have
been duly authorized and validly issued and are fully paid and nonassessable,
were not issued in violation of any preemptive rights or other preferential
rights of subscription or purchase of any Person and are owned of record and
beneficially by the Companies or the Subsidiaries identified on such schedule as
owning such interest free and clear of all Liens (other than restrictions on
sales of shares under applicable securities laws). There are no outstanding
options, warrants, convertible securities, calls, rights, commitments,
preemptive rights, agreements, arrangements or understandings of any character
obligating either Company or any Subsidiary (i) to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares in the capital of such
Company or any securities or obligations convertible into or exchangeable for
such shares or (ii) to grant, extend or enter into any such option, warrant,
convertible security, call, right, commitment, preemptive right, agreement,
arrangement or understanding. Neither Company nor any Subsidiary owns (directly
or indirectly) any equity interest or other interest or investment in any
corporation, partnership, joint venture, association or other entity or
organization, other than the Subsidiaries set forth in Section 3.1(e) of the
Disclosure Schedule.
(f) Set forth in Section 3.1(f) of the Disclosure Schedule is a
true, correct and complete copy of the organizational documents of each of the
Companies and the Subsidiaries, in each case as in full force and effect on the
date hereof.
(g) No part of the business conducted by either Company or any
Subsidiary is conducted in any province, state or commonwealth under any name
other than "Xxxxxxxx Tool Co.", "Xxxxxxxx Tool Co. (Canada) Inc.", "J&J Rubber
Molding and Supply Company", "Xxxxxxxx Rotating Head" or any other name set
forth in Section 3.1(g) of the Disclosure Schedule.
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3.2 Validity of Agreement and Conflict with Other Instruments.
(a) Each Shareholder that is a trust has been duly formed and is
validly existing under the laws of the State of Texas. Each Shareholder that is
a natural person is a resident of and domiciled in the State of Arkansas (or, in
the case of Xxxx Xxxxxx Xxxxxxxx and Xxxxx Xxx Xxxxxxxx, the State of Texas).
Each of the Shareholders (or, in the case of a Shareholder that is a trust, the
trustee acting for and on behalf of such Shareholder) has the requisite legal
capacity, power and authority to enter into this Agreement, to consummate the
transactions contemplated hereby and to perform his or its obligations under
this Agreement. This Agreement has been duly authorized, executed and delivered
by each of the Shareholders (or, in the case of a Shareholder that is a trust,
the trustee acting for and on behalf of such Shareholder) and is a legal, valid
and binding obligation of such Shareholder, enforceable against such Shareholder
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect that affect creditors' rights generally and by legal
and equitable limitations on the availability of specific remedies. The
Shareholders (or, in the case of a Shareholder that is a trust, the trustee
acting for and on behalf of such Shareholder) have not entered into any other
agreement whereby the Xxxxxxxx U.S. Shares or the Xxxxxxxx Canada Shares will be
sold, assigned or otherwise transferred to another Person.
(b) Xxxxxxxx U.S. has all requisite corporate power and authority to
enter into this Agreement, to consummate the transactions contemplated hereby
and to perform its obligations hereunder. This Agreement has been duly
authorized, executed and delivered by Xxxxxxxx U.S. and is a legal, valid and
binding obligation of Xxxxxxxx U.S., enforceable against it in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect that affect creditors' rights generally and (b) by legal and
equitable limitations on the availability of specific remedies.
(c) The execution, delivery and performance of this Agreement by the
Shareholders (or, in the case of a Shareholder that is a trust, the trustee
acting for and on behalf of such Shareholder) and Xxxxxxxx U.S. and the
consummation of the transactions contemplated hereby (i) do not violate any
provision of the organizational documents of the Companies or the Subsidiaries,
or any law, statute, ordinance, regulation, judgment, writ, injunction, rule,
decree, order or any other restriction of any kind or character applicable to
any Shareholder, either Company or any Subsidiary or any of their respective
properties or assets, (ii) except as set forth in Section 3.2(c) of the
Disclosure Schedule, do not conflict with, or result in any breach of, or
default or loss of any right under (or an event or circumstance that, with
notice or the lapse of time, or both, may result in a default), or the creation
of a Lien pursuant to, or cause or permit the acceleration prior to maturity of
any amounts owing under, any indenture, mortgage, deed of trust, lease or other
agreement to which any Shareholder, either Company or any Subsidiary is a party
or to which any of their respective assets are subject, (iii) except for the
filing of a premerger notification and report form under the HSR Act and the
filing and recordation of Articles of Merger as required by the ABCA and the
Certificate of Merger as required by the GCLD, do not require the consent,
approval, clearance, waiver, order or authorization of any Person or
Governmental Entity that has not been obtained and (iv) conflict with,
constitute a breach, violation or termination of any provision of any agreement
or contract, whether written or otherwise, to which either Company, any
Subsidiary or any Shareholder is a party or by which it or he or any of their
respective assets are bound.
(d) The execution, delivery and performance of this Agreement by the
Shareholders and Xxxxxxxx U.S. will not result in the loss of any material
license, franchise or permit possessed by either Company or any Subsidiary or
give a right of acceleration or termination to any party to any material
agreement or other instrument to which either Company or any Subsidiary is a
party or by which any of its assets are bound, or the loss of any material right
or benefit under such agreement or instrument.
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3.3 Approvals, Licenses and Authorizations.
(a) Except for the filing of a premerger notification and report
form under the HSR Act and the filing and recordation of Articles of Merger as
required by the ABCA and the Certificate of Merger as required by the GCLD and
the passing of the shareholders' resolutions and the obtaining of the director's
approval described in Section 7.15 hereof, no order, license, consent, waiver,
authorization or approval of, or exemption by, or the giving of notice to, or
the registration with, or the taking of any other action in respect of, any
Person not a party to this Agreement, including any Governmental Entity, and no
filing, recording, publication or registration in any public office or any other
place is now, or under existing law in the future will be, necessary on behalf
of any Shareholder or either Company to authorize the execution, delivery and
performance of this Agreement or any other agreement contemplated hereby to be
executed and delivered by the Shareholders or the Companies and the consummation
of the transactions contemplated hereby or thereby (including, but not limited
to, assignment of the Xxxxxxxx Canada Shares), or to effect the legality,
validity, binding effect or enforceability thereof.
(b) All licenses, permits, concessions, warrants, franchises and
other governmental authorizations and approvals of all Governmental Entities
required or necessary for the Companies and the Subsidiaries to carry on their
business in the places and in the manner currently conducted have been duly
obtained and are in full force and effect and are set forth in Section 3.3 of
the Disclosure Schedule. No violations are in existence or have been recorded
with respect to such licenses, permits or other authorizations and no proceeding
is pending or, to the best knowledge of the Shareholders, threatened with
respect to the revocation or limitation of any of such licenses, permits or
other authorizations. The Companies and the Subsidiaries have complied in all
material respects with all laws, statutes, ordinances, rules, regulations and
orders of any Governmental Entity, applicable to their business, and all rules,
regulations and orders respecting the provision of services by them.
3.4 Title to and Condition of Properties.
(a) The Companies and the Subsidiaries have good and marketable
title to, or valid and subsisting leasehold interests in, all of the personal
property reflected on the Financial Statements or used or useful in their
business, free and clear of all Liens. Except as set forth in Section 3.4(a) of
the Disclosure Schedule, since March 31, 1999, the Companies and the
Subsidiaries have not sold, transferred or otherwise conveyed any personal
property reflected in the Financial Statements, except for inventory sold,
leased, consumed or otherwise disposed of in the ordinary course of business and
in accordance with past practice.
(b) Each parcel of real estate owned or leased by either Company or
any Subsidiary (the "Real Estate") is set forth in Section 3.4(b) of the
Disclosure Schedule. A Company or a Subsidiary is, and at Closing will be, the
sole and exclusive record, legal and equitable owner of all right, title and
interest in, and has, and at Closing will have, good and indefeasible record
title in fee simple or leasehold, as the case may be, to, and at Closing will be
in possession of, the Real Estate, including the buildings, structures and
improvements situated thereon and appurtenances thereto, and the Real Estate (i)
is free and clear of any Liens, (ii) is not subject to any governmental decree
and (iii) is not being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, nor has any such
condemnation, expropriation or taking been proposed. Neither Company nor any
Subsidiary is in violation of any zoning, land use, public health, fire safety,
building code or other similar laws, ordinances and regulations applicable to
the Real Estate or to the ownership, occupancy and/or operation thereof, nor
does there exist any variances, conditional use permits, waivers or exemptions
relating to the Real Estate with respect to any non-conforming use or other
zoning or building code matters. Final permanent and unconditional certificates
of occupancy and/or use have been duly issued by the applicable Governmental
Entity having jurisdiction for all buildings located on the Real Estate. The
Companies and the Subsidiaries have all easements and rights necessary to
continue operation of the business of the Companies and the Subsidiaries. To the
best knowledge of the Shareholders, there is no condition that could result in
the termination of current access to or from the Real
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Estate to or from any currently existing road or utility servicing the Real
Estate. Neither Company nor any Subsidiary has received notice from any
insurance company requiring any work or other activity to be performed on or
about the Real Estate or requiring or imposing any increases in the premiums of
any insurance policy or policies presently covering the Real Estate. All
obligations and liabilities of either Company or any Subsidiary, as the case may
be, incurred by either Company or any Subsidiary, as the case may be, in
connection with the ownership of the Real Estate have been paid or will be paid
at or prior to Closing, to the extent that any such obligation or liability is
due or owing at or prior to Closing. All leases of real property leased for the
use or benefit of either Company or any Subsidiary to which it is a party, and
all amendments and modifications thereof, are in full force and effect under
their respective terms and there exists no default under the leases by it, nor
any event that with notice or lapse of time or both would constitute a default
thereunder by it, except as set forth in Section 3.4(b) of the Disclosure
Schedule.
(c) The Companies and the Subsidiaries own and have good and
marketable title to, or are licensed or otherwise have the right to use, all
Proprietary Information, including, patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service xxxx
rights, copyrights, applications for any of the foregoing and other proprietary
intellectual property rights and computer programs, that are used in or useful
to the conduct of the business conducted by the Company and the Subsidiaries
(collectively, "Intellectual Property"). The consummation of the transactions
contemplated by this Agreement will not result in the loss or restriction of use
of any Intellectual Property. Section 3.4(c) of the Disclosure Schedule sets
forth all Intellectual Property and other rights for any of the same owned or
held by the Companies and the Subsidiaries, together with all registrations and
recordings applicable to Intellectual Property. No claims are pending or, to the
best knowledge of the Shareholders, threatened that either Company, any
Subsidiary and/or any Shareholder is infringing or otherwise adversely affecting
the rights of any Person with regard to any Intellectual Property. Except as set
forth in Section 3.4(c) of the Disclosure Schedule and to the best knowledge of
the Shareholders, no Person is infringing the rights of the Companies, the
Subsidiaries and/or the Shareholders with respect to any Intellectual Property.
The Companies or the Subsidiaries own or license all of the Intellectual
Property free and clear of all Liens.
(d) There are no agreements or arrangements that exist between
Xxxxxxxx U.S. (or any of its affiliates) and Xxxxxxxxx, except as set forth in
Section 3.4(d) of the Disclosure Schedule.
(e) Xxxxxxxxx has no claims, rights to receive royalties or payments
or other rights with respect to, or interests in, any of the Intellectual
Property or any other asset that is owned, leased or licensed to Xxxxxxxx U.S.
or in which Xxxxxxxx U.S. has an interest, except as set forth in Section 3.4(e)
of the Disclosure Schedule.
(f) All of the assets used or necessary for the conduct of the
business currently conducted by the Companies and the Subsidiaries are, or will
by the Closing be, owned by them or leased by them under valid leases. The
conduct of the business currently conducted by the Companies and the
Subsidiaries in the ordinary course is not dependent on the right to use the
property of others.
3.5 Contracts and Commitments.
(a) Except as set forth in Section 3.5(a) of the Disclosure
Schedule, neither Company nor any Subsidiary is a party to or bound by: (i) any
agreement, contract or commitment requiring the expenditure or series of related
expenditures of funds in excess of $25,000 (other than purchase orders in the
ordinary course of business for materials necessary for the Companies and the
Subsidiaries); (ii) any agreement, contract or commitment requiring the payment
for goods or services whether or not such goods or services are actually
provided or the provision of goods or services at a price less than cost to the
Companies and the Subsidiaries of producing such goods or providing such
services; (iii) any loan or advance to, or investment in, any Person or any
agreement, contract, commitment or understanding relating to the making of any
such loan, advance or investment; (iv) any agreement or obligation with any
Shareholder or any Affiliate of either Company or
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any Subsidiary; (v) any Debt Obligations; (vi) any labor union, management
service, employment, consulting or other similar type contract or agreement;
(vii) any agreement, contract or commitment that would limit the freedom of
Xxxxxxxxxxx or any Affiliate thereof following the Closing Date to engage in any
line of business, to own, operate, sell, transfer, pledge or otherwise dispose
of or encumber any of the assets of the Companies and the Subsidiaries or to
compete with any Person or to engage in any business or activity in any
geographic area; (viii) any agreement, lease, contract or commitment or series
of related agreements, leases, contracts or commitments not entered into in the
ordinary course of business or, except for agreements to purchase or sell goods
and services entered into in the ordinary course of business of the Companies
and the Subsidiaries, not cancelable by the Companies and the Subsidiaries,
without penalty to the Companies and the Subsidiaries, within 30 calendar days;
(ix) any agreement or contract obligating the Companies and the Subsidiaries or
that would obligate or require any subsequent owner of the Companies and the
Subsidiaries 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 Companies and the Subsidiaries;
(xi) any license, royalty or similar agreement; or (xii) any other agreement,
contract or commitment that might reasonably be expected to be material to the
Companies and the Subsidiaries or their business.
(b) Neither Company nor any Subsidiary is in breach of any provision
of, or in default (and the Shareholders have no knowledge of any event or
circumstance that with notice, or lapse of time or both, would constitute an
event of default) under, the terms of any of the contracts or agreements listed
in Section 3.5(a) of the Disclosure Schedule. All of the contracts and
agreements set forth in Section 3.5(a) of the Disclosure Schedule are in full
force and effect. The Shareholders are not aware of any pending or threatened
disputes with respect to any of the contracts or agreements set forth in Section
3.5(a) of the Disclosure Schedule.
(c) The enforceability of the contracts and agreements set forth in
Section 3.5(a) of the Disclosure Schedule will not be affected in any material
respect by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
(d) Except for the Xxxxxx Note and intercompany indebtedness,
neither Company nor any Subsidiary is indebted to any Shareholder or any
Affiliate of any Shareholder.
3.6 Financial Statements. Attached as Section 3.6 of the Disclosure
Schedule are true, correct and complete copies of (a) certain financial
statements of each Company and its respective Subsidiaries as of and for the
years ended December 31, 1998 and December 31, 1997 (collectively, the "Annual
Financial Statements"), and (b) certain financial statements of each Company and
its respective Subsidiaries as of and for the three-month period ended March 31,
1999 (collectively, the "Interim Financial Statements" and together with the
Annual Financial Statements, the "Financial Statements"). Subject to the last
sentence of this Section 3.6, the Financial Statements (a) fairly present the
financial position of each Company and its respective Subsidiaries as of their
respective dates and the results of operations of such Company and its
Subsidiaries for the periods indicated therein, (b) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered by the Financial Statements, subject, in the case of the Interim
Financial Statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and the
absence of notes, and (c) have not been rendered untrue, incomplete or unfair as
representations of the financial condition of such Company and its Subsidiaries
by events subsequent to the date of the Financial Statements. As of the date of
this Agreement, neither Company nor any Subsidiary has any liability of any kind
or matter, either direct, accrued, absolute or otherwise, that is not reflected
or disclosed in the Financial Statements. Except as set forth in Section 3.6 of
the Disclosure Schedule, all accounts receivable represented in the Financial
Statements were generated in the ordinary course of business and, to the best
knowledge of the Shareholders, are fully collectible net of reserves for
doubtful accounts.
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3.7 No Litigation. Except as set forth in Section 3.7 of the Disclosure
Schedule, there is no action, suit, claim, judgment, investigation or legal,
administrative, arbitration or other proceeding, or governmental investigation
or examination, or any change in any zoning or building ordinance pending or, to
the best knowledge of the Shareholders, threatened against or affecting the
Shareholders, either Company or any Subsidiary, at law or in equity, before or
by any Governmental Entity and, to the best knowledge of the Shareholders, no
basis exists for any such action, suit, claim, investigation or proceeding.
3.8 No Adverse Changes or Events. Since March 31, 1999, the Companies
and the Subsidiaries have been consistently operated only in the ordinary
course, and there has not been: (a) except as set forth in Section 3.8 of the
Disclosure Schedule, any adverse change in the financial condition, assets,
liabilities (contingent or otherwise), results of operations, business or
prospects of either Company or any Subsidiary or any occurrence, circumstance or
combination thereof that might reasonably be expected to have a Material Adverse
Effect on either Company or any Subsidiary before or after the Closing; (b) any
damage, destruction or loss, whether or not covered by insurance, adversely
affecting either Company or any Subsidiary; (c) except as set forth in Section
3.8 of the Disclosure Schedule, any increase in the compensation or rate of
compensation or commissions or bonuses payable or to become payable by either
Company or any Subsidiary to any of their respective employees that is not
consistent with past practice, any payment or accrual of, or commitment with
respect to, any bonus plan or severance arrangement that is not consistent with
past practice or any change or modification to any severance arrangement; (d)
except as set forth in Section 3.8 of the Disclosure Schedule, any sale,
assignment, transfer or other disposition or lapse of any Intellectual Property
or disclosure to any Person (other than employees of either Company or any
Subsidiary in the scope of their employment) of any Intellectual Property; (e)
except as set forth in Section 3.8 of the Disclosure Schedule, any cancellation
or compromise of any claims, or any waiver of any other rights relating to
either Company or any Subsidiary, or any sale, transfer or other disposition of
any properties or assets, real, personal or mixed, tangible or intangible, of
either Company or any Subsidiary (other than sales of inventory in the ordinary
course of business); (f) any change in either Company's or any Subsidiary's
method of accounting for financial, Tax or other purposes or any increase in the
carrying value of the assets; (g) any revaluation by either Company or any
Subsidiary of any of its assets, including, without limitation, writing down the
value of inventory or writing off notes or accounts receivable other than in the
ordinary course of business consistent with past practice; (h) any entry by
either Company or any Subsidiary into any commitment or transaction that would
be material to it not otherwise in the ordinary course of business; (i) any
declaration, setting aside or payment of any dividends or distributions in
respect of the Xxxxxxxx U.S. Common Stock or the Xxxxxxxx Canada Common Stock or
any redemption, purchase or other acquisition of any of its securities, other
than as set forth in Section 3.8 of the Disclosure Schedule; (j) any increase in
indebtedness of borrowed money other than borrowing under any existing credit
facilities; (k) any granting of a security interest or Lien on any property or
assets of either Company or any Subsidiary other than (A) Liens for taxes not
due and payable and (B) inchoate mechanics, warehousemen's and other statutory
Liens incurred in the ordinary course of business; or (l) except as set forth in
Section 3.8 of the Disclosure Schedule, any action taken or omitted to be taken
that would have been prohibited under Section 6.2 hereof had such action been
taken or omitted to be taken after the date hereof.
3.9 Environmental Matters.
(a) Except as set forth in Sections 3.9 and 12.42 of the Disclosure
Schedule, to the best knowledge of the Shareholders, the Companies and the
Subsidiaries have at all times operated in compliance with all applicable
limitations, restrictions, conditions, standards, prohibitions, requirements and
obligations of Environmental Laws and related orders of any court or other
Governmental Entity, except where the failure to so operate in compliance would
not result in any material liability, contingent or otherwise, to Xxxxxxxxxxx,
its Affiliates, either Company or any Subsidiary.
(b) There are no existing, pending or, to the best knowledge of the
Shareholders, threatened actions, suits, claims, investigations, inquiries or
proceedings by or before any court or any other Governmental Entity directed
against either Company, any Subsidiary or any of their respective assets that
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pertain or relate to (i) any obligations or liabilities, contingent or
otherwise, under any applicable Environmental Law, (ii) violations of any
Environmental Law or (iii) personal injury or property damage claims relating to
the use, release or disposal of Hazardous Materials.
(c) All Environmental Permits required to be obtained or filed by
the Companies and the Subsidiaries under all applicable Environmental Laws in
connection with its operation or use of the assets or properties or the conduct
of its business have been duly obtained or filed and are in full force and
effect and will remain in full force and effect following the consummation of
the transactions contemplated by this Agreement, except where the failure to do
so would not require any Company or any Subsidiary to cease or modify its
business operations or any portion thereof or cause any Company or Subsidiary to
incur expenses in excess of $25,000.
(d) Neither Company, any Subsidiary, nor any of their respective
Affiliates has received notice that any Environmental Permit is to be revoked or
suspended by any Governmental Entity and neither Company nor any Subsidiary is
currently operating or required to be operating under any compliance order,
schedule, decree or agreement, any consent decree, order or agreement, or
corrective action decree, order or agreement issued or entered into under, or
pertaining to matters regulated by, any Environmental Law.
(e) Except as set forth in Section 3.9 of the Disclosure Schedule,
to the best knowledge of the Shareholders, neither Company nor any Subsidiary
owns or operates any underground storage tanks or has polluted with any
Hazardous Materials the soil or groundwater of any past or present owned or
leased premises of the Company.
(f) No portion of the assets or properties currently or previously
leased or owned by either Company or any Subsidiary is part of any type of site
designated as an environmental site under applicable law or is part of a
decontamination schedule or plan of any Governmental Authority.
(g) Except as set forth in Section 3.9 of the Disclosure Schedule,
to the best knowledge of the Shareholders, all Waste Materials generated by
either Company or any Subsidiary have been transported, stored, treated and
disposed of in compliance with all applicable Environmental Laws, except for
such matters that would not result in any liability, contingent or otherwise, to
either Company, any Subsidiary, Xxxxxxxxxxx or any of their respective
Affiliates.
(h) Except as set forth in Section 3.9 of the Disclosure Schedule,
to the best knowledge of the Shareholders, no Person has disposed or released
any Hazardous Materials on or under any asset or property currently or
previously leased or owned by either Company or any Subsidiary and neither
Company nor any Subsidiary has disposed or released Hazardous Materials on or
under the assets or properties currently or previously leased or owned by it.
(i) None of the assets or properties of either Company or any
Subsidiary is encumbered by a Lien arising or imposed under Environmental Laws.
(j) Except for the Known Environmental Losses identified in Section
12.42 of the Disclosure Schedule, there are no existing or, to the best
knowledge of the Shareholders, proposed requirements under Environmental Laws
that will require either Company or any Subsidiary to make capital improvements
to its assets or properties or make other expenditures subsequent to the Closing
to remain in compliance with Environmental Laws.
(k) No notice or other filing, consent or approval is required under
any Environmental Law as a prerequisite to the consummation of the transactions
contemplated by this Agreement.
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(l) The Shareholders have provided Xxxxxxxxxxx copies of all
environmental audits, assessments or other evaluations of either Company, any
Subsidiary or any of their respective assets or properties.
(m) Except as set forth in Section 3.9 of the Disclosure Schedule,
to the best knowledge of the Shareholders, no facts or circumstances exist that
could reasonably be expected to result in any material liability to any Person
with respect to the current or past business and operations of either Company or
any Subsidiary or the assets or properties currently or previously leased or
owned by either Company or any Subsidiary in connection with (i) any release,
transportation or disposal of any Hazardous Materials or (ii) action taken or
omitted that was not in full compliance with or was in violation of any
applicable Environmental Law, except for such matters that would not result in
any liability, contingent or otherwise, to Xxxxxxxxxxx, its Affiliates, either
Company or any Subsidiary.
3.10 Warranties and Product Liability. Except for (a) warranties implied
by law and (b) warranties disclosed in Section 3.10 of the Disclosure Schedule,
neither Company nor any Subsidiary has given or made any warranties in
connection with the sale or rental of goods or services on or prior to the
Closing, including, without limitation, warranties covering the customer's
consequential damages. The Shareholders have no knowledge of any state of facts
or the occurrence of any event forming the basis of any present claim against
either Company or any Subsidiary with respect to warranties relating to products
manufactured, sold, rented or distributed by it, or services performed by or on
behalf of it on or prior to the Closing. The Shareholders have provided to
Xxxxxxxxxxx all information relating to any known or alleged design or other
defect with respect to the products manufactured, sold or rented by either
Company or any Subsidiary, and set forth in Section 3.10 of the Disclosure
Schedule is a list and brief description of each such design or other defect.
3.11 Employee Matters.
(a) Section 3.11 of the Disclosure Schedule contains a true,
complete and accurate list of each director, consultant to either Company or any
Subsidiary and each person employed by either Company or any Subsidiary,
together with such individual's title or job description and date of hire by
such Company or Subsidiary, and, for each Company or Subsidiary employee who is
compensated on a salaried basis, such individual's salary, the last date of
increase of his or her salary and his or her incentive compensation arrangements
with such Company or Subsidiary. As of the date immediately prior to the date
hereof, neither Company nor any Shareholder has received notification that any
of the current employees of either Company or any Subsidiary presently plans to
terminate his or her employment during the 12 months following the date of this
Agreement, whether by reason of the transactions contemplated by this Agreement
or otherwise; provided, however, that although each Shareholder has no knowledge
that any such employee plans to terminate his or her employment, no Shareholder
warrants or represents that any such employee will remain employed for any
specified period following the Closing.
(b) Except as and to the extent set forth in Section 3.11 of the
Disclosure Schedule, (i) there is no labor strike, work stoppage, lockout or
material dispute or material slowdown pending or, to the best knowledge of the
Shareholders, threatened against either Company or any Subsidiary, and there has
not been any such action during the last three years; (ii) neither Company nor
any Subsidiary is a party to or bound by any (A) collective bargaining or
similar agreement with any labor organization or (B) written work rules or
practices agreed to with any labor organization or employee association
applicable to employees of either Company or any Subsidiary; (iii) no employee
of either Company or any Subsidiary is represented by any labor organization
and, to the best knowledge of the Shareholders, there are no current union
organizing activities among the employees of either Company or any Subsidiary;
and (iv) there are no material written personnel policies, rules or procedures
applicable to employees of either Company or any Subsidiary.
(c) Except as and to the extent set forth in Section 3.11 of the
Disclosure Schedule (i) the Companies and the Subsidiaries are, and during the
last three years have been, in material compliance with
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all applicable laws in respect of employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and has not engaged in any unfair labor practices as defined in the
National Labor Relations Act; (ii) there is no unfair labor practice charge or
complaint against either Company or any Subsidiary pending or, to the best
knowledge of the Shareholders, threatened before the National Labor Relations
Board or any similar state or foreign agency; (iii) no charges with respect to
or relating to either Company or any Subsidiary are pending before the Equal
Employment Opportunity Commission or any other agency responsible for the
prevention of unlawful employment practices; (iv) no Company, Subsidiary or
Shareholder has received notice of the intent of any Governmental Entity
responsible for the enforcement of labor or employment laws to conduct an
investigation with respect to or relating to either Company or any Subsidiary
and no such investigation is in progress; and (v) there are no complaints,
lawsuits or other proceedings pending or, to the best knowledge of the
Shareholders, threatened in any forum against either Company or any Subsidiary
by or on behalf of any present or former employee of either Company or any
Subsidiary, any applicant for employment or classes of the foregoing, alleging
breach of any express or implied contract of employment, any law governing
employment or the termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment relationship.
(d) During the last four years, neither Company nor any Subsidiary
has effectuated (i) a "plant closing" (as defined in the Worker Adjustment
Retraining Notification Act of 1988 (the "WARN Act")) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of either Company or any Subsidiary; or (ii) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of either Company or any Subsidiary; and neither Company nor any
Subsidiary has been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law. No employees of either Company or any Subsidiary has
suffered an "employment loss" (as defined in the WARN Act) during the past six
months.
(e) Section 3.11 of the Disclosure Schedule contains a true,
complete and accurate list of all Company Benefit Plans. The Shareholders shall
have made, or shall have caused the Companies and Subsidiaries to make,
available to Xxxxxxxxxxx prior to Closing, as applicable, true, complete and
correct copies of all plan documents, summary plan descriptions, financial
statements, funding vehicles, agreements pursuant to which either Company or any
Subsidiary may be obligated to indemnify any Person, determination letters
issued by the Service and filings with all applicable governmental agencies for
the past three years relating to the foregoing Company Benefit Plans.
(f) No Company, Subsidiary or any Person, whether or not
incorporated, that was at any time during the past six years treated as a single
employer together with either Company or any Subsidiary has ever maintained,
contributed to, had an obligation to contribute to, or incurred any liability
with respect to, any employee benefit plan (within the meaning of Section 3(2)
of ERISA) that is or was subject to Title IV of ERISA.
(g) Each Company Benefit Plan (i) has been operated and administered
in all respects in accordance with its terms and applicable laws, including but
not limited to ERISA and the Code,(ii) is in compliance with all registration,
reporting and disclosure requirements of all applicable laws, (iii) has had all
appropriate filings filed timely for each year of its existence, if required,
(iv) has at all times complied with any bonding requirements of ERISA or other
applicable law, (iv) has been properly funded and (v) to the best knowledge of
the Shareholders, has no controversy pending with any Governmental Entity, nor
any controversy resolved adversely to either Company, any Subsidiary or any of
their respective Affiliates, that may subject Xxxxxxxxxxx, either Company or any
Subsidiary to the payment of any penalty, interest, tax or other obligation.
(h) Neither the execution of this Agreement nor the consummation of
the transactions contemplated by this Agreement, either alone or in conjunction
with another event (such as termination of employment) will (i) entitle any
current or former employee of either Company or any Subsidiary to severance
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pay from either Company or any Subsidiary, or any other payment under a Company
Benefit Plan, (ii) except as set forth in Section 3.11 of the Disclosure
Schedule, accelerate the time of payment or vesting of benefits under an Company
Benefit Plan or (iii) increase the amount of compensation due any such employee
by either Company or any Subsidiary.
(i) Except as set forth in the Company Benefit Plans identified in
Section 3.11 of the Disclosure Schedule, no Company, Subsidiary or any of their
respective Affiliates provides employee post-retirement medical or health
coverage for any employee of either Company or any Subsidiary or contributes to
or maintains any employee welfare benefit plan that provides for health benefit
coverage following termination of employment of any employee of either Company
or any Subsidiary, except as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, or a similar state law, nor has it made
any representations, agreements, covenants or commitments to provide that
coverage.
(j) No Company, Subsidiary or any of their respective Affiliates,
any officer or partner of either Company, any Subsidiary or any of their
respective Affiliates or any of the Company Benefit Plans, including the pension
plans of either Company or any Subsidiary, or any trusts created thereunder, or
any trustee or administrator thereof, has engaged in any prohibited transaction
or act or any other breach of fiduciary responsibility that could subject either
Company, any Subsidiary or Xxxxxxxxxxx as the successor to the Companies to any
Tax or penalty or to any liability under any applicable law or regulation.
(k) Each Company Benefit Plan may be unilaterally amended or
terminated by the appropriate Company or Subsidiary or Xxxxxxxxxxx without
liability to either Company, any Subsidiary or Xxxxxxxxxxx on or at any time
after the Closing.
(l) Except as set forth in Section 3.11 of the Disclosure Schedule,
with respect to each Company Benefit Plan that is a welfare benefit plan (as
defined in Section 3(1) of ERISA), all claims incurred (including claims
incurred but not reported) by employees thereunder as of the Closing for which
either Company or any Subsidiary is, or will become, liable are (i) insured
pursuant to a contract of insurance whereby the insurance company bears any risk
of loss with respect to such claims; (ii) covered under a contract with a health
maintenance organization pursuant to which such organization bears the liability
for such claims or (iii) are reflected as a liability or accrued for on the
Financial Statements.
(m) Any liabilities of either Company or any Subsidiary with respect
to future obligations related to pension liabilities have been reflected in the
Financial Statements.
(n) All contributions required to have been made as of the Closing
to the Company Benefit Plans pursuant to their terms and applicable law have
been timely made.
(o) The terms of all Company Benefit Plans that are intended to
qualify under Section 401(a) of the Code (i) have been determined by the Service
to qualify under Section 401(a) of the Code or (ii) are such that the applicable
remedial amendment periods under Section 401(b) of the Code will not have
expired prior to the Closing. To the best knowledge of the Shareholders, no
event or circumstance has occurred that could cause the Service to disqualify
any Company Benefit Plan that is intended to qualify under Section 401(a) of the
Code.
(p) There is no litigation, action, proceeding, audit, examination
or claim pending, or to the best knowledge of the Shareholders, threatened or
contemplated relating to any Company Benefit Plan (other than routine claims for
benefits).
(q) There has been no partial termination of any Company Benefit
Plan within the meaning of Section 411(d)(3) of the Code.
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(r) No Person has engaged in a transaction that could result in the
imposition upon either Company or any Subsidiary of a civil penalty under
Sections 409 or 502(i) of ERISA or a Tax under Sections 4971, 4972, 4975, 4976,
4980, 4980B or 6652 of the Code, and no fact or event exists that could give
rise to any such liability.
(s) No employee pension benefit plan as defined in Section 3(2) of
ERISA that is maintained or contributed to by either Company, any Subsidiary or
any ERISA Affiliate had an accumulated funding deficiency as defined in Section
302 of ERISA and Section 412 of the Code, whether or not waived, as of the last
day of the most recent fiscal year of the plan ending on or prior to the
Closing.
(t) No Company, Subsidiary or any Person that was at any time during
the six-year period ending on the date of this Agreement an ERISA Affiliate has
ever maintained, had an obligation to contribute to, contributed to, or incurred
any liability with respect to a multiemployer plan, as defined in Section 3(37)
of ERISA, or a plan described in Section 4063(a) of ERISA.
(u) No Company, Subsidiary or ERISA Affiliate has incurred any
liability under Title IV of ERISA that has not been satisfied (other than
liability to the PBGC for the payment of premiums pursuant to Section 4007 of
ERISA). No condition exists for which the PBGC is authorized to seek from either
Company, any Subsidiary or an ERISA Affiliate a late payment charge under
Section 4007(b) of ERISA. No condition exists that presents a risk that either
Company, any Subsidiary or an ERISA Affiliate will incur any liability under
Title IV of ERISA (other than liability to the PBGC for the payment of premiums
pursuant to Section 4007 of ERISA).
3.12 Taxes and Governmental Returns and Reports.
(a) Except as set forth in Section 3.12 of the Disclosure Schedule,
all Tax Returns of or relating to any Tax that are required to be filed (taking
into account any applicable extensions) on or before the Closing Date for, by,
on behalf of or with respect to either Company or any Subsidiary, including, but
not limited to, those relating to the income, business, operations or property
of either Company or any Subsidiary and those that include or should include
either Company or any Subsidiary (whether on a separate, consolidated,
affiliated, combined, unitary or any other basis), have been or will be timely
filed with the appropriate foreign, federal, provincial, state and local
authorities on or before the Closing Date, and all Taxes shown to be due and
payable on such Tax Returns have been or will be paid in full on or before their
respective due dates. The Shareholders have provided, or shall have caused the
Companies to provide, Xxxxxxxxxxx or its representatives complete and accurate
copies of all such Tax Returns and all examination or audit reports, closing
agreements and statements of deficiencies, if any, relating to such Tax Returns.
(b) All such Tax Returns and the information and data contained
therein have been or will be properly and accurately compiled and completed,
fairly present or will fairly present the information purported to be shown
therein, and reflect or will reflect all liabilities for Taxes for the periods
covered by such Tax Returns.
(c) Except as set forth in Section 3.12 of the Disclosure Schedule,
neither Company nor any Subsidiary is under audit or examination by any foreign,
federal, provincial, state or local authority and there are no agreements,
waivers or other arrangements providing for an extension of time with respect to
the assessment or collection of any Tax or deficiency of any nature against
either Company or any Subsidiary or with respect to any such Tax Return, or any
suits or other actions, proceedings, investigations or claims now pending or
threatened against either Company or any Subsidiary with respect to any Tax, or
any matters under discussion with any foreign, federal, state or local authority
relating to any Tax, or any claims for any additional Tax asserted by any such
authority.
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(d) All Taxes due and owing or claimed to be due and owing from or
against either Company or any Subsidiary on or before the Closing Date
(including, but not limited to, ad valorem Taxes relating to any property of
either Company or any Subsidiary) have been or will be timely paid in full on or
before the Closing Date.
(e) All withholding Tax and Tax deposit requirements imposed on
either Company or any Subsidiary for any and all periods ending on or before the
Closing Date, or through and including the Closing Date for periods that have
not ended on or before the Closing Date, have been or will be timely satisfied
in full on or before the Closing Date.
(f) Except as set forth in Section 3.12 of the Disclosure Schedule,
neither Company nor any Subsidiary has requested, nor has any Person requested
on its behalf, any extension of time within which to file any Tax Return in
respect of any taxable period that has not since been filed.
(g) Neither Company nor any Subsidiary has any liability for any
Taxes of any other Person under Treasury Regulation ss. 1.1502-6 or similar
provision of state, local, foreign, federal, provincial or other applicable law,
by contract or as transferor or successor or otherwise.
(h) Except as set forth in Section 3.12 of the Disclosure Schedule,
no power of attorney has been granted with respect to any matter relating to
either Company or any Subsidiary that is currently in force.
(i) Neither Company nor any Subsidiary has made any payments or
provided any benefits, is obligated to make any payments or provide any benefits
or is a party to any contract or other arrangement that will result, separately
or in the aggregate, in an obligation to make any payments or provide any
benefits that will not be deductible under Section 280G or Section 162 of the
Code.
(j) Neither Company nor any Subsidiary has filed a consent pursuant
to Section 341(f) of the Code (or any predecessor provision) or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by either
Company or any Subsidiary.
(k) No property of either Company or any Subsidiary is property that
either Company, any Subsidiary or any Person is or will be required to treat as
being owned by another Person pursuant to the provisions of Section 168(f)(8) of
the Code (as in effect before amendment by the Tax Reform Act of 1984 or the Tax
Reform Act of 1986) or is "tax-exempt use property" within the meaning of
Section 168(h) of the Code.
(l) Neither Company nor any Subsidiary has issued any debt
obligations, and no assets of either Company or any Subsidiary directly or
indirectly secures any debt, the interest on which is exempt from federal income
Tax under Section 103 or Section 141-150 of the Code.
(m) Neither Company nor any Subsidiary has agreed to make, or is
required to make, any adjustment under Section 481(a) of the Code.
(n) Neither Company nor any Subsidiary has participated in or
cooperated with an international boycott within the meaning of Section 999 of
the Code.
(o) Upon receipt of the Revenue Canada Clearance Certificate,
Xxxxxxxxxxx is not required under any provision of applicable Tax law to
withhold any amounts otherwise payable to the Shareholders under this Agreement.
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(p) The Financial Statements reflect and include adequate charges,
accruals, reserves and provisions for the payment in full of any and all Taxes
payable with respect to any and all periods ending on or before the respective
dates thereof.
(q) To the best knowledge of the Shareholders, there is no basis for
any reassessment of Tax of either Company or any Subsidiary and there have been
no special assessments on any assets of either Company or any Subsidiary.
(r) Neither Company nor any Subsidiary is a party to any Tax
allocation or Tax sharing agreement.
(s) Except as set forth in Section 3.12 of the Disclosure Schedule,
neither Company nor any Subsidiary is or has been a member of any affiliated,
consolidated, combined, unitary or similar group for Tax purposes.
(t) All consolidated, affiliated, combined, unitary or similar
groups or fiscal unities of which either Company or any Subsidiary is or has
been a party have duly fulfilled, in a timely and accurate manner, all
obligations to any foreign, federal, provincial, state or local authority for
all periods or portions thereof up to and including the Closing Date, and
adequate provisions for payment of all Taxes, including all obligations
regarding the termination of any consolidated, affiliated, combined, unitary or
similar groups or fiscal unities of which either Company or any Subsidiary is or
has been a party, have been made.
(u) During the current fiscal year and for the five previous fiscal
years, neither Company nor any Subsidiary has been a party to a transaction
intended to be treated as a reorganization under Section 368 of the Code or a
distribution under Section 355 of the Code and neither Company nor any
Subsidiary has claimed or been granted exemptions from Taxes in connection with
any such reorganization or distribution. Any such reorganization or distribution
involving either Company or any Subsidiary that was consummated before the
Closing Date will not give rise to the assessment or payment of Taxes after the
Closing Date.
(v) No special agreements, rulings or compromises have been entered
into between either Company or any Subsidiary and any foreign, federal,
provincial, state or local authority regarding the assessment or payment of
Taxes.
(w) Neither Company nor any Subsidiary owns any interest in real
property in any jurisdiction in which a Tax is imposed on the transfer of a
controlling interest in an entity that owns any interest in real property.
(x) Xxxxxxxx U.S. has made a valid election under subchapter S of
the Code to which all Persons required to give their consent to such election
(including, but not limited to, to the extent necessary, each such Person's
spouse) gave their consent and such election became effective on July 1, 1982.
(y) Xxxxxxxx U.S. is, and has been since July 1, 1982, an S
corporation (as defined in Section 1361 of the Code).
(z) On and following July 1, 1982 (the date Xxxxxxxx U.S.'s S
corporation election became effective) and through the date hereof,
(i) the only authorized and outstanding shares of capital
stock of Xxxxxxxx U.S. have been Xxxxxxxx U.S. Common Stock;
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(ii) no Person other than an individual or a trust described
in Section 1361(c)(2) of the Code has been the record or beneficial owner
of Xxxxxxxx U.S. Common Stock (or any interest therein);
(iii) not more than 35 individuals have been the record or
beneficial owners of Xxxxxxxx U.S. Common Stock (or any interest therein)
at any time;
(iv) no Person who has been the record or beneficial owner of
any Xxxxxxxx U.S. Common Stock (or any interest therein), or such Person's
spouse, has been a nonresident alien within the meaning of Section
1361(b)(1)(C) of the Code or a dual resident taxpayer within the meaning
of Treas. Reg. ss. 301.7701(b)-7(a)(1);
(v) Xxxxxxxx U.S. has not been an "ineligible corporation"
within the meaning of Section 1361(b)(2) of the Code;
(vi) Xxxxxxxx U.S. has not issued or entered into any
restricted stock, deferred compensation or profit-sharing plans, call
options, warrants or similar instruments with respect to its stock, stock
appreciation rights, convertible debt instruments, stock-based employee
incentive plans or other similar instruments, obligations or arrangements;
(vii) Xxxxxxxx U.S. has not issued or entered into any
indebtedness other than indebtedness that constitutes "straight debt"
within the meaning of Section 1361(c)(5) of the Code and Treas. Reg. ss.
1.1361-1(l)(5);
(viii) neither Xxxxxxxx U.S. nor any Person who has been the
record or beneficial owner of any Xxxxxxxx U.S. Common Stock (or any
interest therein) has entered into any binding agreements relating to
rights to distributions or liquidation proceeds in respect of Xxxxxxxx
U.S. Common Stock, or any other agreement with respect to Xxxxxxxx U.S.
Common Stock, including, but not limited to, buy-sell agreements,
agreements restricting the transferability of Xxxxxxxx U.S. Common Stock
or redemption agreements; and
(ix) Xxxxxxxx U.S. has not acquired the assets of any other
corporation in a transaction described in Section 381(a) of the Code.
(aa) Neither Xxxxxxxx U.S. nor any Subsidiary has owned any stock
(including any instrument or interest that constitutes stock for United
States federal income tax purposes) of any corporation or entered into any
partnership, joint venture, marketing or other similar contract or
arrangement with any person, in each case where such ownership or
arrangement would invalidate Xxxxxxxx U.S.'s status as an S corporation
(as defined in Section 1361 of the Code) or J&J Rubber's status as a
qualified subchapter S subsidiary under Section 1361(b) of the Code.
(bb) Section 3.12 of the Disclosure Schedule contains a list of all
jurisdictions (whether foreign or domestic) to which any Tax is properly
payable by either Company and each Subsidiary.
(cc) J&J Rubber made a valid election under subchapter S of the Code
to which all Persons required to give their consent to such election
(including, but not limited to, to the extent necessary, each such
Person's spouse) gave their consent, such election became effective on May
19, 1986 (the date of incorporation of J&J Rubber), and from and including
May 19, 1986 (the date of incorporation of J&J Rubber) through and
including February 28, 1999, J&J Rubber was an S corporation (as defined
in Section 1361 of the Code) for federal income tax purposes.
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(dd) Xxxxxxxx U.S. has properly and timely made the election and all
other required filings to qualify J&J Rubber as a qualified subchapter S
subsidiary under Section 1361(b) of the Code. Such election became
effective on March 1, 1999. J&J Rubber is, and has been since March 1,
1999, a qualified subchapter S subsidiary under Section 1361(b) of the
Code.
(ee) Neither Xxxxxxxx U.S. nor J&J Rubber has been subject to the
tax imposed under Section 1374 of the Code. Neither Xxxxxxxx U.S. nor J&J
Rubber will be subject to the Tax imposed under Section 1374 of the Code
as a result of the consummation of the transactions contemplated by this
Agreement.
(ff) The consummation of the transactions contemplated by this
Agreement, which will result in the termination of Xxxxxxxx U.S.'s status
as an S corporation (as defined in Section 1361 of the Code) and J&J
Rubber's status as a qualified subchapter S subsidiary under Section
1361(b) of the Code, will not result in any income or gain being
recognized by Xxxxxxxx U.S. or J&J Rubber for periods or portions thereof
ending on or before the Closing Date.
(gg) Xxxxxxxx U.S., Xxxx Xxxxxx Xxxxxxxx, Xxxxx Xxx Xxxxxxxx and
Xxxxxx Xxxx Xxxxxxxx have properly and timely made the election and all
other required filings to xxxxx Xxxxxxxx Mexico as a partnership for
United States federal income tax purposes. Such election became effective
on September 1, 1998. Xxxxxxxx Mexico is treated, and has been treated
since September 1, 1998, as a partnership for United States federal income
tax purposes.
3.13 Finder's Fees. Except for investment banking fees and expenses
payable pursuant to the Xxxxxx Xxxxxxx Agreement, no Company, Shareholder or
Affiliate thereof has employed or retained any investment banker, broker, agent,
finder or other party, or incurred any obligation for brokerage fees, finder's
fees or commissions, with respect to the transactions contemplated by this
Agreement, or otherwise dealt with anyone purporting to act in the capacity of a
finder or broker with respect thereto whereby any party hereto may be obligated
to pay such a fee or commission. Except as provided for in Section 13.5 hereof,
the Shareholders agree to jointly and severally indemnify and hold Xxxxxxxxxxx
and its Affiliates harmless from and against any and all claims, liabilities or
obligations with respect to all fees, commissions or expenses asserted by any
Person on the basis of any act, statement, agreement or commitment alleged to
have been made by either Company, any Shareholder or any of their respective
Affiliates with respect to any such fee, commission or expense.
3.14 Insurance. Section 3.14 of the Disclosure Schedule sets forth all
existing insurance policies held by either Company or any Subsidiary relating to
the business, assets, employees or agents of either Company or any Subsidiary.
Each such policy is in full force and effect and is with reputable insurance
carriers. There is no dispute with respect to such policies and all claims
arising from events or circumstances occurring prior to the date hereof have
been paid in full or adequate reserves therefor are recorded in the Financial
Statements. All retroactive premium adjustments for any period ended on or
before March 31, 1999, under any worker's compensation policy or any other
insurance policies of either Company or any Subsidiary, for which such Company
or Subsidiary has received notice, have been recorded in accordance with GAAP
and are reflected in the Financial Statements. None of such policies will
terminate as a result of the transactions contemplated by this Agreement.
3.15 Securities Law Matters.
(a) Each of the Shareholders (or in the case of a Shareholder that
is a trust, the trustee acting for and on behalf of such Shareholder) recognizes
and understands that the Xxxxxxxxxxx Shares (the "securities") will not, except
as expressly provided in Article 5 hereof, be registered under the Securities
Act, or under the securities laws of any state (the "securities laws"). The
securities are not being so registered in
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reliance upon exemptions from the Securities Act and the securities laws that
are predicated, in part, on the representations, warranties and agreements of
the Shareholders contained herein.
(b) Each of the Shareholders represents and warrants that (i) such
Shareholder is (x) an "accredited investor" within the meaning of Regulation D
promulgated by the Commission pursuant to the Securities Act and is not relying
on a financial advisor in connection with his or its participation in the
transactions contemplated hereby, or (y) the Purchaser Representative is such
Shareholder's "purchaser representative" within the meaning of Regulation D
promulgated by the Commission pursuant to the Securities Act in connection with
evaluating the merits and risks of this Agreement, the transactions contemplated
hereby and an investment in the Xxxxxxxxxxx Shares and the suitability thereof
as an investment therefor, (ii) such Shareholder (or in the case of a
Shareholder that is a trust, the trustee acting for and on behalf of such
Shareholder), individually or together with the Purchaser Representative, has
such knowledge and experience in financial, investment and business matters,
such experience being based on actual participation therein, that such
Shareholder (or in the case of a Shareholder that is a trust, the trustee acting
for and on behalf of such Shareholder), individually or together with the
Purchaser Representative, is capable of evaluating the merits and risks of this
Agreement, the transactions contemplated hereby and an investment in the
Xxxxxxxxxxx Shares and the suitability thereof as an investment therefor, (iii)
the Xxxxxxxxxxx Shares will be acquired for his or its own account solely for
investment and not with a view toward resale or redistribution in violation of
the securities laws, (iv) such Shareholder (or in the case of a Shareholder that
is a trust, the trustee acting for and on behalf of such Shareholder),
individually or together with the Purchaser Representative, has reviewed such
Shareholder's financial condition and commitments, and such Shareholder (or in
the case of a Shareholder that is a trust, the trustee acting for and on behalf
of such Shareholder), individually or together with the Purchaser
Representative, is satisfied that such Shareholder has adequate means and
providing for such Shareholder's financial needs and reasonably forseeable
contingencies, has no present or anticipated need to dispose of all or any
portion of his or its interest in the Xxxxxxxxxxx Shares to satisfy any existing
or currently contemplated undertaking, need or indebtedness, and has assets or
sources of income that, taken together, are sufficient so that such Shareholder
can bear the risk of the loss of his or its entire investment in the Xxxxxxxxxxx
Shares, (v) such Shareholder has no plan or intention to sell, exchange or
otherwise dispose of his or its interest in the Xxxxxxxxxxx Shares in violation
of the securities laws, (vi) such Shareholder is (x) a natural person whose
residence and domicile are in the State of Arkansas (or, in the case of Xxxxx
Xxx Xxxxxxxx, the State of Texas) or (y) a trust duly formed and validly
existing under the laws of the State of Texas and (vii) in connection with the
transactions contemplated hereby, no assurances have been made concerning the
future results of Xxxxxxxxxxx or as to the value of the Weatherford Shares. Each
Shareholder (or in the case of a Shareholder that is a trust, the trustee acting
for and on behalf of such Shareholder) understands that such Shareholder must
bear the economic risks of such Shareholder's investment in the Xxxxxxxxxxx
Shares for an indefinite period of time. If such Shareholder is relying upon the
Purchaser Representative in such connection, the Purchaser Representative has
disclosed to such Shareholder (or in the case of a Shareholder that is a trust,
the trustee acting for and on behalf of such Shareholder) any material
relationship between himself and his Affiliates and either Company, any
Subsidiary, any other Shareholder, any trustee acting for and on behalf of a
Shareholder that is a trust, Xxxxxxxxxxx or any of their respective Affiliates
during the past two years or currently contemplated and any compensation
received or to be received as a result of such relationship. Each of the
Shareholders (or in the case of a Shareholder that is a trust, the trustee
acting for and on behalf of such Shareholder) understands that Xxxxxxxxxxx is
not under any obligation to file a registration statement or to take any other
action under the securities laws with respect to any such securities except as
expressly set forth in Article 5 hereof.
(c) Each of the Shareholders (or in the case of a Shareholder that
is a trust, the trustee acting for and on behalf of such Shareholder) has had
the opportunity to consult with his or its own counsel in regard to the
securities laws and is fully aware (i) of the circumstances under which such
Shareholder is required to hold the securities, (ii) of the limitations on the
transfer or disposition of the securities, (iii) that the securities must be
held indefinitely unless the transfer thereof is registered under the securities
laws or an exemption from registration is available and (iv) that no exemption
from registration is likely to become
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available for at least one year from the date of acquisition of the securities.
Each of the Shareholders (or in the case of a Shareholder that is a trust, the
trustee acting for and on behalf of such Shareholder) has been advised by his or
its counsel as to the provisions of Rules 144 and 145 as promulgated by the
Commission under the Securities Act and has been advised of the applicable
limitations thereof. Each of the Shareholders (or in the case of a Shareholder
that is a trust, the trustee acting for and on behalf of such Shareholder)
acknowledges that Xxxxxxxxxxx is relying upon the truth and accuracy of the
representations and warranties in this Section 3.15 by each of the Shareholders
in consummating the transactions contemplated by this Agreement without
registering the securities under the securities laws.
(d) Xxxxxxxxxxx has furnished the Shareholders' legal counsel with
the SEC Documents, a summary description of the terms of the Xxxxxxxxxxx Common
Stock and a summary description of any material written information concerning
the transactions contemplated hereby that has been provided to each Shareholder
that is an "accredited investor" but has not been provided to the other
Shareholders (or in the case of a Shareholder that is a trust, the trustee
acting for and on behalf of such Shareholder). The Shareholders' legal counsel
has provided each Shareholder (or in the case of a Shareholder that is a trust,
the trustee acting for and on behalf of such Shareholder) and the Purchaser
Representative with the SEC Documents and such summary descriptions. Each
Shareholder (or in the case of a Shareholder that is a trust, the trustee acting
for and on behalf of such Shareholder) and the Purchaser Representative have
reviewed copies of the SEC Documents and such summary descriptions and have
attended one or more meetings at which representatives of the Companies and the
Shareholders' legal counsel have made presentations concerning this Agreement
and the transactions contemplated hereby (all such written materials, including
this Agreement and the Exhibits and Schedules hereto, and such presentations are
hereinafter referred to as the "Disclosure Information") and no person has made
any representations or warranties of any kind or nature to induce such
Shareholder to enter into this Agreement except as set forth in the written
Disclosure Information. Xxxxxxxxxxx has made available to each of the
Shareholders (or in the case of a Shareholder that is a trust, the trustee
acting for and on behalf of such Shareholder) and the Purchaser Representative
the opportunity to ask questions of, and receive answers from, its
representatives concerning the terms and conditions of the transactions
contemplated by this Agreement and to obtain any additional information that
they possess or could reasonably acquire for the purpose of verifying the
accuracy of information furnished to the Shareholders' legal counsel and the
Purchaser Representative as set forth herein or for the purpose of considering
the transactions contemplated hereby. Xxxxxxxxxxx has offered to make available
to each of the Shareholders (or in the case of a Shareholder that is a trust,
the trustee acting for and on behalf of such Shareholder) and the Purchaser
Representative upon request at any time all exhibits filed by Xxxxxxxxxxx with
the Commission as part of any of the reports filed therewith.
(e) Each Shareholder, individually or together with the Purchaser
Representative, and the Purchaser Representative have made an independent
investigation of the pertinent facts relating to the transactions contemplated
hereby, have reviewed carefully the terms of this Agreement and the information
furnished to such Shareholder (or in the case of a Shareholder that is a trust,
the trustee acting for and on behalf of such Shareholder) and the Purchaser
Representative (including the Disclosure Information) to the extent each such
person deems necessary to be fully informed with respect thereto and understand
the nature of an investment in the Xxxxxxxxxxx Shares.
(f) Each of the Shareholders agrees that the certificates
representing the Xxxxxxxxxxx Shares will be imprinted with the following legend,
the terms of which are specifically agreed to:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON EXEMPTIONS FROM
REGISTRATION REQUIREMENTS. WITHOUT SUCH REGISTRATION, SUCH SHARES MAY NOT
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT REGISTRATION IS
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NOT REQUIRED FOR SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO
THE COMPANY TO THE EFFECT THAT SUCH SALE, PLEDGE, HYPOTHECATION OR
TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933 OR
APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED
THEREUNDER.
Each of the Shareholders (or in the case of a Shareholder that is a trust, the
trustee acting for and on behalf of such Shareholder) understands and agrees
that appropriate stop transfer notations will be placed in the records of
Xxxxxxxxxxx and with its transfer agents in respect of the securities that are
to be issued to the Shareholders. Xxxxxxxxxxx agrees that any Xxxxxxxxxxx Shares
sold pursuant to an effective registration statement, including a registration
statement filed pursuant to Article 5 hereof, shall have the above legend
removed to permit the closing of the sale within three Business Days of written
notice of the sale and certification by the selling Shareholder that the sale
was made pursuant to the plan of distribution described in the registration
statement and the prospectus delivery requirements under the Securities Act were
fully complied with in connection with the sale.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXXXX
Xxxxxxxxxxx hereby represents and warrants to the Shareholders as follows:
4.1 Corporate Matters. Each of Xxxxxxxxxxx and Sub is a corporation
validly existing and in good standing under the laws of Delaware. Each of
Xxxxxxxxxxx and Sub has all requisite power and authority to enter into this
Agreement and to perform its obligations under this Agreement. This Agreement
has been duly authorized, executed and delivered by each of Xxxxxxxxxxx and Sub
and is a legal, valid and binding obligation of each of Xxxxxxxxxxx and Sub,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect that affect creditors' rights generally
and by legal and equitable limitations on the availability of specific remedies.
The execution and delivery of this Agreement by each of Xxxxxxxxxxx and Sub and
the consummation of the transactions contemplated hereby by Xxxxxxxxxxx and Sub
will not violate any provision of, or constitute a default under, any contract
or other agreement to which either Xxxxxxxxxxx or Sub is a party or by which it
is bound, or conflict with its organizational documents, other than violations,
defaults or conflicts that would not materially adversely affect the ability of
Xxxxxxxxxxx or Sub to consummate the transactions provided for in this
Agreement.
4.2 Capitalization. The authorized capital stock of Weatherford consists
of 250,000,000 shares of Xxxxxxxxxxx Common Stock and 3,000,000 shares of
Xxxxxxxxxxx Preferred Stock. At the close of business on August 10, 1999,
97,888,168 shares of Xxxxxxxxxxx Common Stock (excluding 10,589,517 shares of
Xxxxxxxxxxx Common Stock held in treasury), were issued and outstanding, and no
shares of Xxxxxxxxxxx Preferred Stock were issued and outstanding. In addition,
at the close of business on August 10, 1999, 2,154,627 shares of Xxxxxxxxxxx
Common Stock were reserved for issuance pursuant to (i) conversion provisions of
Xxxxxxxxxxx'x outstanding debentures, (ii) Xxxxxxxxxxx'x stock plans and
arrangements and (iii) the proposed transactions contemplated by this Agreement.
Except as set forth above, no shares of capital stock or other equity or voting
securities of Xxxxxxxxxxx are reserved for issuance or outstanding. All
outstanding shares of capital stock of Xxxxxxxxxxx are, and all such shares
issuable upon the exercise of options will be, validly issued, fully paid and
nonassessable and not subject to preemptive rights. The Xxxxxxxxxxx Shares, when
issued pursuant to the terms of this Agreement, will be validly issued, fully
paid and nonassessable and not subject to preemptive rights.
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4.3 Approvals, Licenses and Authorizations. Except for the filing of a
premerger notification and report form under the HSR Act and the filing and
recordation of Articles of Merger as required by the ABCA and the Certificate of
Merger as required by the GCLD, no order, license, consent, waiver,
authorization or approval of, or exemption by, or the giving of notice to, or
the registration with, or the taking of any other action in respect of, any
Person not a party to this Agreement, including any Governmental Entity, and no
filing, recording, publication or registration in any public office or any other
place is now, or under existing law in the future will be, necessary on behalf
of Xxxxxxxxxxx or Sub to authorize its execution, delivery and performance of
this Agreement or any other agreement contemplated hereby to be executed and
delivered by Xxxxxxxxxxx or Sub and the consummation by Weatherford and Sub of
the transactions contemplated hereby or thereby, or to effect the legality,
validity, binding effect or enforceability thereof.
4.4 Finder's Fees. None of Xxxxxxxxxxx, Sub or any of their respective
Affiliates has employed or retained any investment banker, broker, agent, finder
or other party, or incurred any obligation for brokerage fees, finder's fees or
commissions, with respect to the transactions contemplated by this Agreement, or
otherwise dealt with anyone purporting to act in the capacity of a finder or
broker with respect thereto whereby any party hereto may be obligated to pay
such a fee or a commission. Xxxxxxxxxxx agrees to indemnify and hold the
Shareholders and their Affiliates harmless from and against any and all claims,
liabilities or obligations with respect to all fees, commissions or expenses
asserted by any Person on the basis of any act, statement, agreement or
commitment alleged to have been made by Xxxxxxxxxxx or any Affiliate of
Weatherford with respect to any such fee, commission or expense.
4.5 Authorization for the Weatherford Shares. Weatherford has taken, or
will have taken prior to Closing, all necessary action to permit it to issue the
Xxxxxxxxxxx Shares. The Xxxxxxxxxxx Shares, when issued pursuant to the terms of
this Agreement, will be validly issued, fully paid and nonassessable and not
subject to preemptive rights. The Xxxxxxxxxxx Shares will be listed on the New
York Stock Exchange.
4.6 SEC Documents. Weatherford has delivered to the Shareholders' legal
counsel all of the SEC Documents. The SEC Documents represent each report filed
by Xxxxxxxxxxx with the Commission since March 30, 1999. As of their respective
dates, the SEC Documents (i) were prepared in all material respects in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations thereunder applicable to such documents and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading except
for such statements, if any, as have been modified by subsequent filing with the
Commission prior to the date hereof. The consolidated financial statements of
Xxxxxxxxxxx included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, have been prepared in
accordance with GAAP (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Xxxxxxxxxxx and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended. Since December
31, 1998, other than as discussed in the SEC Documents, there has been no
material adverse change in the business of Xxxxxxxxxxx and its subsidiaries,
individually or taken as a whole.
4.7 Continuation of Company. Xxxxxxxxxxx has no present intention or
plan to liquidate Xxxxxxxx U.S. or Xxxxxxxx Canada or to merge Xxxxxxxx U.S. or
Xxxxxxxx Canada with and into any other entity, including without limitation,
Xxxxxxxxxxx, pursuant to which Xxxxxxxx U.S. or Xxxxxxxx Canada would not be the
surviving company and further has no plan or intention to take any action or
refuse to take any action that would result in the Merger not qualifying as a
reorganization under Section 368(a)(1)(A) of the Code or any comparable
provision of applicable state law, or the Exchange not qualifying as a
reorganization under Section 368(a)(1)(B) of the Code or any comparable
provision of applicable state or provincial law.
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ARTICLE 5
REGISTRATION RIGHTS
5.1 Registration Rights.
(a) Xxxxxxxxxxx will use its best efforts to register under the
Securities Act the Xxxxxxxxxxx Shares pursuant to a non-underwritten offering
having a period of distribution not to exceed one year from the Closing Date. In
furtherance of such obligation, Xxxxxxxxxxx shall file, within 30 Business Days
after the Closing Date, with the Commission a registration statement on the
appropriate form seeking the registration for resale of the Xxxxxxxxxxx Shares
(the "Registration Statement"), pursuant to a non-underwritten offering in
accordance with the plan of distribution described therein. References in this
Article 5 to the Xxxxxxxxxxx Shares shall be deemed to include any shares of
Xxxxxxxxxxx Common Stock or other securities received by the Shareholders on
account of any stock split, stock dividend or merger of Xxxxxxxxxxx.
(b) Notwithstanding anything to the contrary contained in this
Section 5.1, Xxxxxxxxxxx shall not be obligated to prepare and file the
Registration Statement pursuant to this Section 5.1, or prepare or file any
amendment or supplement thereto, at any time when Xxxxxxxxxxx reasonably
believes that the filing thereof, or the offering of securities pursuant
thereto, would adversely affect a pending or proposed public offering of
securities of Weatherford, an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction relating to Xxxxxxxxxxx or
negotiations, discussions or pending proposals with respect thereto or require
premature disclosure of information not otherwise required to be disclosed to
the potential detriment of Xxxxxxxxxxx.
(c) Notwithstanding anything to the contrary contained in this
Section 5.1, Xxxxxxxxxxx shall be permitted, on written notice to the
Shareholders, to suspend the period of sale or distribution of the Xxxxxxxxxxx
Shares at any time when Xxxxxxxxxxx reasonably believes that the sale or
distribution thereof would adversely affect a pending or proposed public
offering of securities of Weatherford, an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction relating to Xxxxxxxxxxx or
negotiations, discussions or pending proposals with respect thereto or require
premature disclosure of information not otherwise required to be disclosed to
the potential detriment of Xxxxxxxxxxx.
(d) The filing of the Registration Statement, or any amendment or
supplement thereto, by Xxxxxxxxxxx may not be deferred pursuant to Section
5.1(b) hereof, and the sale and distribution of the Xxxxxxxxxxx Shares may not
be suspended pursuant to Section 5.1(c) hereof, for more than 60 days after the
abandonment or consummation (or the completion of the distribution of securities
in the case of a public offering) of any of the proposals or transactions
described therein or, in any event, for more than 120 days.
(e) The Shareholders agree and covenant to fully cooperate with and
assist Xxxxxxxxxxx and its counsel and representatives in connection with
Xxxxxxxxxxx'x obligations under this Article 5, including providing such
information as requested by Xxxxxxxxxxx in connection the preparation of the
Registration Statement and the resale of the Xxxxxxxxxxx Shares.
5.2 Procedure. Xxxxxxxxxxx will, subject to the provisions of Sections
5.1, 5.2 and 5.4 hereof:
(a) seek to cause the Registration Statement to become and remain
effective for a period of up to one year following the Closing Date or such
shorter period of time until the transfer or sale of all the Xxxxxxxxxxx Shares
has been completed;
(b) as expeditiously as reasonably practicable, prepare and file
with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep the Registration Statement effective and to comply with the provisions of
the
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Securities Act with respect to the disposition of the Xxxxxxxxxxx Shares
covered by the Registration Statement in accordance with the intended method of
distribution set forth therein;
(c) afford the Shareholder Representative a reasonable opportunity
to review and comment on drafts of the Registration Statement and each amendment
thereof and supplement thereto, and drafts of each preliminary prospectus used
in connection with the Registration Statement, prior to their filing or
distribution, as the case may be;
(d) as expeditiously as reasonably practicable, furnish to the
Shareholders such number of copies of prospectuses and preliminary prospectuses
in conformity with the requirements of the Securities Act, and such other
documents as the Shareholders may reasonably request, in order to facilitate the
public sale or other disposition of the Xxxxxxxxxxx Shares owned by the
Shareholders; provided, however, that the obligation of Xxxxxxxxxxx to deliver
copies of prospectuses or preliminary prospectuses to the Shareholders shall be
subject to the receipt by Xxxxxxxxxxx of reasonable assurances from the
Shareholders that they will comply with the applicable provisions of the
Securities Act and of such other securities laws as may be applicable in
connection with any use by them of any prospectuses or preliminary prospectuses;
(e) as expeditiously as practicable, use its best efforts to
register or qualify the Xxxxxxxxxxx Shares under such other securities laws of
such United States jurisdictions as the Shareholders shall reasonably request
(considering the nature and size of the offering) and do any and all other acts
and things that may be necessary or desirable to enable the Shareholders to
consummate the public sale or other disposition in such jurisdictions of the
Xxxxxxxxxxx Shares; provided, however, that Xxxxxxxxxxx shall not be required to
qualify to transact business as a foreign corporation in any jurisdiction in
which it would otherwise not be required to be so qualified or to take any
action that would subject it to general service of process in any jurisdiction
in which it is not then so subject;
(f) notify the Shareholder Representative promptly (1) when a
prospectus or any prospectus supplement has been filed with the Commission and,
with respect to the Registration Statement or any post-effective amendment
thereto, when such document has been declared effective by the Commission, (2)
of any request by the Commission for amendments or supplements to the
Registration Statement or related prospectus, or for additional information, (3)
of the issuance by the Commission of any stop order or the initiation of any
proceedings for such or a similar purpose (and Xxxxxxxxxxx shall make every
reasonable effort to obtain the withdrawal of any such order as soon as
practicable) and (4) of the receipt by Xxxxxxxxxxx of any notification with
respect to the suspension of the qualification of any of the Xxxxxxxxxxx Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose (and Xxxxxxxxxxx shall use commercially reasonable efforts to
obtain the withdrawal of any such suspension as soon as practicable); and
(g) bear all Registration Expenses (as defined below) in connection
with the registration hereunder; provided, however, that all Selling Expenses
(as defined below) of the Xxxxxxxxxxx Shares and all fees and disbursements of
counsel for the Shareholders shall be borne by the Shareholders. For purposes of
this Section 5.2, expenses incurred by Xxxxxxxxxxx in complying with this
Agreement, including (i) all registration and filing fees; (ii) all printing
expenses, (iii) all fees and disbursements of counsel for Xxxxxxxxxxx, (iv) all
blue sky fees and expenses and (v) all fees and expenses of accountants for
Xxxxxxxxxxx, are herein referred to as "Registration Expenses". All brokerage
and selling commissions and fees and expenses of counsel for the Shareholders in
connection with any such registration or resale are herein referred to as
"Selling Expenses".
5.3 Indemnification.
(a) In the event of a registration of the Xxxxxxxxxxx Shares under
the Securities Act pursuant to this Agreement, Xxxxxxxxxxx will indemnify and
hold harmless the Shareholders and any other Person, if any, who controls the
Shareholders within the meaning of Section 15 of the Securities Act, against
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any losses, claims, damages or liabilities, several, to which the Shareholders
or such controlling Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities or actions in
respect thereof arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the effective date thereof,
in the Registration Statement, any preliminary prospectus distributed with the
consent of Xxxxxxxxxxx or final prospectus contained therein, or any amendment
thereof or supplement thereto, including all documents incorporated by reference
therein, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will, unless Xxxxxxxxxxx assumes the
defense as provided in Section 5.3(c) hereof, promptly following request and
receipt of reasonable supporting documents, such as invoices, reimburse the
Shareholders and each such controlling Person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that Xxxxxxxxxxx will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such Registration Statement, such preliminary prospectus, such final prospectus
or such amendment or supplement, including all documents incorporated by
reference therein, in reliance upon and in conformity with written information
furnished to Xxxxxxxxxxx by or on behalf of the Shareholders or a controlling
Person thereof specifically for use in the preparation thereof.
(b) In the event of any registration of the Xxxxxxxxxxx Shares under
the Securities Act pursuant to this Agreement, each Shareholder will indemnify
and hold harmless Xxxxxxxxxxx and each Person, if any, who controls Xxxxxxxxxxx
within the meaning of Section 15 of the Securities Act, each officer of
Xxxxxxxxxxx who signs the Registration Statement and each director of
Weatherford, against any and all such losses, claims, damages, liabilities or
actions that Xxxxxxxxxxx or such officer, director or controlling Person may
become subject under the Securities Act or otherwise, and will reimburse
Weatherford, each such officer, director and controlling Person for any legal or
any other expenses reasonably incurred by such party in connection with
investigating or defending any such loss, claim, damage, liability or action, if
(i) such loss, claim, damage, liability or action in respect thereof arises out
of or is based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any such prospectus, or
any amendment thereof or supplement thereto, or arises out of or is based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading and
such statement or omission of a material fact was made in reliance upon and in
conformity with information furnished to Xxxxxxxxxxx by or on behalf of such
Shareholder specifically for use in connection with the preparation of the
Registration Statement or prospectus or (ii) such loss, claim, damage, liability
or action in respect thereof arises out of or is based upon such Shareholder's
failure to deliver any required prospectus or otherwise comply with applicable
laws regarding the same.
(c) Within five days after receipt by any indemnified Person of
notice of any claim or commencement of any action in respect of which indemnity
is to be sought against an indemnifying Person pursuant to this Agreement, such
indemnified Person shall notify the indemnifying Person in writing of such claim
or of the commencement of such action, and, subject to provisions hereinafter
stated, in case any such action shall be brought against an indemnified Person
and such indemnifying Person shall have been notified of the same, such
indemnifying Person shall be entitled to participate therein, and, to the extent
it shall desire, in its sole discretion, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified Person, and after notice
from the indemnifying Person to such indemnified Person of its election to
assume the defense thereof, such indemnifying Person shall not be liable to such
indemnified Person in connection with the defense thereof; provided, however, if
there exists or will exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the indemnified Person for the
same counsel to represent both the indemnified Person and such indemnifying
Person then such indemnifying Person shall be entitled to retain its own counsel
at the expense of such indemnifying Person; provided further, however, the
indemnifying Person shall not be required to pay for more than one separate
counsel for all of the indemnified Persons in
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addition to any local counsel. Payment of any amounts due pursuant to this
Section 5.3 shall be made within ten Business Days after notice is sent by the
indemnified Person.
5.4 Termination. If Rule 144 or Rule 145 as promulgated under the
Securities Act or any successor or similar rule or statute shall permit the
public sale of the Xxxxxxxxxxx Shares, the rights of the Shareholders as to the
registration provided for in this Agreement as to the Xxxxxxxxxxx Shares shall
terminate immediately.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Access to Information.
(a) Until the Closing, the Shareholders will furnish, and will cause
the Companies and the Subsidiaries to furnish, Xxxxxxxxxxx and its employees,
officers, accountants, attorneys, agents, investment bankers and other
authorized representatives with all financial, operating and other data and
information concerning the assets, commitments and properties of the Companies
and the Subsidiaries as Xxxxxxxxxxx shall from time to time reasonably request
and will afford Xxxxxxxxxxx and its employees, officers, accountants, attorneys,
agents, investment bankers and other authorized representatives access to the
offices, properties, books, records, contracts and documents of the Companies
and the Subsidiaries and the opportunity to ask questions of, and receive
answers from, representatives of the Companies and the Subsidiaries. As part of
its investigation, Xxxxxxxxxxx shall have the right, at its expense, to conduct
environmental assessments of the properties of the Companies and the
Subsidiaries, including soil and groundwater sampling, as Xxxxxxxxxxx deems
appropriate and will promptly provide to the Shareholder Representative full and
complete copies of all such reports and assessments obtained. No investigations
by Xxxxxxxxxxx or its employees, representatives or agents shall reduce or
otherwise affect the obligation or liability of the Shareholders with respect to
any representations, warranties, covenants or agreements made herein or in any
exhibit, schedule or other certificate, instrument, agreement or document,
including the Disclosure Schedule, executed and delivered in connection with
this Agreement. The Shareholders will cooperate with Xxxxxxxxxxx and its
employees, officers, accountants, attorneys, agents and other authorized
representatives in the preparation of any documents or other materials that may
be required by any Governmental Entity. Notwithstanding the foregoing,
Xxxxxxxxxxx shall not discuss the Companies, the Subsidiaries or the
transactions contemplated by this Agreement with any customers or suppliers of
the Companies and the Subsidiaries, without obtaining the prior written approval
of the Shareholder Representative.
(b) In accordance with the terms and conditions of the
Confidentiality Agreement, each party hereto agrees to hold in confidence all,
and not to disclose to others for any reason whatsoever any, non-public
information received by it or its representatives from the other party hereto in
connection with the transactions contemplated by this Agreement except (i) as
required by law; (ii) for disclosure to officers, directors, employees and
representatives of such party as necessary in connection with the transactions
contemplated hereby or as necessary to the operation of such party's business;
and (iii) for information that becomes publicly available other than through
such party. If the transactions contemplated by this Agreement are not
consummated, each party hereto (i) will return to the other party hereto all
non-public documents and other material obtained from such other party, and all
copies, summaries and extracts thereof, or certify to such other party that such
information has been destroyed and, and will destroy all summaries, reports and
analyses prepared in whole or in part based on Confidential Information or in
connection with any investigation of the other party and certify to such other
party that such information has been destroyed, and (ii) agrees not to use for
its own benefit or for the benefit of any other Person any non-public
information received by it or its representatives or Affiliates from the other
party in connection with the transactions contemplated by this Agreement.
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(c) The Shareholders agree to cooperate with Xxxxxxxxxxx, and cause
the Companies' outside auditors to assist Xxxxxxxxxxx, in the preparation of any
financial statements relating to the Companies and the Subsidiaries that may be
reasonably requested by Xxxxxxxxxxx for filing with the Commission in connection
with any filings that may be made by Xxxxxxxxxxx under the Securities Act or the
Exchange Act. Such financial statements shall, if requested by Xxxxxxxxxxx,
consist of (i) such audited balance sheets and audited statements of operations,
cash flows and changes in equity together with the notes thereon and (ii) such
unaudited interim balance sheets and unaudited interim statements of operations,
cash flows and changes in equity, if any, in each case as Xxxxxxxxxxx shall
reasonably deem to be required. All costs with respect to the preparation of the
foregoing financial statements shall be borne by Xxxxxxxxxxx.
6.2 Conduct of the Business. The Shareholders covenant and agree with
Xxxxxxxxxxx that from and after the date hereof until the Closing, except as
expressly authorized by this Agreement or as expressly consented to in writing
by Xxxxxxxxxxx, the Shareholders shall, and shall cause the Companies and the
Subsidiaries to:
(a) operate each Company and each Subsidiary only in the usual,
regular and ordinary manner with a view to maintaining the goodwill that the
Companies and the Subsidiaries now enjoy and, to the extent consistent with such
operation, will use all reasonable efforts to preserve intact their present
business organization, keep available the services of their employees and
preserve their relationships with their customers, suppliers, jobbers,
distributors and other Persons having business relations with them;
(b) use all reasonable efforts to maintain the assets of each
Company and each Subsidiary in a state of repair, order and condition consistent
with their usual practice;
(c) maintain the books of account and records relating to each
Company and each Subsidiary in the usual, regular and ordinary manner, in
accordance with the usual accounting practices of the Companies and the
Subsidiaries applied on a consistent basis, and not increase the carrying value
of any assets above their historical costs;
(d) comply in all respects with all statutes, laws, orders and
regulations applicable to each Company and each Subsidiary and to the conduct of
the Companies and the Subsidiaries;
(e) not sell, assign, transfer, lease or otherwise dispose of any
assets of either Company or any Subsidiary except for dispositions of the
inventories of the Companies and the Subsidiaries for value in the usual and
ordinary course of business and except as provided for in Section 7.21 hereof;
(f) preserve and maintain all rights that the Companies, the
Subsidiaries and the Shareholders now enjoy in and to the Intellectual Property
and not sell, assign, transfer, lease or otherwise dispose of any Intellectual
Property other than to Xxxxxxxxxxx pursuant to the terms of this Agreement;
(g) not mortgage, pledge or otherwise create a security interest or
permit there to be created or exist any Liens on any assets of either Company or
any Subsidiary;
(h) not incur any obligation for borrowed money or purchase money
indebtedness whether or not evidenced by a note, bond, debenture or similar
instrument, except in the ordinary course of business;
(i) not enter into any contract, commitment or lease in relation to
either Company or any Subsidiary or any of their respective assets that is out
of the ordinary course of business of such Company or Subsidiary or that is with
an Affiliate of either Company or any Subsidiary or that would bind Xxxxxxxxxxx
under a contract or other obligation with either Company, any Subsidiary or any
of their respective Affiliates;
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(j) not amend or modify any of the contracts or agreements disclosed
in Section 3.5(a) of the Disclosure Schedule;
(k) not consent to the termination of any of the contracts and
agreements disclosed in Section 3.5(a) of the Disclosure Schedule or waive any
of the rights of either Company or any Subsidiary with respect thereto;
(l) except as set forth in Section 6.2(l) of the Disclosure
Schedule, not permit any insurance policy naming either Company, any Subsidiary
or any Shareholder as a beneficiary or a loss payee relating to either Company
or any Subsidiary to be canceled or terminated or any of the coverage thereunder
to lapse unless simultaneously with such termination or cancellation replacement
policies providing substantially the same coverage are in full force and effect;
(m) pay when due all accounts payable, all payments required by any
of the contracts and agreements set forth in Section 3.5(a) of the Disclosure
Schedule, and all Taxes other than Taxes that are being contested in good faith
and for which adequate reserves exist in the Financial Statements and that would
not result in a Lien being imposed on any assets of either Company or any
Subsidiary;
(n) collect the accounts receivable of each Company and each
Subsidiary only in the ordinary course of business and not accelerate the
payment of any account receivable;
(o) not make any Tax elections that would affect either Company or
any Subsidiary or change any method of accounting or application of any
principles under GAAP;
(p) not change the terms of employment of any officer or senior
employee or increase the compensation or rate of compensation or commissions or
bonuses payable by either Company or any Subsidiary to any of their respective
employees that is not consistent with past practice;
(q) not declare or pay any dividend on or make any other
distribution in respect of any of the shares in the capital of either Company or
any Subsidiary or purchase, redeem or otherwise acquire any of such shares;
(r) not authorize or issue, sell, pledge, dispose of or encumber any
shares of capital stock of either Company or any Subsidiary;
(s) not grant any stock options or rights to acquire capital stock
of either Company or any Subsidiary;
(t) not amend or otherwise modify the organizational documents of
either Company or any Subsidiary;
(u) not amend any Company Benefit Plan except as required by law or
this Agreement; and
(v) promptly notify Xxxxxxxxxxx in writing if the Shareholders
become aware of any change that shall have occurred or that shall have been
threatened (or any development that shall have occurred or that shall have been
threatened involving a prospective change) in either Company or any Subsidiary
that would reasonably be expected to adversely affect either Company or any
Subsidiary, whether or not occurring in the ordinary course of business.
6.3 Negotiation with Others. The Shareholders agree that from the date
hereof until the Closing Date or the termination of this Agreement pursuant to
Article 11 hereof, none of the Shareholders or any of
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their respective Affiliates, including the Companies, will, directly or
indirectly, through any representative or otherwise, solicit or entertain offers
from, negotiate with or in any manner encourage, discuss, accept or consider any
proposal or offer from any Person not a party hereto or not affiliated with a
party hereto with respect to a merger, consolidation, asset purchase, stock
purchase or any similar transaction involving either Company or any Subsidiary
with any such Person. During such period, the Shareholders will immediately
notify Xxxxxxxxxxx regarding any such contact between the Shareholders or any of
their Affiliates or representatives and any Person regarding any such offer or
proposal or any related inquiry and shall return without discussion all offers
or proposals regarding any such transaction involving either Company or any
Subsidiary.
6.4 Information. During the period from the date of this Agreement to
the Closing Date, Xxxxxxxxxxx and the Shareholders will promptly inform each
other in writing of any claim, action or any proceeding commenced against such
party with respect to the transactions contemplated by this Agreement or any
assets or property of either Company or any Subsidiary.
6.5 Delivery of Documents. The Shareholders shall deliver to Xxxxxxxxxxx
at the Closing all Documents and Other Papers relating to the Companies and the
Subsidiaries that are in the Shareholders' possession or control, including,
without limitation, all files relating to the Financial Statements, computer
disks reflecting any books or records, documents or other papers, or other
information or data relating to the operation of the Companies and the
Subsidiaries stored on any electronic media, including computers. For purposes
of this Section 6.5, the Shareholders shall be considered to have satisfied the
delivery requirements of this Section 6.5 by delivering such Documents and Other
Papers to the offices of Xxxxxxxx U.S. in Fort Xxxxx, Arkansas. For a period of
six years after the Closing Date, Xxxxxxxxxxx agrees to provide the Shareholders
with access to such Documents and Other Papers to the extent required for tax,
financial accounting or legal purposes on a reasonable basis during normal
business hours and to permit copies to be made of such Documents and Other
Papers as may be reasonably needed. All such Documents and Other Papers shall be
maintained by the Shareholders in confidence except to the extent required to be
disclosed under law or in furtherance of any defense by the Shareholders or any
Affiliate of the Shareholders to any action, suit or proceeding against the
Shareholders or any Affiliate of the Shareholders; provided, however,
Xxxxxxxxxxx shall be advised of any such proposed disclosure in advance and be
entitled to seek a limitation on the use of such information and scope of such
disclosure.
6.6 Further Assurances.
(a) Each of the Canadian Shareholders shall execute, acknowledge and
deliver or cause to be executed, acknowledged and delivered to Xxxxxxxxxxx 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 Xxxxxxxxxxx, as shall be necessary to vest
in Xxxxxxxxxxx all the right, title and interest in and to the Xxxxxxxx Canada
Shares free and clear of all Liens (other than those Liens created or suffered
by Xxxxxxxxxxx and restrictions on sales of Xxxxxxxx Canada Shares under
applicable securities laws) and shall use his best efforts to cause to be taken
such other action as Xxxxxxxxxxx reasonably may require to more effectively
implement and carry into effect the transactions contemplated by this Agreement.
For the assignment of the Xxxxxxxx Canada Shares from the Canadian Shareholders
to Xxxxxxxxxxx, each of the Canadian Shareholders is obligated at all times
without delay in the legal or contractual required form to carry out all
necessary acts and to deliver all legally required declarations.
(b) If at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any further assignments or
assurances in law or otherwise are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, all rights, title
and interests in all real estate and other property and all privileges, powers
and franchises of Xxxxxxxx U.S. and Sub, the Surviving Corporation and its
proper officers and directors, in the name and on behalf of Xxxxxxxx U.S. and
Sub, shall execute and deliver all such proper deeds, assignments and assurances
in law and do all things necessary and
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proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purpose of this Agreement,
and the proper officers and directors of the Surviving Corporation are fully
authorized in the name of Xxxxxxxx U.S. or otherwise to take any and all such
action.
6.7 Nondisclosure of Proprietary Information.
(a) Each of the Shareholders agrees that, from and after the
Closing, such Shareholder and such Shareholder's Affiliates shall (i) hold in
confidence and not directly or indirectly at any time reveal, report, publish,
disclose or transfer to any Person other than Xxxxxxxxxxx any of the Proprietary
Information that is not generally known to the public or utilize any of the
Proprietary Information for any purpose and (ii) not for a period of five years
solicit or hire any employees of either Company or any Subsidiary who are
currently employed or may be employed as of the Closing by either Company or any
Subsidiary.
(b) The Shareholders acknowledge that all documents and objects
containing or reflecting any Proprietary Information, whether developed by
either Company, any Subsidiary or any Shareholder, or by someone else for either
Company, any Subsidiary, any Shareholder or any of their respective Affiliates,
will after the Closing become the exclusive property of Xxxxxxxxxxx and be
delivered to Xxxxxxxxxxx.
(c) Because of the unique nature of the Proprietary Information, the
Shareholders understand and agree that the breach or anticipated breach of the
obligations under this Section 6.7 will result in immediate and irreparable harm
and injury to Xxxxxxxxxxx and its Affiliates, for which it will not have an
adequate remedy at law, and that Xxxxxxxxxxx and its Affiliates and their
successors and assigns shall be entitled to relief in equity to enjoin such
breach or anticipated breach and to seek any and all other legal and equitable
remedies to which they may be entitled.
6.8 Covenant Not to Compete With the Business. Each of Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx Xxxx Xxxxxxxx and Xxxxx Xxx Xxxxxxxx (the "Non-Compete
Parties") agrees that, effective as of the Closing Date and for a period of five
years thereafter, and except for the activities described in Section 6.14 hereof
(which shall not be subject to the restrictions set forth in this Section 6.8
provided that such Non-Compete Party complies with all the terms of Section 6.14
hereof), neither such Non-Compete Party nor any of his Affiliates shall, without
the consent of Xxxxxxxxxxx, directly or indirectly, design, develop, market,
produce, manufacture, rent, distribute, repair, provide or sell oilfield
products or related services in any geographic location in the world or, except
for the benefit of Xxxxxxxxxxx and its Affiliates, assist any Person to do the
same; provided, however, that a Non-Compete Party may design and sell products
that do not compete with the products and the business of either Company or any
Subsidiary as long as such Non-Compete Party has complied with Section 6.14
hereof. Each Non-Compete Party acknowledges that a remedy at law for any breach
or attempted breach of this Section 6.8 will be inadequate and further agrees
that any breach of this Section 6.8 will result in irreparable harm to the
Companies, the Subsidiaries and Xxxxxxxxxxx, and, accordingly, Xxxxxxxxxxx
shall, in addition to any other remedy that may be available to it, be entitled
to specific performance and injunctive and other equitable relief against the
Non-Compete Party who violates the provisions of this Section 6.8 in case of any
such breach or attempted breach and shall be entitled to terminate payments
under the Xxxxxxxx Technology Royalty Agreement to any Non-Compete Party who
violates the provisions of this Section 6.8. Each Non-Compete Party acknowledges
that this covenant not to compete is being provided as an inducement to
Xxxxxxxxxxx to consummate the transactions contemplated by this Agreement and
that this Section 6.8 contains reasonable limitations as to time, geographical
area and scope of activity to be restrained that do not impose a greater
restraint than is necessary to protect the goodwill or other business interest
of Xxxxxxxxxxx. Whenever possible, each provision of this Section 6.8 shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Section 6.8 shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of this
Section 6.8. If any provision of this Section 6.8 shall, for any reason, be
judged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Section 6.8
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but shall be confined in its operation to the provision of this Section 6.8
directly involved in the controversy in which such judgment shall have been
rendered. In the event that the provisions of this Section 6.8 should ever be
deemed to exceed the time or geographic limitations permitted by applicable
laws, then such provision shall be reformed to the maximum time or geographic
limitations permitted by applicable law. Notwithstanding anything to the
contrary contained herein, the Shareholders, including the Non- Compete Parties,
shall have the full right and ability to own no more than 5% of any class of
securities listed on a national securities exchange or traded publicly in the
over-the-counter market, including that of companies in competition with
Xxxxxxxxxxx or any of its Affiliates.
6.9 Use of Corporate Name. All uses of the corporate names "Xxxxxxxx
Tool Co.", "Xxxxxxxx Tool Co. (Canada) Inc.", "J&J Rubber Molding and Supply
Company", "Xxxxxxxx Rotating Head" and any other name set forth in Section
3.1(g) of the Disclosure Schedule or any derivations thereof, are being
transferred to Xxxxxxxxxxx hereunder. Each of the Shareholders agrees not to
take any action that could reasonably be expected to adversely affect
Xxxxxxxxxxx'x right to the names "Xxxxxxxx Tool Co.", "Xxxxxxxx Tool Co.
(Canada) Inc.", "J&J Rubber Molding and Supply Company", "Xxxxxxxx Rotating
Head" and any other name set forth in Section 3.1(g) of the Disclosure Schedule
or cause confusion with respect to Xxxxxxxxxxx'x use of such names. All goodwill
with respect to the use of the names "Xxxxxxxx Tool Co.", "Xxxxxxxx Tool Co.
(Canada) Inc.", "J&J Rubber Molding and Supply Company", "Xxxxxxxx Rotating
Head" and any other name set forth in Section 3.1(g) of the Disclosure Schedule
will inure to the benefit of Xxxxxxxxxxx, and none of the Shareholders will have
any rights to xxx or recover against any Person with respect to the use of such
name.
6.10 RELEASE.
(a) AS OF THE CLOSING DATE, EACH OF THE SHAREHOLDERS DOES HEREBY FOR
HIMSELF OR ITSELF AND HIS OR ITS SUCCESSORS AND ASSIGNS REMISE, RELEASE, ACQUIT
AND FOREVER DISCHARGE EACH COMPANY, EACH SUBSIDIARY, SUB, XXXXXXXXXXX AND EACH
OF THEIR RESPECTIVE AFFILIATES, AND THEIR SUCCESSORS AND ASSIGNS, OF AND FROM
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
SHAREHOLDER OR HIS 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 EITHER COMPANY OR ANY SUBSIDIARY AND THEIR RESPECTIVE 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 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 (INCLUDING THE
XXXXXXXX TECHNOLOGY ROYALTY AGREEMENT) 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;
PROVIDED FURTHER, HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL RELEASE XXXXXXXX
U.S. OF ITS OBLIGATIONS UNDER THE XXXXXX NOTE.
(b) EACH OF THE SHAREHOLDERS 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 THE CLAIMS, DEMANDS,
LIABILITIES, RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS
RELEASED HEREIN. EACH OF THE SHAREHOLDERS COVENANTS AND AGREES THAT SUCH
SHAREHOLDER WILL NOT ASSIGN OR TRANSFER TO ANY PERSON OR ENTITY WHATSOEVER ALL
OR ANY PART OF THE CLAIMS, DEMANDS, LIABILITIES, RESPONSIBILITIES, DISPUTES,
CAUSES OF ACTION OR OBLIGATIONS TO BE RELEASED HEREIN. EACH OF THE SHAREHOLDERS
REPRESENTS AND WARRANTS THAT SUCH SHAREHOLDER HAS READ AND UNDERSTANDS ALL OF
THE PROVISIONS OF THIS SECTION 6.10 AND THAT 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.
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(c) THE RELEASE PROVIDED BY THE SHAREHOLDERS PURSUANT TO THIS
SECTION 6.10 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 XXXXXXXXXXX, THE COMPANIES, THE SUBSIDIARIES, SUB AND XXXXXXXXXXX AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, AND FOR 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.
6.11 Payment of Obligations. Immediately prior to the Closing, each of
the Shareholders and each of their respective Affiliates shall pay to each
Company and each Subsidiary all indebtedness and other obligations (other than
intercompany indebtedness) that such Shareholder or such Affiliate owes to such
Company and such Subsidiary as of the Closing.
6.12 HSR Filing.
(a) Xxxxxxxxxxx and the Companies (collectively, the "HSR Parties")
shall have made prior to the execution and delivery of this Agreement all
premerger notification and report form filings required under the HSR Act. Each
of the HSR Parties agrees to use reasonable efforts to respond promptly to, and
fully address, any formal or informal inquiry or request for information by a
Governmental Entity regarding the transactions contemplated hereby.
(b) Each of the HSR Parties have or will furnish one another copies
of all correspondence, filings or communications (or memoranda setting forth the
substance thereof (collectively, "HSR Documents")) between such HSR Party, or
any of their respective representatives, on the one hand, and any Governmental
Entity, or members of the staff of such agency or authority, on the other hand,
with respect to this Agreement; provided, however, that (i) with respect to
documents and other materials filed by or on behalf an HSR Party with the
Antitrust Division of the Department of Justice, the Federal Trade Commission or
any state attorneys general that are otherwise available for review by the other
HSR Parties, copies will not be required to be so provided, (ii) the other HSR
Parties may redact all revenue figures relating to any service not provided or
any product not manufactured or sold by the other HSR Parties or any of their
respective subsidiaries (according to such other HSR Parties' HSR Documents) and
(iii) with respect to any HSR Party's Documents (A) that contain any information
that, in the reasonable judgment of such HSR Party's counsel, should not be
furnished to such other HSR Parties' counsel because of antitrust considerations
or (B) relating to a request for additional information pursuant to Section
(e)(1) of the HSR Act, the obligation of an HSR Party to furnish any such HSR
Documents to the other HSR Party's counsel shall be satisfied by the delivery of
such HSR Documents on a confidential basis to such other HSR Parties' counsel
pursuant to an appropriate confidentiality agreement to be entered into by
Friday, Xxxxxxxx & Xxxxx, L.L.P., on behalf of the Companies and the
Shareholders, and Fulbright & Xxxxxxxx L.L.P., on behalf of Xxxxxxxxxxx and Sub.
(c) Notwithstanding the foregoing provisions in this Section 6.12,
nothing contained in this Agreement shall be construed so as to require any of
the HSR Parties, or any of their respective Affiliates, to sell, license,
dispose of or hold separate, or to operate in any specified manner, any of their
respective assets or businesses (or to require any of the HSR Parties or any of
their respective subsidiaries or Affiliates to agree to any of the foregoing).
The obligations of each HSR Party under Section 6.12(a) hereof to use reasonable
efforts with respect to antitrust matters shall be limited to compliance with
the reporting provisions of the HSR Act and with its obligations under Section
6.12(b) hereof.
6.13 Shareholder Approval; Voting. Each U.S. Shareholder hereby
irrevocably (i) waives notice of a meeting of shareholders for purpose of
approving and adopting this Agreement as contemplated by Xxxxxxx 0-00-000 xx xxx
XXXX, (xx) acknowledges that the Board of Directors of Xxxxxxxx U.S. has taken
all
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action to approve the plan of merger relating to the Merger described in this
Agreement and has taken all other action required to consummate the transactions
provided for herein as contemplated by Sections 4-27- 1101 through 4-27-1107 of
the ABCA, (iii) approves and adopts, and consents to the approval and adoption
of, this Agreement, the plan of merger provided for herein and all transactions
contemplated hereby and (iv) waives any right to dissent or seek any appraisal
rights on account of the Merger. Xxxxxxxx U.S. and the U.S. Shareholders shall
take such additional action as may be necessary under the ABCA to approve the
Merger.
6.14 Right of First Refusal.
(a) Each of the Shareholders agrees that if, during the period
commencing on the Closing Date and ending on the fifth anniversary thereof (the
"Non-Compete Period"), such Shareholder or any of his or its Affiliates (the
"Offeror") develops or has developed any product, service, technology,
information, know how or intellectual property related to the oilfield services
and products industry (the "New Technology"), the Offeror shall offer to
Xxxxxxxxxxx and its Affiliates the right, at Xxxxxxxxxxx'x sole discretion, to
purchase the New Technology or enter into an exclusive license agreement with
the Offeror to utilize the New Technology on commercially reasonable terms or on
such terms as may be offered by any third party. A Shareholder that develops or
has developed New Technology shall not be subject to the terms of Section 6.8
hereof with respect to such New Technology provided that such Shareholder
complies with all the terms of this Section 6.14.
(b) The Offeror shall, as soon as is commercially practicable,
provide Xxxxxxxxxxx with a written description of the New Technology and shall
afford Xxxxxxxxxxx and its Affiliates access to the books, records, facilities
and personnel of the Offeror to allow Xxxxxxxxxxx to fully review, test and
analyze the New Technology, subject to the terms of a customary confidentiality
agreement.
(c) If Xxxxxxxxxxx elects to purchase or license the New Technology,
Xxxxxxxxxxx shall notify the Offeror of such election in writing no later than
30 days after Xxxxxxxxxxx receives written notice from the Offeror of the New
Technology. If Xxxxxxxxxxx fails to notify the Offeror within such 30-day
period, Xxxxxxxxxxx shall be deemed to have elected not to purchase or license
the New Technology. If Xxxxxxxxxxx elects to purchase or license the New
Technology, Xxxxxxxxxxx or one of its Affiliates and the Offeror will enter into
an agreement for such purchase or license on commercially reasonable terms. If
Weatherford makes such election, the Offeror will not sell or license the New
Technology to any Person other than Weatherford or an Affiliate of Weatherford
or use the New Technology for its own benefit during the Non-Compete Period.
(d) Subject to the provisions of this Section 6.14, if Weatherford
affirmatively declines to purchase or license any New Technology, then the
Offeror may enter into an agreement to license or sell the New Technology to any
third party provided that the terms of the license or purchase agreement with
any third party are more beneficial and advantageous to the Offeror than were
the terms offered to Weatherford.
ARTICLE 7
XXXXXXXXXXX'X AND SUB'S CONDITIONS
The obligation of Weatherford and Sub to consummate the transactions
contemplated by this Agreement is, at the option of Weatherford and Sub, subject
to the satisfaction on or before the Closing Date of the conditions set forth
below, any of which may be waived by Weatherford or Sub in writing; provided,
however, Xxxxxxxxxxx'x and Sub's election to proceed with the Closing shall not
be deemed a waiver of any breach of any representation, warranty or covenant
herein and such action shall not prejudice Xxxxxxxxxxx'x or Sub's right to
recover damages for any such breach.
7.1 Representations, Warranties and Covenants. The representations and
warranties of the Shareholders contained in this Agreement shall be true,
correct and complete in all respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made or
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given on and as of such date; each and all of the agreements and covenants of
the Shareholders to be performed or complied with by them on or before the
Closing Date pursuant to this Agreement shall have been performed or complied
with in all respects; and the Shareholders shall have delivered to Weatherford a
certificate, dated the Closing Date, regarding the matters set forth in this
Section 7.1.
7.2 Good Standing. The Shareholders shall have delivered to Weatherford
certificates issued by appropriate Governmental Entities evidencing the status
of each Company and each Subsidiary, as of a date not earlier than July 1, 1999,
in each jurisdiction specified in Section 3.1(b) of the Disclosure Schedule.
7.3 Certificates and Instruments of Transfer. The Canadian Shareholders
shall have delivered to Weatherford all stock certificates representing the
Xxxxxxxx Canada Shares and shall have executed, acknowledged and delivered to
Weatherford such instruments of transfer of the Xxxxxxxx Canada Shares
(including stock powers) as shall be reasonably requested by Weatherford to vest
in Weatherford all the right, title and interest in and to the Xxxxxxxx Canada
Shares.
7.4 No Litigation. No preliminary or permanent injunction or other order
of any court or other Governmental Entity shall be in effect or threatened nor
shall there be in effect any statute, rule, regulation or executive order
promulgated or enacted by any Governmental Entity that, in any such case,
prevents the consummation of the transactions contemplated by this Agreement. No
suit, action, claim, proceeding or investigation before any court or other
Governmental Entity shall have been commenced or threatened by any Person (other
than Weatherford, Sub or any of their respective Affiliates) seeking to prevent
the consummation of the transactions contemplated by this Agreement or asserting
that the consummation of the transactions contemplated by this Agreement would
be unlawful.
7.5 No Material Adverse Event. The business and properties of the
Company shall not be affected or threatened to be affected by any loss or
damage, whether or not covered by insurance, except to the extent that the same
would not have a Material Adverse Effect on either Company or any Subsidiary.
7.6 Other Legal Matters. All exhibits, schedules, certificates,
documents and legal matters in connection with this Agreement and the
transactions contemplated hereby shall be in substantially the forms required by
this Agreement.
7.7 Licenses, Consents and Approvals. Except for the Revenue Canada
Clearance Certificate, all necessary actions or nonactions, waivers, licenses,
consents or approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
shall have been obtained, made, expired or lapsed and shall be in full force and
effect. The Shareholders shall have delivered to Weatherford a copy of each of
the licenses, consents, approvals and other authorizations from Governmental
Entities necessary or appropriate for the Shareholders to consummate the
transactions contemplated by this Agreement.
7.8 Consents of Third Persons. All consents from third Persons,
including those consents necessary for the consummation of the transactions
contemplated by this Agreement or for the continued enjoyment by the Surviving
Corporation of the benefits of any agreement, contract, license or any other
instrument described in the Disclosure Schedule or referred to herein, shall
have been obtained and be effective on terms satisfactory to Weatherford and
delivered to Weatherford.
7.9 Legal Opinions.
(a) Weatherford shall have been furnished an opinion of Friday,
Xxxxxxxx & Xxxxx, L.L.P., counsel to the U.S. Shareholders and Williams U.S.,
with regard to the matters set forth on Exhibit D hereto.
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(b) Weatherford shall have been furnished an opinion of Field
Xxxxxxxx Perraton, Canadian counsel to the Canadian Shareholders, with regard to
the matters set forth on Exhibit E hereto.
7.10 Shareholder Obligations. Each of the Shareholders and each of their
respective Affiliates shall have paid in full to each Company and each
Subsidiary all indebtedness and other obligations (other than intercompany
indebtedness) that such Shareholder or such Affiliate owes to such Company and
such Subsidiary as of the Closing.
7.11 Liabilities. The Shareholders shall have provided to Weatherford
evidence satisfactory to Weatherford of the assumption of the Retained
Liabilities by the Shareholders.
7.12 Board Approvals. The boards of directors of Weatherford and Sub
shall have approved this Agreement and the transactions contemplated hereby.
7.13 Stock Exchange Approval. The New York Stock Exchange shall have
approved the listing of the Weatherford Shares.
7.14 Approvals for Issuance of Weatherford Shares. Weatherford shall have
received all consents, approvals and other authorizations from Governmental
Entities necessary or appropriate for Weatherford to issue the Weatherford
Shares.
7.15 Resolutions. The Shareholders shall have delivered to Weatherford
certified copies of resolutions of the board of directors and the shareholders
of Williams U.S. approving this Agreement, the Merger and the transactions
contemplated hereby and certified copies of resolutions of the shareholders of
Xxxxxxxx Canada approving this Agreement, the sale of the Xxxxxxxx Canada Shares
to Weatherford and the transactions contemplated hereby, which resolutions shall
have been approved by the sole director of Xxxxxxxx Canada.
7.16 Xxxxxxxx Technology Royalty Agreement. Weatherford and the
Non-Compete Parties shall have entered into the Xxxxxxxx Technology Royalty
Agreement.
7.17 Resignation of Directors and Officers. Weatherford and Sub shall
have received from each Company letters of resignation effective as of the
Effective Date from the directors and officers of such Company and its
Subsidiaries.
7.18 Dissenters' Rights. Weatherford and Sub shall have received a Waiver
executed by each Shareholder.
7.19 Williams Mexico. The U.S. Shareholders shall have delivered to
Weatherford evidence satisfactory to Weatherford of (a) the transfer by Williams
U.S. of its 99% interest in Xxxxxxxx Mexico to the U.S. Shareholders and (b) the
transfer by Williams Mexico or the U.S. Shareholders of all of Xxxxxxxx Mexico's
assets to Williams U.S.
7.20 Intellectual Property. The U.S. Shareholders shall have delivered to
Weatherford evidence satisfactory to Weatherford of (a) the transfer to Williams
U.S. of any Intellectual Property owned by or licensed to any of the U.S.
Shareholders and (b) the termination of any agreements relating to Intellectual
Property to which any U.S. Shareholder is a party.
7.21 Excluded Property. Xxxxxxxx shall have transferred the real property
described in Section 7.21 of the Disclosure Schedule to the persons or entities
set forth in Section 7.21 of the Disclosure Schedule.
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7.22 Shareholder Agreements. The U.S. Shareholders shall have delivered
to Weatherford evidence satisfactory to Weatherford of the termination of the
Shareholder Agreement dated December 3, 1993, among Xxxxxxxx Tool Company, Xxxx
X. Xxxxxxxx, Xxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxxx. The Canadian Shareholders
shall have delivered to Weatherford evidence satisfactory to Weatherford of the
termination of the Shareholder Agreement dated May 26, 1994, among Xxxxxxxx Tool
Company (Canada), Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxx X.
Xxxxxxxxx.
7.23 Revenue Canada Clearance Certificate. The Canadian Shareholders
shall have delivered to Weatherford the Revenue Canada Clearance Certificate.
ARTICLE 8
SHAREHOLDERS' CONDITIONS
The obligation of the Shareholders to consummate the transactions
contemplated by this Agreement is, at the option of the Shareholders, subject to
the satisfaction on or before the Closing Date of the conditions set forth
below, any of which may be waived by the Shareholders in writing; provided,
however, the Shareholders' election to proceed with the Closing shall not be
deemed a waiver of any breach of any representation, warranty or covenant herein
and such action shall not prejudice the Shareholders' rights to recover damages
for any breach.
8.1 Representations, Warranties and Covenants. The representations and
warranties of Weatherford contained in this Agreement shall be true, correct and
complete in all respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made or given on
and as of such date; each and all of the agreements and covenants of Weatherford
to be performed or complied with by it on or before the Closing Date pursuant to
this Agreement shall have been performed or complied with in all respects; and
Weatherford shall have delivered to the Shareholders a certificate signed by one
of its duly authorized officers, dated the Closing Date, regarding the matters
set forth in this Section 8.1.
8.2 Purchase Price. Weatherford shall have caused to be issued to the
Shareholders the Weatherford Shares.
8.3 Licenses, Consents and Approvals. All necessary actions or
nonactions, waivers, licenses, consents or approvals from Governmental Entities
and the making of all necessary registrations and filings (including filings
with Governmental Entities, if any) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, shall have been obtained, made, expired
or lapsed and shall be in full force and effect. Weatherford shall have
delivered to the Shareholders a copy of each of the licenses, consents,
approvals and other authorizations from Governmental Entities necessary or
appropriate for Weatherford to consummate the transactions contemplated by this
Agreement.
8.4 No Litigation. No preliminary or permanent injunction or other order
of any court or other Governmental Entity shall be in effect or threatened nor
shall there be in effect any statute, rule, regulation or executive order
promulgated or enacted by any Governmental Entity that, in any such case,
prevents the consummation of the transactions contemplated by this Agreement. No
suit, action, claim, proceeding or investigation before any court or other
Governmental Entity shall have been commenced or threatened by any Person (other
than the Shareholders or any of their respective Affiliates) seeking to prevent
the consummation of the transactions contemplated by this Agreement or asserting
that the consummation of the transactions contemplated by this Agreement would
be unlawful.
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8.5 Other Legal Matters. All exhibits, schedules, certificates,
documents and legal matters in connection with this Agreement and the
transactions contemplated hereby shall be in substantially the forms required by
this Agreement.
8.6 Legal Opinions. The Shareholders shall have been furnished an
opinion of Fulbright & Xxxxxxxx L.L.P., counsel to Weatherford and Sub, with
regard to the matters set forth on Exhibit F hereto.
8.7 Xxxxxxxx Technology Royalty Agreement. Weatherford and the
Non-Compete Parties shall have entered into the Xxxxxxxx Technology Royalty
Agreement.
8.8 Stock Exchange Approval. The New York Stock Exchange shall have
approved the listing of the Weatherford Shares.
8.9 Approvals for Issuance of Weatherford Shares. Weatherford shall have
received all consents, approvals and other authorizations from Governmental
Entities necessary or appropriate for Weatherford to issue the Weatherford
Shares.
8.10 Resolutions. Weatherford shall have delivered to the Shareholders
certified copies of resolutions of the board of directors of Weatherford and the
board of directors and sole stockholder of Sub approving this Agreement, the
Merger and the transactions contemplated hereby.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification by the Shareholders. Except as otherwise limited by
this Article 9 and Article 10 hereof, (i) each Shareholder, severally and not
jointly, with respect to matters pertaining solely to such Shareholder, (ii) the
U.S. Shareholders, jointly and severally, with respect to matters pertaining to
Williams U.S. and its Subsidiaries, and (iii) the Canadian Shareholders, jointly
and severally, with respect to matters pertaining to Xxxxxxxx Canada and its
Subsidiaries, agree to indemnify, defend and hold Weatherford, Sub, each of
their respective Affiliates (including, after the Closing, Williams U.S.,
Xxxxxxxx Canada and their Subsidiaries) and each of their respective officers,
directors, employees, agents, stockholders and controlling Persons and their
respective successors and assigns, harmless from and against and in respect of
Damages actually suffered, incurred or realized by such party (collectively,
"Weatherford Losses"), arising out of, resulting from or relating to:
(a) any misrepresentation, breach of representation or warranty or
breach of any covenant or agreement made or undertaken by the Shareholders in
this Agreement or any misrepresentation or omission from any other agreement,
certificate, exhibit or writing delivered to Weatherford pursuant to this
Agreement, including the Disclosure Schedule; or
(b) any Retained Liability.
For purposes of determining Xxxxxxxxxxx'x and Sub's right to indemnification for
a misrepresentation or breach of warranty made by the Shareholders in this
Agreement, all such representations and warranties that have been made subject
to a materiality qualification shall be deemed to have been made without that
qualification, it being understood that the threshold provided in Section 9.7
hereof, to the extent applicable, is intended to be the only materiality
qualification for purposes of indemnification. Except for the immediately
preceding sentence, this Section 9.1 does not apply to or cover Environmental
Losses or Environmental Liabilities. The indemnity obligation of the
Shareholders with respect to Environmental Losses is governed by Section 9.9
hereof.
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9.2 Indemnification by Weatherford. Except as otherwise limited by this
Article 9 and Article 10 hereof, Weatherford agrees to indemnify, defend and
hold the Shareholders and their successors and assigns harmless from and against
and in respect of Damages actually suffered, incurred or realized by such party
(collectively, "Shareholders Losses"), (i) arising out of or resulting from any
misrepresentation, breach of representation or warranty or breach of any
covenant or agreement made or undertaken by Weatherford in this Agreement,
including the agreements contained in Article 5 hereof, or any misrepresentation
in or omission from any other agreement, certificate, exhibit or writing
delivered to the Shareholders pursuant to this Agreement or (ii) arising out of
events relating solely to the ownership of the Companies and Subsidiaries or use
of the assets or the operation of the Companies' and the Subsidiaries' business
with respect to the period after the Closing provided that such Damages
(including those related to Retained Liabilities and Environmental Losses) are
not attributable to or do not result from acts or omissions that occurred prior
to the Closing.
9.3 Procedure. All claims for indemnification under this Article 9 shall
be asserted and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor notice of any
matter that an Indemnitee has determined has given or could give rise to a right
of indemnification under this Agreement, stating the amount of the Loss, if
known, and method of computation thereof, all with reasonable particularity, and
stating with particularity the nature of such matter. Failure to provide such
notice shall not affect the right of the Indemnitee to indemnification except to
the extent such failure shall have resulted in liability to the Indemnitor that
could have been actually avoided had such notice been provided within such
required time period.
(b) The obligations and liabilities of an Indemnitor under this
Article 9 with respect to Losses arising from claims of any third party that are
subject to the indemnification provided for in this Article 9 ("Third Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: if an Indemnitee shall receive notice of any Third Party Claim,
the Indemnitee shall give the Indemnitor prompt notice of such Third Party Claim
and the Indemnitor may, at its option, assume and control the defense of such
Third Party Claim at the Indemnitor's expense and through counsel of the
Indemnitor's choice reasonably acceptable to the Indemnitee. In the event the
Indemnitor assumes the defense against any such Third Party Claim as provided
above, the Indemnitee shall have the right to participate at its own expense in
the defense of such asserted liability, shall cooperate with the Indemnitor in
such defense and will attempt to make available on a reasonable basis to the
Indemnitor all witnesses, pertinent records, materials and information in its
possession or under its control relating thereto as is reasonably required by
the Indemnitor. In the event the Indemnitor does not elect to conduct the
defense against any such Third Party Claim, the Indemnitor shall pay all
reasonable costs and expenses of such defense as incurred and shall cooperate
with the Indemnitee (and be entitled to participate) in such defense and attempt
to make available to it on a reasonable basis all such witnesses, pertinent
records, materials and information in its possession or under its control
relating thereto as is reasonably required by the Indemnitee. Except for the
settlement of a Third Party Claim that involves the payment of money only and
for which the Indemnitee is totally indemnified by the Indemnitor, no Third
Party Claim may be settled without the written consent of the Indemnitee.
9.4 Payment. Payment of any amounts due pursuant to this Article 9 shall
be made within ten Business Days after notice is sent by the Indemnitee and all
provisions of this Article 9 have been satisfied. The Shareholders may satisfy
their indemnification obligations under this Article 9 in cash, delivery of
Weatherford Common Stock or a combination of cash and Weatherford Common Stock.
Any Weatherford Common Stock delivered pursuant to this Section 9.4 shall be
valued at the average of the closing sales price per share of the Weatherford
Common Stock for the 30 consecutive trading days ending on the Business Day
immediately preceding the date of delivery of such shares pursuant to this
Section 9.4, as reported by the New York Stock Exchange.
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9.5 Failure to Pay Indemnification. If and to the extent the Indemnitee
shall make written demand upon the Indemnitor for indemnification pursuant to
this Article 9 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.
9.6 Express Negligence. THE INDEMNITIES SET FORTH IN THIS ARTICLE 9 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.
9.7 Indemnification Limitations. The Shareholders shall be liable under
Section 9.1(a) hereof in respect of a misrepresentation or breach of warranty
and under Section 9.9 hereof in respect of Unknown Environmental Losses only if,
and then only to the extent that, the aggregate amount of any Weatherford Losses
and any Unknown Environmental Losses for which Weatherford, Sub and their
respective Affiliates are entitled to indemnification pursuant to such clauses
exceeds $500,000; provided, however, the Shareholders' liability under Section
9.1(a) hereof shall not be so limited if such Weatherford Losses arise from a
breach of any of the representations set forth in Sections 3.1, 3.2(a) , 3.2(b)
, 3.4, 3.7, 3.12, 3.13 or 3.15 hereof. The aggregate liability of the
Shareholders under Sections 9.1(a) and 9.9 hereof for Weatherford Losses arising
from a misrepresentation or breach of warranty and for Environmental Losses
shall not exceed $32,000,000. There shall be no limits on the Shareholders'
liability (i) under Section 9.1(a) hereof with respect to breaches of covenants
or agreements or (ii) under Section 9.1(b) hereof.
9.8 Right of Offset. Weatherford shall be entitled to offset against any
payments to any Non- Compete Party under the Xxxxxxxx Technology Royalty
Agreement any amount that it shall be entitled to recover from such Non-Compete
Party with respect to any indemnifiable Weatherford Losses pursuant to this
Article 9.
9.9 Environmental Indemnification by Shareholders. The indemnity
obligation of the Shareholders with respect to Environmental Losses is set forth
in this Section 9.9. Subject to the limitations set forth in this Section 9.9
and the limitations set forth in Section 9.7 hereof, the U.S. Shareholders,
jointly and severally, with respect to matters pertaining to Williams U.S. and
its Subsidiaries, and the Canadian Shareholders, jointly and severally, with
respect to matters pertaining to Xxxxxxxx Canada and its Subsidiaries, agree to
indemnify, defend and hold Weatherford, Sub, each of their respective Affiliates
(including, after the Closing, Williams U.S., Xxxxxxxx Canada and their
Subsidiaries) and each of their respective officers, directors, employees,
agents, stockholders and controlling Persons and their respective successors and
assigns, harmless from and against and in respect of all Environmental Losses
arising out of, resulting from or relating to matters for which Weatherford
provides notice to the Shareholder Representative within five years of the
Closing Date. The indemnification obligation under this Section 9.9 with respect
to matters for which notice is given within five years of the Closing Date shall
continue until such matters are fully resolved. In addition, the $500,000
threshold provided for in Section 9.7 hereof shall not apply to Known
Environmental Losses and the indemnity obligation of the U.S. Shareholders or
the Canadian Shareholders, as applicable, shall apply to the entire amount of
the Known Environmental Losses, subject to the limit on the maximum liability of
the Shareholders provided for in Section 9.7 hereof. Weatherford shall provide
the Shareholder Representative a copy of the proposed work plan for any actions
for which the U.S. Shareholders or the Canadian Shareholders may be liable
pursuant to this Section 9.9, and the Shareholders shall have a period of ten
days in which to review the proposed work plan and provide comments to
Weatherford, unless a shorter review
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period is necessary in order to meet a deadline imposed by a Governmental
Entity, in which case the Shareholders' period of review shall end five days
before the deadline imposed by the Governmental Entity. Upon the written request
of the Shareholder Representative, the period for review by the Shareholders may
be extended to a period of not more than 21 days, provided such extended period
ends at least five days before any deadline imposed by a Governmental Entity.
Weatherford will consider the comments of the Shareholders in good faith and
will incorporate any revisions it deems advisable into the final work plan.
Weatherford will implement and complete the actions described in the final work
plan in a commercially reasonable manner.
ARTICLE 10
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
All statements of fact contained in any written statement (including
financial statements), certificate, instrument or document delivered by or on
behalf of the Shareholders pursuant to this Agreement shall be deemed
representations and warranties of the Shareholders. The several representations
and warranties of the parties to this Agreement shall survive the Closing Date
for a period of two years from the Closing Date (except that the representations
and warranties set forth in Sections 3.1, 3.2(a), 3.2(b), 3.4, 3.7, 3.12, 3.13,
3.15, 4.1, 4.4 and 4.5 hereof shall survive the Closing Date without limitation
and the representations and warranties set forth in Section 3.9 hereof shall
survive the Closing Date for a period of five years from the Closing Date) (the
period during which the representations and warranties shall survive being
referred to herein with respect to such representations and warranties as the
"Survival Period"), and shall be effective with respect to any inaccuracy
therein or breach thereof (and a claim for indemnification under Article 9
hereof may be made thereon) if a written notice asserting the claim shall have
been given within the Survival Period with respect to such matter. Any claim for
indemnification made during the Survival Period shall be valid and the
representations and warranties relating thereto shall remain in effect for
purposes of such indemnification notwithstanding such claim may not be resolved
within the Survival Period. The agreements and covenants set forth herein shall
survive without limitation. All representations, warranties, covenants and
agreements made by the parties shall not be affected by any investigation
heretofore or hereafter made by and on behalf of either of them and shall not be
deemed merged into any instruments or agreements delivered in connection with
this Agreement or otherwise in connection with the transactions contemplated
hereby.
ARTICLE 11
TERMINATION
11.1 Termination. The obligation of the parties to close the transactions
contemplated by this Agreement may be terminated by:
(a) mutual agreement of Weatherford, Sub, Xxxxxxxx U.S. and the
Shareholders;
(b) Weatherford, if a material default shall be made by any of the
Shareholders in the observance or in the due and timely performance by any of
the Shareholders of any agreements and covenants of the Shareholders herein
contained, or if there shall have been a breach by any of the Shareholders of
any of the warranties and representations of the Shareholders herein contained,
and such default or breach has not been cured or has not been waived;
(c) the Shareholders, if a material default shall be made by
Weatherford in the observance or in the due and timely performance by
Weatherford of any agreements and covenants of such Person herein contained, or
if there shall have been a breach by such Person of any of the warranties and
representations of Weatherford herein contained, and such default or breach has
not been cured or has not been waived; or
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(d) Weatherford, Sub, Xxxxxxxx U.S. or the Shareholders (provided
the terminating party has not materially breached any of its agreements,
covenants or representations and warranties) if the Closing shall not have
occurred on or before September 30, 1999.
11.2 Liability Upon Termination. If the obligation to close the
transactions contemplated by this Agreement is terminated pursuant to any
provision of Section 11.1 hereof, then this Agreement shall forthwith become
void and there shall not be any liability or obligation with respect to the
terminated provisions of this Agreement on the part of the Shareholders,
Williams U.S., Weatherford or Sub except and to the extent such termination
results from the willful breach by a party of any of its representations,
warranties or agreements hereunder. The termination of this Agreement shall not
relieve any party of its obligations under Section 6.1(b) and Article 9 hereof
and this Section 11.2.
11.3 Notice of Termination. The parties hereto may exercise their
respective rights of termination under this Article 11 only by delivering
written notice to that effect to the other party or parties, and only if such
notice is received on or before the Closing Date.
ARTICLE 12
DEFINITIONS OF CERTAIN TERMS
In addition to terms defined elsewhere in this Agreement, the following
terms shall have the meanings assigned to them herein, unless the context
otherwise indicates, both for purposes of this Agreement and all exhibits hereto
and the Disclosure Schedule:
12.1 "ABCA" shall mean the Arkansas Business Corporation Act of 1987
(A.C.A. ss. 4-27-101, et seq.).
12.2 "Affiliate" shall mean, with respect to any specified Person, any
officer, director, shareholder or any other Person that directly or indirectly
controls, is controlled by or is under common control with such specified
Person.
12.3 "Agreement" shall mean this Agreement and Plan of Reorganization
among Williams U.S., the Shareholders, Weatherford and Sub, as amended from time
to time by the parties hereto, including the exhibits hereto and the Disclosure
Schedule. .
12.4 "Xxxxxxxxx" shall mean Xxxxxxxxx Enterprises, Inc. or any affiliate
thereof, including, without limitation, Xxxx Xxx Xxxxxxxxx, Xxxxxx X. Xxxxxxxxx
and Xxxxx X. Xxxxxxxxx.
12.5 "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in Houston, Texas are authorized by law to
close.
12.6 "Canadian Shareholders" shall have the meaning given such term in
the preamble hereof.
12.7 "Closing" shall mean the closing of the transactions contemplated by
this Agreement.
12.8 "Closing Date" shall have the meaning given such term in Section 1.2
hereof.
12.9 "Code" shall mean the Internal Revenue Code of 1986, as amended.
12.10 "Commission" shall mean the United States Securities and Exchange
Commission.
12.11 "Companies" shall have the meaning given such term in the preamble
hereof.
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12.12 "Company" shall mean either Xxxxxxxx U.S. or Xxxxxxxx Canada.
12.13 "Company Benefit Plan" shall mean (a) any employee welfare benefit
plan or employee pension benefit plan as defined in Sections 3(1) and 3(2) of
ERISA (whether or not such plan is subject to regulation under ERISA),
including, but not limited to, a plan that provides retirement income or results
in deferrals of income by employees for periods extending to their terminations
of employment or beyond, and a plan that provides medical, surgical or hospital
care benefits or benefits in the event of sickness, accident, disability, death
or unemployment, and (b) any other material employee benefit agreement or
arrangement that is not an ERISA plan, including, without limitation, any
deferred compensation plan, incentive plan, bonus plan or arrangement, stock
option plan, stock purchase plan, stock award plan, golden parachute agreement,
severance pay plan, dependent care plan, cafeteria plan, employee assistance
program, scholarship program, employment contract, retention incentive
agreement, noncompetition agreement, consulting agreement, confidentiality
agreement, vacation policy or other similar plan or agreement or arrangement
that has been sponsored, maintained or adopted by either Company or any
Subsidiary at any time during the past three years, or has been approved by
either Company or any Subsidiary before the date of this Agreement but is not
yet effective, for the benefit of directors, officers, employees or former
employees (or their beneficiaries) of either Company or any Subsidiary, or with
respect to which either Company or any Subsidiary may have any liability.
12.14 "Confidentiality Agreement" shall have the meaning given such term
in Section 13.9 hereof.
12.15 "Damages" shall mean any and all liabilities, losses, damages,
demands, assessments, claims, costs and expenses (including interest, awards,
judgments, penalties, settlements, fines, costs of remediation, diminutions in
value, consequential damages, 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)).
12.16 "Debt Obligations" shall mean 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 any
Shareholder or any Affiliate of any Shareholder.
12.17 "Disclosure Information" shall have the meaning given such term in
Section 3.15(d) hereof.
12.18 "Disclosure Schedule" shall mean the disclosure schedule of even
date delivered to Weatherford by the Shareholders.
12.19 "Documents and Other Papers" shall mean and include any document,
agreement, instrument, certificate, writing, notice, consent, affidavit, letter,
telegram, telex, statement, file, computer disk, microfiche or other document in
electronic format, schedule, exhibit or any other paper or record whatsoever.
12.20 "Effective Time" shall mean the date and time when the Merger shall
become effective.
12.21 "Environmental Condition" shall mean any pollution, contamination,
degradation, damage or injury caused by, related to or arising from the
generation, handling, use, treatment, storage, transportation, disposal,
discharge, release or emission of any Hazardous Materials.
12.22 "Environmental Laws" shall mean all national, federal, state,
provincial, municipal or local laws, rules, codes, regulations, statutes,
ordinances, orders or decrees of any Governmental Entity relating to (a) the
control of any Hazardous Materials, (b) the protection of the air, water or
land, (c) Waste Materials, including the generation, handling, treatment,
storage, disposal or transportation of any Waste Material,
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whether solid, gaseous or liquid, and (d) the regulation of or exposure to
hazardous, toxic or other substances alleged to be harmful to human health or
the environment. "Environmental Laws" shall include, but not be limited to, any
and all guidelines published or recommended from time to time by entities or
organizations such as the Canadian Council of Ministers of Environment and
Alberta Environmental Protection.
12.23 "Environmental Liabilities" shall mean any and all Damages
(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 or directive (including directives embodied in Environmental
Laws), injunction, judgment or similar documents (including settlements) arising
out of, in connection with or under Environmental Laws, or (b) pursuant to any
claim by a Governmental Entity or other third Person or entity for personal
injury, property damage, damage to natural resources, remediation or similar
costs or expenses incurred or asserted by such entity or person pursuant to
common law or statute and arising out of or in connection with a release, as
such term is defined in Environmental Laws, of Hazardous Materials.
12.24 "Environmental Losses" shall mean any and all Environmental
Liabilities that may be imposed upon or incurred by Weatherford, either Company
or any Subsidiary or any of their respective officers, directors, employees,
agents, shareholders and controlling Persons or their respective successors and
assigns, arising out of or in connection with (a) the acts or omissions of any
Person prior to the Closing Date relating to the Shareholders, any business
currently or previously conducted by either Company or any Subsidiary, or the
operations currently or previously conducted by either Company, any Subsidiary
or any of their respective Affiliates on any other assets or properties
currently or previously leased or owned by either Company, any Subsidiary or any
of their respective Affiliates in connection with any business currently or
previously conducted at the properties owned or leased by either Company, any
Subsidiary or any of their respective Affiliates, (b) any breach of a
representation or warranty contained in Section 3.9 hereof, (c) any and all
Environmental Conditions existing on or prior to the Closing Date on, at or
underlying the real property owned or leased by either Company, any Subsidiary
or any of their respective Affiliates or (d) the handling, storage, treatment or
disposal of any Hazardous Materials generated by either Company, any Subsidiary
or any of their respective Affiliates on or prior to the Closing Date.
12.25 "Environmental Permit" shall mean any permit, license, approval,
registration, identification number or other authorization with respect to
either Company or any Subsidiary under any Environmental Law.
12.26 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
12.27 "ERISA Affiliate" shall mean any entity that is treated as a single
employee together with either Company under section 414 of the Code.
12.28 "Exchange" shall have the meaning given such term in Section 2.1
hereof.
12.29 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
12.30 "Financial Statements" shall have the meaning given such term in
Section 3.6 hereof.
12.31 "GAAP" shall mean United States (or, in the case of Xxxxxxxx Canada,
Canadian) generally accepted accounting principles applied on a consistent
basis.
12.32 "GCLD" shall mean the General Corporation Law of the State of
Delaware.
12.33 "Governmental Entity" shall mean any national, state, local or
foreign government or any subdivision thereof or any arbitrator, court,
administrative or regulatory agency, commission, department,
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board or bureau or body or other government or authority or instrumentality or
any entity or Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
12.34 "Hazardous Materials" shall mean (a) any substance or material that
is listed, defined or otherwise designated as a hazardous substance under any
Environmental Law, (b) any petroleum or petroleum products, (c) radioactive
materials, urea formaldehyde, asbestos and PCBs and (d) any other chemical,
substance or waste that is regulated by any Governmental Entity under any
Environmental Law.
12.35 "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
12.36 "HSR Documents" shall have the meaning given such term in Section
6.12(b) hereof.
12.37 "HSR Parties" shall have the meaning given such term in Section
6.12(a) hereof.
12.38 "Indemnitee" shall mean the Person or Persons indemnified, or
entitled or claiming to be entitled to be indemnified, pursuant to the
provisions of Section 9.1 or Section 9.2 hereof, as the case may be.
12.39 "Indemnitor" shall mean the Person or Persons having the obligation
to indemnify pursuant to the provisions of Section 9.1 or Section 9.2 hereof, as
the case may be.
12.40 "Intellectual Property" shall have the meaning given such term in
Section 3.4(c) hereof.
12.41 "J&J Rubber" shall mean J&J Rubber Molding and Supply Company, an
Arkansas corporation.
12.42 "Known Environmental Losses" shall mean all Environmental Losses
arising out of, resulting from or relating to the matters described in Section
12.42 of the Disclosure Schedule, as such Section 12.42 may be supplemented
prior to the Closing. "Known Environmental Losses" shall be limited to actions
required by Environmental Laws in effect as of the Closing Date.
12.43 "Lien" shall mean any lien, pledge, claim, charge, security interest
or other encumbrance, option, defect or other rights of any third Person of any
nature whatsoever (including, without limitation, lessor ownership rights).
12.44 "Losses" shall mean Shareholders Losses or Weatherford Losses, as
the case may be.
12.45 "Material Adverse Effect" shall mean, with respect to either Company
or any Subsidiary, any change, occurrence, condition or effect that is or would
be materially adverse to the condition (financial or otherwise), business,
operations, assets or results of operations of such Person and its subsidiaries,
taken as a whole; provided, however, that "Material Adverse Effect" shall not
include any occurrence, change or effect attributable to or resulting from (a)
any act or omission of any party hereto taken with the written consent of the
other parties hereto or as contemplated hereby or (b) changes relating to the
United States economy generally or changes relating to the oilfield services and
products industry as a whole.
12.46 "Merger" shall have the meaning given such term in the preamble
hereof.
12.47 "Merger Consideration" shall have the meaning given such term in
Section 1.3(a) hereof.
12.48 "Merger Conversion Rate" shall have the meaning given such term in
Section 1.3(a) hereof.
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12.49 "Xxxxxx Xxxxxxx Agreement" shall mean the letter agreement dated
March 29, 1999, between Xxxxxxxx U.S. and Xxxxxx Xxxxxxx Xxxx Xxxxxx, a copy of
which has been provided by Xxxxxxxx U.S. to Weatherford.
12.50 "Xxxxxx Note" shall mean the note payable dated January 2, 1982, in
the principal amount of $1,690,372.71, as amended, and with an unpaid balance of
approximately $462,000 as of the date of this Agreement, executed by Xxxxxxxx
U.S. in favor of Xxxx Xxxxxxxx Xxxxxx.
12.51 "New Technology" shall have the meaning given such term in Section
6.14(a) hereof.
12.52 "Non-Compete Parties" shall have the meaning given such term in
Section 6.8 hereof.
12.53 "Non-Compete Period" shall have the meaning given such term in
Section 6.14(a) hereof.
12.54 "Offeror" shall have the meaning given such term in Section 6.14(a)
hereof.
12.55 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
12.56 "Person" shall mean a corporation, an association, a partnership, an
organization, a business, an individual or a Governmental Entity.
12.57 "Proprietary Information" shall mean collectively (a) Proprietary
Rights and (b) any and all other information and material proprietary to either
Company, any Subsidiary or any Shareholder, owned, possessed or used by either
Company, any Subsidiary or any Shareholder, whether or not such information is
embodied in writing or other physical form, and that is not generally known to
the public, that (i) relates to financial information regarding either Company
or any Subsidiary, including, without limitation, (A) business plans and (B)
sales, financing, pricing and marketing procedures or methods of either Company
or any Subsidiary, or (ii) relates to specific business matters concerning
either Company or any Subsidiary, including, without limitation, the identity of
or other information regarding sales personnel or customers of either Company or
any Subsidiary.
12.58 "Proprietary Rights" shall mean all rights to the names "Xxxxxxxx
Tool Co.", "Xxxxxxxx Tool Co. (Canada) Inc.", "J&J Rubber Molding and Supply
Company", "Xxxxxxxx Rotating Head" and any other name set forth in Section
3.1(g) of the Disclosure Schedule, and all patents, inventions, shop rights,
know how, trade secrets, designs, drawings, art work, plans, prints, manuals,
computer files, computer software, hard copy files, catalogs, specifications,
confidentiality agreements, confidential information and other proprietary
technology and similar information; all registered and unregistered trademarks,
service marks, logos, names, trade names and all other trademark rights; all
registered and unregistered copyrights; and all registrations for, and
applications for registration of, any of the foregoing, that are used in the
conduct of the business of either Company or any Subsidiary.
12.59 "Purchase Price" shall mean $64,000,000.
12.60 "Purchaser Representative" shall mean Xxxxx Xxxxx and Xxxxx Xxxxxx.
12.61 "Real Estate" shall have the meaning given such term in Section
3.4(b) hereof.
12.62 "Registration Statement" shall have the meaning given such term in
Section 5.1(a), 5.1(a) hereof.
12.63 "Retained Liabilities" shall mean liabilities, debts and obligations
to the extent not fully accrued for on the Financial Statements relating to or
arising from (a) any and all Taxes pertaining or
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attributable to either Company or any Subsidiary with respect to any and all
taxable periods or portions thereof ending on or before the Closing Date, (b)
any liability or claim for liability (whether in contract, in tort or otherwise,
and whether or not successful) related to any Liens of any nature whatsoever
against or in any way related to the assets or the business of either Company or
any Subsidiary to the extent such liability or claim for liability arises in
connection with any Lien that is in existence at or attributable to periods
prior to the Closing Date (c) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related to any
lawsuit or threatened lawsuit or claim involving any Shareholder, either Company
or any Subsidiary based upon actions, omissions or events occurring on or prior
to the Closing Date, including, but not limited to, those items set forth in
Section 3.7 of the Disclosure Schedule, (d) any liability or claim for liability
(whether in contract, in tort or otherwise, and whether or not successful)
related to or involving Xxxxxxxx Mexico or its assets or business, (e) any
liability or claim for liability (whether in contract, in tort or otherwise, and
whether or not successful) related to the transfer of Intellectual Property
previously owned by or licensed to any Shareholder to Xxxxxxxx U.S. or Xxxxxxxx
Canada, including the transfer effective as of June 1, 1999 of Intellectual
Property previously owned by or licensed to Xxxx Xxxxxxxx and Xxxxxx Xxxxxxxx to
Xxxxxxxx U.S. for 336 shares and 208 shares, respectively, of Xxxxxxxx U.S.
Common Stock, (f) any liability or claim for liability (whether in contract, in
tort or otherwise, and whether or not successful) related to the granting of a
royalty interest to the Non-Complete Parties pursuant to the Xxxxxxxx Technology
Royalty Agreement, (g) any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related to the
transfer on September 14, 1999 of Xxxxxxxx U.S.'s 99% interest in Xxxxxxxx
Mexico to the U.S. Shareholders, (h) any liability or claim for liability
(whether in contract, in tort or otherwise, and whether or not successful)
related to the transfer of Xxxxxxxx Mexico's assets to Xxxxxxxx U.S., (i) any
liability or claim for liability (whether in contract, in tort or otherwise, and
whether or not successful) related to the transfer of real property described in
Section 7.21 hereof, (j) any claim against either Company or any Subsidiary by
any Shareholder or any Affiliate of any Shareholder other than with regard to
intercompany indebtedness and the Xxxxxx Note, (k) any liability or claim for
liability (whether in contract, in tort or otherwise, and whether or not
successful) related to a breach of Section 3.4(d) or Section 3.4(e) hereof,
(l) any liability or claim for liability (whether in contract, in tort or
otherwise, and whether or not successful) related to any variance between the
valuations set forth in the draft report prepared by Deloitte & Touche LLP
attached as Exhibit G hereto and the valuations set forth in the final report
related to such draft report to be prepared by Deloitte & Touche LLP and to be
delivered to Weatherford and the Shareholder Representative, (m) any liability
or claim for liability (whether in contract, in tort or otherwise, and whether
or not successful) related to (i) any distributions by Xxxxxxxx U.S. to its
shareholders, (ii) any issuance of shares of capital stock by Xxxxxxxx U.S.,
(iii) any bonuses paid by Xxxxxxxx U.S. to its employees, (iv) any transfer of
shares of capital stock by any current or former shareholder of Xxxxxxxx U.S.,
(v) any purchase or transfer of Intellectual Property by Xxxxxxxx U.S. or any
current or former shareholder of Xxxxxxxx U.S., (vi) any other restructurings,
distributions to shareholders, issuances of capital stock, bonuses or transfers
of any kind effected in contemplation of the transactions contemplated hereby,
or (vii) the timing of any of the transactions described in this Section
12.63(m), (n) any liability or claim for liability (whether in contract, in tort
or otherwise, and whether or not successful) related to legal and other
professional fees in excess of an aggregate of $320,000 incurred prior to the
Closing by either Company, any Subsidiary or, with respect to the transactions
contemplated hereby, any Shareholder and (o) any liability or claim for
liability (whether or not successful) related to investment banking fees and
expenses in excess of $1,000,000 payable or claimed to be payable pursuant to
the Xxxxxx Xxxxxxx Agreement; provided, however, that prior to paying such
amount and seeking indemnification under Section 9.1(b) hereof related to
Section 12.63(k) hereof, the Indemnitees shall provide the Purchaser
Representative with an opportunity, for a period of five Business Days after
notice of liability or claimed liability related to Section 12.63(k) hereof is
sent by the Indemnitees to the Purchaser Representative, to convince Xxxxxx
Xxxxxxx Xxxx Xxxxxx that it is not entitled to investment banking fees and
expenses in excess of $1,000,000 under the Xxxxxx Xxxxxxx Agreement.
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12.64 "Revenue Canada Clearance Certificate" shall mean a clearance
certificate issued by Revenue Canada under Section 116 of the Income Tax Act
(Canada) in form and substance satisfactory to Weatherford certifying that
Weatherford is not required to withhold or remit any Taxes that may be payable
by the Canadian Shareholders to Revenue Canada in respect of the sale and
transfer of the Xxxxxxxx Canada Shares to Weatherford.
12.65 "SEC Documents" shall mean Xxxxxxxxxxx'x (a) Annual Report on Form
10-K for the year ended December 31, 1998, (b) proxy statement with respect to
the Annual Meeting of Stockholders held on May 6, 1999, (c) Quarterly Reports on
Form 10-Q for the quarterly periods ended March 31, 1999 and June 30, 1999, and
(d) Current Reports on Form 8-K dated April 29, 1999, May 21, 1999, July 21,
1999, August 16, 1999 and August 31, 1999.
12.66 "Securities Act" shall mean the Securities Act of 1933, as amended.
12.67 "Service" shall mean the United States Internal Revenue Service.
12.68 "Share Consideration" shall have the meaning given such term in
Section 2.3 hereof.
12.69 "Shareholder Representative" shall have the meaning given such term
in Section 13.1 hereof.
12.70 "Shareholders" shall have the meaning given such term in the
preamble hereof.
12.71 "Shareholders Losses" shall have the meaning given such term in
Section 9.2 hereof.
12.72 "Sub" shall mean Xxxxxxxxxxx Acquisition, Inc., a Delaware
corporation.
12.73 "Sub Common Stock" shall mean the common stock, $1.00 par value, of
Sub.
12.74 "Subsidiary" shall mean any corporation, partnership, joint venture,
association or other entity or organization in which either Company owns
(directly or indirectly) any equity or other similar ownership interest.
12.75 "Surviving Corporation" shall have the meaning given such term in
Section 1.1(a) hereof.
12.76 "Tax Returns" shall mean all returns, declarations, reports,
statements and other documents of, relating to, or required to be filed in
respect of, any and all Taxes.
12.77 "Taxes" shall mean all United States, federal, state, provincial,
local, foreign and other taxes, charges, fees, duties, levies, imposts, customs
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
profit share, license, lease, service, service use, value added, withholding,
payroll, employment, excise, estimated, severance, stamp, occupation, premium,
property, windfall profits, or other taxes, fees, assessments, customs, duties,
levies, imposts or charges of any kind whatsoever, together with any interest,
penalties, additions to tax, fines or other additional amounts imposed thereon
or related thereto, and the term "Tax" shall mean any one of the foregoing
Taxes.
12.78 "Third Party Claims" shall have the meaning given such term in
Section 9.3(b) hereof.
12.79 "Unknown Environmental Losses" shall mean all Environmental Losses
arising out of, resulting from or relating to matters other than those described
in Section 12.42 of the Disclosure Schedule, as such Section 12.42 may be
supplemented prior to the Closing.
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12.80 "U.S. Shareholders" shall have the meaning given such term in the
preamble hereof.
12.81 "Waiver" shall mean the Waiver of Dissenters' Rights in
substantially the form attached as Exhibit H hereto.
12.82 "Waste Materials" shall mean any toxic or hazardous materials or
substances or solid wastes, including asbestos, buried contaminants, chemicals,
flammable or explosive materials, radioactive materials, petroleum and petroleum
products, and any other chemical, pollutant, contaminant, substance or waste
that is regulated by any Governmental Entity under any Environmental Law. "Waste
Materials" does not include useful products that are stored or maintained in
authorized containers.
12.83 "Weatherford" shall mean Xxxxxxxxxxx International, Inc., a Delaware
corporation.
12.84 "Weatherford Common Stock" shall mean the common stock, par value
$1.00 per share, of Weatherford.
12.85 "Weatherford Losses" shall have the meaning given such term in
Section 9.1 hereof.
12.86 "Weatherford Preferred Stock" shall mean the preferred stock, par
value $1.00 per share, of Weatherford.
12.87 "Weatherford Shares" shall mean the shares of Weatherford Common
Stock to be issued to the Shareholders pursuant to this Agreement.
12.88 "Xxxxxxxx Canada" shall mean Xxxxxxxx Tool Co. (Canada) Inc.
(formerly, 000000 Xxxxxxx Ltd.), an Alberta, Canada corporation.
12.89 "Xxxxxxxx Canada Common Stock" shall have the meaning given such
term in Section 3.1(d) hereof.
12.90 "Xxxxxxxx Canada Shares" shall have the meaning given such term in
the preamble hereof.
12.91 "Xxxxxxxx Mexico" shall mean Xxxxxxxx Tool Co. Sociedad de
Responsabilidad Limitada de Capital Variable.
12.92 Xxxxxxxx Technology Royalty Agreement" shall mean the Technology
Royalty Agreement to be entered into among Xxxxxxxx U.S. and the Non-Compete
Parties, in substantially the form attached as Exhibit I hereto.
12.93 "Xxxxxxxx U.S." shall mean Xxxxxxxx Tool Co., an Arkansas
corporation.
12.94 "Xxxxxxxx U.S. Common Stock" shall have the meaning given such term
in Section 3.1(c) hereof.
ARTICLE 13
MISCELLANEOUS
13.1 Shareholder Representative. Each of the Shareholders hereby
irrevocably appoints Xxxx Xxxxxx Xxxxxxxx to be the representative (the
"Shareholder Representative") of the Shareholders following the Closing Date in
any matter arising out of this Agreement. For any matter in which Weatherford or
Sub is entitled to rely on or otherwise deal with the Shareholders, Weatherford
and Sub shall be entitled to
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communicate solely with the Shareholder Representative and shall be entitled to
rely on any such communications as being the desire and will of the
Shareholders. Notice delivered to the Shareholder Representative in accordance
with Section 13.6 hereof shall be deemed notice to all of the Shareholders.
13.2 Negotiated Transaction. The parties hereto (a) agree that the
provisions of this Agreement were negotiated by the parties hereto, that each of
the parties hereto has had the opportunity to be represented by separate legal
counsel during the negotiation and execution of this Agreement and that this
Agreement shall be deemed to have been drafted by all the parties hereto and,
therefore, (b) waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
13.3 Acknowledgment. Each of the Shareholders acknowledges and confirms
that he (or in the case of a Shareholder that is a trust, the trustee acting for
an on behalf of such Shareholder) (a) has had the opportunity to review this
Agreement, the exhibits hereto and the Disclosure Schedule, (b) has had the
opportunity to retain separate legal counsel (other than Friday, Xxxxxxxx &
Xxxxx, L.L.P.) And has declined to retain such separate legal counsel, (c) has
had the opportunity to ask questions of, and receive answers from,
representatives of each Company and Weatherford concerning the terms and
conditions of the transactions contemplated by this Agreement and to obtain
additional information that they possess or could reasonably acquire for the
purpose of verifying the accuracy of information furnished to such Shareholder
(or in the case of a Shareholder that is a trust, the trustee acting for and on
behalf of such Shareholder) or for the purpose of considering the transactions
contemplated hereby, (d) such Shareholder is making his or its own business
decision and (e) is aware of an understands the transactions contemplated by
this Agreement and the exhibits hereto, including, without limitation, (i) the
transfer effective as of June 1, 1999 of Intellectual Property previously owned
by or licensed to Xxxx Xxxxxxxx and Xxxxxx Xxxxxxxx to Xxxxxxxx U.S. for 336
shares and 208 shares, respectively, of Xxxxxxxx U.S. Common Stock, (ii) the
granting of a royalty interest to the Non-Compete Parties pursuant to the
Xxxxxxxx Technology Royalty Agreement, (iii) the issuance of 48 and 12 shares of
Xxxxxxxx U.S. Common Stock to Don Xxxx Xxxxxxxx and Xxxxxxx Xxxx Xxxx,
respectively, (iv) the transfer on September 14, 1999 of Xxxxxxxx U.S.'s 99%
interest in Xxxxxxxx Mexico to the U.S. Shareholders, (v) the transfer of
Xxxxxxxx Mexico's assets to Xxxxxxxx U.S. and (vi) the transfer of real property
described in Section 7.21 hereof.
13.4 Spousal Consent. The spouse of Xxxx Xxxxxx Xxxxxxxx is also
executing this Agreement. By executing this Agreement, such spouse (a)
acknowledges that she knows of the contents of this Agreement, (b) consents to
the entering into of this Agreement by her spouse and (c) agrees that this
Agreement shall be binding upon such spouse to the extent of his community
property interest.
13.5 Expenses. Except as otherwise set forth herein, and whether or not
the transactions contemplated by this Agreement shall be consummated, each party
agrees to pay, without right of reimbursement from any other party, the costs
incurred by such party incident to the preparation and execution of this
Agreement and performance of its obligations hereunder, including, without
limitation, the fees and disbursements of legal counsel, accountants and
consultants employed by such party in connection with the transactions
contemplated by this Agreement; provided, that Xxxxxxxx U.S. shall remain
responsible for payment of the investment banking fees and expenses incurred
pursuant to the Xxxxxx Xxxxxxx Agreement in connection with the transactions
contemplated by this Agreement. Notwithstanding the foregoing, the parties agree
that all filing fees in connection with premerger notification and report form
filings required under the HSR Act shall be borne by Weatherford.
13.6 Notices. All notices, requests, consents, directions and other
instruments and communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered in person, by courier, by overnight delivery service with proof of
delivery or by prepaid registered or certified first-class mail, return receipt
requested, addressed to the respective party at the address
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set forth below, or if sent by facsimile or other similar form of communication
(with receipt confirmed) to the respective party at the facsimile number set
forth below:
If to the Shareholders, the Shareholder Representative or Xxxxxxxx U.S.,
to:
Xxxx Xxxxxx Xxxxxxxx
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxx 00000
Confirm: (000) 000-0000
Copies to:
Friday, Xxxxxxxx & Xxxxx, L.L.P.
2000 Regions Center
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Xx. and Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
If to Weatherford or Sub, to:
Xxxxxxxxxxx International, Inc.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Copies to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
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. Any notice mailed shall be
deemed to have been given and received on the third Business Day following the
day of mailing.
13.7 Specific Performance. It is specifically understood and agreed that
any breach by the Shareholders or Xxxxxxxx U.S. of the provisions of this
Agreement is likely to result in irreparable harm to Weatherford 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
Weatherford, in the event of breach or threatened breach by any of the
Shareholders or Xxxxxxxx U.S. of the provisions of this Agreement, including,
without limitation, Section 6.8 hereof, Weatherford shall be entitled to enforce
the specific performance of this Agreement by the Shareholders and Xxxxxxxx U.S.
and to seek both temporary and permanent injunctive relief (to the extent
permitted by law), without the necessity of proving actual damages, and such
other relief as the court may allow.
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13.8 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 party; provided, however,
Weatherford may assign its rights and obligations in this Agreement to an
Affiliate of Weatherford. This Agreement shall inure to the benefit of, be
binding upon and be enforceable by the parties hereto and their respective
successors and assigns.
13.9 Confidentiality Agreement. Notwithstanding anything in this
Agreement to the contrary, the Confidentiality Agreement entered into between
Xxxxxxxx Tool Co. and Weatherford Holding U.S., Inc. dated effective May 28,
1999 (the "Confidentiality Agreement") is hereby incorporated by reference
herein and made a part hereof.
13.10 Entire Agreement. This Agreement, the exhibits hereto, the
Disclosure Schedule and the Confidentiality Agreement 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, between the
parties relating to the subject matter hereof. This Agreement may not be
modified, amended, rescinded, canceled, altered or supplemented, in whole or in
part, except upon the execution and delivery of a written instrument executed by
a duly authorized representative of each of the parties hereto.
13.11 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Texas without giving effect
to choice of law principles.
13.12 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 of this Agreement.
13.13 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.
13.14 No Third Party Beneficiaries. Any agreement contained, expressed or
implied in this Agreement shall be only for the benefit of the parties hereto
and their respective legal representatives, successors and assigns, and such
agreements shall not inure to the benefit of the obligees of any indebtedness of
any party hereto, it being the intention of the parties hereto that no Person
shall be deemed a third party beneficiary of this Agreement, except to the
extent a third party is expressly given rights herein.
13.15 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.
13.16 Headings. Each statement set forth in the Disclosure Schedule with
respect to a particular section herein shall be deemed made solely with respect
to such section and not with respect to any other section hereof unless
specifically set forth in the Disclosure Schedule as also being made with
respect to such other section. The headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference only and shall in no
way restrict or otherwise modify any of the terms or provisions hereof or affect
in any way the meaning or interpretation of this Agreement.
13.17 Arbitration. In the event there shall exist any dispute or
controversy with respect to this Agreement or any matter relating hereto or the
transactions contemplated hereby, including, but not limited to, Article 9, the
parties hereto agree to seek to resolve such dispute or controversy by mutual
agreement. If the parties hereto are unable to resolve such dispute or
controversy by agreement within 60 days following
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notice by any party hereto of the nature of such dispute or controversy setting
forth in reasonable detail the circumstances and basis of such dispute or
controversy, the parties agree that such dispute or controversy be resolved by
binding arbitration pursuant to the provisions of this Section 13.17 and in
accordance with the then current Commercial Arbitration Rules of the American
Arbitration Association. If a party elects to submit such matter to arbitration,
such party shall provide notice to the other party of its election to do so,
which notice shall name one arbitrator. Within 10 days after the receipt of such
notice, the other party shall provide written notice to the electing party
naming a second arbitrator. The two arbitrators so appointed shall name a third
arbitrator, or failing to do so, a third arbitrator shall be appointed pursuant
to the Commercial Arbitration Rules of the American Arbitration Association. All
arbitration proceedings shall be held in Dallas, Texas. Each arbitrator selected
to act hereunder shall be qualified by education and experience to pass on the
particular question in dispute and shall be independent and not affiliated with
any of the parties hereto. The arbitrators shall resolve all disputes in
controversy in accordance with the Texas substantive law. All statutes of
limitations that would otherwise be applicable shall apply to any arbitration
proceeding. The arbitrators appointed pursuant to this Section 13.17 shall
promptly hear and determine (after due notice and hearing and giving the parties
reasonable opportunity to be heard) the questions submitted, and shall render
their decision within 60 days after appointment of the third arbitrator or as
soon as practical thereafter. If within such period a decision is not rendered
by the board or a majority thereof, new arbitrators may be named and shall act
hereunder at the election of either party in like manner as if none had
previously been named. The decision of the arbitrators, or a majority thereof,
made in writing, shall absent manifest error be final and binding upon the
parties hereto as to the questions submitted, and each party shall abide by such
decision. The cost of the arbitration shall be borne by the parties thereto as
unanimously determined by the arbitrators.
13.18 Canadian Laws. Any references in this Agreement to any specific
statutes, regulations, codes or laws of the United States and the applicability
thereof to, or the compliance therewith by, either Company, any Subsidiary or
any Affiliate thereof shall, in the case of Xxxxxxxx Canada, any Subsidiary or
any Affiliate thereof, be construed as also including references to the
equivalent or similar statutes, regulations, codes or laws of Alberta, British
Columbia and Canada, if any.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
WEATHERFORD:
XXXXXXXXXXX INTERNATIONAL, INC.
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------------
Title: Sr. Vice President
----------------------------------------
SUB:
XXXXXXXXXXX ACQUISITION, INC.
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
-----------------------------------------
Title: President
----------------------------------------
XXXXXXXX U.S.:
XXXXXXXX TOOL CO.
By: /s/ XXXX XXXXXX XXXXXXXX
-------------------------------------------
Xxxx Xxxxxx Xxxxxxxx, President
U.S. SHAREHOLDERS:
/s/ XXXXXX XXXX XXXXXXXX
---------------------------------------------
Xxxxxx Xxxx Xxxxxxxx
/s/ XXXXX XXX XXXXXXXX
---------------------------------------------
Xxxxx Xxx Xxxxxxxx
/s/ DON XXXX XXXXXXXX
---------------------------------------------
Don Xxxx Xxxxxxxx
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/s/ XXXXXXX XXXX XXXX
---------------------------------------------
Xxxxxxx Xxxx Xxxx
XXXX X. XXXXXXXX REVOCABLE TRUST
By: /s/ XXXX X. XXXXXXXX
-------------------------------------------
Xxxx X. Xxxxxxxx, Trustee
XXXXXX XXXX XXXXX TRUST
By: Xxxxxx Xxxx Xxxxx, Trustee
-------------------------------------------
By: /s/ XXXX X. XXXXXXXX
-------------------------------------------
Xxxx X. Xxxxxxxx, Agent for
Xxxxxx Xxxx Xxxxx,
pursuant to a Specific Power of Attorney
dated September 1, 1999
XXXX XXXXXXX XXXXXXXX TRUST
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee
XXX XXXXXXX BELT TRUST
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee
XXXX XXXX BELT TRUST
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee
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XXXXXX XXXXXXX BELT TRUST
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee
CANADIAN SHAREHOLDERS:
/s/ XXXXXXX XXXXXXXX /s/ XXXX XXXXXX XXXXXXXX
--------------------------------- ------------------------------------------
Xxxxxxx Xxxxxxxx, spouse of Xxxx Xxxxxx Xxxxxxxx
Xxxx Xxxxxx Xxxxxxxx
/s/ XXXXXX XXXX XXXXXXXX
------------------------------------------
Xxxxxx Xxxx Xxxxxxxx
/s/ XXXXX XXX XXXXXXXX
------------------------------------------
Xxxxx Xxx Xxxxxxxx
56
