AGREEMENT
THIS AGREEMENT (this "Agreement") is dated as of September 20, 1995, by and
among, on the one hand, Xxxxxx Corporation, a Delaware corporation ("Xxxxxx"),
Energy Industries, Inc., a Delaware corporation and a wholly-owned subsidiary of
Xxxxxx ("Xxxxxx Sub"), and Xxxxxx Energy Industries, L.P., a Delaware limited
partnership which is wholly-owned by Xxxxxx ("Xxxxxx Partnership" and
collectively with Xxxxxx and Xxxxxx Sub, the "Seller"), and, on the other hand,
Enterra Corporation, a Delaware corporation ("Enterra"), and Enterra Compression
Company, a Delaware corporation and a wholly-owned subsidiary of Enterra
("Enterra Sub", and collectively with Enterra, the "Purchasers").
WHEREAS, the Purchasers desire to purchase from the Seller, and the Seller
desires to sell to the Purchasers, the Assets (as defined herein) upon the terms
and conditions set forth herein;
WHEREAS, Purchasers desire to assume the Assumed Liabilities (as defined
herein) from the Seller upon the terms and conditions set forth herein; and
WHEREAS, to induce Purchasers to enter into this Agreement, a principal
stockholder of Xxxxxx has executed an agreement with Enterra pursuant to which
such stockholder has agreed to vote the shares of common stock of Xxxxxx owned
or controlled by such stockholder in accordance with the recommendation of the
Board of Directors of Xxxxxx with respect to the approval by the stockholders of
Xxxxxx of resolutions to be submitted to the stockholders of Xxxxxx relating to
this Agreement;
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Accounting Terms and Determinations. Unless otherwise specified
in this Agreement, all accounting terms used in this Agreement shall be
interpreted, all determinations as to accounting matters pursuant to the terms
of this Agreement shall be made and all financial statement matters and
certificates and reports as to financial or accounting matters required to be
delivered pursuant to the terms of this Agreement shall be prepared in
accordance with GAAP (except that interim financial statements may not include
footnotes) applied on a consistent basis.
Section 1.2 Other Terms. As used herein, certain other words and terms
shall have the meanings given to them in Exhibit 1 attached hereto.
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND
AGREEMENTS OF THE SELLER
Each Seller, jointly and severally, hereby makes to the Purchasers the
representations, warranties and agreements set forth in this Article II. The
Seller has delivered to the Purchasers a Disclosure Schedule to this Agreement
(the "Disclosure Schedule") on the date hereof. The Seller shall, from time to
time through the Closing Date, advise the Purchasers as to any change, amendment
or supplement to the Disclosure Schedule which is necessary to reflect changes
in the subject matter thereof occurring through the Closing Date.
Section 2.1 Organization and Qualification. Each Seller is a corporation or
partnership, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each Seller has all requisite power
and authority to carry on its business as now being conducted and to own, lease
and operate its properties
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and assets as now owned, leased or operated. The nature of the businesses and
activities of Seller, as currently conducted, do not require Seller to be
qualified to do business in any foreign jurisdiction in which they are not so
qualified, except to the extent the failure so to comply would not have a
Material Adverse Effect. Xxxxxx owns all of the outstanding capital stock of
Xxxxxx Sub and directly or indirectly owns all of the outstanding partnership
interests of Xxxxxx Partnership.
Section 2.2 Authority Relative to the Agreement. Each Seller has full
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, the performance of Seller's
obligations hereunder and the consummation of the transactions contemplated
hereby have been duly and validly authorized and approved by the Boards of
Directors of each Seller (or its general partner) and no further actions or
proceedings on the part of any Seller are necessary to authorize the execution
and delivery of this Agreement, the performance of Seller's obligations
hereunder or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each Seller, and
this Agreement constitutes the legal, valid and binding agreement of each
Seller, enforceable against each Seller in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to creditors' rights generally and general equitable
principles.
Section 2.3 No Violation. Except for any filings and waiting period
requirements under the HSR Act, the consent of Seller's bank lender, preliminary
and definitive proxy material filings of Xxxxxx with the Securities and Exchange
Commission, and approval of the stockholders of Xxxxxx, no prior consent,
approval or authorization of, or declaration, filing or registration with, any
party, domestic or foreign, is necessary in connection with the execution,
delivery and performance of this Agreement by the Seller, the failure of which
to obtain would have a Material Adverse Effect. Neither the execution, delivery
nor performance of this Agreement in its entirety, nor the consummation of all
of the transactions contemplated hereby, will (i) violate any material
Governmental Requirement applicable to the Seller or any of the Assets, (ii) be
in conflict with, result in a breach or termination of any provision of, cause
the acceleration of the maturity of any debt or obligation pursuant to,
constitute a default under, or result in the creation of a Lien upon any
property or assets of Seller pursuant to any terms, conditions or provisions of
any material Governmental Authorization, lease, license, permit, Environmental
Permit, Contract or other agreement or instrument to or of which any Seller is a
party or a beneficiary (provided, however, that the parties acknowledge that
consents to assignment of the above items will be delivered by Seller to
Purchaser on or prior to the Closing Date and not on the date of this
Agreement), (iii) give rise to any Lien on any of the Assets, or (iv) conflict
with or violate any provision of the charter, Bylaws, limited partnership
agreement or other organizational documents of any Seller or resolutions of the
Board of Directors of any Seller (or any general partner thereof). There are no
Proceedings pending, or to the Seller's knowledge threatened against the Seller,
at law or in equity or before or by any Governmental Authority which may result
in liability to the Purchasers upon the consummation of the transactions
contemplated hereby or which would prevent or delay such consummation.
Section 2.4 Financial Statements.
(a) The Seller has provided the Purchasers with true and complete copies
of the combined balance sheets of the Business as of May 31, 1995 (the "Balance
Sheet Date" and the combined balance sheet as of such date, the "May Balance
Sheet") and September 30, 1994 and the related income statements for the fiscal
year ended September 30, 1994 and the eight (8)-month period ended May 31, 1995,
and the Seller will provide the Purchasers with balance sheets and the related
statements of income for the Business for each monthly period (unaudited) ending
after the Balance Sheet Date and prior to the Closing Date (all of the foregoing
statements of financial position and the related statements of income of the
Business are collectively referred to as the "Seller's Financial Statements").
(b) Seller's Financial Statements, which are, in the case of those
financial statements existing on the date of this Agreement, attached hereto as
Schedule 2.4(b) (including without limitation all notes, schedules and
supplemental data contained in or annexed to such statements), are or will be,
as the case may be, accurate,
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complete and in accordance with the books and records of Seller and present, or
will present, as the case may be, fairly in all material respects, the combined
financial position and assets and liabilities of the Business as their
respective dates and the results of its combined operations for the periods then
ended, in conformity with GAAP (subject, in the case of the interim financial
statements, to normal year-end adjustments, the effect of which, individually or
in the aggregate, will not be materially adverse, and the fact that they do not
or will not, as the case may be, contain all of the footnote disclosures
required by GAAP, except as otherwise noted therein).
Section 2.5 Accounting Records. The books of account and other accounting
records of the Business, all of which have been or will be made available to the
Purchasers, are complete and correct subject to normal year-end adjustments, the
effect of which, individually or in the aggregate, will not be materially
adverse, and have been maintained in accordance with Seller's normal business
practices, including, but not limited to, the maintenance of an adequate system
of internal controls.
Section 2.6 Assets Acquired. Upon consummation of the transactions
contemplated by this Agreement, Enterra Sub shall have acquired from Seller all
of the assets (other than Excluded Assets, as defined herein) being used (or
held for use) to generate the operating results reflected in Seller's Financial
Statements. Since the Balance Sheet Date there has been no change in the
inventory or revenue producing equipment of the Business that generated the
revenues reflected in the Seller's Financial Statements, other than changes in
the ordinary course of the Business, consistent with the past practice, which
are not material in the aggregate.
Section 2.7 Absence of Undisclosed Liabilities. Neither any Seller nor
Energy Industries Financial Services, Inc. is liable for or subject to any
liability in connection with the Business except for:
(a) those Liabilities disclosed on the May Balance Sheet and not heretofore
paid or discharged;
(b) those Liabilities arising in the ordinary course of the Business
consistent with past practice under any Contract, commitment or arrangement
disclosed on Schedule 2.11 of the Disclosure Schedule or not required to be
disclosed thereon because of the term or amount involved or otherwise; and
(c) those Liabilities incurred in the ordinary course of the Business,
consistent with past practice, and either not required to be shown on the May
Balance Sheet or arising since the Balance Sheet Date, which liabilities and
obligations individually and in the aggregate are of a character and magnitude
consistent with its past practice.
Section 2.8 Absence of Certain Changes. Except as and to the extent set
forth on Schedule 2.8, since May 31, 1995 (a) no Seller has in connection with
the Business (i) suffered, individually or in the aggregate, any Material
Adverse Effect or (ii) conducted the Business other than in the ordinary course,
consistent with past practice, and (b) neither Xxxxxx Sub nor Xxxxxx Partnership
has declared, set aside or paid any dividend, or made or agreed to make any
other distribution or payment in respect of its shares nor has it redeemed,
purchased or otherwise acquired or agreed to redeem, purchase or otherwise
acquire any of its shares.
Section 2.9 Title to Properties: Encumbrances. Schedule 2.9 of the
Disclosure Schedule sets forth a true and complete description of all real
property used or held for use in connection with the Business. Seller has,
except for Liens which will be terminated in their entirety on or before the
Closing Date, and at the Closing will convey to Enterra Sub, unencumbered, good,
legal, and indefeasible title to all of the Assets, except for Permitted Liens
and those Assets disposed of for fair market value in the ordinary course of the
Business, consistent with past practice, since the Balance Sheet Date and
otherwise in accordance with this Agreement.
Section 2.10 Litigation. Except as set forth on Schedule 2.10 of the
Disclosure Schedule, there are no actions, suits, claims or other proceedings
pending or, to the best knowledge of the Seller, threatened against any Seller
or involving any of its Assets, at law or in equity or before or by any foreign,
federal, state, municipal, or other governmental court, department, commission,
board, bureau, agency, Governmental Authority, or other instrumentality or
person or any board of arbitration or similar entity (a "Proceeding"). The
Seller will promptly
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notify the Purchasers of any material Proceeding which relates to the Business
initiated by or against Seller prior to the Closing Date.
Section 2.11 Contracts. Except as listed and described on Schedule 2.11 of
the Disclosure Schedule, no Seller is, in connection with the Business, a party
to or otherwise bound by any written or oral:
(a) Contract or commitment with any present or former stockholder,
director, officer, partner, employee or consultant or for the employment of any
person, including, without limitation, any consultant;
(b) Contract or commitment for the purchase of, or payment for, supplies or
products, or for the performance of services by a third party, involving in any
one case $50,000 or more or in excess of $3,000,000 in the aggregate;
(c) Contract or commitment to sell or supply products or to perform
services outside the ordinary course of business, consistent with past practice,
involving in any one case $50,000 or more or in excess of $3,000,000 in the
aggregate;
(d) Contract or commitment not otherwise covered by this Section 2.11 and
continuing over a period of more than six (6) months from the date hereof and
exceeding $100,000 in value, or in excess of $8,000,000 in the aggregate;
(e) Any Equipment Lease, or any other lease under which Seller is either
lessor or lessee, involving in any one case $100,000 or more or in excess of
$4,000,000 in the aggregate;
(f) Contract or commitment for any capital expenditure involving in any one
case $200,000 or more or in excess of $500,000 in the aggregate;
(g) Master service agreements which (i) (a) are not a standard form
contract used in the gas compression industry or (b) contain amendments to the
indemnification provisions in standard form agreements used in the gas
compression industry, and (ii) continue over a period of more than six (6)
months from the date hereof and exceeding $100,000 in value, or in excess of
$14,000,000 in the aggregate; or
(h) Contract, commitment or arrangement with any other Seller or any
Affiliate of any Seller.
Except as may be disclosed on Schedule 2.11 of the Disclosure Schedule, each of
the Contracts, commitments, arrangements, leases and other instruments,
documents and undertakings listed on such Schedule or not required to be listed
thereon because of the term or amount involved or otherwise, is valid and
enforceable in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally and general equitable principles. The Seller, and
to Seller's knowledge, other parties thereto, are in material compliance with
the provisions thereof. The Seller is not, and to Seller's knowledge, other
parties thereto are not, in default in the performance, observance or
fulfillment of any material obligation, covenant or condition contained therein,
and, to Seller's knowledge, no event has occurred which with or without the
giving of notice or lapse of time, or both, would constitute a default
thereunder.
Section 2.12 Compliance with Laws. Except as set forth on Schedule 2.12 of
the Disclosure Schedule and except for such as would not in the aggregate have a
Material Adverse Effect, to the knowledge of the Seller, no Seller is in default
with respect to or in violation of (i) any judgment, order, writ, injunction or
decree of any court or (ii) any legal requirement of any Governmental Authority.
The consummation of the transactions contemplated by this Agreement will not
constitute such a default or violation as to the Seller. Seller has all
Governmental Authorizations required to conduct the Business as now being
conducted. All required filings with respect to such Governmental Authorizations
have been timely made and all required applications for renewal thereof have
been
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timely filed. All such Governmental Authorizations are in full force and effect
and there are no proceedings pending or threatened that seek the revocation,
cancellation, suspension, or adverse modification thereof.
Section 2.13 Insurance. Schedule 2.13 of the Disclosure Schedule sets
forth all material policies of property, fire and casualty, product liability,
workers' compensation, liability and other forms of insurance owned or held by
Seller. Such description identifies the issuer of each such policy, the amount
of coverage available and outstanding under each such policy, and whether each
such policy is a "claims made" or an "occurrence" policy. True and complete
copies of such policies have been made available to the Purchasers for review.
Section 2.14 Trademarks. Schedule 2.14 of the Disclosure Schedule sets
forth a list of each trademark, trademark registration, trademark registration
application and trade name which any Seller owns or uses which is material to
the operation of the Business and with respect to which they are the licensor or
licensee.
Section 2.15 Environmental Matters. In addition to the representations
and warranties in Section 2.12 hereof, and not in limitation thereof, except as
disclosed on Schedule 2.15, (a) no releases of Hazardous Materials have occurred
and no conditions have existed from November 9, 1993 until the date of this
Agreement, or the Closing Date, as applicable, at or from any property currently
or previously owned or leased by Seller during the period such property was
owned or leased by Seller, which would require (i) release reporting to a
Governmental Authority or remediation under applicable Environmental Law and
(ii) result in a Material Adverse Effect; (b) there are no pending, or to the
actual knowledge of Seller, threatened Environmental Claims against the Seller
in connection with the Business including, without limitation, Environmental
Claims brought pursuant to CERCLA or comparable state statutes with respect to
the disposal, or arrangement for disposal or treatment (with a transporter or
otherwise), of Hazardous Materials at sites or facilities owned by Seller or
third-parties; and (c) to Seller's actual knowledge and during the period from
November 9, 1993 through the date hereof, or the Closing Date, as applicable,
there are and were no leaking underground storage tanks currently or previously
owned or operated by Seller in connection with the Business located at any
property currently or previously owned or operated by any Seller in connection
with the Business which such leak occurred during the period such property was
owned or leased by Seller.
Section 2.16 Employee Severance/Continuation Agreements. Schedule 2.16 of
the Disclosure Schedule sets forth a complete list of all employees of the
Business that are subject to any employment, retention and/or severance
agreement under which any Seller is obligated. Seller has furnished Purchasers
with the forms (sufficient for determining costs) of such agreements and of any
other plans or arrangements under which any Seller is obligated to provide any
retention compensation or severance benefits to any Xxxxxx Employee.
Section 2.17 Completeness of Disclosure. No representation or warranty by
any Seller contained in this Agreement, and no representation, warranty or
statement contained in any list, certificate, Schedule or other instrument,
document, agreement or writing furnished or to be furnished to, or made with,
the Purchasers pursuant hereto or in connection with the negotiation, execution
or performance hereof, contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary to make
any statement herein or therein not misleading.
Section 2.18 No Other Representations. The Seller is not making any
representations or warranties, express or implied, of any nature whatsoever
except as specifically set forth in this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby makes, jointly and severally, to the Seller the
representations and warranties set forth in this Article III.
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Section 3.1 Organization and Authority. Each Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. Each Purchaser has full power and authority to execute and
deliver this Agreement. Enterra directly owns all of the outstanding capital
stock of Enterra Sub.
Section 3.2 Authority Relative to Agreement. The execution, delivery and
performance of this Agreement have been duly and validly authorized and approved
by the Board of Directors of each Purchaser and no further actions on the part
of the Purchasers or Xxxxxxxxxxx International Incorporated are necessary to the
execution, delivery and performance of this Agreement. This Agreement has been
duly executed and delivered by the Purchasers and is a valid, legally binding
and enforceable obligation of the Purchasers, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors' rights generally and general equitable principles.
Section 3.3 No Violation. Except for any filing and waiting period
requirements under the HSR Act, no prior consent, approval or authorization of,
or declaration, filing or registration with, any party, domestic or foreign
(including, without limitation, Xxxxxxxxxxx International Incorporated), is
necessary in connection with the execution, delivery and performance of this
Agreement by the Purchasers, the failure of which to obtain would have a
material adverse effect on Purchasers. Neither the execution, delivery nor
performance of this Agreement in its entirety, nor the consummation of all of
the transactions contemplated hereby, will (i) violate any material Governmental
Requirement applicable to the Purchasers, or (ii) conflict with or violate any
provision of the Certificate of Incorporation, Bylaws or resolutions of the
Boards of Directors of either Purchaser. There are no Proceedings pending or, to
the Purchasers' knowledge, threatened against the Purchasers, at law or in
equity or before or by any Governmental Authority which may result in liability
to any Seller upon the consummation of the transactions contemplated hereby or
which would prevent or delay such consummation.
Section 3.4 Financing. The Purchasers will have on the Closing Date
sufficient funds available to permit the Purchasers to pay the total Purchase
Price.
Section 3.5 Independent Investigation. The Purchasers have been provided an
opportunity to review all documents and information as they have deemed
necessary or appropriate concerning the Business and such other matters as they
have deemed necessary or appropriate in making their own financial, business and
legal evaluations of the Business and the transactions contemplated hereby, and
the Purchasers have independently and based on such documents, information and
evaluations, as they have deemed appropriate, made their own independent
appraisal and decision with respect to (i) the transactions contemplated hereby,
and (ii) the properties, assets, business, financial value and condition of the
Business and, except for the specific representations and warranties of Seller
made in Article II hereof, Purchasers are acquiring the Assets "As Is".
Section 3.6 Completeness of Disclosure. No representation or warranty by
any Purchaser contained in this Agreement, and no representation, warranty or
statement contained in any list, certificate, Schedule or other instrument,
document, agreement or writing furnished or to be furnished to, or made with,
the Seller pursuant hereto or in connection with the negotiation, execution or
performance hereof, contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary to make any
statement herein or therein not misleading.
Section 3.7 WARN. Based on the list of Continuing Employees which
Purchasers are to deliver to Seller pursuant to Section 11.1 hereof and on which
Seller intends to rely in fulfilling its obligations under the WARN Act, the
Seller's termination of the Xxxxxx Employees who are not Continuing Employees in
accordance with Section 11.1(b) will not violate, conflict with or breach the
WARN Act or result in any liability to Seller or its Affiliates arising out of
the WARN Act.
Section 3.8 No Other Representations. The Purchasers are not making any
representations or warranties, express or implied, of any nature whatsoever
except as specifically set forth in this Agreement.
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ARTICLE IV.
CONVEYANCE TO PURCHASER
Section 4.1 Conveyance to Purchaser. Subject to the terms and conditions of
this Agreement, the Seller will convey, transfer and deliver to Enterra Sub on
the Closing Date all of the assets, properties and rights of, or used or held
for use in connection with, the Business, its goodwill and the Business as a
going concern (collectively, the "Assets"). The Assets to be conveyed,
transferred and delivered shall include all those reflected on the May Balance
Sheet with only such changes therein as shall have occurred between the Balance
Sheet Date and the Closing Date in the ordinary course of business consistent
with past practice. Without limitation of the foregoing provisions, the Assets
shall include, without limitation, all real property, buildings, structures,
leasehold rights and improvements, machinery, equipment, furniture, fixtures,
supplies, vehicles, goodwill, cash, Inventories, accounts and notes receivable
including STL Unit receivables and employee receivables (other than any such
accounts receivable due from any Affiliate of Seller), contract rights and
claims relating thereto, stock, securities, licenses and applications therefor,
franchises, claims, deposits, all rights and interests in, to and under any
patents, patent applications, trademarks, trademark registrations and
applications therefor, copyrights, trade secrets, intellectual property, ideas
and other know-how, shop rights, permits and other rights and privileges, all
shares of capital stock of Energy Industries Financial Services, Inc., and all
records, sales data, and customer and supplier lists of the Business or used or
held for use in connection therewith. Notwithstanding anything in this Section
4.1 that may be construed to the contrary, the Assets shall not include accounts
receivable due from any Affiliate of Seller, the corporate seal, certificate of
incorporation or bylaws of any Seller, the partnership agreement or certificate
of limited partnership of Xxxxxx Partnership, minute books or other records
having to do with the corporate or partnership organization of any Seller, or
tax returns and schedules and work papers relating thereto; any rights to or
under any insurance policies or any claims thereunder; intercompany receivables;
books of accounts; the rights that will accrue to the Seller under this
Agreement; any rights to Seller's claims for any Tax refunds; the tax records of
any Seller; the name "Xxxxxx" or any assets of any Seller not used or held for
use in connection with the Business (collectively, the "Excluded Assets").
Notwithstanding any other provisions in this Agreement which could be construed
to the contrary, Seller is not selling, and Purchasers are not purchasing, any
assets owned by Xxxxxx Protein, Inc., Cimarron Gas Holding Company or their
respective subsidiaries which are not used or held for use in the Business.
Section 4.2 Consideration for Assets.
(a) At the Closing, the Purchasers will purchase the Assets from the
Seller, upon and subject to the terms and conditions of this Agreement and in
reliance upon the representations, warranties, covenants and agreements of the
Seller contained herein, and will pay the Seller, as consideration for the
Assets, the sum of One Hundred and Thirty Million Dollars ($130,000,000) (the
"Purchase Price"), increased or decreased by the amount of the net asset value
adjustment as set forth in Section 4.5(a). The allocation of the Purchase Price
(and the liabilities to be assumed by the Purchasers at the Closing pursuant to
Section 4.2(b) hereof) among the Assets shall be agreed upon by the parties.
Once the allocation has been determined, the Purchasers and the Seller shall
jointly prepare IRS Form 8594 pursuant to Temporary Treasury Regulations Section
1.1060-1T to report the allocation of the Purchase Price. The Seller and the
Purchasers each hereby covenant and agree that they will not take a position on
any tax return before any Governmental Authority or in any Proceeding that is in
any way inconsistent with such allocation and will cooperate with each other in
good faith to resolve any disagreement or dispute that may arise between them
with respect thereto.
(b) As further consideration for the Assets, at the Closing, Enterra
Sub will deliver to the Seller a written undertaking in accordance with Section
4.4(b) hereof, whereby Enterra Sub will assume the following (collectively, the
"Assumed Liabilities"):
(i) all of Seller's liabilities and obligations of the Business on the
May Balance Sheet which are also liabilities and obligations described in
the example attached as Exhibit 2, but only if and to the extent that the
same are accrued or reserved for on the May Balance Sheet and have not been
paid or
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discharged prior to or at the Closing (all of which shall be included in
the calculation of net asset value pursuant to Section 4.5);
(ii) all of Seller's liabilities and obligations of the Business that
have arisen in the ordinary course of the Business, consistent with past
practice, between the Balance Sheet Date and the Closing Date that would be
disclosed on a balance sheet prepared in accordance with GAAP and which are
also liabilities and obligations of the type described in the example
attached as Exhibit 2, but only if and to the extent that the same have not
been paid or discharged prior to or at the Closing (all of which shall be
included in the calculation of net asset value pursuant to Section 4.5);
(iii) all liabilities and obligations of the Seller in respect of the
Contracts, commitments and arrangements, which Contracts, commitments and
arrangements are specifically identified in any list called for by
paragraphs (b) through (g) of Section 2.11 as it may be supplemented or
updated by Seller with Contracts, commitments and arrangements entered into
in the ordinary course of business prior to the Closing Date consistent
with Sections 5.1 or 5.2, or are not required to be identified on any such
list because of the term or amount involved or the descriptive limitations
set forth in Section 2.11, except that the Purchasers shall not assume any:
(A) liabilities or obligations of the aforesaid character
existing as of the Balance Sheet Date and which under GAAP are or
should be accrued or reserved for on a balance sheet or the notes
thereto as a liability or obligation, if and to the extent that the
same were not accrued or reserved for on the May Balance Sheet; or
(B) liabilities or obligations of the character described in
paragraphs (b) through (g) of Section 2.11 existing at the date of
this Agreement, except for those items which are specifically
identified on Schedule 2.11(b) through Schedule 2.11(g) as they may be
supplemented or updated by Seller with Contracts, commitments or
arrangements entered into in the ordinary course of business prior to
the Closing Date, consistent with Sections 5.1 and 5.2; or
(C) liabilities or obligations arising out of any breach by any
Seller of any item of the character referred to in this Section
4.2(b)(iii), including, without limitation, liabilities or obligations
arising out of any Seller's failure to perform any Contract,
commitment or arrangement in accordance with its terms prior to the
Closing; or
(D) any liabilities or obligations arising out of Seller's credit
facility with Texas Commerce Bank; and
(iv) liabilities and obligations of the Seller in respect of warranty
claims by customers relating to the Business;
In determining the liabilities and obligations of the Business to be
assumed by Enterra Sub pursuant to Section 4.2(b)(i) and (ii) hereof, to the
extent that there is a conflict between the methodology set forth in the example
attached as Exhibit 2 and GAAP, then the methodology set forth in the example
attached as Exhibit 2 shall control.
(c) Other than the Assumed Liabilities, the Purchasers shall not assume or
be responsible for any liability of any Seller (collectively, the "Excluded
Liabilities"). (The parties acknowledge that it is possible that the Purchasers
may, in the operation of the Business after the Closing Date, incur liability
which may result in a Loss, other than as a result of contractual assumption of
liability, and that such Loss, if any, shall be governed in accordance with the
terms and provisions of Article X). The obligations of the Purchasers under
Section 4.2(b) are subject to whatever rights the Purchasers may have under this
Agreement for a breach by any Seller of any representation, warranty, covenant
or agreement contained in this Agreement. In addition to the foregoing, in no
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event shall the Purchasers assume or incur any liability or obligation under
Section 4.2(b) or otherwise (i) in respect of any Tax payable with respect to
the sales, assets or income of the Seller, (ii) based upon Seller's employment
of persons at any time except for the reimbursement arrangement set forth in
Section 11.1(b), or (iii) with respect to each item included as a liability in
the Net Asset Value calculation provided for in Section 4.5, any liability in
excess of the amount relating to such item included in such calculation (and
which is not otherwise superseded by Section 12.2).
(d) The Purchasers shall pay all sales, use, documentary and transfer
Taxes, if any, due as a result of the sale of the Assets and other transactions
undertaken pursuant to this Agreement.
Section 4.3 Closing. The closing of the purchase and sale (the "Closing")
provided for in this Agreement shall take place at the offices of Liddell, Sapp,
Zivley, Hill & XxXxxx, L.L.P., Texas Commerce Tower, Xxxxxxx, Xxxxx 00000 at
10:00 a.m. on the date which is the later of forty-five (45) days after the date
hereof or five (5) days following satisfaction or waiver of all conditions set
forth in Sections 7.1(a) and (c) and 7.2(d). Subject to the provisions of
Article VIII hereof, failure to consummate the purchase and sale provided for in
this Agreement on the date and time and at the place determined pursuant to this
Section 4.3 shall not result in the termination of this Agreement and shall not
relieve any parties to this Agreement of any obligation hereunder. For purposes
of this Agreement, the date on which the Closing occurs is the "Closing Date".
Section 4.4 Closing Deliveries.
(a) At the Closing, the Seller shall deliver to the Purchasers such deeds,
bills of sale, endorsements, assignments and other good and sufficient
instruments of conveyance, transfer and assignment, in form and substance
reasonably satisfactory to counsel for the Purchasers, as shall be effective to
vest in the Enterra Sub good and indefeasible title to the Assets, subject only
to Permitted Liens; deliver to Enterra Sub all of the Assets, including, without
limitation, leases, contracts and commitments, books and records and other data
relating to the Business and deliver to the Purchasers such other documents as
may be required by this Agreement.
(b) At the Closing, the Purchasers shall cause to be transferred to the
Seller in immediately available funds the Purchase Price, increased or
decreased, as the case may be, based on Xxxxxx'x calculation of Net Asset Value
on the date of the most recently delivered balance sheet in Seller's Financial
Statements to the extent that such Net Asset Value is greater than, or less
than, as the case may be, One Hundred Six Million, Six Hundred Twenty-Three
Thousand, Nine Hundred and Sixty-Eight Dollars ($106,623,968) ("Interim Net
Asset Value Adjustment"), subject to adjustment pursuant to the Footnote to
Exhibit 2 and also pursuant to Section 4.5. Xxxxxx'x calculation shall utilize
the same methods and criteria employed by Xxxxxx in connection with the
preparation of the May Balance Sheet and the example set forth in Exhibit 2, to
the extent such methods and criteria are consistent with GAAP. In making such
calculation, to the extent that there is a conflict between the methodology set
forth in the example attached as Exhibit 2 and GAAP, then the methodology set
forth in the example attached as Exhibit 2 shall control. At the Closing, the
Purchasers shall also deliver to the Seller such instruments, in form and
substance reasonably satisfactory to counsel for the Seller, as shall be
necessary for Enterra Sub to assume the Assumed Liabilities; and deliver to the
Seller such other documents as may be required by this Agreement.
Section 4.5 Net Asset Value Adjustment.
(a) As soon as reasonably practical following (but not more than ninety
(90) days after) the Closing Date, Enterra shall prepare and deliver to Xxxxxx a
statement of Assets and Assumed Liabilities as of the Closing Date (the
"Statement of Net Assets"). The Statement of Net Assets shall be prepared using
the same methods and criteria employed by the Seller in connection with the
preparation of the May Balance Sheet and the example set forth in Exhibit 2, to
the extent such methods and criteria are consistent with GAAP. In making such
calculation, to the extent that there is a conflict between the methodology set
forth in the example attached as Exhibit 2 and GAAP, then the methodology set
forth in the example attached as Exhibit 2 shall control. All expenses incurred
in connection with the preparation of the Statement of Net Assets shall be the
responsibility of the Purchasers. The
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Statement of Net Assets shall be accompanied by Enterra's calculation based
thereon of the amount by which the Assets exceed the Assumed Liabilities (the
amount of such excess, the "Net Asset Value", and Purchasers' calculation
thereof, "Purchasers' Calculation of Net Asset Value"). Xxxxxx shall have the
opportunity, but not the obligation, to participate in Enterra's preparation of
the Purchasers' Calculation of Net Asset Value. Within ten (10) days following
the delivery of the Purchasers' Calculation of Net Asset Value, Xxxxxx shall
notify Enterra whether it agrees or disagrees with the determination of the
Purchasers' Calculation of Net Asset Value, and, if Xxxxxx disagrees, Enterra
and Xxxxxx shall, on a good faith basis, seek to reconcile their disagreement
regarding the Purchasers' Calculation of Net Asset Value and Xxxxxx'x
calculation of Net Asset Value ("Xxxxxx'x Calculation of Net Asset Value"). The
calculation of Net Asset Value agreed upon by the Purchasers and Xxxxxx shall be
referred to herein as the "Agreed Upon Net Asset Value". Xxxxxx and Enterra
shall each have access to the other party's books, records and other information
and documents supporting such other party's calculation of Net Asset Value.
(b) If, after the review set forth in Section 4.5(a), Enterra and Xxxxxx
reconcile Xxxxxx'x Calculation of Net Asset Value with the Purchasers'
Calculation of Net Asset Value, then within three (3) business days, as the case
may be: (i) the Seller shall pay the Purchasers by wire transfer of immediately
available funds the amount by which the Interim Net Asset Value Adjustment
exceeds the Agreed Upon Net Asset Value, or (ii) the Purchasers shall pay to the
Seller by wire transfer of immediately available funds the amount by which the
Agreed Upon Net Asset Value exceeds the Interim Net Asset Value Adjustment. Any
such amounts paid pursuant to this Section 4.5(b) shall be considered an
increase or decrease, as the case may be, to the Purchase Price.
(c) If, after the review set forth in Section 4.5(a), Enterra and Xxxxxx
are unable to reconcile Xxxxxx'x Calculation of Net Asset Value with the
Purchasers' Calculation of Net Asset Value, as soon as practical, and in any
event within ten (10) days, the calculation of Net Asset Value and the balance
owing to the Purchasers or the Seller hereunder, as the case may be, shall be
determined jointly by Coopers & Xxxxxxx, L.L.P., Houston, Texas and another
independent, Big Six accounting firm to be named by Enterra. The Net Asset
Value as determined jointly by such accounting firms shall be referred to herein
as the "Accountants' Calculation of Net Asset Value". In making such
determination, to the extent that there is a conflict between the methodology
set forth in the example attached as Exhibit 2 and GAAP, then the methodology
set forth in the example attached as Exhibit 2 shall control. If Coopers &
Xxxxxxx, L.L.P. and such accounting firm named by Enterra shall not be able to
agree on the Net Asset Value and the balance owing to the Purchasers or the
Seller hereunder, as the case may be, within thirty (30) days, then such
accounting firms shall select a third nationally recognized accounting firm
which shall determine the Net Asset Value and the balance owing to the
Purchasers or the Seller hereunder, as the case may be, and the determination of
such third accounting firm shall be final and binding on the parties hereto. The
fees and expenses of such accounting firms shall be borne equally by Xxxxxx and
Enterra. The parties hereto agree to cooperate fully with such accounting firms
and furnish such firms with such information as they may require to make such
determination.
(d) After the determination of the Net Asset Value and the balance owing to
the Purchasers or the Seller hereunder, as the case may be, by the accounting
firm or firms provided for in Section 4.5(c), within three (3) days after such
determination: (i) the Seller shall pay to the Purchasers by wire transfer of
immediately available funds the amount by which the Interim Net Asset Value
Adjustment exceeds the Accountants' Calculation of Net Asset Value, or (ii) the
Purchasers shall pay to the Seller by wire transfer of immediately available
funds the amount by which the Accountants' Calculation of Net Asset Value
exceeds the Interim Asset Value Adjustment. Any such excess amounts paid
pursuant to this Section 4.5(d) shall be considered an increase or decrease, as
the case may be, to the Purchase Price.
(e) Nothing in this Section 4.5 shall preclude any party from exercising,
or shall adversely affect any right or remedy available to it hereunder or limit
in any respect the exercise of, any right or remedy available to it hereunder
for misrepresentation or breach of warranty hereunder, but neither the
Purchasers nor any Seller shall have the right to dispute the Net Asset Value or
any element of the calculation thereof once it has been finally determined in
accordance with Section 4.5(a) or (c) hereof.
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(f) An example of the calculations referred to in this Section 4.5 is
attached hereto on Exhibit 2.
Section 4.6 Assets of Affiliates. To the extent any assets, properties or
rights (other than the Excluded Assets), wherever located, used or held for use
in connection with the Business, are owned, including, without limitation,
assets, properties and rights (a) previously used or held for use in connection
with the Business and (b) still owned by any Affiliate of any Seller, they are
included within the term "Assets", such Affiliate is deemed to be included
within the term "Seller", and the Seller shall cause each such Affiliate, at the
Closing, to convey such Assets to Enterra Sub, or to a Seller for conveyance to
Enterra Sub, in accordance with the provisions hereof.
Section 4.7 Assigned Contracts. To the extent that any Seller's rights
under any Contract included in the Assets, or under any other Asset to be
assigned to Enterra Sub hereunder, may not be assigned without the consent of
another person which has not been obtained by a Seller prior to the Closing,
neither this Agreement nor any instruments of transfer shall constitute an
agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful. If any such consent has not been obtained or if
any attempted assignment would be ineffective or would impair Enterra Sub's
rights under the instrument in question so that Enterra Sub would not in effect
acquire the benefit of all such rights, then the Seller, to the maximum extent
permitted by law and the instrument, shall act as Enterra Sub's agent in order
to obtain for Enterra Sub the benefits thereunder and shall cooperate, to the
maximum extent permitted by law and the instrument, with Enterra Sub in any
other reasonable arrangement designed to provide such benefits to Enterra Sub
(including, without limitation, by entering into an equivalent arrangement).
ARTICLE V.
OBLIGATIONS OF THE SELLER PENDING CLOSING
During the period commencing on the date of this Agreement through the
Closing Date, the Seller hereby covenants and agrees to comply with the
covenants and agreements contained in this Article V, to wit:
Section 5.1 Affirmative Covenants of the Seller. Prior to the Closing
Date, each Seller shall except as specifically contemplated by this Agreement:
(a) operate and conduct the Business only in the ordinary course,
consistent with past practice, including, without limitation, the continuation
of existing insurance coverages;
(b) preserve intact Xxxxxx Sub's and Xxxxxx Partnership's existence,
business organization, Business, Assets and Governmental Authorizations;
(c) promptly notify the Purchasers upon obtaining knowledge of any material
default or event of default under any of the Contracts and promptly notify and
provide copies to the Purchasers of any material written communications
concerning such default; and
(d) comply with all material Governmental Requirements applicable to Seller
and the conduct of the Business except where the failure to do so would not have
a Material Adverse Effect.
Section 5.2 Negative Covenants of Xxxxxx Sub and Xxxxxx Partnership.
Except with the prior written consent of the Purchasers or as otherwise
specifically permitted by this Agreement, Xxxxxx Sub and Xxxxxx Partnership
shall not, from the date of this Agreement to the Closing Date:
(a) make any amendment to its, as applicable, Certificate of Incorporation,
Bylaws, certificate of limited partnership or partnership agreement;
(b) make any change in accounting methods except as may be required by
applicable law or GAAP and after written notice to the Purchasers;
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(c) contract to create any obligation or Liability except in the ordinary
course of the Business, consistent with past practice;
(d) contract to create any mortgage, pledge, lien, security interest or
encumbrance, restriction, or charge of any kind (other than Permitted Liens);
(e) cancel any debts, waive any claims or rights of value or sell,
transfer, or otherwise dispose of any of its properties or assets, except in the
ordinary course of the Business, consistent with past practice;
(f) sell any real estate owned as of the date of this Agreement or acquired
thereafter except for fair market value in the ordinary course of the Business,
consistent with past practice;
(g) except in the ordinary course of the Business, consistent with past
practice, or as agreed by Purchasers and Seller, grant any increase in
compensation or pay or agree to pay or accrue any bonus or like benefit to or
for the credit of any director, officer, employee or other person or enter into
any employment, consulting or severance agreement or other agreement with any
director, officer, employee, or other person or adopt, amend or terminate any
benefit plan or change or modify the period of vesting or retirement age for any
participant of such a plan;
(h) acquire the capital stock or other equity securities or interest of any
person;
(i) make any capital expenditure or a series of expenditures of a similar
nature in excess of $500,000 in the aggregate;
(j) except for negotiations and discussions between the parties hereto
relating to the transactions contemplated by this Agreement or as otherwise
permitted hereunder, enter into any transaction, or enter into, modify or amend
any Contract or commitment, other than in the ordinary course of the Business,
consistent with past practice;
(k) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization, or other reorganization or
business combination of Xxxxxx Sub and Xxxxxx Partnership; or
(l) agree to do any of the things described in clauses (a) through (k) of
this Section 5.2.
Section 5.3 Negative Covenant of Xxxxxx. Except with the prior written
consent of the Purchasers, Xxxxxx shall not, from the date of this Agreement to
the Closing Date, adopt a plan of complete liquidation or dissolution.
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.1 Access To, and Information Concerning, Properties and Records.
During the pendency of the transactions contemplated hereby, the Seller shall
give the Purchasers, their legal counsel, accountants and other representatives
full access during normal business hours, throughout the period prior to the
Closing Date, to all of the assets of the Business, including, without
limitation, the books, Contracts, properties, premises, permits, licenses,
Governmental Authorizations and records, and shall permit the Purchasers and
their representatives to make such inspections (including, without limitation,
with regard to such properties, physical inspection of the surface and
subsurface thereof which is not materially intrusive) and to have discussions
with material suppliers and customers of Seller as the Purchasers and such
representatives may require and furnish to the Purchasers and their
representatives during such period all such information concerning Seller and
its affairs as they may reasonably request. With regard to physical inspection
or testing, Purchasers shall restore such properties, to the extent reasonable
and customary under the circumstances, to substantially their original
condition. Purchasers shall be responsible for any Loss (other than consequences
of complying with applicable Governmental Requirements)
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resulting directly from Purchasers' entry or conduct of such testing. Purchasers
shall be responsible for disposal of any waste or materials generated during
such investigation in accordance with any applicable Governmental Requirements.
Upon Seller's request, Purchasers shall provide Seller a copy of any such
written test methodologies or results which relate to the Assets. Purchasers
shall maintain the confidentiality of such test results in accordance with
Section 6.4. The Purchasers agree that all discussions and communications with
suppliers and customers of the Seller will be with the consent and cooperation
of the Seller.
Section 6.2 Miscellaneous Agreements and Consents. Subject to the terms and
conditions of this Agreement, the Purchasers and the Seller agree to use their
good faith, reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate and make effective, as soon as
practicable after the date hereof, the transactions contemplated by this
Agreement, including, without limitation, making the required filings under the
HSR Act and seeking the early termination or expiration of the waiting period
thereunder. Purchasers agree to pay the filing fee in connection with the HSR
Act filings.
Section 6.3 Public Announcement. Except as determined under applicable law
by counsel to the Seller or the Purchasers, the timing and content of any
announcements, press releases or other public statements concerning the matters
contained herein will occur upon, and be determined by, the mutual consent of
the Seller and the Purchasers.
Section 6.4 Confidentiality. Without the express written consent of all of
the parties hereto, each of the parties hereto agrees to maintain in confidence
and not disclose to any other person the terms of the transactions contemplated
herein or the information delivered in connection with the Purchasers' due
diligence investigation, other than disclosures required to obtain the approvals
for the transactions contemplated hereby, disclosures to those professionals and
advisors who have a need to know, disclosures of information already available
to the public or any other disclosures required by applicable law or judicial,
regulatory or administrative proceeding. In the event that any Purchaser or any
Seller is at any time requested or required (by oral questions, interrogatories,
request for information or documents, subpoena or other similar process) to
disclose any information supplied to it in connection with the transactions
contemplated hereby, such party agrees to provide the other parties hereto
prompt notice of such request so that an appropriate protective order may be
sought and/or such other party may waive the first party's compliance with the
terms of this Section 6.4.
Section 6.5 Certain Post-Closing Assistance by Purchasers. Purchasers agree
to cause the appropriate personnel to assist Seller in the prosecution or
defense of any claims and litigation (including counterclaims filed by Seller)
for which Seller has indemnified Purchasers hereunder. Such services shall be
rendered by Purchasers to Seller at no cost and expense to Seller except that
Seller shall reimburse Purchasers for any reasonable out-of-pocket travel and
similar expenses incurred by the personnel of Purchasers in performing these
functions.
Section 6.6 Xxxxxx Name. Purchasers acknowledge and agree that no rights of
any kind whatsoever in the name "Xxxxxx" are being granted or transferred in
connection with this Agreement. At all times after the Closing Date, Purchasers
shall refrain from using the word "Xxxxxx" or any word or expression similar
thereto in the name under which Purchasers do business or in any corporate name,
trademark, service xxxx or other name or xxxx used in connection with their
business. As promptly as practicable after the Closing Date, but in any event
within thirty (30) days after the Closing Date, the name "Xxxxxx" shall be
removed by Purchasers from all of the Assets, including any stationery, business
cards, forms or other documents.
Section 6.7 Compliance with Bulk Sales Laws. The Purchasers and the Seller
hereby waive compliance with the bulk sales law and any other similar laws in
any applicable jurisdiction in respect of the transactions contemplated by this
Agreement.
Section 6.8 Stockholder Meeting. Xxxxxx shall call and hold a meeting of
its stockholders to be held as soon as is practicable for the purpose of voting
on the transactions contemplated hereunder. Xxxxxx'x Board of Directors
13
shall recommend to its stockholders approval of the transactions contemplated
hereunder and shall take all such actions as may be reasonably required to
obtain such approvals as promptly as practicable, including, without limitation,
the solicitation of proxies.
ARTICLE VII.
CONDITIONS TO CLOSING
Section 7.1 Conditions to Each Party's Obligation to Close. The obligations
of each party to close the transactions contemplated hereby are subject to the
reasonable satisfaction or waiver of the following conditions on or prior to the
Closing Date:
(a) The receipt of regulatory approvals and the expiration of any
applicable waiting period with respect thereto;
(b) The Closing will not violate any injunction, order or decree of any
court or Governmental Authority having competent jurisdiction; and
(c) Approval of the transactions contemplated hereunder by the stockholders
of Xxxxxx.
Section 7.2 Conditions to the Obligations of the Purchasers to Close. The
obligations of the Purchasers to close the transactions contemplated herein are
subject to the reasonable satisfaction or waiver of the following conditions on
or prior to the Closing Date:
(a) Subject to Section 7.4, all representations and warranties of the
Seller contained herein shall be true and correct in all material respects
(except to the extent qualified by a materiality standard, in which case such
representations and warranties shall be true and correct) as of the date hereof
and at and as of the Closing (except that Purchaser's satisfaction with its
review of any update by Seller to Schedule 2.8 shall also be a condition to
closing), with the same force and effect as though made on and as of the
Closing;
(b) The Seller shall have performed in all material respects all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by the Seller prior
to the Closing Date;
(c) The Seller shall have executed and delivered to the Purchasers proper
instruments for the transfer of the Assets in form and substance reasonably
satisfactory to Purchasers and their counsel in accordance with Section 4.4
hereof;
(d) The Seller shall have furnished the Purchasers with evidence of
consents as shall be required to enable the Purchasers to continue to enjoy the
benefit of any material Governmental Authorization, lease, license, permit,
Environmental Permit, Contract or other agreement or instrument to or of which
any Seller is a party or a beneficiary as it relates to the Business, including,
without limitation, consents to assignment of the agreements listed on Exhibit
3;
(e) The Purchasers shall have received certificates dated as of the Closing
Date executed by the President or Vice President of each Seller certifying to
the effect described in Sections 7.2(a) and 7.2(b):
(f) The Purchasers shall have received the written opinion dated the
Closing Date of Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P., counsel for the
Seller, in form and substance reasonably satisfactory to the Purchasers and
their counsel.
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Section 7.3 Conditions to the Obligations of the Seller to Close. The
obligations of the Seller to close the transactions contemplated herein are
subject to the reasonable satisfaction or waiver of the following conditions on
or prior to the Closing Date:
(a) All representations and warranties of Purchasers contained herein shall
be true and correct in all material respects (except to the extent qualified by
a materiality standard, in which case such representations and warranties shall
be true and correct) as of the date hereof and at and as of the Closing, with
the same force and effect as though made on and as of the Closing;
(b) The Purchasers shall have performed in all material respects all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by Purchasers prior
to the Closing Date;
(c) The Seller shall have received certificates dated as of the Closing
Date, executed by an appropriate officer of each Purchaser certifying to the
effect described in Sections 7.3(a) and 7.3(b);
(d) The Seller shall have received the Purchase Price;
(e) Enterra Sub shall have executed and delivered to the Seller proper
instruments for the assumption of the Assumed Liabilities, in each case, in form
and substance reasonably satisfactory to Seller and its counsel in accordance
with Section 4.4 hereto; and
(f) The Seller shall have received the written opinion dated the Closing
Date of Xxxxxx, Xxxxx & Bockius, counsel for the Purchasers, in form and
substance reasonably satisfactory to Seller and its counsel.
Section 7.4 Amendments to Disclosure Schedule. In addition to changes,
amendments or supplements to the Disclosure Schedule as permitted by the first
paragraph of Article II, Seller may amend the Disclosure Schedule to include an
item or items which should have been included on the date of this Agreement but
which was inadvertently omitted. In such case, the Disclosure Schedule will be
deemed corrected as of the date of this Agreement; provided however, that such
amendment made by Seller shall not be taken into account in connection with
determining fulfillment of Purchaser's condition to closing set forth in Section
7.2(a) hereof which provides that all representations of the Seller shall be
true and correct in all material respects on the date of this Agreement (subject
to the exception set forth therein).
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) By mutual written consent of Enterra and Xxxxxx;
(b) By Enterra, if any of the conditions to Closing contained in Section
7.1 or 7.2 shall not have been complied with or performed at the time required
for such compliance or performance and such noncompliance or nonperformance
shall not have been waived in writing by Enterra.
(c) By Xxxxxx, if any of the conditions to Closing contained in Section 7.1
or 7.3 shall not have been complied with or performed at the time required for
such compliance or performance and such noncompliance or nonperformance shall
not have been waived in writing by Xxxxxx.
(d) By Enterra or Xxxxxx, if the Closing Date shall not have occurred on or
before 5:00 p.m., Houston time, on December 20, 1995 or such later date agreed
to in writing by Enterra and Xxxxxx; and
15
(e) By Enterra or Xxxxxx, if any court of competent jurisdiction in the
United States of America or other federal or state governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions herein contemplated and such
order, decree, ruling or other action shall have been final and nonappealable.
Section 8.2 Effect of Termination. The following provisions shall apply in
the event of a termination of this Agreement:
(a) If this Agreement is terminated by either Enterra or Xxxxxx as
permitted under Section 8. l(a) or (e) hereof and not as the result of the
failure of any party to perform its obligations hereunder, such termination
shall be without liability to any party to this Agreement or any stockholder,
partner, director, officer, employee, agent or representative of such party.
(b) If this Agreement is terminated as a result of the failure of
Purchasers to perform their obligations hereunder, Purchasers shall be fully
liable for any and all damages (other than special, consequential or punitive
damages) sustained or incurred by Seller.
(c) If this Agreement is terminated as a result of the failure of Seller to
perform its obligations hereunder, Seller shall be fully liable for any and all
damages (other than special, consequential or punitive damages) sustained or
incurred by Purchasers.
(d) Seller and Purchasers agree that the provisions of Sections 6.4 and
12.3 shall survive any termination of this Agreement. In the event of such
termination, each party promptly will destroy or, if requested, redeliver to the
other party all documents, work papers and other materials furnished by such
party relating to the transactions contemplated hereby (including all copies
made thereof). All confidential information received by any party, or any
employee, agent or representative of any party, concerning the other party shall
continue to be treated in accordance with the confidentiality obligations set
forth in Section 6.4.
Section 8.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed by all the parties.
Section 8.4 Extension; Waiver. At any time prior to the Closing Date,
Purchasers or Seller may (i) extend the time for the performance of any of the
obligations or other acts of the non-extending party, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto by the non-waiving
party, or (iii) waive compliance with any of the agreements or conditions
contained herein by the non-waiving party. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE IX.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 9.1 Survival of Representations and Warranties. The parties hereto
agree that their respective representations and warranties contained in this
Agreement shall survive for a period of one year after the Closing Date and
shall thereafter terminate and be of no further force or effect, except that (a)
all representations and warranties set forth in Sections 2.1, 2.2, 2.9, 3.1 and
3.2 hereof shall survive the Closing Date without limitation, (b) the
representations and warranties set forth in Section 2.15 hereof shall survive
for a period of five (5) years after the Closing Date, and (c) any
representation or warranty as to which a claim (including, without limitation, a
contingent claim) has been asserted in writing by a party and delivered to the
other party during the survival period shall continue in effect with respect to
such claim until such claim shall have been finally resolved or settled.
Notwithstanding any investigation or audit conducted before or after the Closing
Date or the decision of any party to complete the Closing, each party shall be
entitled to rely upon the representations and warranties of the other party or
parties set forth herein.
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ARTICLE X.
INDEMNIFICATION
Section 10.1 Indemnification by the Seller. Subject to the limitations
described in Section 10.5, each Seller, jointly and severally, unconditionally,
absolutely and irrevocably agrees to and shall defend, indemnify and hold
harmless the Purchasers, and each of the Purchasers' Subsidiaries, stockholders,
partners, Affiliates, officers, directors, employees, agents, successors,
assigns, heirs and legal and personal representatives (the Purchasers and all
such persons or other entities are collectively referred to as the "Purchasers'
Indemnified Persons"), from and against, and shall reimburse the Purchasers'
Indemnified Persons for, each Loss paid, imposed on or incurred by the
Purchasers' Indemnified Persons:
(a) resulting from any inaccuracy in any representations or warranties of
any Seller under this Agreement, or any certificate delivered or to be delivered
by any Seller pursuant hereto,
(b) to the extent caused by any breach of any covenant or agreement in this
Agreement by any Seller,
(c) which is an Excluded Liability,
(d) to the extent caused by any violation of any bulk sales law or other
similar state laws designed to protect the rights of creditors in sales of
substantially all assets in any applicable jurisdiction in respect of the
transactions contemplated by this Agreement,
(e) with the exception of those matters governed by Section 10.1(f) hereof,
because of, resulting from or arising out of the business, operations or assets
of the Seller prior to the Closing Date but excluding any Assumed Liabilities,
or
(f) to the extent caused by an Environmental Claim, or any Liability which
otherwise relates to, or involves a Liability that arises out of or is based
upon, any Environmental Law to the extent that such Environmental Claim or
Liability is caused by any activity occurring, condition existing, omission to
act or other matter existing prior to the Closing Date, subject to reduction, if
any, to the extent the liability has been exacerbated by Purchaser after the
Closing Date or Purchaser has failed to use reasonable efforts to mitigate such
liability after the Closing Date if Purchaser actually knew of such liability;
provided, however, no indemnity or reimbursement shall be provided by Seller for
any Liability for which an Environmental Claim has not been made unless any
proposed cost or expenditure is approved in writing by Seller, which approval
will not be withheld unreasonably and; provided further, however, except to the
extent that no flexibility exists with regard to ordered compliance with
Environmental Laws, no indemnity may be sought for costs associated with an
Environmental Claim or Liability that exceeds the minimum standard necessary to
attain compliance with Environmental Laws. Purchaser shall at all times have
the right to self report to Governmental Authorities any condition it believes
constitutes a Liability under Environmental Laws. For the purpose of this
Section 10.1(f), written agreement by Governmental Authorities of clean-up
responsibility, or approval by Governmental Authorities of a clean-up plan,
shall constitute an Environmental Claim. Any proposed plan to address
compliance with Environmental Laws shall be developed jointly between Purchasers
and Seller, and must be presented to Seller prior to any implementation;
and any and all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, costs and other Losses (including,
without limitation, disbursements and expenses of attorneys) incident to any of
the foregoing or to the enforcement of this Section 10.1.
With respect to matters not involving Proceedings commenced or threatened by
third parties, within five (5) days after notification from the Purchasers'
Indemnified Persons supported by reasonable documentation setting forth the
nature of the circumstances entitling the Purchasers' Indemnified Persons to
indemnity hereunder, the Seller, at no cost or expense to the Purchasers'
Indemnified Persons, shall acknowledge, if Seller agrees to so indemnify, to the
Purchasers' Indemnified Persons its obligations to indemnify under this Section
10.1 and shall diligently commence
17
resolution of such matters in a manner reasonably acceptable to the Purchasers'
Indemnified Persons and shall diligently and timely prosecute such resolution to
completion; provided, however, with respect to those claims that may be
satisfied by payment of a liquidated sum of money, the Seller may, in its sole
discretion, but shall not be required to, promptly pay the amount so claimed to
the extent supported by reasonable documentation and so long as any settlement
includes a complete release of all Purchasers' Indemnified Persons. If
litigation or any other Proceeding is commenced or threatened, the provisions of
Section 10.3 shall control.
Section 10.2 Indemnification by the Purchasers. Subject to the limitations
described in Section 10.6, each Purchaser, jointly and severally,
unconditionally, absolutely and irrevocably agrees to and shall defend,
indemnify and hold harmless the Seller and each of Seller's Subsidiaries,
stockholders, partners, Affiliates, officers, directors, employees, agents,
successors, assigns, heirs and legal and personal representatives (the Seller
and all such persons or other entities are collectively referred to as the
"Seller's Indemnified Persons") from and against, and shall reimburse the
Seller's Indemnified Persons for, each Loss paid, imposed on or incurred by the
Seller's Indemnified Persons:
(a) resulting from any inaccuracy in any representations or warranties of
the Purchasers under this Agreement, or any certificate delivered or to be
delivered by the Purchasers pursuant hereto,
(b) to the extent caused by any breach of any covenant or agreement in this
Agreement by the Purchasers,
(c) which is an Assumed Liability, or
(d) because of, resulting from or arising out of the operation of the
Business after the Closing Date, and
any and all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, costs and other Losses (including without
limitation disbursements and expenses of attorneys) incident to any of the
foregoing or to the enforcement of this Section 10.2.
With respect to matters not involving Proceedings commenced or threatened by
third parties, within five (5) days after notification from the Seller's
Indemnified Persons supported by reasonable documentation setting forth the
nature of the circumstances entitling the Seller's Indemnified Persons to
indemnity hereunder, the Purchasers or Enterra (as the case may be), at no cost
or expense to the Seller's Indemnified Persons, shall acknowledge, if Purchasers
agree to so indemnify, to the Seller's Indemnified Persons their obligations to
indemnify under this Section 10.2 and shall diligently commence resolution of
such matters in a manner reasonably acceptable to the Seller's Indemnified
Persons and shall diligently and timely prosecute such resolution to completion;
provided, however, with respect to those claims that may be satisfied by payment
of a liquidated sum of money, the Purchasers or Enterra (as the case may be) may
promptly pay the amount so claimed to the extent supported by reasonable
documentation and so long as any settlement includes a complete release of all
Seller's Indemnified Persons. If litigation or any other Proceeding is commenced
or threatened, the provisions of Section 10.3 shall control.
Section 10.3 Notice and Defense of Third Party Claims. If any Proceeding
shall be brought or asserted under this Article against an indemnified party or
any successor thereto (the "Indemnified Person") in respect of which indemnity
may be sought under this Article from an indemnifying person or any successor
thereto (the "Indemnifying Person"), the Indemnified Person shall give prompt
written notice of such Proceeding to the Indemnifying Person who shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to the Indemnified Person and the payment of all expenses. Actual or threatened
action by a Governmental Authority or other entity is not a condition or
prerequisite to the Indemnifying Person's obligations under this Article. The
Indemnified Person shall have the right to employ separate counsel in any of the
foregoing Proceedings and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the
18
expense of the Indemnified Person. The Indemnified Person's right to participate
in the defense or response to any Proceeding should not be deemed to limit or
otherwise modify its rights under this Article. In the event that the
Indemnifying Person, within ten (10) business days after notice of any such
Proceeding, fails to acknowledge its obligation to indemnify hereunder and to
assume the defense thereof, the Indemnified Person shall have the right to
undertake the defense, compromise or settlement of such Proceeding for the
account of the Indemnifying Person, subject to the right of the Indemnifying
Person to assume the defense of such Proceeding with counsel reasonably
satisfactory to the Indemnified Person at any time prior to the settlement,
compromise or final determination thereof. Anything in this Article to the
contrary notwithstanding, the Indemnifying Person shall not, without the
Indemnified Person's prior written consent, settle or compromise any Proceeding
or consent to the entry of any judgment with respect to any Proceeding for
anything other than money damages paid by the Indemnifying Person. The
Indemnifying Person may, without the Indemnified Person's prior written consent,
settle or compromise any such Proceeding or consent to entry of any judgment
with respect to any such Proceeding that requires solely the payment of money
damages by the Indemnifying Person and that includes as an unconditional term
thereof the release by the claimant or the plaintiff of the Indemnified Person
from all liability in respect of such Proceeding. As a condition to asserting
any rights under this Article, each of the Purchasers' Indemnified Persons must
appoint Enterra, and each of the Seller's Indemnified Persons must appoint
Xxxxxx, as their sole agents for all matters relating to any claim under this
Article. Subject to compliance with the time limitations set forth in Section
9.1 hereof, the Indemnified Person's failure to give prompt written notice to
the Indemnifying Person of any actual, threatened or possible demand which may
give rise to a right of indemnification hereunder shall not relieve the
Indemnifying Person of any liability which the Indemnifying Person may have to
the Indemnified Person unless the failure to give such notice materially and
adversely prejudiced the Indemnifying Person.
Section 10.4 Limitations.
(a) An Indemnifying Person shall have no liability under Section 10.1(a) or
10.2(a) unless notice of a claim for indemnity, or notice of facts as to which
an indemnifiable Loss is expected to be incurred, shall have been given within
the periods specified in Section 9.1.
(b) In calculating the amount of any Loss for which any Indemnifying Person
is liable under this Article X, there shall be taken into consideration the
value of any federal or state income tax effects on the Indemnified Person that
result from the circumstances to which the Loss related or from which the Loss
arose as well as any payments made by any Indemnifying Person.
Section 10.5 Limitation of Seller's Liability.
(a) Notwithstanding anything to the contrary contained in Section 10.1,
after the Closing, the aggregate liability of the Seller for any Loss,
individually or in the aggregate with all other Losses covered by this
Agreement, for which indemnification is required by Seller on behalf of
Purchasers' Indemnified Persons pursuant to Section 10.1, shall be limited to
(i) the aggregate amount of the Excluded Liabilities (which may be used to
satisfy only the Excluded Liabilities) and (ii) $4,000,000 (for all other
matters, exclusive of a termination described in Section 8.2(c), for which
liability shall be unlimited). The matters referred to in the immediately prior
parenthetical shall include, without limitation, all matters described in
Section 10.1(a), (b), (d), (e) and (f) and the qualifier set forth immediately
after Section 10.1(f).
(b) The Purchasers' Indemnified Persons are entitled to indemnification
pursuant to Section 10.l only to the extent that the amount of any Loss,
individually or in the aggregate with all other Losses covered by this
Agreement, exceeds $250,000 and is not an Assumed Liability and in such event
the Purchasers' Indemnified Persons shall be entitled, subject to Section
10.5(a) hereof, to recover the full amount of such Loss in excess of $250,000.
Such $250,000 limitation shall not apply, however, to (i) a Net Asset Value
adjustment payment pursuant to Section 4.5, or (ii) Seller's obligations
pursuant to Section 12.2.
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Section 10.6 Limitation of Purchasers' Liability.
(a) Notwithstanding anything to the contrary contained in Section 10.2,
after the Closing, the aggregate liability of the Purchasers for any Loss,
individually or in the aggregate with all other Losses covered by this
Agreement, for which indemnification is required by Purchasers on behalf of
Seller's Indemnified Persons pursuant to Section 10.2, shall be limited to (i)
the aggregate amount of the Assumed Liabilities (which may be used to satisfy
only the Assumed Liabilities) and (ii) $4,000,000 (for all other matters,
exclusive of a termination described in Section 8.2(b), for which liability
shall be unlimited).
(b) The Seller's Indemnified Persons are entitled to indemnification
pursuant to Section 10.2 only to the extent that the amount of any Loss,
individually or in the aggregate with all other Losses covered by this
Agreement, exceeds $250,000 and is not an Excluded Liability, and in such event
the Seller's Indemnified Persons shall be entitled, subject to Section 10.6(a)
hereof, to recover the full amount of such Loss in excess of $250,000. Such
$250,000 limitation shall not apply, however, to (i) a reimbursement obligation
of a Purchaser pursuant to Section 11.1(b) hereof, (ii) a Loss resulting from a
breach by a Purchaser of Section 3.7 hereof, (iii) a Loss resulting from
Purchasers' reimbursement obligation set forth in Section 12.15, (iv) the Net
Asset Value adjustment payment pursuant to Section 4.5; or (v) Purchasers'
obligations pursuant to Section 12.2.
Section 10.7 Limitation on Claims. No party to this Agreement shall make a
claim against another party to this Agreement except pursuant to, and subject to
the limitations contained in, this Article X.
Section 10.8 Inconsistent Provisions. The provisions of this Article shall
govern and control over any inconsistent provisions of this Agreement.
ARTICLE XI.
EMPLOYMENT MATTERS
Section 11.1 Employment.
(a) The full-time and part-time employees of the Business, whether
currently employed, or employed between the date hereof and the Closing Date,
are collectively referred to as the "Xxxxxx Employees". As soon as reasonably
practicable after the date of this Agreement, Purchasers shall furnish Seller
with a list of the names of each of the Xxxxxx Employees to whom Purchasers
reasonably expect to extend offers of employment on the Closing Date
("Continuing Employees").
(b) Any Xxxxxx Employee who is not a Continuing Employee, as determined
according to the list provided by Purchasers to Seller under Section 11.1(a),
shall be terminated by Seller prior to the Closing Date. Notwithstanding
anything to the contrary in Section 11.1(a), prior to the Closing Date, Seller
shall provide Xxxxxx Employees who are not Continuing Employees and who are
identified in Section 11.1(a), with severance benefits under the Seller's
Severance Plan attached hereto as Exhibit 4; provided, however, that if the
aggregate amount of such severance payments referred to in this sentence (taking
into account only those Xxxxxx Employees whose employment is terminated by
Xxxxxx as required by this Agreement) exceeds Fifty Thousand Dollars ($50,000),
Purchasers shall promptly reimburse Seller for the amount of such excess. With
respect to any Xxxxxx Employee, however, in no event shall Purchasers be
required to reimburse Seller for severance payments in excess of those required
by the terms of the Seller's Severance Plan.
Section 11.2 Purchasers' Responsibility for Xxxxxx Employees' Retirement
and Other Benefits.
(a) Purchasers will cause to be provided pension, medical, 401k plan and
other benefits to all Continuing Employees from and after the Closing Date to
the same extent provided to similarly situated employees of Purchasers.
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(b) Seller will retain responsibility for and continue to pay all medical,
life insurance, disability and other welfare plan expenses and benefits for each
Xxxxxx Employee with respect to claims incurred by such employees or their
covered dependents under any benefit plan and subject to the terms thereof prior
to the Closing Date. Expenses and benefits with respect to claims incurred by
Continuing Employees or their covered dependents on or after the Closing Date
shall be the responsibility of Purchasers. For purposes of this paragraph, a
claim is deemed incurred when the services that are the subject of the claim are
performed; provided, however, that in the case of life insurance, a claim is
deemed incurred when the death occurs and in the case of long-term disability
benefits, when the disability occurs. With respect to each Xxxxxx Employee who
is not a Continuing Employee or such employee's dependent, the Seller shall be
responsible for health care continuation rights under Section 4980B of the Tax
Code and Sections 601-609 of ERISA for those Xxxxxx Employees. The Purchasers
shall be responsible for all continuation of health coverage rights under
Section 4980B of the Tax Code and Sections 601-609 of ERISA for all Continuing
Employees and their dependents.
Section 11.3 No Third Party Beneficiaries. No provision of this Article
shall create any third party beneficiary or other rights in any employee or
former employee (including any beneficiary or dependent thereof) of the Seller
in respect to continued employment or resumed employment with either the
Purchasers or Seller and no provision of this Article XI shall create any such
rights in any employee or former employee (including any beneficiary or
dependent thereof) of Seller with respect to any benefits that may be provided
directly or indirectly in any Benefit Plan or other employee benefit plan or
program.
ARTICLE XII.
MISCELLANEOUS
Section 12.1 Books and Records. Upon consummation of the transactions
provided herein and for a period of five years thereafter, the Seller agrees
that upon the reasonable written request of the Purchasers, the Seller will
provide the Purchasers with access to the tax records (or copies thereof)
retained by the Seller pursuant to this Agreement. All costs and expenses
associated with providing such tax records (or copies thereof) shall be borne by
the Purchasers. Nothing herein shall be deemed to require the Seller to maintain
or refrain from disposing of any books and records transferred pursuant to this
Agreement for any period of time after the Closing Date. However, if Seller
desires to dispose of any such books or records, Seller agrees to give
Purchasers notice of such intention and the opportunity to retain such books and
records, at Purchasers' expense.
Section 12.2 Accounts Receivable.
(a) In the event that 90% of the face amount of the accounts receivable
included within the Assets on the Closing Date (the "90% Amount") are not
collected within one hundred twenty (120) days after the Closing Date, then at
the request of Purchasers, the Seller shall pay Enterra Sub an amount equal to
(i) the 90% Amount, (ii) less amounts collected by Purchasers, (iii) less the
allowance for doubtful accounts utilized in the calculation of the Agreed Upon
Net Asset Value.
(b) For purposes of Section 12.2(a), Purchasers shall use best efforts to
diligently collect all accounts receivable. All payments received by Purchasers
from any debtor for accounts receivable which are Assets shall be applied first
to the oldest accounts receivable applicable to such debtor, whether owed to
Seller or Purchasers.
(c) If and when a payment is made by Seller to Enterra Sub pursuant to
Section 12.2(a), upon receipt of such payment Purchasers shall assign to the
Seller making the payment all of its rights with respect to the uncollected
accounts receivables giving rise to the payment and shall also thereafter
promptly remit any excess collections received by Purchasers with respect to
such assigned receivables. If and when the amount subsequently collected by
Seller with respect to the assigned receivables equals (i) the payment therefor
plus (ii) the costs and expenses reasonably incurred by Seller in the collection
of such assigned receivables, Seller shall reassign to Enterra Sub all of such
assigned receivables as have not been collected in full by Seller and shall also
thereafter promptly
21
remit any excess collections received by Seller. Upon the reasonable written
request of Enterra Sub, Seller shall provide it with a status report concerning
the collection of assigned receivables.
Section 12.3 Expenses. The Purchasers and the Seller will each pay their
own expenses in connection with the transactions contemplated hereby.
Section 12.4 Brokers and Finders. Neither the Purchasers nor the Seller
shall be responsible to the other party for the payment of any broker's fee,
finder's fee or commission of any sort in connection with the transactions
described herein. The Seller shall be responsible for payment of any such fee to
Wertheim Xxxxxxxx & Co. Incorporated or any other party to which the Seller has
such an obligation. The Purchasers shall be responsible for payment of any such
fee to Xxxxxxx & Company International, Inc. or any other party to which the
Purchasers have such an obligation.
Section 12.5 Entire Agreement; Assignment. This Agreement constitutes the
entire agreement among the parties and their Affiliates with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties and their Affiliates or
any of them with respect to the subject matter hereof. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns, but
neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties, except that this Agreement may be assigned
to an Affiliate by any party without the prior written consent of another party;
provided however, that notwithstanding such assignment, the assignor shall
remain liable for all obligations hereunder.
Section 12.6 Further Assurances. From time to time as and when requested by
the Purchasers, the Seller shall execute such further agreements, assignments,
documents, deeds, certificates and other instruments of conveyance and transfer
and to take or cause to be taken such other actions as the Purchasers may
reasonably require to vest title to the Assets in the Purchasers and as shall be
reasonably necessary or advisable to carry out the purposes of and to effect the
transactions contemplated by this Agreement.
Section 12.7 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled pursuant to the terms hereof or
otherwise, at law or in equity.
Section 12.8 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws in any
jurisdiction, that provision shall be ineffective to the extent of such
illegality, invalidity or unenforceability in that jurisdiction and such holding
shall not, consistent with applicable law, invalidate or render unenforceable
such provision in any other jurisdiction, and the legality, validity and
enforceability of the remaining provisions of this Agreement shall not be
affected thereby, and shall remain in full force and effect in all
jurisdictions.
Section 12.9 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by registered mail (postage prepaid, return receipt
requested) or prepaid Federal Express (return receipt requested) to the
respective parties as follows:
22
if to any Seller:
Xxxxxx Corporation
0000 Xx. Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. xxx Xxxxxxxxx, III, Esq.
Vice President, General Counsel and Corporate Secretary
with required copy (which shall not constitute notice) to:
Xx. Xxxxx X. Xxxxxx
President and Chief Executive Officer
00 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
and
Xxxx X. Held, Esq.
Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
if to the Purchasers:
Enterra Corporation
00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: President
with required copy (which shall not constitute notice) to:
Xxxxxxxxxxx International Incorporated
0000 Xxxx Xxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: H. Xxxxxxx Xxxxxx, Esq.
and
Xxxxx X. Xxxx, Esq.
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Section 12.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
23
Section 12.11 Gender: "Including" is Not Limiting; Descriptive Headings.
The masculine and neuter genders used in this Agreement each includes the
masculine, feminine and neuter genders, and the singular number includes the
plural, each where appropriate, and vice versa. Wherever the term "including" or
a similar term is used in this Agreement, it shall mean "including by way of
example only and without in any way limiting the generality of the clause or
concept referred to." The descriptive headings are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
Section 12.12 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and the other Purchasers'
Indemnified Parties and Seller's Indemnified Parties, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 12.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 12.14 Incorporation by Reference. Any and all schedules, exhibits,
annexes, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are incorporated herein by reference
hereto as though fully set forth at the point referred to in the Agreement.
Section 12.15 Non-Competition Agreement with Xxxxx X. Xxxx and Xxxxxxxx X.
Xxxx, Xx. Seller agrees to enforce Seller's rights under the Non-Competition
Agreement dated November 9, 1993 among Xxxxxx, Xxxxx X. Xxxx and Xxxxxxxx X.
Xxxx, Xx. (the "Xxxx Non-Competition Agreement") in accordance with its terms;
provided, however, the Purchasers shall promptly reimburse Seller for any costs
or expenses (including, without limitation, attorneys' fees) incurred by Seller
as a result of such action. Seller agrees not to amend the Xxxx Non-Competition
Agreement, or grant the waiver described in Section 5 of the Xxxx Non-
Competition Agreement, without the prior written consent of Purchasers. Each
Seller acknowledges that any violation of this Section 12.15 will result in
irreparable injury to the Purchasers and their Affiliates and that damages at
law would not be reasonable or adequate compensation to the Purchasers and their
Affiliates for a violation of this Section 12.15 and that Purchasers and their
Affiliates shall be entitled to have the provisions of this Section 12.15
specifically enforced by preliminary and permanent injunctive relief without the
necessity of proving actual damages and without posting bond or other security.
Section 12.16 Non-Competition by Seller; Equitable Remedies.
(a) Until three years after the Closing Date, Seller agrees that it will
not, anywhere in the world, unless acting in accordance with Enterra's prior
written consent: (i) own directly or indirectly, manage, operate or control or
participate in the ownership, management, operation or control of, or be
connected as a principal, agent, representative, consultant, investor, owner,
partner, manager or joint venturer with, or permit its name to be used by or in
connection with, any business or enterprise engaged anywhere in the world, in
any aspect of the Business, provided that Seller may invest as an investor in
the voting securities of any person that is a reporting company under the
Securities Exchange Act of 1934, as amended, so long as (A) the aggregate amount
of such securities that Seller owns directly or indirectly is less than five
percent of the total outstanding voting securities of such person and (B) Seller
is not otherwise an Affiliate with respect to such person, or (ii) solicit the
employment of any person who on the Closing Date, or who within two years
thereafter, is employed by Purchasers on a full or part-time basis, provided,
however, that Seller may have employment discussions with, and hire, those
persons who approach Seller of their own volition.
(b) Each Seller acknowledges that (i) the provisions of this Section 12.16
are reasonable and necessary to protect the legitimate interests of Purchasers
and their Affiliates, (ii) the Business is international in scope, (iii) any
violation of this Section 12.16 will result in irreparable injury to the
Purchasers and their Affiliates and that damages at law would not be reasonable
or adequate compensation to the Purchasers and their Affiliates for a violation
of this Section 12.16 and (iv) Purchasers and their Affiliates shall be entitled
to have the provisions of this
24
Section 12.16 specifically enforced by preliminary and permanent injunctive
relief without the necessity of proving actual damages and without posting bond
or other security. In the event that any of the provisions of this Section
12.16 should ever be deemed to exceed the time, geographic, or any other
limitations permitted by applicable law, then such provisions shall be deemed
reformed to the maximum permitted by applicable law.
(c) Purchasers and each Seller intend to and do hereby confer jurisdiction
to enforce the covenants set forth in this Section 12.16 upon the courts of any
jurisdiction within the geographical scope of such covenants. In addition to
Section 12.8 hereof and not in limitation thereof, if the courts of any one or
more of such jurisdictions hold such covenants unenforceable in whole or in
part, it is the intention of Purchasers and each Seller that such determination
not bar or in any way adversely affect the right of Purchasers and their
Affiliates to equitable relief and remedies hereunder in courts of any other
jurisdiction as to breaches or violations of this Section 12.16, such covenants
being, for this purpose, severable into diverse and independent covenants.
(d) Nothing in this Section 12.16 is intended to restrict, and shall not be
construed to restrict, Xxxxxx'x ownership, management, operation, control or
participation of its wholly owned subsidiary, Cimarron Gas Holding Company, or
its subsidiaries, which engage in the natural gas marketing, trading, gathering
and processing business and which utilizes gas compressors in connection with
such business in the ordinary course of business.
Section 12.17 Equitable Remedies.
Notwithstanding any other provision of this Agreement, each party will have
the right to institute judicial proceedings against the other party or anyone
acting by, through or under such other party in order to enforce the instituting
party's rights under Section 12.15 or 12.16 through specific performance,
injunction or similar equitable relief. For this purpose, each of the parties
hereto irrevocably and unconditionally (i) agrees that any suit arising out of
this Agreement may be brought and adjudicated in the U.S. District Court for the
Southern District of Texas, or, if such court will not accept jurisdiction, in
any court of competent jurisdiction sitting in Xxxxxx County, Texas, (ii)
submits to the non-exclusive jurisdiction of any such court for the purposes of
any such suit and (iii) waives and agrees not to assert by way of motion, as a
defense or otherwise in any such suit, any claim that it is not subject to the
jurisdiction of the above courts, that such suit is brought in an inconvenient
forum or that the venue of such suit is improper. Each of the parties hereto
also irrevocably and unconditionally consents to the service of any process,
pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 12.9 hereof.
Section 12.18 Arbitration.
(a) Except as provided in Section 12.17, all disputes, differences or
questions arising out of or relating to this Agreement (including, without
limitation, those as to the validity, interpretation, breach, violation or
termination hereof) shall, at the written request of any party hereto, be
finally determined and settled pursuant to arbitration in Houston, Texas, by
three arbitrators, one to be appointed by Enterra, and one by Seller, and a
neutral arbitrator to be appointed by such two appointed arbitrators. The
neutral arbitrator shall be an attorney and shall act as chairman. Should (i)
either party fail to appoint an arbitrator as hereinabove contemplated within
ten (10) days after the party not requesting arbitration has received such
written request, or (ii) the two arbitrators appointed by or on behalf of the
parties as contemplated in this Section 12.18 fail to appoint a neutral
arbitrator as hereinabove contemplated within ten (10) days after the date of
the appointment of the last arbitrator appointed, then any person sitting as a
Judge of the United States District Court for the Southern District of Texas,
Houston Division, upon application of Seller or of Enterra, shall appoint an
arbitrator to fill such position with the same force and effect as though such
arbitrator had been appointed as hereinabove contemplated.
(b) The arbitration proceeding shall be conducted in Houston, Texas, in
accordance with the Rules of the American Arbitration Association. A
determination, award or other action shall be considered the valid action of the
arbitrators if supported by the affirmative vote of two or three of the three
arbitrators. The costs of arbitration (exclusive of attending the arbitration,
and of the fees and expenses of legal counsel to such party, all of which shall
be borne by such party) shall be shared equally by Purchasers and Seller. The
arbitration award shall be final and
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conclusive and shall receive recognition, and judgment upon such award may be
entered and enforced in any court of competent jurisdiction.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the day and year first above written.
XXXXXX CORPORATION
By: /s/ Xxxxxx X. xxx Xxxxxxxxx, III
--------------------------------------
Xxxxxx X. xxx Xxxxxxxxx, III
Vice President, General Counsel and
Corporate Secretary
ENERGY INDUSTRIES, INC.
By: /s/ Xxxxxx X. xxx Xxxxxxxxx, III
--------------------------------------
Xxxxxx X. xxx Xxxxxxxxx, III
Vice President, General Counsel and
Corporate Secretary
XXXXXX ENERGY INDUSTRIES, L.P.
By XXXXXX RENTALS, INC., its general partner
By: /s/ Xxxxxx X. xxx Xxxxxxxxx, III
-----------------------------------
Xxxxxx X. xxx Xxxxxxxxx, III
Vice President, General Counsel and
Corporate Secretary
ENTERRA CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxx
Vice President
ENTERRA COMPRESSION COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxx
Vice President
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EXHIBIT 1
DEFINITIONS
(a) "Accountants' Calculation of Net Asset Value" shall have the meaning set
forth in Section 4.5.
(b) "Affiliate" as used in this Agreement means, with respect to any person,
(i) any person that, directly or indirectly, controls, is controlled by, or
is under common control with, such person in question, (ii) any officer,
director, stockholder or partner of such person in question, or member of
the extended family of such officer, director, stockholder or partner and
(iii) any person that, directly or indirectly, controls, is controlled by,
or is under common control with, any officer, director, stockholder or
partner of such person in question or member of the extended family of such
officer, director, stockholder or partner. For the purposes of the
definition of Affiliate, "control" (including, with correlative meaning,
the terms "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities
or by contract or otherwise.
(c) "Agreed Upon Net Asset Value" shall have the meaning set forth in Section
4.5 hereof.
(d) "Agreement" shall have the meaning specified in the Preamble.
(e) "Assets" shall have the meaning specified in Section 4.1.
(f) "Assumed Liabilities" shall have the meaning specified in Section 4.2(b).
(g) "Business" shall mean the natural gas compression businesses historically
engaged in by Xxxxxx Sub and Xxxxxx Partnership and their Affiliates.
(h) "Continuing Employees" shall have the meaning specified in Section 11.1.
(i) "Contracts" mean all agreements contracts, leases or subleases relating to
the Business to which any Seller is a party or by which any Seller or any
of the Assets is bound.
(j) "Disclosure Schedule" shall have the meaning specified in the beginning of
Article II.
(k) "Environmental Claims" means any and all administrative or judicial
actions, suits, orders, claims, liens, notices, violations or proceedings
arising under any applicable Environmental Law or any Environmental Permit
binding upon Seller, or at common law or otherwise, brought, issued or
asserted by: (A) a Governmental Authority for compliance, damages,
penalties, removal, response, remedial or other action pursuant to any
applicable Environmental Law or (B) a third party seeking damages for
personal injury caused by Seller or property damage resulting from the
release of a Hazardous Material at or from any current or prior facility of
any Seller for which Seller would bear liability, including, without
limitation, Seller's employees seeking damages for exposure to Hazardous
Materials.
(l) "Environmental Laws" means applicable Governmental Requirements currently
in effect related to protection of the environment (including, without
limitation, natural resources), exposure to, control, emission, discharge,
release, threatened release, exposure, handling, use, manufacturing,
generation, treatment, storage, transportation or disposal of Hazardous
Materials.
(m) "Environmental Permit" means all Governmental Authorizations required for
the operation of the Business in conformity with applicable Environmental
Laws and includes any and all orders, consent orders or
1
binding agreements issued or entered into by a Governmental Authority and
binding upon Seller under any applicable Environmental Laws.
(n) "Equipment Leases" means the lease agreements covering the compressor
systems and related equipment used or held for use in the Business.
(o) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
(p) "Excluded Liabilities" shall have the meaning set forth in Section 4.2.
(q) "GAAP" means as to a particular person, such accounting practice as, in the
opinion of independent certified public accountants of recognized national
standing, conforms at the time to generally accepted accounting principles
in the United States, consistently applied, and which are recognized as
such by the Financial Accounting Standards Board.
(r) "Governmental Authority" means any foreign governmental authority, the
United States of America, any state of the United States, any local
authority and any political subdivision of any of the foregoing, any multi-
national organization or body, any agency, department, commission, board,
bureau, court or other authority of any of the foregoing, or any quasi-
governmental or private body exercising, or purporting to exercise, any
executive, legislative, judicial, administrative, police, regulatory or
taxing authority or power of any nature.
(s) "Governmental Authorization" means any permit, license, franchise,
approval, certificate, consent, ratification, permission, confirmation,
endorsement, waiver, certification, registration, qualification or other
authorization issued, granted, given or otherwise made available by or
under the authority of any Governmental Authority or pursuant to any
Governmental Requirement.
(t) "Governmental Requirement" means any currently published and applicable
law, treaty, ordinance, statute, rule, code, regulation, judgment, decree
or order binding upon Seller, injunction, edict, writ, permit, certificate,
stipulation, common law or other published and legally enforceable
requirement of any Governmental Authority.
(u) "Hazardous Material" means any hazardous, extremely hazardous, or toxic
substance, material or waste not at a background level (taking into account
offsite conditions) which is regulated by any Governmental Authority,
including without limitation any material or substance that is (i) defined
as a "hazardous substance" under applicable state or local law, (ii) (a)
crude oil products, including, without limitation, petroleum and (b) solid
waste as defined under the Environmental Laws; the prior or continued
presence of which would result in investigation or cleanup responsibility
of Buyer or Seller under Environmental Laws, (iii) asbestos as regulated by
CERCLA, (iv) designated as a "hazardous substance" pursuant to section 311
of the Federal Water Pollution Control Act, as amended, 33 U.S.C. (S)1251
et seq. (33 U.S.C. (S)1321), (v) defined as a "hazardous waste" pursuant to
section 1004 of the Resource Conversation and Recovery Act, as amended, 42
U.S.C. (S)6901 et seq. (42 U.S.C. (S)6901), (vi) defined as a "hazardous
substance" pursuant to section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C. (S)9601 et
seq. (42 U.S.C. (S)9601) ("CERCLA"), (vii) defined as a "regulated
substance" pursuant to section 9001 of the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. (S)6901 et seq. (42 U.S.C. (S)6991)
("RCRA") or (viii) otherwise regulated under the Toxic Substances Control
Act, 15 U.S.C. (S)2601, et seq., the Clean Air Act, as amended, 42 U.S.C.
(S)7401, et seq., the Hazardous Materials Transportation Act, as amended,
49 U.S.C. (S)1801, et seq., or the Federal Insecticide, Fungicide and
Rodenticide Act, as amended, 7 U.S.C. (S)136, et seq; or other Governmental
Requirement provided, however, the reference to specific statutory or other
general legal references contained within this definition shall be
construed as those statutes in effect on the date of this Agreement.
2
(v) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, together with all rules and regulations promulgated thereunder.
(w) "Indemnified Person" shall have the meaning specified in Section 10.3.
(x) "Indemnifying Person" shall have the meaning specified in Section 10.3.
(y) "Inventories" means all inventories used or held for use in connection with
the Business, including without limitation, finished goods, work-in-
progress and raw materials.
(z) "IRS" means the Internal Revenue Service.
(aa) "Liability" means any debt, obligation, duty, liability or obligation of
any nature (including any guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, whether or not
accrued, absolute, undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, contingent, conditional, inchoate, implied,
vicarious, joint, several or secondary liability), regardless of whether
such debt, obligation, duty, liability or obligation would be required to
be disclosed on a balance sheet prepared in accordance with GAAP.
(bb) "Lien" means any mortgage, pledge, hypothecation, assignment, deposit,
arrangement, encumbrance, lien (statutory or otherwise), security interest
or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
(cc) "Loss" means any loss, damage, injury, Liability, claim, demand,
Proceeding, settlement judgment, award, punitive damage, award, fine,
penalty, Tax, fee, charge, cost or expense (including, without limitation,
costs of attempting to avoid or in opposing the imposition thereof,
interest, penalties, costs of preparation and investigation, and the fees,
disbursements and expenses of attorneys, accountants and other professional
advisors). In calculating the dollar amount of any Loss, an allowance shall
be made for any insurance proceeds or other amounts, including any Tax
benefits, that may be recovered in connection therewith (subject to
reduction for any premium relating thereto).
(dd) "Material Adverse Effect" shall mean any material adverse change in the
condition (financial or otherwise), assets, Liabilities, reserves,
business, or results of operations of the Business.
(ee) "PBGC" means the Pension Benefit Guaranty Corporation.
(ff) "Permitted Lien" means the following:
(i) Liens for taxes not due or due but not yet delinquent or which are
being contested in good faith by appropriate proceedings and for which
adequate reserves have been established;
(ii) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising as required in the conduct of its Business
and not overdue for a period of more than sixty (60) days or which are
being contested in good faith by appropriate proceedings and other
non-consensual Liens arising as required in the conduct of its
Business and removed within thirty (30) days of the date on which the
entity on whose property the Lien is imposed knows or reasonably
should have known of the existence thereof or which are being
contested in good faith by appropriate proceedings, in each case for
which adequate reserves have been established;
(iv) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred as required in the ordinary course of the Business.
consistent with past practice;
3
(v) easements, rights-of-way, restrictions and other similar encumbrances
incurred as required in the conduct of its Business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
entity on whose property the Lien is imposed; or
(vi) Equipment Leases entered into in the ordinary course of the Business,
consistent with past practice (all of which are listed in the
Disclosure Schedule in accordance with Section 2.11).
(gg) "Proceeding" shall have the meaning specified in Section 2.10.
(hh) "Purchasers" shall have the meaning specified in the Preamble and shall
include permitted successors and assigns of Purchasers.
(ii) "Purchasers' Calculation of Net Asset Value" shall have the meaning set
forth in Section 4.5.
(jj) "Purchasers' Indemnified Persons" shall have the meaning set forth in
Section 10.1.
(kk) "Real Property Leases" means all leases covering real property used or held
for use in the Business.
(ll) "Seller" shall have the meaning set forth in the Preamble and shall include
permitted successors and assigns of any Seller.
(mm) "Seller's Indemnified Persons" shall have the meaning set forth in Section
10.2.
(nn) "Subsidiary" means, when used with reference to a particular person any
corporation, a majority of the outstanding voting securities of which is
owned or controlled directly or indirectly by such person, or if less than
a majority of such voting securities are so owned or controlled, any
corporation in regard to which such person possesses, directly or
indirectly, the power to direct or cause the direction of management and
policies of such corporation. Any partnership, joint venture or other
enterprise shall be a Subsidiary of a particular person, if that person
has, directly or indirectly, a 50% or greater equity interest or in regard
to which such person possesses, directly or indirectly, the power to direct
or cause the direction of management and policies of such entity.
(oo) "Tax Code" means the Internal Revenue Code of 1986, as amended.
(pp) "Taxes" means any federal, state, local or foreign taxes, assessments,
duties, levies, fees or other governmental charge or impositions.
(qq) "WARN" means the federal Workers Adjustment, Retraining and Notification
Act, as amended.
(rr) "Xxxxxx Employees" shall have the meaning set forth in Section 11.1(a).
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