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EXHIBIT 10.1
FORMATION AGREEMENT
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Formation Agreement
By and Among
Xxxxxxxxxxx International, Inc.
a Delaware corporation,
Xxxxxxxxxxx Enterra Compression Company, L.P.,
a Delaware limited partnership,
General Electric Capital Corporation,
a New York corporation, and
Global Compression Services, Inc.,
a Delaware Corporation
Dated as of February 2, 1999
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TABLE OF CONTENTS
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Page
ARTICLE I
DEFINITIONS..........................................................................................1
Section 1.1. Definitions..................................................................1
ARTICLE II
FORMATION AND CONTRIBUTION; CLOSING..................................................................1
Section 2.1. Formation and Contribution...................................................1
Section 2.2. Closing.....................................................................11
Section 2.3. Audit and Adjustment........................................................11
Section 2.4. Financing for the Partnership...............................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES......................................................................12
Section 3.1. Representations and Warranties of Weatherford and WECC......................12
Section 3.2. Representations and Warranties of GE Capital and Global.....................23
ARTICLE IV
CERTAIN COVENANTS...................................................................................34
Section 4.1. Conduct of Weatherford Compression Business.................................34
Section 4.2. Conduct of Global Compression Business......................................36
Section 4.3. Certain Other Covenants.....................................................37
Section 4.4. Curing Adverse Environmental Conditions.....................................40
ARTICLE V
CONDITIONS..........................................................................................40
Section 5.1. Conditions Precedent to Each Party's Obligations............................40
Section 5.2. Conditions Precedent to Obligations of Weatherford and the other
Weatherford Entities........................................................41
Section 5.3. Conditions Precedent to Obligations of GE Capital and the other
GE Entities.................................................................43
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER......................................................................45
Section 6.1. Termination.................................................................45
Section 6.2. Amendment...................................................................46
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Section 6.3. Procedure for Termination, Amendment, Extension or Waiver
.......................................................................................46
ARTICLE VII
TAX MATTERS.........................................................................................46
Section 7.1. Certain Tax Matters.........................................................46
ARTICLE VIII
INDEMNIFICATION.....................................................................................50
Section 8.1. Survival of Certain Representations and Warranties..........................50
Section 8.2. Indemnification by Weatherford and WECC.....................................50
Section 8.3. Indemnification by GE Capital and Global....................................52
ARTICLE IX
MISCELLANEOUS.......................................................................................53
Section 9.1. Expenses....................................................................53
Section 9.2. Dispute Resolution and Arbitration..........................................54
Section 9.3. Notice......................................................................56
Section 9.4. Assignment..................................................................56
Section 9.5. Successors Bound............................................................56
Section 9.6. Governing Law...............................................................56
ANNEX
Annex I Glossary of Terms
EXHIBITS
Exhibit A Certificate of Formation
Exhibit B Certificate of Limited Partnership
Exhibit C LLC Agreement
Exhibit D LP Agreement
Exhibit E Registration Rights Agreement
Exhibit F Unanimous Consent of Directors
Exhibit G [Reserved]
Exhibit H Shared Services Agreement
Exhibit I Transition Agreement
Exhibit J Assignment, Conveyance and Assumption Documents
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SCHEDULES
Schedule 2.1(c)(2)(A) - Included Weatherford Assets
Schedule 2.1(c)(2)(B) - Excluded Weatherford Assets
Schedule 2.1(c)(2)(i) - Weatherford Real Property Interests
Schedule 2.1(c)(2)(ii) - Weatherford Contracts
Schedule 2.1(c)(2)(iii) - Weatherford Other Property Interests
Schedule 2.1(c)(2)(vi) - Weatherford Business Records
Schedule 2.1(c)(2)(vii) - Weatherford Miscellaneous Assets
Schedule 2.1(c)(2)(ix) - Weatherford Licenses
Schedule 2.1(c)(2)(x) - Weatherford Intellectual Property
Schedule 2.1(c)(2)(xii) - Weatherford Bank Accounts
Schedule 2.1(c)(3) - "Twelve-Step" Transfer
Schedule 2.1(d)(2)(A) - Excluded Global Assets
Schedule 2.1(d)(2)(i) - Global Real Property Interests
Schedule 2.1(d)(2)(ii) - Global Contracts
Schedule 2.1(d)(2)(iii) - Global Other Property Interests
Schedule 2.1(d)(2)(vi) - Global Business Records
Schedule 2.1(d)(2)(vii) - Global Miscellaneous Assets
Schedule 2.1(d)(2)(ix) - Global Licenses
Schedule 2.1(d)(2)(x) - Global Intellectual Property
Schedule 2.1(d)(2)(xii) - Global Bank Accounts
Schedule 2.3 - Calculation of Net Assets
Schedule 3.1(a) - Weatherford Foreign Qualifications
Schedule 3.1(b) - Weatherford Financial Statements
Schedule 3.1(f) - Weatherford Business Exceptions
Schedule 3.1(h) - Weatherford Litigation
Schedule 3.1(i) - Weatherford Employee Benefit Matters
Schedule 3.1(j) - Weatherford Tax Matters
Schedule 3.1(l) - Weatherford Environmental Matters
Schedule 3.1(n) - Weatherford Material Contracts and Agreements
Schedule 3.1(o) - Weatherford Property Encumbrances
Schedule 3.1(q) - Weatherford Labor Matters
Schedule 3.1(r) - Weatherford Insurance Policies
Schedule 3.1(s) - Weatherford Undisclosed Liabilities
Schedule 3.1(t) - Weatherford Year 2000 Compliance
Schedule 3.2(a) - Global Foreign Qualifications
Schedule 3.2(b) - Global Financial Statements
Schedule 3.2(f) - Global Business Exceptions
Schedule 3.2(h) - Global Litigation
Schedule 3.2(i) - Global Employee Benefit Matters
Schedule 3.2(j) - Global Tax Matters
Schedule 3.2(l) - Global Environmental Matters
Schedule 3.2(n) - Global Material Contracts and Agreements
Schedule 3.2(o) - Global Property Encumbrances
Schedule 3.2(r) - Global Insurance Policies
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Schedule 3.2(s) - Global Undisclosed Liabilities
Schedule 3.2(t) - Global Year 2000 Compliance
Schedule 4.1(a)(iv) - Weatherford Acquisition Transactions
Schedule 4.2(a)(iv) - Global Acquisition Transactions
Schedule 4.2(a)(viii) - Global Contemplated Transactions
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FORMATION AGREEMENT
This Formation Agreement dated as of February 2, 1999
("Formation Agreement"), by and among (i) Xxxxxxxxxxx International, Inc., a
Delaware corporation ("Weatherford"), and Xxxxxxxxxxx Enterra Compression
Company, L.P., a Delaware limited partnership ("WECC", and, collectively with
Weatherford, the "Weatherford Entities"), on the one hand, and (ii) General
Electric Capital Corporation, a New York corporation ("GE Capital"), and Global
Compression Services, Inc., a Delaware corporation ("Global," and, collectively
with GE Capital, the "GE Entities"), on the other hand.
R E C I T A L S
WHEREAS, the Weatherford Entities and the GE Entities desire
to form a Delaware limited partnership (the "Partnership") and a Delaware
limited liability company to act as the sole general partner thereof, which
Partnership will issue interests therein in exchange for contributions and
transfers by WECC and by the Transferring Weatherford Entities and Global and GE
Capital (Thailand) of certain of their respective gas compression assets, in
each case pursuant to and in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Weatherford Entities and the GE Entities hereby covenant and
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All capitalized or other defined terms used
but not defined in this Formation Agreement are used in this Formation Agreement
with the meanings assigned thereto in Annex I to this Formation Agreement.
ARTICLE II
FORMATION AND CONTRIBUTION; CLOSING
Section 2.1. Formation and Contribution. Subject to the terms and
conditions of this Formation Agreement, (i) WECC and Global shall form Limited,
(ii) Limited, WECC and Global shall form the Partnership, (iii) WECC and Global
shall contribute or transfer their respective gas compression assets to the
Partnership in exchange for Partnership Interests and agree to make certain cash
payments to fund the purchase of certain of the assets of the Transferring
Weatherford Entities and GE Capital (Thailand) and Global's Canadian Assets,
(iv) Weatherford shall cause the Transferring Weatherford Entities and GE
Capital shall cause GE Capital (Thailand) to transfer certain of their assets to
the Partnership as provided in this Article II, and (v) the other transactions
contemplated by this Formation Agreement shall be effected as follows:
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(a) Certain Filings. On or before the Closing Date, the
following organizational documents shall be filed:
(1) Certification of Formation. WECC and Global shall
file the Certificate of Formation with the Secretary of State of Delaware.
(2) Certificate of Limited Partnership. Limited, WECC
and Global shall file the Certificate of Limited Partnership with the Secretary
of State of Delaware.
(b) Execution and Delivery of Certain Agreements. On the
Closing Date, the following agreements and documents shall be executed and
delivered:
(1) LLC Agreement. WECC and Global shall execute and
deliver the LLC Agreement.
(2) LP Agreement. Limited, WECC and Global shall
execute and deliver the LP Agreement and Weatherford shall execute and deliver
the LP Agreement solely to evidence its joint and several liability with WECC
for the obligations of WECC under Section 11.2 thereof.
(3) Registration Rights Agreement. WECC, Global and
the Partnership shall execute and deliver the Registration Rights Agreement.
(4) Unanimous Consent of Directors of General
Partner. All members of the Board of Directors of Limited shall execute and
deliver the Unanimous Consent of Directors.
(5) Shared Services Agreement. Weatherford and the
Partnership shall execute and deliver the Shared Services Agreement.
(6) Transition Services Agreement. GE Capital, Global
and the Partnership shall execute and deliver the Transition Services Agreement.
(7) Employee Lease Agreement. GE Capital, Global and
the Partnership shall execute and deliver the Employee Lease Agreement.
(8) License Agreement. The Partnership, Weatherford
Holding U.S., Inc. and Weatherford/Xxxx, Inc. shall execute and deliver the
License (and Weatherford shall cause each of Weatherford Holding U.S., Inc. and
Weatherford/Lamb, Inc. to so execute and deliver the License Agreement.
(9) Master Lease Assignment. WECC and the Partnership
and the Agents and Lessors named therein will execute and deliver the Assignment
and Assumption and First Amendment to Participation Agreement, Master Lease
Intended as Security and Schedule X dated February 2, 1999 (the "Master Lease
Assignment"), among the Partnership and the Parties thereto.
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(c) Contribution and Transfer by WECC and the other
Transferring Weatherford Entities of the Weatherford Compression Business.
(1) Weatherford shall contribute funds to WECC and
cause WECC to fulfill its obligations under this Section 2.1(c).
(2) Partnership Contribution Transactions. On the
Closing Date, in exchange for sixty three and 36/100 percent (63.36%) of the
Partnership Interests in the Partnership, WECC shall contribute to the
Partnership, by assigning, transferring, conveying and delivering to the
Partnership, and the Partnership shall accept as a contribution therefrom,
pursuant to the Weatherford/Partnership Assignment and Conveyance Agreement and
other instruments of assignment and conveyance as contemplated by the
Weatherford/Partnership Assignment and Conveyance Agreement in form or forms
attached as Exhibit J, an undivided ninety-nine percent (99%) of (i) all assets,
properties, rights, titles, interests, contracts of every kind, character and
description, claims and estates of whatever nature, wherever located, however
evidenced, whether recorded or unrecorded, real, personal or mixed, movable or
immovable, tangible or intangible, Owned by WECC that are Used in connection
with the Weatherford Compression Business (the "Closing Weatherford Assets") and
(ii) its obligation under Section 2.1(c)(4) of this Formation Agreement to
contribute cash to the Partnership in an amount equal to the amount the
Partnership needs to acquire, as described in Section 2.1(c)(4), the assets of
the nature described in clauses (i) through (xiii) below to the extent that such
assets are Owned and Used by the other Transferring Weatherford Entities and
such assets are either scheduled as an Additional Weatherford Assets on Schedule
2.1(c)(2)(A) or are dedicated exclusively to the compression businesses of such
entities, in each case, subject to the exclusions described therein (the
"Additional Weatherford Assets") and all of the Transferring Weatherford
Entities' rights, titles and interests therein, including without limitation all
assets reflected on the Balance Sheet at December 31, 1998, as the same may
exist on the Closing Date (the Closing Weatherford Assets and the Additional
Weatherford Assets (or, prior to the transfer of the Additional Weatherford
Assets to the Partnership by the Transferring Weatherford Entities, WECC's
obligation hereunder to contribute cash therefor) being hereinafter referred to
collectively as the "Included Weatherford Assets"), the Included Weatherford
Assets include the assets shown on Schedule 2.1(c)(2)(A) and further including
without limitation, the following:
(i) All gas compression facilities and interests
therein (including without limitation all leases, subleases, fee estates, joint
operations and leaseholds related thereto), and other real property and real
property interests Used in connection with the Weatherford Compression Business,
including without limitation the properties listed on and referred to in
Schedule 2.1(c)(2)(i) to this Formation Agreement, and rights to acquire any of
the foregoing;
(ii) All rights in, to and under or derived from all
Contracts, which are attributable to or are arising from or are Used, in
connection with the Weatherford Compression Business or the Included Weatherford
Assets, including without limitation all such Contracts for the compression of
natural gas, partnership agreements, Contracts that relate to the Weatherford
Compression Business, the Included Weatherford Assets or any of the properties
and interests described or referred to in Section 2.1(c)(2)(i) of this Formation
Agreement and any other Contracts and all rights to receive payment for products
sold and/or services rendered and all rights
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to receive goods and services purchased pursuant to such Contracts and to assert
claims and take other actions in respect of breaches, defaults or other
violations thereof and otherwise (all of which Contracts and rights are listed
and referred to in Schedule 2.1(c)(2)(ii) to this Formation Agreement);
(iii) All fixtures, personal property, improvements,
easements, permits, licenses, servitudes, rights-of-way, surface leases and
other surface, subsurface, air and water rights Used in connection with the
Weatherford Compression Business including computer hardware that is Owned by a
Transferring Weatherford Entity that is Used by persons who are offered
employment by the Partnership and any boilers, buildings, compression
facilities, construction and construction in progress, machinery, equipment,
furniture, furnishings, automobiles, trucks and rolling stock, tools, power
lines, telephone and telegraph lines, roads, and other appurtenances, easements,
facilities and similar property, Used in connection with the Weatherford
Compression Business or the operation or maintenance of the properties and
interests described in Section 2.1(c)(2)(i) of this Formation Agreement,
including without limitation such assets listed on Schedule 2.1(c)(2)(iii) to
this Formation Agreement;
(iv) All current and long-term notes receivable,
accounts receivables and all bonds and other evidences of indebtedness of, and
rights to receive payments, from any Person, in each case attributable to or
arising solely from the Weatherford Compression Business or the Included
Weatherford Assets (other than intercompany funded debt), and all security
interests of WECC in respect of such notes, accounts, bonds, evidences of
indebtedness and other rights;
(v) All inventories of materials (including without
limitation natural gas), raw materials, work in process, finished products,
spare parts, replacement and component parts, and office and other supplies Used
in connection with the Included Weatherford Assets or the Weatherford
Compression Business;
(vi) All contract files, gas processing files,
division order files, abstracts, title policies, binders or opinions, product
design data, plans, blueprints, specifications, manuals, designs, drawings,
recorded knowledge, surveys, engineering reports, equipment and parts lists,
test reports, materials standards, catalogues, performance and quality control
standards, procedures and records, research and development data, price lists,
mailing lists, photographs, production data, sales and purchase records, sales
order files, records, data, media materials and plates, advertising, marketing,
promotional and sales materials, files and materials relating to suppliers,
vendors and other service providers, and all other books, records, intangibles,
files, maps, accounting information and records and other similar information or
data Used in connection with the Weatherford Compression Business (collectively,
the "Weatherford Compression Business Records") in whatever media such
Weatherford Compression Business Records may be retained and stored, including
without limitation any Transferring Weatherford Entities' proprietary computer
and automatic machinery software and programs and source disks that are Used
thereby in the Weatherford Compression Business and listed on Schedule
2.1(c)(2)(vi) to this Formation Agreement, and program documentation, tapes,
manuals, forms, guides and other materials with respect thereto Used in
connection with the Weatherford Compression Business;
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(vii) All miscellaneous assets listed on Schedule
2.1(c)(2)(vii) to this Formation Agreement;
(viii) All rights in, to and under all express or
implied warranties, representations, indemnities, covenants or other agreements
of any third parties arising from or attributable to the Weatherford Compression
Business or the Included Weatherford Assets;
(ix) To the extent permitted by law, all permits,
approvals, licenses, qualifications, product registrations, safety
certifications and other similar authorizations Used in connection with the
Weatherford Compression Business including without limitation those listed on
Schedule 2.1(c)(2)(ix) to this Formation Agreement;
(x) The rights of the Weatherford Compression
Business in the patents, patent applications, trademarks, trade names, service
marks, service names, registered user names, copyrights and copyright
applications and related agreements and licenses Owned by any Transferring
Weatherford Entity and Used in the Weatherford Compression Business (all of
which are identified on Schedule 2.1(c)(2)(x) to this Formation Agreement), and
all designs, plans, inventions, trade secrets, processes, procedures, research
records, manufacturing know-how and formulas, whether patentable or
unpatentable, and similar proprietary rights wherever located, Owned by any
Weatherford Entity that are Used in connection with the Weatherford Compression
Business;
(xi) All other intangible personal property of the
Weatherford Compression Business;
(xii) The bank accounts listed on Schedule
2.1(c)(2)(xii) to this Formation Agreement, including without limitation the
cash on deposit therein on the Closing Date; and
(xiii) All other rights, properties and assets Used
exclusively for the Weatherford Compression Business of any character
whatsoever, wherever located;
provided, however, that the Included Weatherford Assets do not include and WECC
and the other Transferring Weatherford Entities shall retain all of their
rights, titles and interests in and to (i) those specific assets, properties,
rights, titles, interests, contracts, claims and estates described on Schedule
2.1(c)(2)(B) hereto and (ii) in the case of the Transferring Weatherford
Entities other than WECC, those assets, properties, rights, titles, interests,
contracts, claims and estates that are not dedicated exclusively to the
compression business of such entities, (such retained assets, properties,
rights, titles, interests, contracts, claims and estates, the "Excluded
Weatherford Assets").
(3) Limited Contribution Transactions. On the Closing
Date, in exchange for sixty four percent (64%) of the Membership Interests in
Limited, WECC shall contribute to Limited, by assigning, transferring, conveying
and delivering to Limited, and Limited shall accept as a contribution from WECC,
pursuant to the Xxxxxxxxxxx/Limited Assignment and Conveyance Agreement and
other instruments of assignment and conveyance as contemplated by the
Xxxxxxxxxxx/Limited Assignment and Conveyance Agreement in form or forms
attached as
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Exhibit J, an undivided one percent (1%) of the Included Weatherford Assets and
its obligation under Section 2.1(c)(4) of this Formation Agreement to contribute
cash as provided therein.
(4) Post-Closing Contribution and Transfer
Transactions. Upon receipt of notice from the Partnership to Weatherford and
WECC of the formation by the Partnership of the entities referred to in clauses
(x) and (y) below (which the Partnership shall use its best efforts to complete
not later than 90 days after the Closing Date), (i) WECC shall contribute to the
Partnership an amount in cash necessary to allow the Partnership to purchase or
otherwise acquire an undivided ninety-nine percent (99%) of the Additional
Weatherford Assets, (ii) the Partnership shall use such contributed cash to
purchase or otherwise acquire an undivided ninety-nine percent (99%) of the
Additional Weatherford Assets pursuant to instruments of assignment and
conveyance in form or forms mutually agreed upon by the Parties, (iii) WECC
shall contribute to Limited an amount in cash necessary to allow Limited to
purchase or otherwise acquire an undivided one percent (1%) of the Additional
Weatherford Assets, and (iv) Limited shall use such contributed cash to purchase
or otherwise acquire an undivided one percent (1%) of the Additional Weatherford
Assets and shall transfer such undivided interest to the Partnership, in each
case pursuant to instruments of assignment and conveyance in form or forms
mutually agreed upon by the Parties.
(x) The Additional Weatherford Assets that are located in Venezuela,
Argentina and Australia shall be transferred to one or more entities or
branches of the Partnership to be created promptly following the
Closing in consideration of cash payments by the Partnership or for the
account of the applicable Transferring Weatherford Entities equal to
the net book value as of the Closing Date of the Additional Weatherford
Assets to be transferred. The Partnership shall also assume the
liabilities and obligations associated therewith to the extent such
liabilities and obligations are Partnership Assumed Liabilities. The
cash to be contributed by WECC to purchase such assets shall also
include such cash as may be necessary to pay any value added taxes,
general service taxes or other similar transfer or sales taxes as may
be payable in respect of the transfer. The Partnership shall promptly
take such actions as may be necessary to obtain a refund of such taxes
(and WECC shall have a right to participate in obtaining such refund)
and shall remit to WECC any refunds of such taxes when received, or if
utilized by the Partnership or a subsidiary branch thereof, the amount
equal to the amount utilized shall be promptly paid to WECC as the same
is utilized.
(y) The Additional Weatherford Assets to be transferred that are
located in Canada shall be transferred in a manner designed to be
non-taxable to the Transferring Weatherford Entities and reasonably
acceptable to GE Capital, it currently being anticipated that such
transfer would be effected through a sale of shares of newly formed
entities organized in Nova Scotia or other similar jurisdiction, with
the purchase price to be paid for these shares to be equal to the tax
book value as of the Closing Date of the assets and liabilities in
Canada to be transferred. WECC shall indemnify the Partnership, GE
Capital and Global for any liability or expenses incurred as a result
of the structure of the transaction and if any preferred or separate
class of stock is issued to WECC or another entity (other than the
Partnership, Limited or subsidiary or entity wholly owned by the
Partnership or Limited) as part of such transfer, WECC shall pay to the
Partnership any dividend or distribution that may be received by it in
respect of such stock and shall indemnify the Partnership, GE
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Capital and Global for any additional costs or expenses that may be
incurred by it as a result of the structure as proposed and implemented
by WECC.
(z) All benefits and burdens associated with the ownership and
operation of the Additional Weatherford Assets after the Closing shall
inure to the benefit of the Partnership and Limited. As of the Closing,
the Additional Weatherford Assets shall be deemed to be beneficially
owned by the Partnership and be held in trust for the benefit of the
Partnership and Limited. Except with the consent of all the Partners,
Weatherford shall cause the Additional Weatherford Assets to be
operated in the ordinary course of business.
(d) Contribution and Transfer by Global of the Global
Compression Business.
(1) GE Capital shall contribute funds to Global and cause
Global to fulfill its obligations under this Section 2.1(d).
(2) Partnership Contribution Transactions. On the Closing
Date, in exchange for thirty five and 64/100 percent (35.64%) of the Partnership
Interests in the Partnership, Global shall contribute to the Partnership, by
assigning, transferring, conveying and delivering to the Partnership, and the
Partnership shall accept as a contribution from Global, pursuant to the Global/
Partnership Assignment and Conveyance Agreement and other instruments of
assignment and conveyance as contemplated by the Global/Partnership Assignment
and Conveyance Agreement in form or forms attached as Exhibit J, an undivided
ninety-nine percent (99%) of (i) all assets, properties, rights, titles,
interests, contracts of every kind, character and description, claims and
estates of whatever nature, wherever located, however evidenced, whether
recorded or unrecorded, real, personal or mixed, movable or immovable, tangible
or intangible, Owned by Global that are Used in connection with the Global
Compression Business, (the "Closing Global Assets") and (ii) obligation under
Section 2.1(d)(4) of this Formation Agreement to contribute cash to the
Partnership in an amount equal to the amount the Partnership needs to acquire,
as described in Section 2.1(d)(4), the assets, properties, rights, titles,
interests, contracts, claims and estates owned by GE Capital (Thailand) (the
"Additional Global Assets") and all of Global's and GE Capital (Thailand)'s
rights, titles and interests therein, including without limitation all assets
reflected on the Balance Sheet at December 31, 1998, included in the Global
Financial Statements attached as Schedule 3.2(b) hereto, as the same may exist
on the Closing Date (the Closing Global Assets and the Additional Global Assets
(or, before the transfer of the Additional Global Assets to the Partnership by
GE Capital (Thailand), Global's obligation hereunder to contribute cash
therefor) being hereinafter referred to collectively as the "Included Global
Assets"), and further including without limitation, the following:
(i) All gas compression facilities and
interests therein (including without limitation all leases, subleases, fee
estates, joint operations and leaseholds related thereto), and other real
property and real property interests Used in connection with the Global
Compression Business, including without limitation the properties listed on and
referred to in Schedule 2.1(d)(2)(i) to this Formation Agreement, and rights to
acquire any of the foregoing;
(ii) All rights in, to and under or derived
from all Contracts, which are attributable to or are arising from or are Used,
in connection with the Global Compression Business
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or the Included Global Assets, including without limitation all such Contracts
for the compression of natural gas, partnership agreements, Contracts that
relate to the Global Compression Business, the Included Global Assets or any of
the properties and interests described or referred to in Section 2.1(d)(2)(i) of
this Formation Agreement and any other Contract and all rights to receive
payment for products sold and/or services rendered and all rights to receive
goods and services purchased pursuant to such Contracts and to assert claims and
take other actions in respect of breaches, defaults or other violations thereof
and otherwise (all of which Contracts and rights are listed and referred to in
Schedule 2.1(d)(2)(ii) to this Formation Agreement;
(iii) All fixtures, personal property,
improvements, easements, permits, licenses, servitudes, rights-of-way, surface
leases and other surface, subsurface, air and water rights, including without
limitation any computer hardware Used exclusively by persons who are offered
employment by the Partnership and any boilers, buildings, compression
facilities, construction and construction in progress, machinery, equipment,
furniture, furnishings, automobiles, trucks and rolling stock, tools, power
lines, telephone and telegraph lines, roads, and other appurtenances, easements,
facilities and similar property, Used in connection with the Global Compression
Business or the operation or maintenance of the properties and interests
described in Section 2.1(d)(2)(i) of this Formation Agreement, including without
limitation such assets listed on Schedule 2.1(d)(2)(iii) to this Formation
Agreement;
(iv) All current and long-term notes
receivable, accounts receivables and all bonds and other evidences of
indebtedness of, and rights to receive payments, from any Person, in each case
attributable to or arising from the Global Compression Business or the Included
Global Assets (other than intercompany funded debt, except for the Contributed
Global Note), and all security interests of Global or GE Capital (Thailand) in
respect of such notes, accounts, bonds, evidences of indebtedness and other
rights;
(v) All inventories of materials (including
without limitation natural gas), raw materials, work in process, finished
products, spare parts, replacement and component parts, and office and other
supplies Used in connection with the Included Global Assets or the Global
Compression Business;
(vi) All contract files, gas processing files,
division order files, abstracts, title policies, binders or opinions, product
design data, plans, blueprints, specifications, manuals, designs, drawings,
recorded knowledge, surveys, engineering reports, equipment and parts lists,
test reports, materials standards, catalogues, performance and quality control
standards, procedures and records, research and development data, price lists,
mailing lists, photographs, production data, sales and purchase records, sales
order files, records, data, media materials and plates, advertising, marketing,
promotional and sales materials, files and materials relating to suppliers,
vendors and other service providers, and all other books, records, intangibles,
files, maps, accounting information and records and other similar information or
data Used in connection with the Global Compression Business (collectively, the
"Global Compression Business Records") in whatever media such Global Compression
Business Records may be retained and stored, including without limitation
Global's and GE Capital (Thailand)'s proprietary computer and automatic
machinery software and programs and source disks that are Used thereby in the
Global Compression Business and listed on Schedule 2.1(d)(2)(vi) to this
Formation Agreement, and program documentation,
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tapes, manuals, forms, guides and other materials with respect thereto Used in
connection with the Global Compression Business;
(vii) All miscellaneous assets listed on
Schedule 2.1(d)(2)(vii) to this Formation Agreement;
(viii) All rights in, to and under all express
or implied warranties, representations, indemnities, covenants or other
agreements of any third parties arising from or attributable to the Global
Compression Business or the Included Global Assets;
(ix) To the extent permitted by law, all
permits, approvals, licenses, qualifications, product registrations, safety
certifications and other similar authorizations Used in connection with the
Global Compression Business including without limitation those listed on
Schedule 2.1(d)(2)(ix) to this Formation Agreement;
(x) The rights of the Global Compression
Business in the patents, patent applications, trademarks, trade names, service
marks, service names, registered user names, copyrights and copyright
applications and related agreements and licenses Owned by Global or GE Capital
(Thailand) and Used in the Global Compression Business (all of which are
identified on Schedule 2.1(d)(2)(x) to this Formation Agreement), and all
designs, plans, inventions, trade secrets, processes, procedures, research
records, manufacturing know-how and formulas, whether patentable or
unpatentable, and similar proprietary rights wherever located, Owned by Global
that are Used in connection with the Global Compression Business;
(xi) All other intangible personal property of
the Global Compression Business;
(xii) The bank accounts listed on Schedule
2.1(d)(2)(xii) to this Formation Agreement, including without limitation the
cash on deposit therein on the Closing Date; and
(xiii) All other rights, properties and assets
Used in connection with the Global Compression Business of any character
whatsoever, wherever located;
provided, however, that the Included Global Assets do not include and Global
shall retain all of its rights, titles and interests in and to (i) those
specific assets, properties, rights, titles, interests, contracts, claims and
estates described on Schedule 2.1(d)(2)(A) hereto and (ii) in the case of GE
Capital (Thailand), those assets, properties, rights, titles, interests,
contracts, claims and estates that are not dedicated exclusively to the
compression business of GE Capital (Thailand) (such retained assets, properties,
rights, titles, interests, contracts, claims and estates, the "Excluded Global
Assets").
(3) Limited Contribution Transactions. On the Closing
Date, in exchange for thirty six percent (36%) of the Membership Interests in
Limited, Global shall contribute to Limited, by assigning, transferring,
conveying and delivering to Limited, and Limited shall accept as a contribution
from Global, pursuant to the Global/Limited Assignment and Conveyance Agreement
and other instruments of assignment and conveyance as contemplated by
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the Global/Limited Assignment and Conveyance Agreement in form or forms mutually
agreed upon by the Parties, an undivided one percent (1%) of the Included Global
Assets and its obligation under Section 2.1(d)(4) of this Formation Agreement to
contribute cash as provided therein.
(4) Post-Closing Contribution Transactions.
(w) Upon receipt of notice from the Partnership to GE Capital and
Global of the formation by the Partnership of a new Thailand entity or
branch (which the Partnership shall use its best efforts to complete
not later than 90 days after the Closing Date), (i) Global shall
contribute to the Partnership an amount in cash necessary to allow the
Partnership to purchase or otherwise acquire an undivided ninety-nine
percent (99%) of the Additional Global Assets, (ii) the Partnership
shall use such contributed cash to purchase or otherwise acquire an
undivided ninety-nine percent (99%) of the Additional Global Assets
pursuant to instruments of assignment and conveyance in form or forms
mutually agreed upon by the Parties, (iii) Global shall contribute to
Limited an amount in cash necessary to allow Limited to purchase or
otherwise acquire an undivided one percent (1%) of the Additional
Global Assets, and (iv) Limited shall use such contributed cash to
purchase or otherwise acquire an undivided one percent (1%) of the
Additional Global Assets and shall transfer such undivided interest to
the Partnership, in each case pursuant to instruments of assignment and
conveyance in form or forms mutually agreed upon by the Parties. The
purchase price for the Additional Global Assets shall be paid as of the
date on which payments under Section 2.3 are to be paid. In the event
the adjustment provisions under Section 2.3 result in a Global Excess,
Global shall have the option to have the cash contribution by Global
under this Section reduced by the amount of the Global Excess and the
Global Excess shall not be paid as an adjustment under Section 2.3 (or
to make full payment hereunder and receive payment of the Global
Excess.
(x) The Additional Global Assets shall be transferred to a new Thailand
entity or branch of the Partnership to be created promptly following
the Closing in consideration of a cash payments by the Partnership to
or for the account of GE Capital (Thailand) equal to the net book value
as of the Closing of the Additional Global Assets to be transferred.
The cash to be contributed by Global to purchase such assets shall also
include such cash as necessary to pay any value added taxes, general
service taxes or other similar transfer or sales taxes as may be
payable in respect of the transfer. The Partnership shall promptly take
such actions as may be necessary to obtain a refund of such taxes (and
Global shall have a right to participate in obtaining such refund) and
shall remit to Global any refunds of such taxes when received, or if
utilized by the Partnership or a subsidiary branch thereof, the amount
equal to the amount utilized shall be promptly paid to Global as the
same is utilized.
(y) The assets of Global located in Canada shall be transferred to the
Partnership in a manner designed to be non-taxable to Global and
reasonably acceptable to WECC through a transaction similar to that in
which the Additional Xxxxxxxxxxx Assets are to be transferred to the
Partnership. Global shall contribute to the Partnership, Xxxxxxxxxxx
and WECC cash sufficient to allow for the purchase of such assets
either directly or through a purchase of stock. Global shall also
indemnify the Partnership, Xxxxxxxxxxx and WECC for any liability or
expenses incurred as a result of the structure of the transaction or
the
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contribution of the Canadian assets by it and if any preferred or
separate class of stock is issued to it or another entity (other than
the Partnership, Limited or a subsidiary or entity wholly owned by the
Partnership or Limited) as part of this transfer, Global shall pay to
the Partnership any dividends or distributions that may be received by
or in respect of such stock and indemnify the Partnership, Xxxxxxxxxxx
and WECC for any additional costs or expenses that may be incurred by
it as a result of the structure that is proposed by Global.
(z) All benefits and burdens associated with the ownership and
operations of the assets of GE Capital (Thailand) and the Canadian
assets of Global to be transferred is contemplated by this Section
shall inure to the benefits of the Partnership and Limited. As of the
Closing, the Additional Xxxxxxxxxxx Assets shall be deemed to be
beneficially owned by the Partnership and be held in trust for the
benefit of the Partnership and Limited. Except with the consent of the
Partnership, GE Capital shall cause GE Capital (Thailand) compression
assets and the Global Canadian assets to be operated in the ordinary
course of business.
(e) Personal Property Conveyance. All personal property
conveyed pursuant to this Section 2.1 will be conveyed on an AS IS, WHERE IS
BASIS WITH ALL FAULTS.
(f) Contribution and Transfer by Limited. On the Closing Date,
in exchange for one percent (1%) of the Partnership Interests in the
Partnership, Limited shall contribute to the Partnership, by assigning,
transferring, conveying and delivering to the Partnership, and the Partnership
shall accept as a contribution from Limited, pursuant to the Limited/Partnership
Assignment and Conveyance Agreement and other instruments of assignment and
conveyance as contemplated by the Limited/Partnership Assignment and Conveyance
Agreement in form attached as Exhibit J, the undivided one percent (1%) of the
Included Xxxxxxxxxxx Assets, the undivided one percent (1%) of the Included
Global Assets contributed to Limited by WECC and Global, respectively and the
obligations under Sections 2.1(c)(4) and 2.1(d)(4) to contribute cash by WECC
and Global as provided therein.
Section 2.2. Closing. The closing of the transactions contemplated by
this Formation Agreement (the "Closing") shall take place at the offices of
Fulbright & Xxxxxxxx L.L.P., 0000 XxXxxxxx Xxxxxx, Xxxxxxx, Xxxxx, beginning at
9 a.m. on the Closing Date. All actions to be taken at the Closing as set forth
herein and all agreements, documents and instruments delivered and payments made
with respect thereto shall be considered to have been taken or delivered or made
and shall be effective simultaneously at 5:00 p.m. on the Closing Date (except
as otherwise expressly provided in such agreements, documents and instruments),
and no such action, delivery or payment shall be considered as complete until
all such actions, delivery and payments incident to the Closing have been
completed.
Section 2.3. Audit and Adjustment. Promptly after the Closing Date, but
in no event later than sixty (60) days thereafter, the Partnership shall cause
(i) Xxxxxx Xxxxxxxx LLP to audit the combined consolidated financial statements
of the Xxxxxxxxxxx Compression Business at and as of December 31, 1998, adjusted
to reflect transactions after that date to the Closing Date (the balance sheet
included in such financial statements is hereinafter referred to as the
"Xxxxxxxxxxx Closing Date Balance Sheet"), and to provide an unqualified written
opinion on the financial statements at
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and as of December 31, 1998, and an opinion with respect to the Net Assets of
the Xxxxxxxxxxx Compression Business as of the Closing Date based on the audit
of the financial statements at December 31, 1998, brought down to reflect
transactions after that date, and (ii) KPMG Peat Marwick LLP to audit the
combined consolidated financial statements of the Global Compression Business at
and as of December 31, 1998, adjusted to reflect transactions after that date to
the Closing Date (the balance sheet included in such financial statements is
hereinafter referred to as the "Global Closing Date Balance Sheet") and to
provide an unqualified written opinion on the financial statements at and as of
December 31, 1998 and an opinion with respect to the Net Assets of the Global
Compression Business as of the Closing Date based on the audit of the financial
statements at December 31, 1998, brought down to reflect transactions after that
date. The opinions resulting from such audits will be delivered by the
Partnership to Xxxxxxxxxxx and GE Capital promptly upon receipt thereof, but in
no event later than one Business Day thereafter. If the Net Assets of the
Xxxxxxxxxxx Compression Business set forth in the Xxxxxxxxxxx Closing Date
Balance Sheet exceed $326,868,000, the Partnership shall pay WECC an amount
equal to such excess. If the Net Assets of the Xxxxxxxxxxx Compression Business
set forth in the Xxxxxxxxxxx Closing Date Balance Sheet are less than
$326,868,000, WECC shall pay the Partnership an amount equal to the amount by
which $326,868,000 exceeds the Net Assets of the Xxxxxxxxxxx Compression
Business. If the Net Assets of the Global Compression Business set forth in the
Global Closing Date Balance Sheet exceed $199,950,000, Global shall have the
option to have the cash contribution to be made pursuant to Section 2.1(d)(4)
reduced by the excess (the "Global Excess") as provided therein. If the Net
Assets of the Global Compression Business set forth in the Global Closing Date
Balance Sheet are less than $199,950,000, Global shall pay the Partnership an
amount equal to the amount by which $199,950,000 exceeds the Net Assets of the
Global Compression Business. All payments pursuant to this Section 2.3 shall be
made within five Business Days following the delivery by the Partnership to
Xxxxxxxxxxx and GE Capital of such written audit opinions. All such payments
shall be made in immediately available funds to an account designated by the
relevant recipient. Attached as Schedule 2.3 is an estimated calculation of the
Net Assets of each of the Xxxxxxxxxxx Compression Business and the Global
Compression Business excluding adjustments for the Master Lease Expenses.
Section 2.4. Financing for the Partnership. As part of the formation of
the Partnership, the Partnership is assuming the obligations of WECC and
becoming a party to the Master Lease. In December 1998, WECC entered into a
portion of the Master Lease and sold and leased back certain of its assets and
received a payment of $100,000,000. As soon as practicable after the Closing
Date, but in no event later than sixty (60) days thereafter, the Partnership
will sell and lease back certain assets acquired from Global under the Master
Lease and will pay the Contributed Global Note and make the Payment Obligation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Xxxxxxxxxxx and WECC.
Xxxxxxxxxxx and WECC jointly and severally represent and warrant to GE Capital
and each other GE Entity as follows:
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(a) Organization. Each of Xxxxxxxxxxx and WECC is a
corporation or limited partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Xxxxxxxxxxx owns,
directly or indirectly, all the outstanding equity interests in each Xxxxxxxxxxx
Entity, free and clear of all Liens and all such interests have been validly
issued and are fully paid and nonassessable. The only jurisdictions in which any
Xxxxxxxxxxx Entity is required to qualify to transact business as a foreign
entity as set forth on Schedule 3.1(a) attached hereto, and each Xxxxxxxxxxx
Entity is in good standing under the laws of each such jurisdiction, other than
in such jurisdictions where the failure to be so qualified, individually or in
the aggregate, would not have a Material Adverse Effect on the Xxxxxxxxxxx
Compression Business.
(b) Financial Statements. Xxxxxxxxxxx has delivered to GE
Capital the following financial statements (the "Xxxxxxxxxxx Financial
Statements") which Xxxxxxxxxxx Financial Statements are attached as Schedule
3.1(b) hereto: (i) a combined consolidated balance sheet of the Xxxxxxxxxxx
Compression Business at December 31, 1997, and the related consolidated
statements of income, stockholders' equity and changes in financial position for
the Xxxxxxxxxxx Compression Business, all for the year then ended, together with
the related notes thereto, as examined by Xxxxxx Xxxxxxxx LLP, whose unqualified
opinion thereon is included therewith, and (ii) the unaudited consolidated
balance sheet of the Xxxxxxxxxxx Compression Business at December 31, 1998, and
the related unaudited consolidated statements of income, stockholders' equity
and changes in financial position of the Xxxxxxxxxxx Compression Business for
the year then ended, as certified by the Chief Financial Officer of WECC. The
Xxxxxxxxxxx Financial Statements present fairly the consolidated financial
position of the Xxxxxxxxxxx Compression Business at the dates indicated and the
consolidated results of its operations and the changes in its consolidated
financial position for the periods indicated, in accordance with GAAP applied on
a consistent basis during such periods, except as therein noted.
(c) Subsidiaries. WECC does not own, directly or indirectly,
any capital stock or other ownership interest in any subsidiary.
(d) Options. There are no outstanding or authorized
securities, options, warrants, calls, rights, commitments, preemptive rights,
agreements, arrangements or undertakings of any kind to which WECC is a party,
or by which it is bound, obligating any WECC to issue, deliver or sell, or cause
to be issued, delivered or sold, any shares of capital stock or other equity or
voting securities of, or other ownership interests in, WECC to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking.
(e) Authority; Non-contravention. Xxxxxxxxxxx and each other
Xxxxxxxxxxx Entity has the requisite corporate or partnership, as the case may
be, power and authority to enter into this Formation Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Formation Agreement by Xxxxxxxxxxx and each other Xxxxxxxxxxx Entity and the
consummation by Xxxxxxxxxxx and each other Xxxxxxxxxxx Entity of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Xxxxxxxxxxx and each other Xxxxxxxxxxx Entity.
This Formation Agreement has been duly and validly executed and delivered by
Xxxxxxxxxxx and each other Xxxxxxxxxxx Entity and constitutes a valid and
binding obligation of Xxxxxxxxxxx and each other Xxxxxxxxxxx Entity, enforceable
against Xxxxxxxxxxx and each other Xxxxxxxxxxx Entity in accordance with its
terms, except that (i) such
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enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws or judicial decisions now or hereafter in effect relating
to creditors' rights generally, (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought and (iii) the
enforceability of any indemnification provision contained herein may be limited
by applicable federal or state laws. The execution and delivery of this
Formation Agreement by Xxxxxxxxxxx and each other Xxxxxxxxxxx Entity do not, and
the consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or result in
the creation of any Lien, upon any of the properties or assets of the
Xxxxxxxxxxx Compression Business under, any provision of (i) the Certificate of
Incorporation, Bylaws or other organizational documents of any Xxxxxxxxxxx
Entity or the limited partnership agreement of WECC, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease, or other agreement,
instrument, permit, concession, franchise or license applicable to Xxxxxxxxxxx
or any other Weatherford Entity or any of their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to in
the following sentence any judgment, order, decree, statute, law, ordinance,
rule or regulation or arbitration award applicable to Xxxxxxxxxxx or any other
Weatherford Entity or their respective properties or assets, other than, in the
case of clause (ii), any such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not have a Material Adverse Effect
on the Weatherford Compression Business taken as a whole and would not
materially impair the ability of Xxxxxxxxxxx or any other Weatherford Entity to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Xxxxxxxxxxx or any other Weatherford Entity in
connection with the execution and delivery of this Formation Agreement by
Xxxxxxxxxxx or the consummation by Xxxxxxxxxxx or any other Weatherford Entity
of the transactions contemplated hereby, except for the filing of premerger
notification information with the Canadian Competition Bureau and the expiration
of the applicable waiting period(s) under Part IX of the Competition Act
(Canada), and such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not have a Material Adverse Effect on the Xxxxxxxxxxx Compression
Business taken as a whole.
(f) Absence of Certain Changes of Events. Except as set forth
on Schedule 3.1(f) attached hereto or as contemplated by this Formation
Agreement, since December 31, 1997, the Xxxxxxxxxxx Compression Business has
been conducted only in the ordinary course consistent with past practice, and
there has not been (i) any material adverse change with respect to the
Xxxxxxxxxxx Compression Business, (ii) (A) any granting by the Xxxxxxxxxxx
Compression Business to any employee of the Xxxxxxxxxxx Compression Business of
any increase in compensation, except in the ordinary course of the Xxxxxxxxxxx
Compression Business consistent with prior practice or as was required under
employment agreements in effect as of December 31, 1997, (B) any granting by the
Xxxxxxxxxxx Compression Business to any such employee of any increase in
severance or termination pay, except as was required under employment, severance
or termination agreements in effect as of December 31, 1997, or (C) any entry by
the Xxxxxxxxxxx Compression Business into any employment, severance or
termination agreement with any such
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executive officer, (iii) any damage, destruction or loss, whether or not covered
by insurance, that has or reasonably could be expected to have a Material
Adverse Effect on the Xxxxxxxxxxx Compression Business, taken as a whole or (iv)
any change in accounting methods, principles or practices by the Xxxxxxxxxxx
Compression Business materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in generally accepted
accounting principles.
(g) Brokers. Except for Credit Suisse First Boston
Corporation, whose fees are to be paid by Xxxxxxxxxxx, no broker, investment
banker or other Person is entitled to receive from any Xxxxxxxxxxx Entity or the
Xxxxxxxxxxx Compression Business any investment banking, broker's, finder's or
similar fee or commission in connection with this Formation Agreement or the
transactions contemplated hereby.
(h) Litigation. Except as set forth in Schedule 3.1(h)
attached hereto, there is no claim, suit, action, proceeding or investigation
pending or, to the best of Xxxxxxxxxxx'x knowledge, threatened against or
affecting the Xxxxxxxxxxx Compression Business that could reasonably be expected
to have a Material Adverse Effect on the Xxxxxxxxxxx Compression Business, taken
as a whole, or prevent, hinder or materially delay the ability of Xxxxxxxxxxx to
consummate the transactions contemplated by this Formation Agreement, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against Xxxxxxxxxxx or any of its subsidiaries having,
or which, insofar as reasonably can be foreseen, in the future could have, any
such effect.
(i) Employee Benefit Matters.
(i) Set forth on Schedule 3.1(i) attached
hereto is a list of each of the following that is currently sponsored,
maintained or contributed to by Xxxxxxxxxxx or any of its subsidiaries for the
benefit of the employees of the Weatherford Compression Business:
(A) each "employee benefit plan," as such
term is defined in Section 3(3) of ERISA (including, but not limited to,
employee benefit plans, such as foreign plans, which are not subject to the
provisions of ERISA) ("Xxxxxxxxxxx Plan");
(B) each stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan or
arrangement, severance pay plan, policy or agreement, deferred compensation
agreement or arrangement, executive compensation or supplemental income
arrangement, consulting and employment agreement, including without limitation
those covering employees outside the United States ("Xxxxxxxxxxx Benefit Program
or Agreement").
The Xxxxxxxxxxx Compression Business has no outstanding liability other than
accrued as a current liability on its balance sheet as of June 30, 1998 with
respect to any of the items described in clauses (a) and (b) above that are not
currently sponsored, maintained or contributed to by the Xxxxxxxxxxx Compression
Business, but were so sponsored, maintained or contributed to by the Xxxxxxxxxxx
Compression Business within the past six years.
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(ii) True, correct and complete copies of each
of the Xxxxxxxxxxx Plans, the Xxxxxxxxxxx Benefit Programs or Agreements and
related trusts, as in effect on the date hereof, have been furnished to GE
Capital. In addition, with respect to the Xxxxxxxxxxx International, Inc. 401(k)
Savings Plan (the "Xxxxxxxxxxx 401(k) Plan"), Xxxxxxxxxxx has furnished to GE
Capital and Global true, correct and complete copies of the most recent Form
5500 (including all attachments), Summary Plan Description and IRS Determination
Letter.
(iii) Except as set forth on Schedule 3.1(i)
attached hereto:
(A) The Xxxxxxxxxxx Compression Business has
substantially performed all obligations, whether arising by operation of law or
by contract, required to be performed by it in connection with the Xxxxxxxxxxx
401(k) Plan and there have been no defaults or violations by any other party to
the Xxxxxxxxxxx 401(k) Plan;
(B) The Xxxxxxxxxxx 401(k) Plan has been
administered and operated in substantial compliance with its governing documents
and applicable law (including, where applicable, ERISA, and the Internal Revenue
Code of 1986, as amended (the "Code");
(C) The Xxxxxxxxxxx 401(k) Plan intended to
be qualified under Section 401 of the Code and the Trust maintained pursuant to
the Xxxxxxxxxxx 401(k) Plan is tax-exempt under Section 501 of the Code and has
received a favorable determination letter from the Internal Revenue Service
("IRS") regarding such qualified and tax-exempt status and has not, since
receipt of the most recent favorable determination letter, been amended or
operated in a way which is reasonably likely to adversely affect such qualified
and tax-exempt status;
(D) There are no actions, suits or claims
pending (other than routine claims for benefits) or threatened against, or with
respect to, the Xxxxxxxxxxx 401(k) Plan or its assets, and there is no matter
pending (other than routine qualification determination filings) with respect to
the Xxxxxxxxxxx 401(k) Plan before any Governmental Entity which are reasonably
likely to result in a material liability;
(j) Tax Matters.
(i) Except as set forth on Schedule 3.1(j)
hereto, (a) all Tax Returns of or with respect to any Tax that are required to
be filed on or before the Closing Date by or with respect to the Xxxxxxxxxxx
Compression Business have been or will be duly and timely filed under the
statutes, rules and regulations of each jurisdiction in which such Tax Returns
are required to be filed, (b) all items of income, gain, loss, deduction and
credit or other items required to be included in each such Tax Return have been
or will be so included and all information provided in each such Tax Return is
or will be true, correct and complete in all material respects, (c) all Taxes
which have become or will become due with respect to the period covered by each
such Tax Return whether or not reflected on the Tax Returns have been or will be
timely paid in full, (d) all withholding Tax requirements imposed on or with
respect to the Xxxxxxxxxxx Compression Business have been or will be satisfied
in full, and (e) no penalty, interest or other charge is or will become due with
respect to the late filing of any such Tax Return or late payment of any such
Tax.
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(ii) Except as set forth on Schedule 3.1(j)
hereto, all Tax Returns of, or with respect to the Xxxxxxxxxxx Compression
Business or any Xxxxxxxxxxx Group have been audited by the applicable
Governmental Entity or the applicable statute of limitations has expired, for
all periods up to and including the periods set forth in Schedule 3.1(j)
attached hereto. No member of the Xxxxxxxxxxx Group is aware that assertion has
ever been made by a Governmental Authority in a jurisdiction where any member of
the Xxxxxxxxxxx Group does not currently file Tax Returns that it is or may be
subject to taxation in that jurisdiction nor is any member of the Xxxxxxxxxxx
Group aware that any such assertion is pending or threatened, in each case where
such assertion could reasonably be expected to have a Material Adverse Effect on
the Xxxxxxxxxxx Compression Business.
(iii) There is no claim with respect to the
Xxxxxxxxxxx Compression Business for any Taxes, and no assessment, deficiency or
adjustment has been asserted or proposed with respect to any Tax Return of or
with respect to the Xxxxxxxxxxx Compression Business, other than those disclosed
(and to which are attached true and complete copies of all audit or similar
reports) on Schedule 3.1(j) attached hereto.
(iv) There is not in force any extension of
time with respect to the due date for the filing of any Tax Return of or with
respect to the Xxxxxxxxxxx Compression Business or any waiver or agreement for
any extension of time for the assessment or payment of any Tax of or with
respect to the Xxxxxxxxxxx Compression Business.
(v) Schedule 3.1(j) attached hereto contains a
true and complete copy of each written Tax allocation or sharing agreement and a
true and complete description of each unwritten Tax allocation or sharing
arrangement affecting the Xxxxxxxxxxx Compression Business. All such agreements
shall be terminated prior to the Closing Date and no payments are due or will
become due on or after the Closing Date pursuant to any such agreement or
arrangement.
(vi) Except for WECC and as set forth on
Schedule 3.1(j), none of the property of the Xxxxxxxxxxx Compression Business is
held in an arrangement that could be classified as a partnership for Tax
purposes, and the Xxxxxxxxxxx Compression Business does not own any interest in
any controlled foreign corporation (as defined in Section 957 of the Code),
passive foreign investment company (as defined in Section 1297 of the Code) or
other entity the income of which is required to be included in the income of the
Xxxxxxxxxxx Compression Business.
(vii) Except as set forth on Schedule 3.1(j)
hereto, none of the property of the Xxxxxxxxxxx Compression Business is: (i)
subject to a safe-harbor lease (pursuant to Section 168(f)(8) of the Internal
Revenue Code of 1954 as amended and in effect immediately prior to the enactment
of the Tax Reform Act of 1986) or (ii) "tax-exempt use property" (within the
meaning of Section 168(h) of the Code) or (iii) "tax-exempt bond financed
property" (within the meaning of Section 168(g) of the Code) or (iv) "limited
use property" (as that term is used in Rev. Proc. 76- 30).
(viii) The Xxxxxxxxxxx Compression Business
will not be required to include any amount in income for any taxable period
beginning after the Closing Date as a result of
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a change in accounting method for any taxable period ending on or before the
Closing Date or pursuant to any agreement with any Tax authority with respect to
any such taxable period.
(ix) No corporation whose stock is included in
the Xxxxxxxxxxx Compression Business has consented to have the provisions of
Section 341(f)(2) of the Code apply with respect to a sale of its stock.
(x) No Liens (whether filed or arising by
operation of law) have been imposed upon or asserted against the Xxxxxxxxxxx
Compression Business as a result of or in connection with the failure, or
alleged failure to pay any tax.
(k) No Excess Parachute Payments. No amount that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Formation Agreement by any
employee, officer or director of the Xxxxxxxxxxx Compression Business or any of
its subsidiaries who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Xxxxxxxxxxx Plan
currently in effect would be characterized as an "excess parachute payment" (as
such term is defined in Section 280G(b) (1) of the Code) or would be
non-deductible by reason of Code Section 162(m).
(l) Environmental Matters. Except as set forth on Schedule
3.1(l) attached hereto or as described in the TRC Reports:
(i) The Xxxxxxxxxxx Compression Business has
been and is in compliance with all Environmental Laws and there are no
conditions existing on or resulting from the operation of the businesses or
properties of the Xxxxxxxxxxx Compression Business that may give rise to any
on-site or off-site remedial obligations under any Environmental Law, except for
such noncompliance or remedial obligations as would not have a Material Adverse
Effect on the Xxxxxxxxxxx Compression Business;
(ii) Without limitation of clause (i) above,
the Xxxxxxxxxxx Compression Business and its properties are not subject to any
existing, pending or, to the knowledge of Xxxxxxxxxxx, threatened action, suit,
investigation, inquiry or proceeding by or before any Governmental Entity under
any Environmental Law.
(iii) All notices, permits, licenses or
similar authorizations, if any, required to be obtained or filed by the
Xxxxxxxxxxx Compression Business under any Environmental Law, including without
limitation those relating to the treatment, storage, disposal or Release of any
substance, material or waste regulated under Environmental Laws into the
environment, have been duly obtained or filed, and the Xxxxxxxxxxx Compression
Business is in compliance with the terms and conditions of all such permits and
authorizations, except as would not have a Material Adverse Effect on the
Xxxxxxxxxxx Compression Business and no actions or appeals are pending or, to
the knowledge of Xxxxxxxxxxx, threatened, to revoke or materially alter the
terms and conditions of such material permits;
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(iv) Except where such failure would not have
a Material Adverse Effect, since the effective date of the relevant requirements
of RCRA or other comparable Environmental Laws, all substances, materials or
wastes regulated under RCRA or another comparable Environmental Law that are
generated by the Xxxxxxxxxxx Compression Business or at any properties of the
Xxxxxxxxxxx Compression Business and require disposal or treatment have been
transported only by carriers maintaining valid authorizations under RCRA and any
other comparable Environmental Laws and treated and disposed of only at
treatment, storage and disposal facilities maintaining valid authorizations
under RCRA and any other comparable Environmental Law, and, to the knowledge of
Xxxxxxxxxxx, such carriers and facilities have been and are operating in
compliance with such authorizations and are not the subject of any existing,
pending or overtly threatened action, investigation or inquiry by any
Governmental Authority in connection with any Environmental Laws;
(v) There are no asbestos-containing materials
or naturally occurring radioactive materials on or in any of the properties of
the Xxxxxxxxxxx Compression Business that are required to be removed, remediated
or abated under Environmental Laws, and there are no storage tanks, open or
closed pits, sumps, or other containers on or under any of the properties of
Xxxxxxxxxxx Compression Business from which any substances, materials or wastes
regulated under Environmental Laws have been Released into the surrounding
environment, except as would not have a Material Adverse Effect on the
Xxxxxxxxxxx Compression Business; and
(vi) Without limiting the foregoing, there is
no liability to any non-governmental third party under Environmental Laws or
under common law tort, trespass and nuisance in connection with any Release or
threatened Release of any substances, materials or wastes regulated under
Environmental Laws into the environment as a result of or with respect to the
properties or businesses of Xxxxxxxxxxx Compression Business, except as would
not have a Material Adverse Effect on the Xxxxxxxxxxx Compression Business.
(m) Compliance with Laws. The Xxxxxxxxxxx Compression Business
holds all required, necessary or applicable permits, licenses, variances,
exemptions, orders, franchises and approvals of all Governmental Entities,
except where the failure to so hold would not have a Material Adverse Effect on
the Xxxxxxxxxxx Compression Business (the "Xxxxxxxxxxx Compression Business
Permits"). The Xxxxxxxxxxx Compression Business is in compliance with the terms
of the Xxxxxxxxxxx Compression Business Permits except where the failure to so
comply would not have a Material Adverse Effect on the Xxxxxxxxxxx Compression
Business taken as a whole. The Xxxxxxxxxxx Compression Business has not violated
or failed to comply with any statute, law, ordinance, regulation, rule, permit
or order of any federal, state or local government, domestic or foreign, or any
Governmental Entity, any arbitration award or any judgment, decree or order of
any court or other Governmental Entity, applicable to the Xxxxxxxxxxx
Compression Business or its businesses, assets or operations, except for
violations and failures to comply that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Xxxxxxxxxxx Compression Business.
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(n) Material Contracts and Agreements.
(i) Schedule 3.1(n) attached hereto lists the
following contracts and other agreements (written or oral) to which the
Xxxxxxxxxxx Compression Business or any of its assets is a party or subject to:
(A) Any agreement (or group of related
agreements) for the purchase or sale of compressors, compressor parts or other
goods and services in an amount in excess of $500,000;
(B) any lease or rental of real or personal
property to or from any Person providing for lease payments in excess of
$500,000 per year or having a remaining term in excess of one year;
(C) any agreement concerning a partnership
or joint venture or agency relationship;
(D) any agreement (or group of related
agreements) involving the creation, incurrence, assumption or guarantee of any
indebtedness for borrowed money, any capital lease obligation or any sale lease
back obligation in an amount in excess of $100,000 or which a security interest
for any such obligations has been granted;
(E) any material agreement concerning
confidentiality or non-competition;
(F) any collective bargaining agreement or
other contract with any labor union;
(G) any separate employment agreement
providing for annual compensation in excess of $75,000 or providing severance
benefits outside the Xxxxxxxxxxx Compression Business' customary severance
policy;
(H) any agreement under which the
Xxxxxxxxxxx Compression Business has advanced or loaned any amount of money to
its directors, officers or employees outside the ordinary course of business; or
(I) any agreement under which the
consequences of a default or termination would have a Material Adverse Effect on
the Xxxxxxxxxxx Compression Business taken as a whole.
All material contracts of the Xxxxxxxxxxx Compression Business
are listed on Schedule 3.1(n) attached hereto and copies thereof have been made
available to GE Capital. For purposes of this provision, material contracts
shall be deemed to include all contracts that would be required to be filed by
the Xxxxxxxxxxx Compression Business with the Securities and Exchange Commission
as exhibits to an Annual Report on Form 10-K if the Xxxxxxxxxxx Compression
Business had equity securities registered under the Securities Exchange Act of
1934, as amended.
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(o) Title to Properties.
(i) The Xxxxxxxxxxx Entities have indefeasible
title to all owned real properties in the Included Xxxxxxxxxxx Assets and good
and marketable title to, or valid leasehold interests in, all of the other
Included Xxxxxxxxxxx Assets, except for minor defects in title, easements,
restrictive covenants and similar encumbrances or impediments that, in the
aggregate, do not and will not materially interfere with its ability to conduct
its business as currently conducted or as reasonably expected to be conducted.
All the Included Xxxxxxxxxxx Assets, other than Included Xxxxxxxxxxx Assets in
which any Xxxxxxxxxxx Entity has leasehold interests (but only to the extent of
such leasehold interests), are free and clear of all Liens, other than those set
forth on Schedule 3.1(o) attached hereto and those arising from purchase options
granted to lessees under rental contracts entered into in the ordinary course of
business, and except for Liens, that, in the aggregate, do not and will not
materially interfere with its ability to conduct its business as currently
conducted or as reasonably expected to be conducted.
(ii) Except as would not have a Material
Adverse Effect on the Xxxxxxxxxxx Compression Business taken as a whole, each
Xxxxxxxxxxx Entity has complied in all material respects with the terms of all
leases to which it is a party and under which it is in occupancy, and all such
leases are in full force and effect. The applicable Xxxxxxxxxxx Entity enjoys
peaceful and undisturbed possession under all such leases.
(iii) Upon consummation of the transactions
contemplated hereby, (A) the Partnership will have acquired and own indefeasible
title to all owned real properties in the Included Xxxxxxxxxxx Assets, and good
and marketable title to or valid leasehold interests in all of the other
Included Xxxxxxxxxxx Assets, except for minor defects in title, easements,
restrictive covenants and similar encumbrances or impediments that, in the
aggregate, do not and will not materially interfere with the ability of the
Partnership to conduct its business as currently conducted or as reasonably
expected to be conducted, and (B) all the Included Xxxxxxxxxxx Assets so
acquired by the Partnership, other than those in which the Partnership acquires
leasehold interests (but only to the extent of such leasehold interests) will be
free and clear of all Liens, except as set forth on Schedule 3.1(o) attached
hereto and those arising from purchase options granted to lessees under rental
contracts entered into in the ordinary course of business, and except for Liens,
that in the aggregate, do not and will not materially interfere with its ability
to conduct its business as currently conducted or as reasonably expected to be
conducted.
(p) Intellectual Property. The Xxxxxxxxxxx Compression
Business owns or is licensed or otherwise has the right to use, all patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
service marks, service xxxx rights, copyrights, technology, know-how, processes
and other proprietary intellectual property rights and computer programs which
are material to the condition (financial or otherwise) or conduct of the
business and operations of the Xxxxxxxxxxx Compression Business taken as a
whole. To Xxxxxxxxxxx'x knowledge, the use of such patents, patent rights,
trademarks, trademark rights, service marks, service xxxx rights, trade names,
copyrights, technology, know-how, processes and other proprietary intellectual
property rights and computer programs by the Xxxxxxxxxxx Compression Business
does not infringe on the rights of any Person, subject to such claims and
infringements as do not, in the aggregate, give rise to any liability on the
part of the Xxxxxxxxxxx Compression
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Business which could have a Material Adverse Effect with respect to the
Xxxxxxxxxxx Compression Business taken as a whole.
(q) Labor Matters. Except as set forth on Schedule 3.1(q)
attached hereto, there are no collective bargaining agreements or other labor
union agreements or understandings to which the Xxxxxxxxxxx Compression Business
is a party or by which any of them is bound, nor is the Xxxxxxxxxxx Compression
Business the subject of any proceeding asserting that it or any subsidiary has
committed an unfair labor practice or seeking to compel it to bargain with any
labor organization as to wages or conditions. Except as set forth on Schedule
3.1(q), there is no union organization activity involving any of the employees
of the Xxxxxxxxxxx Compression Business, pending or to the knowledge of any
Xxxxxxxxxxx Entity, threatened. There is no picketing, strikes, or any material
slowdowns, work stoppages, other job actions, lockouts, arbitrations, grievances
or other labor disputes involving any of the employees of the Xxxxxxxxxxx
Compression Business, pending or to the knowledge of any Xxxxxxxxxxx Entity,
threatened. The Xxxxxxxxxxx Compression Business is in material compliance with
all laws, regulations and orders relating to the employment of labor, including
all such laws, regulations and orders relating to wages, hours, the Worker
Adjustment and Retraining Notification Act and any similar state or local "mass
layoff" or "plant closing" law ("WARN"), collective bargaining, discrimination,
civil rights, safety and health, workers' compensation and the collection and
payment of withholding and/or social security taxes and any similar tax. There
has been no "mass layoff" or "plant closing" as defined by the WARN with respect
to the Xxxxxxxxxxx Compression Business within the six (6) months prior to
Closing.
(r) Insurance. Schedule 3.1(r) attached hereto sets forth
information as of the date hereof with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage, and bond and surety arrangements) to which the
Xxxxxxxxxxx Compression Business is a party, a named insured, or otherwise a
named beneficiary of coverage (excluding policies maintained by unaffiliated
third parties for the benefit of the Xxxxxxxxxxx Compression Business). With
respect to each such insurance policy, and except as set forth on Schedule
3.1(r) attached hereto: (i) the policy is in full force and effect; (ii) to the
knowledge of Xxxxxxxxxxx, the Xxxxxxxxxxx Compression Business is not in breach
or default (including with respect to the payment of premiums nor the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration under the policy; and (iii) no party to the policy has
repudiated any provision thereof. The Xxxxxxxxxxx Compression Business has not
reached or exceeded its policy limits for any insurance policies in effect at
any time during the past five years.
(s) Undisclosed Liabilities. Except as set forth on Schedule
3.1(s) attached hereto or as set forth in the Xxxxxxxxxxx Financial Statements,
at the date of the most recent audited financial statements of the Xxxxxxxxxxx
Compression Business, the Xxxxxxxxxxx Compression Business had not, and since
such date the Xxxxxxxxxxx Compression Business has not, incurred (except in the
ordinary course of business), any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise), which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect on
the Xxxxxxxxxxx Compression Business taken as a whole.
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(t) Year 2000 Compliance.
(i) Products and Services. Except as set forth
on Section 3.1(t) attached hereto, all of the Products and Services of the
Xxxxxxxxxxx Entities are Year 2000 Compliant. If any Xxxxxxxxxxx Entity is
obligated to repair or replace Products or Services previously provided thereby
that are not Year 2000 Compliant in order to meet its contractual obligations,
to avoid personal injury or other liability, to avoid misrepresentation claims,
or to satisfy any other obligations or requirements, such Xxxxxxxxxxx Entity has
repaired or replaced those Products and Services to make them Year 2000
Compliant. Each Xxxxxxxxxxx Entity has furnished GE Capital and Global with
true, correct and complete copies of any customer agreements and other materials
and correspondence in which such Xxxxxxxxxxx Entity has furnished (or could be
deemed to have furnished) assurances as to the performance and/or functionality
of the Products or Services of such Xxxxxxxxxxx Entity on or after January 1,
2000.
(ii) Internal MIS Systems and Facilities.
Except as set forth on Schedule 3.1(t) attached hereto, all of the Internal MIS
Systems and Facilities of each Xxxxxxxxxxx Entity are Year 2000 Compliant.
(iii) Suppliers. Except as set forth on
Schedule 3.1(t) attached hereto, all vendors of products or services to each
Xxxxxxxxxxx Entity, and its respective products, services and operations, are
Year 2000 Compliant. To the knowledge of Xxxxxxxxxxx and each other Xxxxxxxxxxx
Entity, after a reasonably diligent investigation, each such vendor will
continue to furnish its products or services to each Xxxxxxxxxxx Entity, without
interruption or material delay, on and after January 1, 2000. Each Xxxxxxxxxxx
Entity has entered into appropriate agreements with each of its vendors
certifying that all hardware, software or firmware, and any other products and
services furnished by such vendor, including any and all enhancements, upgrades,
customizations, modifications, maintenance and the like, are Year 2000
Compliant. All such vendor agreements include appropriate indemnification by the
vendor in favor of such Xxxxxxxxxxx Entity and its respective successors if that
vendor or its products, services or operations fail to be Year 2000 Compliant or
if the products, services or operations fail to conform to or meet the terms of
the vendor warranties, representations, or other contractual terms.
(iv) Year 2000 Compliance Investigations and
Reports. Each Xxxxxxxxxxx Entity has furnished GE Capital and Global with a
true, correct and complete copy of any internal investigations, memoranda,
budget plans, forecasts or reports concerning the Year 2000 Compliance of the
products, services, operations, systems, supplies, and facilities of such
Xxxxxxxxxxx Entity and its vendors.
Section 3.2. Representations and Warranties of GE Capital and Global.
GE Capital and Global jointly and severally represent and warrant to Xxxxxxxxxxx
and WECC as follows:
(a) Organization. Each of GE Capital and Global is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. GE Capital owns, directly or indirectly,
all the outstanding equity interests in Global free and clear of any Liens and
such interests have been validly issued and are fully paid and nonassessable.
The only jurisdictions in which Global is required to qualify to transact
business as a foreign corporation
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are set forth on Schedule 3.2(a) attached hereto and Global is in good standing
under the laws of each such jurisdiction, other than in such jurisdictions where
the failure to be so qualified would not have a Material Adverse Effect on the
Global Compression Business.
(b) Financial Statements. GE Capital has delivered to
Xxxxxxxxxxx the following financial statements (the "Global Financial
Statements"), which Global Financial Statements are attached as Schedule 3.2(b)
hereto, (i) a combined consolidated balance sheet of the Global Compression
Business at December 31, 1997, and the related consolidated statements of
income, stockholders' equity and changes in financial position for the Global
Compression Business other than with respect to GE Capital (Thailand), all for
the year then ended, together with the related notes thereto, as examined by
KPMG Peat Marwick LLP, whose unqualified opinion thereon is included therewith,
and (ii) the unaudited consolidated balance sheet of the Global Compression
Business at December 31, 1998, and the related unaudited consolidated statements
of income and stockholders' equity of the Global Compression Business for the
year then ended, as certified by the Chief Financial Officer of Global. The
Global Financial Statements present fairly the consolidated financial position
of the Global Compression Business at the dates indicated and the consolidated
results of its operations and the changes in its consolidated financial position
for the periods indicated, in accordance with GAAP applied on a consistent basis
during such periods, except as therein noted.
(c) Subsidiaries. Global does not own, directly or indirectly,
any capital stock or other ownership interest in any subsidiary.
(d) Options. There are no outstanding or authorized
securities, options, warrants, calls, rights, commitments, preemptive rights,
agreements, arrangements or undertakings of any kind to which Global is a party,
or by which it is bound, obligating Global to issue, deliver or sell, or cause
to be issued, delivered or sold, any shares of capital stock or other equity or
voting securities of, or other ownership interests in, Global or obligating
Global to issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
(e) Authority; Non-contravention. Each of the GE Entities has
the requisite corporate power and authority to enter into this Formation
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Formation Agreement by each GE Entity and the consummation
by each GE Entity of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each GE Entity. This
Formation Agreement has been duly and validly executed and delivered by each GE
Entity and constitutes a valid and binding obligation of each GE Entity,
enforceable against each GE Entity in accordance with its terms, except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws or judicial decisions now or hereafter in
effect relating to creditors' rights generally, (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought
and (iii) the enforceability of any indemnification provision contained herein
may be limited by applicable federal or state laws. The execution and delivery
of this Formation Agreement by GE Capital do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, conflict with, or result in
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any violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
or "put" right with respect to any obligation or to loss of a material benefit
under, or result in the creation of any Lien, upon any of the properties or
assets of the Global Compression Business under, any provision of (i) the
Certificate of Incorporation or By-Laws of any GE Entity, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease, or other agreement,
instrument, permit, concession, franchise or license applicable to any GE Entity
or their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, governmental filings, statute, law, ordinance, rule or regulation
or arbitration award applicable to any GE Entity or their respective properties
or assets, other than, in the case of clause (ii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not have a Material Adverse Effect on the GE Entities collectively and
would not materially impair the ability of the GE Entities to perform their
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by or with respect to any GE Entity in connection with the execution and
delivery of this Formation Agreement by GE Capital or the consummation by any GE
Entity of the transactions contemplated hereby, except for the filing of
premerger notification information with the Canadian Competition Bureau and the
expiration of the applicable waiting period(s) under Part IX of the Competition
Act (Canada) and such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not have a Material Adverse Effect on the GE Entities collectively.
(f) Absence of Certain Changes of Events. Except as set forth
on Schedule 3.2(f) attached hereto, since December 31, 1997, the Global
Compression Business has been conducted only in the ordinary course consistent
with past practice, and there has not been (i) any material adverse change with
respect to the Global Compression Business, (ii) (A) any granting by the Global
Compression Business to any employee of the Global Compression Business of any
increase in compensation, except in the ordinary course of the Global
Compression Business consistent with prior practice or as was required under
employment agreements in effect as of December 31, 1997, (B) any granting by the
Global Compression Business to any such employee of any increase in severance or
termination pay, except as was required under employment, severance or
termination agreements in effect as of December 31, 1997, or (C) any entry by
the Global Compression Business into any employment, severance or termination
agreement with any such executive officer, (iii) any damage, destruction or
loss, whether or not covered by insurance, that has or reasonably could be
expected to have a Material Adverse Effect on the Global Compression Business
taken as a whole or (iv) any change in accounting methods, principles or
practices by the Global Compression Business materially affecting its assets,
liabilities or business, except insofar as may have been required by a change in
generally accepted accounting principles.
(g) Brokers. Except for ING Baring Xxxxxx Xxxx LLC, whose fees
are to be paid by GE Capital, no broker, investment banker or other Person is
entitled to receive from any GE Entity or the Global Compression Business any
investment banking, broker's, finder's or similar fee or commission in
connection with this Formation Agreement or the transactions contemplated
hereby.
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(h) Litigation. Except as set forth on Schedule 3.2(h)
attached hereto, there is no claim, suit, action, proceeding or investigation
pending or, to the best of GE Capital's knowledge, threatened against or
affecting the Global Compression Business that could reasonably be expected to
have a Material Adverse Effect on the Global Compression Business taken as a
whole, or prevent, hinder or materially delay the ability of GE Capital to
consummate the transactions contemplated by this Formation Agreement, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Global Compression Business having, or
which, insofar as reasonably can be foreseen, in the future could have, any such
effect.
(i) Employee Benefit Matters.
(i) Set forth on Schedule 3.2(i) attached
hereto, is a list of each of the following that is currently sponsored,
maintained or contributed to by GE Capital or any of its subsidiaries for the
benefit of the employees of the Global Compression Business:
(A) each "employee benefit plan," as such
term is defined in Section 3(3) of ERISA (including, but not limited to,
employee benefit plans, such as foreign plans, which are not subject to the
provisions of ERISA) ("Global Plan");
(B) each stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan or
arrangement, severance pay plan, policy or agreement, deferred compensation
agreement or arrangement, executive compensation or supplemental income
arrangement, consulting and employment agreement, including without limitation
those covering employees outside the United States ("Global Benefit Program or
Agreement").
The Global Compression Business has no outstanding liability other than accrued
as a current liability on its balance sheet as of June 30, 1998 with respect to
any of the items described in clauses (a) and (b) above that are not currently
sponsored, maintained or contributed to by the Global Compression Business, but
were so sponsored, maintained or contributed to by the Global Compression
Business within the past six years.
(ii) True, correct and complete copies of each
of the Global Plans, the Global Benefit Programs or Agreements and related
trusts, as in effect on the date hereof, have been furnished to Xxxxxxxxxxx. In
addition, with respect to the Global Compression Services, Inc. 401(k) Plan (the
"Global 401(k) Plan"), Global has furnished to Xxxxxxxxxxx true, correct and
complete copies of the most recent Form 5500, Summary Plan Description and the
submission to the IRS for Determination Letter.
(iii) Except as otherwise set forth on
Schedule 3.2(i) attached hereto:
(A) The Global Compression Business has
substantially performed all obligations, whether arising by operation of law or
by contract, required to be performed by it in connection with the Global 401(k)
Plan, and there have been no defaults or violations by any other party to the
Global 401(k) Plan;
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(B) The Global 401(k) Plan has been
administered and operated in substantial compliance with its governing documents
and applicable law (including, where applicable, ERISA, and the Code);
(C) The Global 401(k) Plan is intended to be
qualified under Section 401 of the Code and the Trust maintained pursuant to
such Plan intended to be tax-exempt under Section 501 of the Code satisfies the
requirements of such Sections and has an application pending for a favorable
determination letter from the Internal Revenue Service regarding such qualified
and tax-exempt status and has not, since receipt of the most recent favorable
determination letter, been amended or operated in a way which is reasonably
likely to adversely affect such qualified and tax-exempt status; and
(D) There are no actions, suits or claims
pending (other than routine claims for benefits) or threatened against, or with
respect to, the Global 401(k) Plan or its assets, and there is no matter pending
(other than routine qualification determination filings) with respect to the
Global 401(k) Plan before any Governmental Entity which are reasonably likely to
result in a material liability.
(j) Tax Matters.
(i) Except as set forth on Schedule 3.2(j)
attached hereto, (a) all Tax Returns of or with respect to any Tax that are
required to be filed on or before the Closing Date by or with respect to the
Global Compression Business have been or will be duly and timely filed under the
statutes, rules and regulations of each jurisdiction in which such Tax Returns
are required to be filed, (b) all items of income, gain, loss, deduction and
credit or other items required to be included in each such Tax Return have been
or will be so included and all information provided in each such Tax Return is
or will be true, correct and complete in all material respects, (c) all Taxes
which have become or will become due with respect to the period covered by each
such Tax Return whether or not reflected on the Tax Returns have been or will be
timely paid in full, (d) all withholding Tax requirements imposed on or with
respect to the Global Compression Business have been or will be satisfied in
full, and (e) no penalty, interest or other charge is or will become due with
respect to the late filing of any such Tax Return or late payment of any such
Tax.
(ii) Except as set forth on Schedule 3.2(j)
hereto, all Tax Returns of, or with respect to the Global Compression Business
or any Global Affiliated Group have been audited by the applicable Governmental
Entity, or the applicable statute of limitations has expired, for all periods up
to and including the periods set forth on Schedule 3.2(j) attached hereto. No
member of the GE Capital Group is aware that assertion has ever been made by a
Governmental Authority in a jurisdiction where any member of the GE Capital
Group does not currently file Tax Returns that is or may be subject to taxation
in that jurisdiction nor is any member of the GE Capital Group aware that any
such assertion is pending or threatened, in each case where such assertion could
reasonably be expected to have a Material Adverse Effect on the Global
Compression Business.
(iii) There is no claim with respect to the
Global Compression Business for any Taxes, and no assessment, deficiency or
adjustment has been asserted or proposed with respect to any Tax Return of or
with respect to the Global Compression Business, other than those
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disclosed (and to which are attached true and complete copies of all audit or
similar reports) set forth on Schedule 3.2(j) attached hereto.
(iv) There is not in force any extension of
time with respect to the due date for the filing of any Tax Return of or with
respect to the Global Compression Business or any waiver or agreement for any
extension of time for the assessment or payment of any Tax of or with respect to
the Global Compression Business.
(v) Schedule 3.2(j) attached hereto contains a
true and complete copy of each written Tax allocation or sharing agreement and a
true and complete description of each unwritten Tax allocation or sharing
arrangement affecting the GE Capital Compression Business. All such agreements
shall be terminated prior to the Closing Date and no payments are due or will
become due by on or after the Closing Date pursuant to any such agreement or
arrangement.
(vi) Except at set forth on Schedule 3.2(j)
hereto, none of the property of the Global Compression Business is held in an
arrangement that could be classified as a partnership for Tax purposes, and the
Global Compression Business does not own any interest in any controlled foreign
corporation (as defined in Section 957 of the Code), passive foreign investment
company (as defined in Section 1297 of the Code) or other entity the income of
which is required to be included in the income of the Global Compression
Business.
(vii) Except as set forth on Schedule 3.2(j)
hereto, none of the property of the Global Compression Business is: (i) subject
to a safe-harbor lease (pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954 as amended and in effect immediately prior to the enactment of the
Tax Reform Act of 1986), or (ii) "tax-exempt use property" (within the meaning
of Section 168(h) of the Code), or (iii) "tax-exempt bond financed property"
(within the meaning of Section 168(g)(5) of the Code) or (iv) "limited use
property" (as that term is used in Rev. Proc. 76-30).
(viii) The Global Compression Business will
not be required to include any amount in income for any taxable period beginning
after the Closing Date as a result of a change in accounting method for any
taxable period ending on or before the Closing Date or pursuant to any agreement
with any Tax authority with respect to any such taxable period.
(ix) No corporation whose stock is included in
the Global Compression Business has consented to have the provisions of Section
341(f)(2) of the Code apply with respect to a sale of its stock.
(x) No Liens (whether filed or arising by
operation of law) have been imposed upon or asserted against the Global
Compression Business as a result of or in connection with the failure, or
alleged failure to pay any tax.
(k) No Excess Parachute Payments. No amount that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Formation Agreement by any
employee, officer or director of the Global Compression Business who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation
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arrangement or Global Plan currently in effect would be characterized as an
"excess parachute payment" (as such term is defined in Section 280G(b) (1) of
the Code) or would be non-deductible by reason of Code Section 162(m).
(l) Environmental Matters. Except as set forth on Schedule
3.2(l) attached hereto or as described in the TRC Reports:
(i) The Global Compression Business has been
and is in compliance with all Environmental Laws, and there are no conditions
existing on or resulting from operation of the businesses or properties of the
Global Compression Business that may give rise to any on-site or off-site
remedial obligations under any Environmental Law, except for such noncompliance
or remedial obligations as would not have a Material Adverse Effect on the
Global Compression Business;
(ii) Without limitation of clause (i) above,
the Global Compression Business and its properties are not subject to any
existing, pending or, to the knowledge of GE Capital, threatened action, suit,
investigation, inquiry or proceeding by or before any Governmental Entity under
any Environmental Law.
(iii) All notices, permits, licenses or
similar authorizations, if any, required to be obtained or filed by the Global
Compression Business under any Environmental Law, including without limitation
those relating to the treatment, storage, disposal or Release of any substance,
material or waste regulated under Environmental Laws, into the environment, have
been duly obtained or filed, and the Global Compression Business is in
compliance with the terms and conditions of all such permits and authorizations,
except as would not have a Material Adverse Effect on the Global Compression
Business and no actions or appeals are pending or, to the knowledge of Global,
threatened to revoke or materially alter the terms and conditions of such
material permits;
(iv) Except where such failure would not have
a Material Adverse Effect, since the effective date of the relevant requirements
of RCRA, as amended, or other comparable Environmental Laws, all substances,
materials or wastes regulated under RCRA or another comparable Environmental Law
that are generated by the Global Compression Business or at any properties of
the Global Compression Business and require disposal or treatment have been
transported only by carriers maintaining valid authorizations under RCRA and any
other comparable Environmental Laws and treated and disposed of only at
treatment, storage and disposal facilities maintaining valid authorizations
under RCRA and any other comparable Environmental Law, and, to the knowledge of
GE Capital, such carriers and facilities have been and are operating in
compliance with such authorizations and are not the subject of any existing,
pending or overtly threatened action, investigation or inquiry by any
Governmental Entity in connection with any Environmental Laws.
(v) There are no asbestos-containing materials
or naturally occurring radioactive materials on or in any of the properties of
the Global Compression Business that are required to be removed, remediated or
abated under Environmental Laws, and there are no storage tanks, open or closed
pits, sumps, or other containers on or under any of the properties of the
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Global Compression Business from which any substances, materials or wastes
regulated under Environmental Laws have been Released into the surrounding
environment, except as would not have a Material Adverse Effect on the Global
Compression Business; and
(vi) Without limiting the foregoing, there is
no liability to any non-governmental third party under Environmental Laws or
under common law tort, trespass and nuisance in connection with any Release or
threatened Release of any substances, materials or wastes regulated under
Environmental Laws into the environment as a result of or with respect to the
properties or businesses of the Global Compression Business, except as would not
have a Material Adverse Effect on the Global Compression Business.
(m) Compliance with Laws. The Global Compression Business
holds all required, necessary or applicable permits, licenses, variances,
exemptions, orders, franchises and approvals of all Governmental Entities,
except where the failure to so hold would not have a Material Adverse Effect on
the Global Compression Business (the "Global Permits"). The Global Compression
Business is in compliance with the terms of the Global Permits except where the
failure to so comply would not have a Material Adverse Effect on Global and its
subsidiaries, taken as a whole. The Global Compression Business has not violated
or failed to comply with any statute, law, ordinance, regulation, rule, permit
or order of any federal, state or local government, domestic or foreign, or any
Governmental Entity, any arbitration award or any judgment, decree or order of
any court or other Governmental Entity, applicable to the Global Compression
Business or its businesses, assets or operations, except for violations and
failures to comply that could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Global Compression
Business.
(n) Material Contracts and Agreements.
(i) Schedule 3.2(n) attached hereto lists the
following contracts and other agreements (written or oral) to which the Global
Compression Business or any of its assets is a party or subject to:
(A) Any agreement (or group of related
agreements) for the purchase or sale of compressors, compressor parts or other
goods and services in an amount in excess of $500,000;
(B) any lease or rental of real or personal
property to or from any Person providing for lease payments in excess of
$500,000 per year or having a remaining term in excess of one year;
(C) any agreement concerning a partnership
or joint venture or agency relationship;
(D) any agreement (or group of related
agreements) involving the creation, incurrence, assumption or guarantee of any
indebtedness for borrowed money, any capital lease obligation or any sale lease
back obligation in an amount in excess of $100,000 or which a security interest
for any such obligations has been granted;
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(E) any material agreement concerning
confidentiality or non-competition;
(F) any collective bargaining agreement or
other contract with any labor union;
(G) any separate employment agreement
providing for annual compensation in excess of $75,000 or providing severance
benefits outside the Global Compression Business' customary severance policy;
(H) any agreement under which the Global
Compression Business has advanced or loaned any amount of money to its
directors, officers or employees outside the ordinary course of business; or
(I) any agreement under which the
consequences of a default or termination would have a Material Adverse effect on
the Global Compression Business taken as a whole.
All material contracts of the Global Compression Business are listed on Schedule
3.2(n) attached hereto and copies thereof have been made available to
Xxxxxxxxxxx. For purposes of this provision, material contracts shall be deemed
to include all contracts that would be required to be filed by the Global
Compression Business with the Securities and Exchange Commission as exhibits to
an Annual Report on Form 10-K if the Global Compression Business had equity
securities registered under the Securities Exchange Act of 1934, as amended.
(o) Title to Properties.
(i) Global has indefeasible title to all owned
real properties in the Included Global Assets and good and marketable title to,
or valid leasehold interests in, all of the other Included Global Assets, except
for minor defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its business as currently
conducted or as reasonably expected to be conducted. All the Included Global
Assets, other than Included Global Assets in which Global has leasehold
interests (but only to the extent of such leasehold interests), are free and
clear of all Liens, other than those set forth on Schedule 3.2(o) attached
hereto and those arising from purchase options granted to lessees under rental
contracts entered into in the ordinary course of business, and except for Liens
that, in the aggregate, do not and will not materially interfere with its
ability to conduct its business as currently conducted or as reasonably expected
to be conducted.
(ii) Except as would not have a Material
Adverse Effect on the Global Compression Business taken as a whole, Global has
complied in all material respects with the terms of all leases to which it is a
party and under which it is in occupancy, and all such leases are in full force
and effect. Global enjoys peaceful and undisturbed possession under all such
leases.
(iii) Upon consummation of the transactions
contemplated hereby, (A) the Partnership will have acquired and own indefeasible
title to all owned real properties in the Included
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Global Assets and good and marketable title to or valid leasehold interests in
all of the other Included Global Assets, except for minor defects in title,
easements, restrictive covenants and similar encumbrances or impediments that,
in the aggregate, do not and will not materially interfere with the ability of
the Partnership to conduct its business as currently conducted or as reasonably
expected to be conducted, and (B) all the Included Global Assets so acquired by
the Partnership, other than those in which the Partnership acquires leasehold
interests (but only to the extent of such leasehold interests) will be free and
clear of all Liens, except as set forth on Schedule 3.2(o) and those arising
from purchase options granted to lessees under rental contracts entered into in
the ordinary course of business attached hereto, and except for Liens, that, in
the aggregate, do not and will not materially interfere with its ability to
conduct its business as currently conducted or as reasonably expected to be
conducted.
(p) Intellectual Property. The Global Compression Business
owns, or is licensed or otherwise has the right to use, all patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service
marks, service xxxx rights, copyrights, technology, know-how, processes and
other proprietary intellectual property rights and computer programs which are
material to the condition (financial or otherwise) or conduct of the business
and operations of the Global Compression Business taken as a whole. To GE
Capital's knowledge, the use of such patents, patent rights, trademarks,
trademark rights, service marks, service xxxx rights, trade names, copyrights,
technology, know-how, processes and other proprietary intellectual property
rights and computer programs by the Global Compression Business does not
infringe on the rights of any Person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liability on the part of the
Global Compression Business which could have a Material Adverse Effect with
respect to the Global Compression Business taken as a whole.
(q) Labor Matters. There are no collective bargaining
agreements or other labor union agreements or understandings to which the Global
Compression Business is a party or by which any of them is bound, nor is the
Global Compression Business the subject of any proceeding asserting that it or
any subsidiary has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions. There is no union
organization activity involving any of the employees of the Global Compression
Business, pending or to the knowledge of any GE Entity, threatened. There is no
picketing, strikes, or any material slowdowns, work stoppages, other job
actions, lockouts, arbitrations, grievances or other labor disputes involving
any of the employees of the Global Compression Business, pending or to the
knowledge of any GE Entity, threatened. The Global Compression Business is in
material compliance with all laws, regulations and orders relating to wages,
hours, WARN, collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or social security taxes and any similar tax. There has been no "mass
layoff" or "plant closing" as defined by WARN with respect to the Global
Compression Business within the six (6) months prior to Closing.
(r) Insurance. Set forth on Schedule 3.2(r) attached hereto is
information as of the date hereof with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage, and bond and surety arrangements) to which the Global
Compression Business is a party, a named insured, or otherwise a named
beneficiary of coverage (excluding policies maintained by unaffiliated third
parties for the benefit of
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the Global Compression Business). With respect to each such insurance policy,
and except as set forth on Schedule 3.2(r) attached hereto: (i) the policy is in
full force and effect; (ii) to the knowledge of GE Capital, the Global
Compression Business is not in breach or default (including with respect to the
payment of premiums nor the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration under the policy; and (iii) no
party to the policy has repudiated any provision thereof. The Global Compression
Business has not reached or exceeded its policy limits for any insurance
policies in effect at any time during the past five years.
(s) Undisclosed Liabilities. Except as set forth on Schedule
3.2(s) attached hereto or as set forth in the Global Financial Statements, at
the date of the most recent audited financial statements of the Global
Compression Business, the Global Compression Business had not, and since such
date the Global Compression Business has not incurred (except in the ordinary
course of business), any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise), which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Global Compression Business taken as a whole.
(t) Year 2000 Compliance.
(i) Products and Services. Except as set forth
on Schedule 3.2(t) attached hereto, all of the Products and Services of Global
are Year 2000 Compliant. If Global is obligated to repair or replace Products or
Services previously provided thereby that are not Year 2000 Compliant in order
to meet its contractual obligations, to avoid personal injury or other
liability, to avoid misrepresentation claims, or to satisfy any other
obligations or requirements, Global has repaired or replaced those Products and
Services to make them Year 2000 Compliant. Global has furnished Xxxxxxxxxxx with
true, correct and complete copies of any customer agreements and other materials
and correspondence in which Global has furnished (or could be deemed to have
furnished) assurances as to the performance and/or functionality of the Products
or Services of Global on or after January 1, 2000.
(ii) Internal MIS Systems and Facilities.
Except as set forth on Schedule 3.2(t) attached hereto, all of the Internal MIS
Systems and Facilities of Global are Year 2000 Compliant.
(iii) Suppliers. Except as set forth on
Schedule 3.2(t) attached hereto, all vendors of products or services to Global,
and its products, services and operations, are Year 2000 Compliant. To the
knowledge of Global after a reasonably diligent investigation, each such vendor
will continue to furnish its products or services to Global, without
interruption or material delay, on and after January 1, 2000. Global has entered
into appropriate agreements with each of its vendors certifying that all
hardware, software or firmware, and any other products and services furnished by
such vendor, including any and all enhancements, upgrades, customizations,
modifications, maintenance and the like, are Year 2000 Compliant. All such
vendor agreements include appropriate indemnification by the vendor in favor of
Global and its successors if that vendor or its products, services or operations
fail to be Year 2000 Compliant or if the products, services or operations fail
to conform to or meet the terms of the vendor warranties, representations, or
other contractual terms.
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(iv) Year 2000 Compliance Investigations and
Reports. Global has furnished Xxxxxxxxxxx with a true, correct and complete copy
of any internal investigations, memoranda, budget plans, forecasts or reports
concerning the Year 2000 Compliance of the products, services, operations,
systems, supplies, and facilities of Global and its vendors.
ARTICLE IV
CERTAIN COVENANTS
Section 4.1. Conduct of Xxxxxxxxxxx Compression Business.
(a) Ordinary Course. During the period from the date of this
Formation Agreement to the Closing Date (except as otherwise specifically
contemplated by the terms of this Formation Agreement), Xxxxxxxxxxx will cause
each Transferring Xxxxxxxxxxx Entity to, and each Transferring Xxxxxxxxxxx
Entity will, carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact its current
business organizations, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with it, in each
case consistent with past practice, to the end that its goodwill and ongoing
business shall be unimpaired to the fullest extent possible at the Closing Date.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Formation Agreement, no Transferring Xxxxxxxxxxx
Entity shall, and Xxxxxxxxxxx shall not permit any Transferring Xxxxxxxxxxx
Entity to:
(i) (A) declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its equity
securities or interests, other than dividends and distributions by any direct or
indirect wholly owned subsidiary of WECC to WECC or a wholly owned subsidiary of
WECC, (B) split, combine or reclassify any of its capital stock or other equity
interests or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (C)
purchase, redeem or otherwise acquire any equity securities or interests of any
Transferring Xxxxxxxxxxx Entity or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities or interests;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock or other equity interests, any other
voting securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, equity interests or securities, voting
securities or convertible securities;
(iii) amend its certificate or articles of
incorporation or similar charter documents, its bylaws or its limited
partnership agreement;
(iv) except for those contemplated
transactions described on Schedule 4.1(a)(iv) attached hereto, acquire or agree
to acquire any business, corporation, partnership, association, joint venture,
limited liability company or other entity or division thereof involving the
payment of consideration in excess of $1,000,000 individually or in the
aggregate (with respect to
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all such transactions by all Transferring Xxxxxxxxxxx Entities) without the
written consent of GE Capital, which consent shall not be unreasonably withheld;
(v) incur any Indebtedness, whether or not
evidenced by a note, bond, debenture or similar instrument, except for such
borrowings that would be repaid in full at Closing;
(vi) sell, lease, mortgage, pledge or xxxxx x
Xxxx on or otherwise encumber or dispose of any of its properties or assets,
except (A) sales or leases in the ordinary course of business consistent with
past practice, (B) as may be required under Xxxxxxxxxxx'x credit and debt
facilities, (C) with respect to purchase money security interests, and (D) other
immaterial transactions not in excess of $1,000,000 in the aggregate (with
respect to all such transactions by all Transferring Xxxxxxxxxxx Entities);
(vii) make any change in any election relating
to Taxes or settle or compromise any Tax audit or controversy relating to any
Xxxxxxxxxxx Entity or the Xxxxxxxxxxx Compression Business;
(viii) except for those transactions
contemplated hereby, adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization;
(ix) change any material accounting principle
used by it, except as required by regulations promulgated by GAAP; or
(x) authorize any of, or commit or agree to
take any of, the foregoing actions.
(b) Changes in Employment Arrangements. Except as contemplated
by the Transaction Documents, Xxxxxxxxxxx shall not permit the Xxxxxxxxxxx
Compression Business to adopt or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or other arrangement (including
any Xxxxxxxxxxx Plan) for the benefit or welfare of any employee, director or
former director or employee, increase the compensation or fringe benefits of any
officer of the Xxxxxxxxxxx Compression Business, or, except as provided in an
existing Xxxxxxxxxxx Plan or in the ordinary course of business consistent with
past practice, increase the compensation or fringe benefits of any employee or
former employee or pay any benefit not required by any existing plan,
arrangement or agreement. Except as contemplated by the Transaction Documents,
Xxxxxxxxxxx shall not permit the Xxxxxxxxxxx Compression Business to grant any
new or modified severance or termination arrangement or increase or accelerate
any benefits payable under its severance or termination pay policies in effect
on the date hereof.
(c) Other Actions. Neither Xxxxxxxxxxx nor any Transferring
Xxxxxxxxxxx Entity shall take any action that would, or that could reasonably be
expected to, result in any of the representations and warranties of Xxxxxxxxxxx
set forth in this Formation Agreement becoming untrue.
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Section 4.2. Conduct of Global Compression Business.
(a) Ordinary Course. During the period from the date of this
Formation Agreement to the Closing Date (except as otherwise specifically
contemplated by the terms of this Formation Agreement), GE Capital will cause
Global to, and Global will, carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and, to
the extent consistent therewith, use all reasonable efforts to preserve intact
its current business organizations, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it,
in each case consistent with past practice, to the end that its goodwill and
ongoing business shall be unimpaired to the fullest extent possible at the
Closing Date. Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Formation Agreement, Global shall not,
and GE Capital shall not permit Global to:
(i) (A) declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its capital
stock, (B) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) purchase, redeem or
otherwise acquire any shares of capital stock of Global or any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities;
(iii) amend its Certificate of Incorporation
or By-laws;
(iv) except for those contemplated
transactions described on Schedule 4.2(a)(iv) attached hereto, acquire or agree
to acquire any business, corporation, partnership, association, joint venture,
limited liability company or other entity or division thereof involving the
payment of consideration in excess of $1,000,000, individually or in the
aggregate, without the written consent of Xxxxxxxxxxx, which consent shall not
be unreasonably withheld;
(v) incur any Indebtedness, whether or not
evidenced by a note, bond, debenture or similar instrument, except for such
borrowings that would be repaid in full at Closing;
(vi) sell, lease, mortgage, pledge or xxxxx x
Xxxx on or otherwise encumber or dispose of any of its properties or assets,
except (A) sales or leases in the ordinary course of business consistent with
past practice, (B) as may be required under Global's existing credit or debt
facilities, (C) with respect to purchase money security interests, and (D) other
transactions not in excess of $1,000,000 in the aggregate;
(vii) make any change in any election relating
to Taxes or settle or compromise any Tax audit or controversy relating to Global
or the Global Compression Business;
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(viii) except for those contemplated corporate
transactions described on Schedule 4.2(a)(viii) attached hereto, adopt a plan of
complete or partial liquidation or resolutions providing for or authorizing such
a liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or reorganization;
(ix) change any material accounting principle
used by it, except as required by GAAP; or
(x) authorize any of, or commit or agree to
take any of, the foregoing actions.
(b) Changes in Employment Arrangements. Except as contemplated
by the Transaction Documents, GE Capital shall not permit the Global Compression
Business to adopt or amend any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other employee
benefit plan, agreement, trust, fund or other arrangement (including any Global
Plan) for the benefit or welfare of any employee, director or former director or
employee, increase the compensation or fringe benefits of any officer of the
Global Compression Business, or, except as provided in an existing Global Plan
or in the ordinary course of business consistent with past practice, increase
the compensation or fringe benefits of any employee or former employee or pay
any benefit not required by any existing plan, arrangement or agreement. Except
as contemplated by the Transaction Documents, GE Capital shall not permit the
Global Compression Business to grant any new or modified severance or
termination arrangement or increase or accelerate any benefits payable under its
severance or termination pay policies in effect on the date hereof.
(c) Other Actions. Neither GE Capital nor Global shall take
any action that would, or that could reasonably be expected to, result in any of
the representations and warranties of GE Capital or Global set forth in this
Formation Agreement becoming untrue.
Section 4.3. Certain Other Covenants.
(a) Further Assurances. Upon the terms and subject to the
conditions set forth in this Formation Agreement, except to the extent otherwise
required by United States regulatory considerations and otherwise provided in
this Section 4.3(a), each of the parties agrees to use reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Formation Agreement,
including, without limitation, (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Authorities and
the making of all necessary registrations and filings (including filings with
Governmental Authorities, if any) and the taking of all reasonable steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Authority, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Formation Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental
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Authority vacated or reversed and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Formation Agreement. Notwithstanding the foregoing, no party shall be
required to agree to any consent, approval or waiver that would require such
party to take an action that would impair the value that such party reasonably
attributes to the transactions contemplated hereby.
(b) Notice. Each Xxxxxxxxxxx Entity shall give prompt written
notice to GE Capital, and each GE Entity shall give prompt written notice to
Xxxxxxxxxxx of (i) any representation or warranty made by it contained in this
Formation Agreement becoming untrue or inaccurate in any respect or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Formation Agreement; provided, however, that no such notification shall affect
the representations or warranties or covenants or agreements of the parties or
the conditions to the obligations of the parties hereunder.
(c) HSR Act.
(i) If required, each of the parties hereto
shall file a premerger notification and report form under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act")and under any
other similar applicable laws of any jurisdiction other than the United States
with respect to the transactions contemplated hereby as promptly as reasonably
possible following execution and delivery of this Formation Agreement. Each of
the parties agrees to use reasonable efforts to promptly respond to any request
for additional information pursuant to Section (e)(1) of the HSR Act or pursuant
to any such other applicable laws.
(ii) Except as otherwise required by United
States regulatory considerations, Xxxxxxxxxxx will furnish to GE Capital copies
of all correspondence, filings or communications (or memoranda setting forth the
substance thereof (collectively, "Xxxxxxxxxxx HSR Documents")) between any
Xxxxxxxxxxx Entity, or any of its respective representatives, on the one hand,
and any Governmental Authority, or members of the staff of such agency or
authority, on the other hand, with respect to this Formation Agreement or the
transactions contemplated hereby; provided, however, that (x) with respect to
documents and other materials filed by or on behalf of any Xxxxxxxxxxx Entity
with the Antitrust Division of the Department of Justice, the Federal Trade
Commission, or any state attorneys general that are available for review by GE
Capital, copies will not be required to be provided to GE Capital and (y) with
respect to any Xxxxxxxxxxx HSR Documents (1) that contain any information which,
in the reasonable judgment of Fulbright & Xxxxxxxx L.L.P., should not be
furnished to GE Capital because of antitrust considerations or (2) relating to a
request for additional information pursuant to Section (e)(1) of the HSR Act,
the obligation of Xxxxxxxxxxx to furnish any such Xxxxxxxxxxx HSR Documents to
GE Capital shall be satisfied by the delivery of such Xxxxxxxxxxx HSR Documents
on a confidential basis to Weil, Gotshal & Xxxxxx LLP pursuant to a
confidentiality agreement in form and substance reasonably satisfactory to GE
Capital. Except as otherwise required by United States regulatory
considerations, GE Capital will furnish to Xxxxxxxxxxx copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof (collectively, "GE Capital HSR Documents")) between any GE
Entity or any of its respective representatives, on the one hand, and any
Governmental Authority, or member of the staff of such agency or authority, on
the other hand,
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with respect to this Formation Agreement or the transactions contemplated
hereby; provided, however, that (x) with respect to documents and other
materials filed by or on behalf of any GE Entity with the Antitrust Division of
the Department of Justice, the Federal Trade Commission, or any state attorneys
general that are available for review by Xxxxxxxxxxx, copies will not be
required to be provided to Xxxxxxxxxxx, and (y) with respect to any GE Capital
HSR Documents (1) that contain any information which, in the reasonable judgment
of Weil, Gotshal & Xxxxxx LLP, should not be furnished to Xxxxxxxxxxx because of
antitrust considerations or (2) relating to a request for additional information
pursuant to Section (e)(1) of the HSR Act, the obligation of GE Capital to
furnish any such GE Capital HSR Documents to Xxxxxxxxxxx shall be satisfied by
the delivery of such GE Capital HSR Documents on a confidential basis to
Fulbright & Xxxxxxxx L.L.P. pursuant to a confidentiality agreement in form and
substance reasonably satisfactory to Xxxxxxxxxxx.
(iii) Nothing contained in this Formation
Agreement shall be construed so as to require any GE Entity or any Xxxxxxxxxxx
Entity, or any of their respective subsidiaries or affiliates, to sell, license,
dispose of, or hold separate, or to operate in any specified manner, any
material assets or businesses of the Global Compression Business, the
Xxxxxxxxxxx Compression Business or the Partnership (or to require the Global
Compression Business or the Xxxxxxxxxxx Compression Business to agree to any of
the foregoing). The obligations of each party under Section 4.3 to use
reasonable efforts with respect to antitrust matters shall be limited to
compliance with the reporting provisions of the HSR Act and with its obligations
under this Section 4.3(c)(iii).
(d) Bulk Sales Waiver. The Xxxxxxxxxxx Entities and the GE
Entities waive compliance with all applicable bulk sales and/or bulk transfer
laws in connection with the formation of the Partnership and Limited. Each Party
hereto shall indemnify and hold harmless the Partnership, Limited and each other
Party hereto from and against any and all losses, claims, damages and
liabilities (including legal and other expenses reasonably incurred in
connection with defending any such claims) incurred as a result of such party's
non-compliance with such laws; provided, however, that the foregoing shall not
affect the obligation of the Partnership to pay, perform and discharge the
Partnership Assumed Liabilities and no indemnity is made hereunder.
(e) Access. After the Closing, Xxxxxxxxxxx will provide the
Partnership and Limited with access to such historical accounting and other
records relating to the Xxxxxxxxxxx Compression Business prior to Closing as
reasonably requested by the Partnership or Limited. After the Closing, Global
will provide the Partnership and Limited with access to such historical
accounting and other records relating to the Global Compression Business prior
to Closing as reasonably requested by the Partnership and Limited.
(f) With respect to any of the Canadian entities to be formed
pursuant to Section 2.1(c)(4)(b), WECC covenants that, as of the date such
entities are acquired by the Partnership, with respect to any Employee Benefit
Plans of such entities, (i) all such plans will be duly registered where
required by, and will be in good standing under, all applicable laws, and any
regulations thereunder, and no events will have occurred or conditions will
exist that would reasonably be likely to jeopardize such status, (ii) all such
plans will be in material compliance and will have been maintained in accordance
with their terms and applicable law, (iii) all such plans will be properly
funded in accordance with their terms and applicable law, (iv) there will exist
no unfunded actuarial liabilities or solvency deficiencies, (v) no actuarial
surplus will have ever been removed nor will
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have any surplus ever been used to offset any contribution obligations of
Xxxxxxxxxxx or any of its subsidiaries under any such plan, and (vi) all
contributions (including all employer contributions and employee salary
reduction contributions) required to have been made under such plans or by law
to any funds or trusts established thereunder or in connection therewith will
have been made by the due date thereof (including any valid extension), and all
contributions for any period ending on or before the date such entities are
acquired by the Partnership which are not yet due will have been paid or accrued
on or prior to such date.
Section 4.4. Curing Adverse Environmental Conditions.
(a) Xxxxxxxxxxx agrees to undertake or cause to be undertaken,
promptly and at its sole cost and expense, all actions set forth on Schedule
3.1(l) to this Formation Agreement.
(b) GE Capital agrees to undertake or cause to be undertaken,
promptly and at its sole cost and expense, all actions set forth on Schedule
3.2(l) to this Formation Agreement.
(c) To the extent any corrective action required by Section
4.4(a) or Section 4.4(b) is undertaken or performed by the Partnership or the
Partnership causes such corrective actions to be undertaken or performed, either
because Xxxxxxxxxxx or GE Capital requests the Partnership to take such action
on its behalf or because Xxxxxxxxxxx or GE Capital fails to complete such
corrective action, (i) Weatherford shall promptly reimburse the Partnership for
all reasonable out-of-pocket costs associated with such corrective action at the
properties or facilities contributed to the Partnership by any Contributing
Xxxxxxxxxxx Entity, and (ii) GE Capital shall promptly reimburse the Partnership
for all reasonable out-of-pocket costs associated with such corrective action at
the properties or facilities contributed to the Partnership by Global.
(d) The obligations under this Section 4.4 are in addition to
and in no way limit the Parties' respective indemnification obligations set
forth in Article VIII of this Formation Agreement.
ARTICLE V
CONDITIONS
Section 5.1. Conditions Precedent to Each Party's Obligations. The
respective obligations of each Xxxxxxxxxxx Entity and each GE Entity to
consummate the transactions contemplated by this Formation Agreement are subject
to the satisfaction or waiver on or prior to the Closing Date of each of the
following conditions:
(a) HSR Act. The waiting period (and any extension thereof),
if applicable to the transactions contemplated by this Formation Agreement,
under the HSR Act shall have been terminated or shall have expired.
(b) Competition Act (Canada). The waiting period (and any
extension thereof) applicable to the transactions contemplated by this Formation
Agreement under Part IX of the Competition Act (Canada) shall have been
terminated or shall have expired.
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(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Formation Agreement shall
be in effect; provided, however, that the Xxxxxxxxxxx Entities and the GE
Entities shall, subject to Section 7(c), use reasonable efforts to have any such
injunction, order, restraint or prohibition vacated.
Section 5.2. Conditions Precedent to Obligations of Xxxxxxxxxxx and the
other Xxxxxxxxxxx Entities. The obligations of Xxxxxxxxxxx and each other
Xxxxxxxxxxx Entity to consummate the transactions contemplated by this Formation
Agreement are further subject to the satisfaction or waiver on or prior to the
Closing Date, of each of the following conditions:
(a) Compliance. The agreement and covenants of GE Capital and
Global to be complied with or performed on or before the Closing Date pursuant
to the terms hereof shall have been duly complied with or performed in all
material respects and Xxxxxxxxxxx shall have received a certificate to that
effect dated the Closing Date and executed on behalf of (i) GE Capital, by an
authorized officer of GE Capital, and (ii) Global, by the chief executive
officer and the chief financial officer of Global.
(b) Certifications and Opinion. GE Capital shall have
furnished Xxxxxxxxxxx with:
(i) a certified copy of a resolution or
resolutions duly adopted by the Board of Directors of Global approving the
Transaction Documents to which it is a party and consummation of the
transactions contemplated hereby;
(ii) a favorable opinion, dated the Closing
Date, in customary form and substance of Xxxxxx Xxxxxxxxxxx, Esq., Vice
President and Associate General Counsel for GE Capital, to the effect that:
(A) GE Capital is a corporation duly
organized, existing and in good standing under the laws of the State of New York
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. (B) GE
Capital has all requisite corporate power and authority to execute and deliver
each of the Transaction Documents to which it is a party and to perform its
obligations thereunder. The execution, delivery and performance by GE Capital of
the Transaction Documents to which it is a party have been duly and validly
authorized by all necessary corporate action on the part of GE Capital. Each of
the Transaction Documents to which GE Capital is a party has been duly and
validly executed and delivered by GE Capital; and
(C) The execution and delivery by GE Capital
of the Transaction Documents to which it is a party and performance by GE
Capital of its obligations thereunder will not violate or conflict with any
provision of the Articles of Incorporation or Bylaws of GE Capital.
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(iii) a favorable opinion, dated the Closing
Date, in customary form and substance of Xxxxxx Xxxxxxxx, Esq., Counsel for
Global, to the effect that:
(A) Global is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own its
properties and to carry on its business as now being conducted;
(B) Global has all requisite corporate power
and authority to execute and deliver the Transaction Documents to which it is a
party and to perform its obligations thereunder. The execution, delivery and
performance by Global of the Transaction Documents to which it is a party and
the consummation by Global of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of Global. Each of
the Transaction Documents to which Global is a party has been duly and validly
executed and delivered by Global; and
(C) The execution and delivery by Global of
the Transaction Documents to which it is a party, the consummation of the
transactions contemplated hereby and compliance by Global with the provisions
thereof will not conflict with, constitute a default under or violate any of the
terms, conditions or provisions of Global's Certificate of Incorporation or
ByLaws; and
(iv) an opinion of Weil, Gotshal & Xxxxxx LLP,
counsel for GE Capital and Global, dated the Closing Date, to the effect that
the Transaction Documents to which GE Capital or Global is a party are valid and
binding agreements of GE Capital and Global enforceable against GE Capital and
Global in accordance with their terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws or judicial decisions now or hereafter in
effect relating to creditors' rights and remedies generally, (ii) such
enforcement may be subject to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity), (iii) the remedy of
specific performance and injunctive relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought, (iv) the enforceability of any indemnification and contribution
provision contained therein may be limited by applicable federal or state laws
or public policy relating thereto and (v) such enforcement may be affected by
the failure of the GE Entities to comply with the bulk sales laws of any
jurisdiction.
(c) Representations and Warranties True. The representations
and warranties of GE Capital and Global contained in this Formation Agreement
(other than any representations and warranties made as of a specific date) shall
be true in all material respects (except to the extent the representation or
warranty is already qualified by materiality, in which case it shall be true in
all respects) on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, except as
contemplated or permitted by this Formation Agreement, and Xxxxxxxxxxx shall
have received a certificate to that effect dated the Closing Date and executed
on behalf of (i) GE Capital, by an authorized officer of GE Capital, and (ii)
Global by the chief executive officer and the chief financial officer of Global.
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(d) Consents, etc.. Xxxxxxxxxxx shall have received evidence,
in form and substance reasonably satisfactory to it, that such licenses,
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and other third parties as are necessary in connection
with the transactions contemplated hereby have been obtained, except such
licenses, permits, consents, approvals, authorizations, qualifications and
orders which are not, individually or in the aggregate, material to the
Partnership and its subsidiaries, taken as a whole, or the failure of which to
have received would not (as compared to the situation in which such license,
permit, consent, approval, authorization, qualification or order had been
obtained) have a Material Adverse Effect on the Partnership and its
subsidiaries, taken as a whole, after giving effect to the transactions
contemplated hereby.
(e) No Litigation. There shall not be pending or threatened by
any Governmental Authority any suit, action or proceeding (or by any other
Person any pending suit, action or proceeding which has a reasonable likelihood
of success), (i) challenging or seeking to restrain or prohibit the consummation
of the transactions contemplated by this Formation Agreement or seeking to
obtain from Xxxxxxxxxxx or any of the other Weatherford Entities any damages
that are material in relation to Weatherford and the other Weatherford Entities
taken as a whole, (ii) seeking to prohibit or limit the ownership or operation
by the Partnership or any of its subsidiaries of any material portion of the
Global Compression Business or the Xxxxxxxxxxx Compression Business or to
dispose of or hold separate any material portion of the business or assets of
the Global Compression Business or the Xxxxxxxxxxx Compression Business, as a
result of the transactions contemplated by this Formation Agreement or (iii)
seeking to prohibit the Partnership or any of its subsidiaries from effectively
controlling in any material respect the Global Compression Business or the
Xxxxxxxxxxx Compression Business.
(f) No Material Adverse Change. There shall not have occurred
any material adverse change with respect to the Global Compression Business
since the date hereof.
Section 5.3. Conditions Precedent to Obligations of GE Capital and the
other GE Entities. The obligations of GE Capital and each other GE Entity to
consummate the transactions contemplated by this Formation Agreement are further
subject to the satisfaction or waiver on or prior to the Closing Date, of each
of the following conditions:
(a) Compliance. The agreements and covenants of Weatherford
and each other Weatherford Entity to be complied with or performed on or before
the Closing Date pursuant to the terms hereof shall have been duly complied with
or performed in all material respects and GE Capital shall have received a
certificate to that effect dated the Closing Date executed on behalf of
Weatherford and each other Weatherford Entity by the chief executive officers
and the chief financial officers of Weatherford and each other Weatherford
Entity (or of the general partner thereof with respect to Weatherford Entities
that are limited partnerships).
(b) Certification and Opinions. Weatherford shall have
furnished GE Capital with:
(i) a certified copy of a resolution or
resolutions duly adopted by the Board of Directors or a duly authorized
committee thereof or the general partner thereof of each
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Weatherford Entity approving the Transaction Documents to which it is a party,
and consummation of the transactions contemplated hereby;
(ii) a favorable opinion, dated the Closing
Date, in customary form and substance, of Fulbright & Xxxxxxxx L.L.P., counsel
for the Xxxxxxxxxxx Entities to the effect that:
(A) Each Weatherford Entity is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has corporate or partnership, as the case may be, power to own its
properties and to carry on its business as now being conducted;
(B) Each Weatherford Entity has the
requisite corporate or partnership, as the case may be, power to effect the
transactions contemplated by the Transaction Documents to which it is a party;
the execution and delivery of such Transaction Documents Agreement did not, and
the consummation of the transactions contemplated thereby will not, violate any
provision of, with respect to Weatherford, Xxxxxxxxxxx'x certificate of
incorporation, or ByLaws, and with respect to WECC, WECC's limited partnership
agreement; and
(C) the Board of Directors of Weatherford
has taken all action required under the DGCL, its certificate of incorporation,
or its By-Laws and the general partner of WECC has taken all action required
under the DRULPA or its limited partnership agreement to authorize the execution
and delivery of the Transaction Documents to which it is a party and the
transactions contemplated thereby; and each such Transaction Document (other
than those governed by the laws of the State of Delaware) is a valid and binding
agreement of such Weatherford Entity enforceable against such Weatherford Entity
in accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws or judicial decisions now or hereafter in effect relating to
creditors' rights and remedies generally, (ii) such enforcement may be subject
to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity), (iii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought,
(iv) the enforceability of any indemnification provision contained therein may
be limited by applicable federal or state laws or public policy relating thereto
and (v) such enforcement may be affected by the failure of the Xxxxxxxxxxx
Entities to comply with the bulk sales laws of any jurisdiction.
(c) Representations and Warranties True. The representations
and warranties of each Weatherford Entity contained in this Formation Agreement
(other than any representations and warranties made as of a specific date) shall
be true in all material respects (except to the extent the representation or
warranty is already qualified by materiality, in which case it shall be true in
all respects) on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, except as
contemplated or permitted by this Formation Agreement, and GE Capital shall have
received a certificate to that effect dated the Closing Date and executed on
behalf of Weatherford and WECC by an authorized officer of Weatherford and of
the general partner of WECC.
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(d) Consents, etc.. GE Capital shall have received evidence,
in form and substance reasonably satisfactory to it, that such licenses,
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and other third parties as are necessary in connection
with the transactions contemplated hereby have been obtained, except such
licenses, permits, consents, approvals, authorizations, qualifications and
orders that are not, individually or in the aggregate, material to the
Partnership and its subsidiaries, taken as a whole, or the failure of which to
have received would not (as compared to the situation in which such license,
permit, consent, approval, authorization, qualification or order had been
obtained) have a Material Adverse Effect on the Partnership and its subsidiaries
taken as a whole after giving effect to the transactions contemplated hereby.
(e) No Litigation. There shall not be pending or threatened by
any Governmental Authority any suit, action or proceeding (or by any other
Person any pending suit, action or proceeding which has a reasonable likelihood
of success) (i) challenging or seeking to restrain or prohibit the consummation
of the transactions contemplated by this Formation Agreement or seeking to
obtain from GE Capital or Global any damages that are material in relation to GE
Capital and Global taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Partnership or any of its subsidiaries of any
material portion of the Global Compression Business or the Xxxxxxxxxxx
Compression Business or to dispose of or hold separate any material portion of
the business or assets of the Global Compression Business or the Xxxxxxxxxxx
Compression Business, as a result of the transactions contemplated by this
Formation Agreement or (iii) seeking to prohibit the Partnership or any of its
subsidiaries from effectively controlling in any material respect the Global
Compression Business or the Xxxxxxxxxxx Compression Business.
(f) No Material Adverse Change. There shall not have occurred
any material adverse change with respect to the Xxxxxxxxxxx Compression Business
since the date hereof.
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1. Termination. (a) This Formation Agreement may be
terminated at any time prior to the Closing Date:
(i) by mutual written consent of the Parties
hereto;
(ii) by either Xxxxxxxxxxx or GE Capital:
(A) if any court of competent jurisdiction
or any Governmental Authority shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the transactions contemplated hereby; or
(B) if the transactions contemplated hereby
shall not have been consummated on or before February 15, 1999, unless the
failure to consummate the transactions
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contemplated hereby is the result of a material breach of this Formation
Agreement by the Party seeking to terminate this Formation Agreement.
(iii) by Weatherford, if GE Capital or
Global breaches any of its representations or warranties herein or fails to
perform in any material respect any of its covenants, agreements or obligations
under this Formation Agreement; and
(iv) by GE Capital, if Xxxxxxxxxxx or any
other Weatherford Entity breaches any of its representations or warranties
herein or fails to perform in any material respect any of its covenants,
agreements or obligations under this Formation Agreement.
(b) In the event of termination of this Formation Agreement as
provided in Section 6.1(a), this Formation Agreement shall forthwith become void
and have no effect, without any liability or obligation on the part of
Xxxxxxxxxxx or any other Weatherford Entity or GE Capital or any other GE
Entity, other than (i) the provisions of Sections 6.1., 6.3, 9.1, 9.2 and 9.6
and (ii) such termination shall not relieve any party hereto for any breach of
this Formation Agreement prior to such termination by a Party of any of its
representations or warranties or any of its covenants, agreements or obligations
set forth in this Formation Agreement.
Section 6.2. Amendment. This Formation Agreement may be amended by the
Parties at any time.
Section 6.3. Procedure for Termination, Amendment, Extension or Waiver.
A termination of this Formation Agreement pursuant to Section 6.1(a)(i), an
amendment of this Formation Agreement pursuant to Section 6.2 or an extension or
waiver pursuant hereof shall, in order to be effective, require the duly
authorized signature of all Parties.
ARTICLE VII
TAX MATTERS
Section 7.1. Certain Tax Matters. The Parties agree as follows with
respect to the period following the Closing:
(a) Access to Information.
(1) Weatherford and each member of the Xxxxxxxxxxx
Group shall grant to the Partnership (or its designees) access at all reasonable
times to all of the information, books and records relating to the Weatherford
Compression Business within the possession of Xxxxxxxxxxx or any member of the
Weatherford Group (including workpapers and correspondence with taxing
authorities), and shall afford the Partnership (or its designees) the right (at
their expense) to take extracts therefrom and make copies thereof, to the extent
reasonably necessary to permit the Partnership (or its designees) to prepare Tax
Returns, to conduct negotiations with Tax authorities, and to implement the
provisions of, or to investigate or defend any claims between the parties
arising under this Formation Agreement.
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(2) GE Capital and each member of the GE Capital
Group shall grant to the Partnership (or its designees) access at all reasonable
times to all of the information, books and records relating to the Global
Compression Business within the possession of GE Capital or any member of the GE
Capital Group (including workpapers and correspondence with taxing authorities),
and shall afford (or its designees) the right (at their expense) to take
extracts therefrom and make copies thereof, to the extent reasonably necessary
to permit the Partnership (or its designees) to prepare Tax Returns, to conduct
negotiations with Tax authorities, and to implement the provisions of, or to
investigate or defend any claims between the parties arising under this
Formation Agreement.
(3) The Partnership shall grant to Xxxxxxxxxxx (or
its designees) access at all reasonable times to all of the information, books
and records relating to the Weatherford Compression Business and its
subsidiaries within the possession of the Partnership (including workpapers and
correspondence with taxing authorities), and shall afford Xxxxxxxxxxx (or its
designees) the right (at Xxxxxxxxxxx'x expense) to take extracts therefrom and
to make copies thereof, to the extent reasonably necessary to permit Xxxxxxxxxxx
(or its designees) to prepare Tax Returns, to conduct negotiations with Tax
authorities, and to implement the provisions of, or to investigate or defend any
claims between the parties arising under, this Formation Agreement.
(4) The Partnership shall grant to GE Capital (or its
designees) access at all reasonable times to all of the information, books and
records relating to the Global Compression Business and its subsidiaries within
the possession of the Partnership (including workpapers and correspondence with
taxing authorities), and shall afford GE Capital (or its designees) the right
(at GE Capital's expense) to take extracts therefrom and to make copies thereof,
to the extent reasonably necessary to permit GE Capital (or its designees) to
prepare Tax Returns, to conduct negotiations with Tax authorities, and to
implement the provisions of, or to investigate or defend any claims between the
parties arising under, this Formation Agreement.
(5) Each of the Parties will preserve and retain all
schedules, workpapers and other documents relating to any Tax Returns of or with
respect to the Global Compression Business, in the case of GE Capital and the
Partnership, and the Xxxxxxxxxxx Compression Business, in the case of
Weatherford and the Partnership, or to any claims, audits or other proceedings
affecting such Businesses until the expiration of the statute of limitations
(including extensions) applicable to the taxable period to which such documents
relate or until the final determination of any controversy with respect to such
taxable period, and until the final determination of any payments that may be
required with respect to such taxable period under this Formation Agreement.
(b) Indemnification Provisions for the Benefit of the
Partnership, Global and GE Capital. Weatherford hereby agrees to defend,
indemnify and hold harmless the Partnership, Global and GE Capital from and
against, and agrees to pay, all Taxes imposed and all costs and expenses
(including, without limitation, litigation costs and reasonable attorneys' and
accountants' fees and disbursements) incurred (all herein referred to as "Tax
Losses") as a result of:
(1) a claim, notice of deficiency, or assessment by,
or any obligation owing to, any Governmental Authority for:
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any Taxes of the Xxxxxxxxxxx Group including, without limitation (i) any and all
Taxes of any entity the assets of which are subsequently acquired, whether by
purchase or otherwise, by the Partnership from any entity controlling or
controlled by, under common control with, or otherwise affiliated with any
Weatherford Entity, and (ii) any and all Taxes of any entity the equity
interests of which are acquired, whether by purchase or otherwise, by the
Partnership, from any entity controlling or controlled by, under common control
with, or otherwise affiliated with any Weatherford Entity in each case to the
extent that such Taxes are attributable to any period prior to the Closing Date;
and
any and all Taxes of any other entity (other than the Xxxxxxxxxxx Compression
Business) that is or was a member of a consolidated, combined or unitary group
of which any Weatherford Entity (or any predecessor) is or was a member on or
prior to the Closing Date, by reason of the liability of any Weatherford Entity
or any entity controlling or controlled by, under common control with, or
otherwise affiliated with any Weatherford Entity, the equity interests of which
are subsequently acquired by the Partnership, whether by purchase or otherwise
pursuant to Treasury Regulation Section 1.1502-6(a) or any analogous or similar
state, local or foreign law or regulation if and to the extent that such
liability exceeds Taxes attributable to taxable periods ending on or before the
Closing Date reflected as current liabilities on the Xxxxxxxxxxx Closing Date
Balance Sheet.
(2) any breach of any representation, warranty or
obligation of Weatherford under Section 3.1(j) or 3.1(k) of this Formation
Agreement.
(c) Indemnification Provisions for the Benefit of the
Partnership, WECC and Weatherford. GE Capital hereby agrees to defend, indemnify
and hold harmless the Partnership, WECC and Weatherford from and against, and
agrees to pay, all Tax Losses as a result of:
(1) a claim, notice of deficiency, or assessment by,
or any obligation owing to, any taxing authority for:
any Taxes of the GE Capital Group including, without limitation (i) any and all
Taxes of any entity the assets of which are subsequently acquired, whether by
purchase or otherwise, by the Partnership from any entity controlling or
controlled by, under common control with, or otherwise affiliated with any
Global Entity, and (ii) any and all Taxes of any entity the equity interests of
which are acquired, whether by purchase or otherwise, by the Partnership, from
any entity controlling or controlled by, under common control with, or otherwise
affiliated with any Global Entity to the extent that such Taxes are attributable
to any period prior to the acquisition of such equity interests by the
Partnership, unless, in the case of the Partnership, to the extent an accrual
therefor is reflected in the Global Closing Date Balance Sheet and any and all
Taxes of any corporation (other than the Global Compression Business) that is or
was a member of a consolidated, combined or unitary group of which any GE Entity
(or any predecessor) is or was a member on or prior to the Closing Date, by
reason of the liability of any GE Entity or any entity controlling or controlled
by, under common control with, or otherwise affiliated with any Global Entity,
the equity interests of which are subsequently acquired by the Partnership,
whether by purchase or otherwise pursuant to Treasury Regulation Section
1.1502-6(a) or any analogous or similar state, local or foreign law or
regulation if and to the extent such liability exceeds Taxes attributable to
taxable periods ending on or before the Closing Date reflected as current
liabilities on the Global Closing Date Balance Sheet.
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(2) any breach of any representation, warranty or
obligation of GE Capital under Section 3.2(j) or 3.2(k) of this Formation
Agreement.
(d) Indemnification Procedures.
(1) If a claim shall be made by any Governmental
Entity that, if successful, would result in the indemnification of a Party under
this Formation Agreement (referred to herein as the "Tax Indemnified Party"),
the Tax Indemnified Party shall promptly notify the party obligated under this
Formation Agreement to so indemnify (referred to herein as the "Tax Indemnifying
Party") in writing; provided, however, that no delay on the part of the Tax
Indemnified Party in notifying the Tax Indemnifying Party shall relieve the Tax
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Tax Indemnifying Party is prejudiced thereby.
(2) The Tax Indemnified Party shall take such action
in connection with contesting such claim as the Tax Indemnifying Party shall
reasonably request in writing from time to time, including the selection of
counsel and experts and the execution of powers of attorney, provided that (A)
within 30 days after the notice described in Section 7.1(d)(1) has been
delivered (or such earlier date that any payment of Taxes is due by the Tax
Indemnified Party but in no event sooner than five days after the Tax
Indemnifying Party's receipt of such notice), the Tax Indemnifying Party
requests that such claim be contested, (B) the Tax Indemnifying Party shall have
agreed to pay to the Tax Indemnified Party all costs and expenses that the Tax
Indemnified Party incurs in connection with contesting such claim, including,
without limitation, reasonable attorneys' and accountants' fees and
disbursements, and (C) if the Tax Indemnified Party is requested by the Tax
Indemnifying Party to pay the Tax claimed and xxx for a refund, the Tax
Indemnifying Party shall have advanced to the Tax Indemnified Party, on an
interest-free basis, the amount of such claim. The Tax Indemnified Party shall
not make any payment of such claim for at least 30 days (or such shorter period
as may be required by applicable law) after the giving of the notice required by
Section 7.1(d)(1), shall give to the Tax Indemnifying Party any information
reasonably requested relating to such claim, and otherwise shall cooperate with
the Tax Indemnifying Party in good faith in order to contest effectively any
such claim.
(3) Subject to the provisions of Section 7.1(d)(2),
the Tax Indemnified Party shall enter into a settlement of such contest with the
applicable Governmental Entity or prosecute such contest to a determination in a
court or other tribunal of initial or appellate jurisdiction, all as the Tax
Indemnifying Party may request.
(4) If, after actual receipt by the Tax Indemnified
Party of an amount advanced by the Tax Indemnifying Party pursuant to Section
7.1(d)(2), the extent of the liability of the Tax Indemnified Party with respect
to the claim shall be established by the final judgment or decree of court or
other tribunal or final and binding settlement with an administrative agency
having jurisdiction thereof, the Tax Indemnified Party shall promptly repay to
the Tax Indemnifying Party the amount advanced to the extent of any refund
received by the Tax Indemnified Party with respect to the claim together with
any interest received thereon from the applicable Governmental Entity and any
recovery of legal fees from such taxing authority, net of any Taxes as are
required to be paid by the Tax Indemnified Party with respect to such refund,
interest or legal fees (calculated
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at the maximum applicable statutory rate of Tax without regard to any other Tax
Items). Notwithstanding the foregoing, the Tax Indemnified Party shall not be
required to make any payment hereunder before such time as the Tax Indemnifying
Party shall have made all payments or indemnities then due with respect to the
Tax Indemnified Party pursuant to this Formation Agreement.
(5) Promptly after a final determination the Tax
Indemnifying Party shall pay to the Tax Indemnified Party the amount of any Tax
Losses to which the Tax Indemnified Party may become entitled by reason of the
provisions of this Section 7.1.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Survival of Certain Representations and Warranties. Except
for the representations and warranties set forth in Sections 3.1(e), 3.1(g),
3.1(o), 3.2(e), 3.2(g) and 3.2(o) of this Formation Agreement, which
representations and warranties will continue without limitation notwithstanding
any otherwise applicable statute of limitations, and the representations and
warranties set forth in Section 3.1(i), 3.1(j), 3.1(k), 3.2(i), 3.2(j) and
3.2(k), which representations and warranties will continue until the expiration
of the applicable statute of limitations, all written representations and
warranties contained in or made pursuant to this Formation Agreement shall
survive the Closing, but shall terminate and be of no further force or effect on
the date three years after the Closing Date, provided, however, that the
representations and warranties set forth in Sections 3.1(b) and 3.2(b) with
respect to unaudited financial statements shall not survive the Closing.
Section 8.2. Indemnification by Weatherford and WECC.
(a) Weatherford and WECC shall, jointly and severally, subject
to the terms and conditions set forth in this Section 8.2, hold harmless and
indemnify each of the Partnership, the General Partner, GE Capital and Global,
and each of their respective directors, officers, employees and agents (each, a
"Weatherford Indemnity Party"), from and against and in respect of any and all
losses, liabilities, claims, damages and reasonable expenses of defense thereof
(including without limitation expenses of investigation and defense and fees and
disbursements of counsel, but excluding ordinary course compensation paid to
employees of a Weatherford Indemnity Party), liens or other obligations of any
nature whatsoever (collectively, "GE Losses"), other than GE Losses to the
extent recovered by the applicable Weatherford Indemnity Party under any
applicable insurance policy, which may be incurred by a Weatherford Indemnity
Party and which relates to or results from:
(i) any breach by Xxxxxxxxxxx or WECC of any
representation or warranty of Xxxxxxxxxxx or WECC contained in this Formation
Agreement, other than a breach of the representations and warranties set forth
in Sections 3.1(j) and 3.1(k) of this Formation Agreement, the breach of which
Sections 3.1(j) and 3.1(k) shall be governed by Section 8.2(a)(iv), or a breach
of Section 3.1(b) with respect to unaudited financial statements; or
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(ii) any breach by Xxxxxxxxxxx or WECC of any
covenant or agreement of Xxxxxxxxxxx or WECC contained in this Formation
Agreement; or
(iii) any Excluded Weatherford Liability;
provided that if the Weatherford Indemnity Party is the Partnership or the
General Partner only to the extent such Excluded Weatherford Liability was not
accrued on the Xxxxxxxxxxx Closing Date Balance Sheet prepared pursuant to
Section 2.3 of this Formation Agreement; or
(iv) Taxes to the extent provided for in
Section 7.1(b) of this Formation Agreement, or any breach by Xxxxxxxxxxx or WECC
of any representation or warranty contained in Section 3.1(j) or 3.1(k) of this
Formation Agreement; or
(v) any matter set forth on Schedule 3.1(h)
attached to this Formation Agreement.
(b) No claim for indemnification shall be made by any
Weatherford Indemnity Party pursuant to Section 8.2(a) unless notice of such
claim (describing in reasonable specificity the basic facts or events underlying
such claim) has been given to Weatherford.
(c) No claim for indemnification shall be made by any
Weatherford Indemnity Party pursuant to Section 8.2(a)(i) until such claim,
individually, is in excess of $500,000; provided, however, that there shall be
no such minimum dollar limitation to any claim made pursuant to Section
8.2(a)(ii), 8.2(a)(iii), 8.2(a)(iv) or 8.2(a)(v).
(d) Except as provided in Article VII with respect to Tax
matters, any claim for indemnification under this Section 8.2 shall be made in
accordance with this Section 8.2(d). A Weatherford Indemnity Party shall give
prompt written notice to Weatherford of any claim or demand of which it has
knowledge and as to which it may request indemnification under this Section 8.2.
Weatherford and WECC shall have the right to defend and to direct the defense
against any claim or demand for which a claim for indemnification is made under
this Section 8.2, including the right to conduct any remediation or other
corrective action required under Environmental Laws to resolve such claim or
demand, in its name or in the name of the applicable Weatherford Indemnity
Party, as the case may be, at the sole expense of Weatherford and WECC, and with
counsel selected by Weatherford; provided that, Weatherford and WECC may not
settle or compromise any such claim or demand without the prior written consent
of the applicable Weatherford Indemnity Party (which consent may not be
unreasonably withheld). Notwithstanding anything in this Formation Agreement to
the contrary, the applicable Weatherford Indemnity Party shall cooperate with
Weatherford and WECC, and keep Weatherford fully informed in the defense of any
such claim or demand. The applicable Weatherford Indemnity Party shall have the
right to participate in the defense of any claim or demand with counsel employed
by such Weatherford Indemnity Party at the sole expense of Weatherford. Neither
Weatherford nor WECC shall have any indemnification obligations with respect to
any such claim or demand which shall be settled by a Weatherford Indemnity Party
without the prior written consent of Weatherford (which consent may not be
unreasonably withheld).
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(e) Except as provided in Article VII with respect to Tax
matters, the rights of the Xxxxxxxxxxx Indemnity Parties under Section 8.2 shall
be the exclusive remedy of the Weatherford Indemnity Parties with respect to
breaches of representations, warranties, covenants and agreements by Xxxxxxxxxxx
or WECC contained in or made pursuant to this Formation Agreement.
(f) In the event that Xxxxxxxxxxx or WECC shall be obligated
to indemnify any Weatherford Indemnity Party pursuant to this Section 8.2, the
applicable Weatherford Entity shall, upon payment of such indemnity, be
subrogated to all rights of the Xxxxxxxxxxx Indemnity Party with respect to
claims to which such indemnification relates.
Section 8.3. Indemnification by GE Capital and Global.
(a) GE Capital and Global shall, jointly and severally,
subject to the terms and conditions set forth in this Section 8.3, hold harmless
and indemnify each of the Partnership, the General Partner, Weatherford and
WECC, and each of their respective directors, officers, employees and agents
(each, a "GE Indemnity Party"), from and against and in respect of any and all
losses, liabilities, claims, damages and reasonable expenses of defense thereof
(including without limitation expenses of investigation and defense and fees and
disbursements of counsel, but excluding ordinary course compensation paid to
employees of a GE Indemnity Party), liens or other obligations of any nature
whatsoever (collectively, "Weatherford Losses"), other than Weatherford Losses
to the extent recovered by the applicable GE Indemnity Party under any
applicable insurance policy, which may be incurred by a GE Indemnity Party and
which relates to or results from:
(i) any breach by GE Capital or Global of any
representation or warranty of GE Capital or Global contained in this Formation
Agreement other than breach of representations and warranties set forth in
Sections 3.2(j) and 3.2(k) of this Formation Agreement, the breach of which
Sections 3.2(j) and 3.2(k) shall be governed by Section 8.3(a)(iv), or a breach
of Section 3.2(b) with respect to unaudited financial statements; or
(ii) any breach by GE Capital or Global of any
covenant or agreement of GE Capital or Global contained in this Formation
Agreement; or
(iii) any Excluded Global Liability; provided
that if the GE Indemnity Party is the Partnership or the General Partner only to
the extent such Excluded Global Liability was not accrued on the Global Closing
Date Balance Sheet prepared pursuant to Section 2.3 of the Formation Agreement;
or
(iv) Taxes to the extent provided for in
Section 7.1(c) of this Formation Agreement, or any breach by GE Capital or
Global of any representation or warranty contained in Sections 3.2(j) or 3.2(k)
of this Formation Agreement.
(b) No claim for indemnification shall be made by any GE
Indemnity Party pursuant to Section 8.3(a) unless notice of such claim
(describing in reasonable specificity the basic facts or events underlying such
claim) has been given to GE Capital.
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(c) No claim for indemnification shall be made by any GE
Indemnity Party pursuant to Section 8.3(a)(i) until such claim, individually, is
in excess of $500,000; provided, however, that there shall be no such minimum
dollar limitation to any claim made pursuant to Section 8.3(a)(ii), 8.3(a)(iii)
or 8.3(a)(iv).
(d) Except as provided in Article VII with respect to Tax
matters, any claim for indemnification under this Section 8.3 shall be made in
accordance with this Section 8.3(d). A GE Indemnity Party shall give prompt
written notice to GE Capital of any claim or demand of which it has knowledge
and as to which it may request indemnification under this Section 8.3. GE
Capital and Global shall have the right to defend and to direct the defense
against any claim or demand for which a claim for indemnification is made under
this Section 8.3, including the right to conduct any remediation or other
corrective action required under Environmental Laws to resolve such claim or
demand, in its name or in the name of the applicable GE Indemnity Party, as the
case may be, at the sole expense of GE Capital and Global, and with counsel
selected by GE Capital; provided that, GE Capital and Global may not settle or
compromise any such claim or demand without the prior written consent of the
applicable GE Indemnity Party (which consent may not be unreasonably withheld).
Notwithstanding anything in this Formation Agreement to the contrary, the
applicable GE Indemnity Party shall cooperate with GE Capital and Global, and
keep GE Capital fully informed in the defense of any such claim or demand. The
applicable GE Indemnity Party shall have the right to participate in the defense
of any claim or demand with counsel employed by such GE Indemnity Party at the
sole expense of GE Capital. Neither GE Capital nor Global shall have any
indemnification obligations with respect to any such claim or demand which shall
be settled by a GE Indemnity Party without the prior written consent of GE
Capital (which consent may not be unreasonably withheld).
(e) Except as provided in Article VII with respect to Tax
matters, the rights of the GE Indemnity Parties under Section 8.3 shall be the
exclusive remedy of the GE Indemnity Parties with respect to breaches of
representations, warranties, covenants and agreements by GE Capital or Global
contained in or made pursuant to this Formation Agreement.
(f) In the event that GE Capital or Global shall be obligated
to indemnify any GE Indemnity Party pursuant to this Section 8.3, the applicable
GE Entity shall, upon payment of such indemnity, be subrogated to all rights of
the GE Indemnity Party with respect to claims to which such indemnification
relates.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Expenses. Whether or not the transactions contemplated by
this Formation Agreement are consummated, all costs and expenses incurred in
connection with this Formation Agreement and the transactions contemplated
hereby shall be paid by the Party incurring such expenses.
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Section 9.2. Dispute Resolution and Arbitration.
(a) Dispute Resolution and Arbitration.
(1) In the event of any controversy or claim, whether
based in contract, tort or otherwise, arising out of or relating to any
Transaction Document or the scope, breach, termination or validity of any
Transaction Document (a "Claim"), the parties thereto involved in such Claim
shall promptly seek to resolve any such Claim by negotiations between senior
executives of such parties who have authority to settle the Claim. When a party
to a Transaction Document believes there is a Claim thereunder, that party will
give all other parties to such Transaction Document written notice of the Claim.
Within 30 days after receipt of such notice, the receiving parties shall submit
to all other parties thereto a written response. Both the notice and response
shall include (A) a statement of each party's position and a summary of the
evidence and arguments supporting its position, and (B) the name, title, fax
number, and telephone number of the executive who will represent that party. In
the event the Claim involves a claim arising out of the actions of any Person
not a signatory to the relevant Transaction Document, the receiving parties
shall have such additional time as necessary, not to exceed an additional 60
days, to investigate the Claim before submitting a written response. The
executives shall meet at a mutually acceptable time and place within 15 days
after the date of the response and thereafter as often as they reasonably deem
necessary to exchange relevant information and to attempt to resolve the Claim.
If one of the executives intends to be accompanied at a meeting by an attorney,
the other executive shall be given at least five Business Days' notice of such
intention and may also be accompanied by an attorney. All negotiations and
communications pursuant to this Section 9.2 shall be treated and maintained by
such parties as confidential information and shall be treated as compromise and
settlement negotiations for the purposes of the Federal Rules of Evidence and
state rules of evidence.
(2) If the Claim has not been resolved within 60 days
after the date of the response given pursuant to Section 9.2(a)(1) above, or
such additional time, if any, that the parties mutually agree to in writing, or
if a party receiving such notice denies the applicability of the provisions of
Section 9.2(a)(1) above or otherwise refuses to participate under the provisions
of Section 9.2(a)(1) above, any party may initiate binding arbitration pursuant
to the provisions of Section 9.2(a)(3) below.
(3) Any Claims not settled pursuant to the foregoing
provisions shall be submitted to binding arbitration in accordance with the
following provisions.
(i) The party desiring to initiate arbitration
in connection with any Claim shall notify all other parties in writing, which
notice shall demand arbitration, and include a statement of the matter in
controversy.
(ii) Within 15 days after receipt of such
demand, the receiving parties and the sending party shall attempt to jointly
agree on three arbitrators from the panel made available by the American
Arbitration Association. If the parties are unable to so agree within such
period, such arbitrators shall be appointed, upon request of the party demanding
arbitration, by the Chief U.S. District Court Judge for the Southern District of
Texas or such other person designated by such judge. In the event the Judge
declines to appoint such arbitrators, appointment shall be
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made, upon application of the party demanding arbitration, pursuant to the
Commercial Arbitration Rules of the American Arbitration Association.
(iii) The parties to the Transaction Documents
hereby request and consent to the three arbitrators conducting a hearing in
Houston, Texas no later than 60 days following their selection or 30 days after
all prehearing discovery has been completed, whichever is later, at which the
parties to the relevant Transaction Documents shall present such evidence and
witnesses as they may choose, with or without counsel.
(iv) Arbitration shall be conducted in
accordance with the Commercial Arbitration Rules and procedures of the American
Arbitration Association.
(v) The Federal Rules of Civil Procedure, as
modified or supplemented by the local rules of civil procedure for the U.S.
District Court, Southern District of Texas, shall apply in the arbitration. The
parties to the relevant Transaction Documents shall make their witnesses
available in a timely manner for discovery pursuant to such rules. If a party
fails to comply with this discovery agreement within the time established by the
arbitrators, after resolving any discovery disputes, the arbitrators may take
such failure to comply into consideration in reaching their decision. All
discovery disputes shall be resolved by the arbitrators pursuant to the
procedures set forth in the Federal Rules of Civil Procedure. Discovery shall be
limited to a 60-day period.
(vi) Adherence to formal rules of evidence
shall not be required. The arbitrators shall consider any evidence and testimony
that they determine to be relevant.
(vii) The parties to the Transaction Documents
hereby request that the arbitrators render their decision within 30 calendar
days following conclusion of the hearing.
(viii) Any decision by a majority of the
arbitration panel shall be set forth in a written opinion thereof which shall
set forth the reasons for such decision and shall be final, binding and
non-appealable. Any such decision may be filed in any court of competent
jurisdiction and may be enforced by any party to the relevant Transaction
Documents as a final judgment in such court. There shall be no grounds for
appeal of any arbitration award hereunder.
(ix) The defenses of statute of limitations
and laches shall be tolled with respect to a Claim of which a party to the
relevant Transaction Documents gives the other parties thereto written notice,
from the date of notice as provided in Section 9.2(a)(1) above until such time
as the Claim has been resolved pursuant to Section 9.2(a)(1) or an arbitration
award has been entered pursuant to this Section 9.2(a)(3).
(x) The arbitrators shall have no authority to
award special, exemplary, or consequential damages.
(b) Recovery of Costs and Attorneys' Fees. In the event
arbitration (or, despite the agreement of the parties to the Transaction
Documents to settle Claims through binding arbitration, litigation) arising out
of any Transaction Document is initiated by any party thereto, the
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prevailing party or parties, after the entry of a final non-appealable order,
shall be entitled to recover from the non-prevailing party or parties, as a part
of said order, all court costs, fees and expenses of such arbitration (or
litigation), including reasonable attorneys' fees.
(c) Choice of Forum. If, despite the agreement of the parties
to the Transaction Documents to submit any Claims to binding arbitration, there
are any court proceedings arising out of or relating to any Transaction Document
or the transactions contemplated hereby, such proceedings shall be brought and
tried exclusively in the federal or state courts situated in Xxxxxx County,
Texas. THE PARTIES TO THE TRANSACTION DOCUMENTS HEREBY WAIVE IRREVOCABLY ANY AND
ALL RIGHTS TO DEMAND A TRIAL BY JURY.
Section 9.3. Notice. Any notice, request or statement provided for in
this Formation Agreement shall be in writing and shall be conclusively deemed to
have been given, made or delivered if sent by prepaid certified mail, return
receipt requested, to any Party at the address set opposite the name of such
Party on the signature page of this Formation Agreement, or at such other
address as any such Party shall hereinafter designate by notices to all other
Parties. Each notice, request or statement given, made or delivered as aforesaid
shall be conclusively deemed to have been given, made or delivered when
deposited in the United States mail.
Section 9.4. Assignment. This Formation Agreement may not be assigned
by any Party without the prior written consent of the other Parties.
Section 9.5. Successors Bound. Subject to the provisions of Section
9.4, this Formation Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors and assigns.
Section 9.6. Governing Law. This Formation Agreement shall be governed
by, and construed in accordance with, the internal laws of the State of Texas,
without reference to or application of any conflicts of laws principles.
[SIGNATURES APPEAR ON FOLLOW PAGE]
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IN WITNESS WHEREOF, the Parties have executed or caused to be executed
this Formation Agreement as of the date first above written.
Address Weatherford Entities:
0 Xxxx Xxx Xxxx Xxxxxxxxxxx International, Inc.
Xxxxx 0000
Xxxxxxx, Xxxxx 00000 By: /s/ XXXXXX X. XXXX
Telecopy: (000) 000-0000 ----------------------------------------
Attention: General Counsel Xxxxxx X. Xxxx
Senior Vice President
Weatherford Enterra Compression Company, L.P.
By: Enterra Compression Company,
as sole General Partner
By: /s/ XXXXXX X. XXXX
---------------------------------------
Xxxxxx X. Xxxx
Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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GE Entities:
General Electric Capital
Corporation General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000 By: /s/ NIGEL X.X. XXXXXXX
Attention: General Counsel ---------------------------------------
Telecopy: (000) 000-0000 Name: Nigel X.X. Xxxxxxx
--------------------------------------
Title: Executive Vice President
-------------------------------------
with copies to:
Xxxxxxx X. Xxxxxxx
Xxxx, Gotshal & Xxxxxx L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Global Compression Services, Inc. Global Compression Services, Inc.
c/o General Electrical Capital
Corporation
000 Xxxx Xxxxx Xxxx By: /s/ XXXX X. XXXXXXX
Xxxxxxxx, Xxxxxxxxxxx 00000 ----------------------------------------
Attention: General Counsel Name: Xxxx X. Xxxxxxx
Telecopy: (000) 000-0000 --------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
with copies to:
Xxxxxxx X. Xxxxxxx
Xxxx, Gotshal & Xxxxxx L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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ANNEX I
Glossary of Terms
As used in the document to which this Annex I is attached, unless
specified to the contrary in such document, the terms set forth below shall (i)
be so used with the meanings assigned thereto below, (ii) apply equally to both
the singular and plural forms of such terms, and (iii) with respect to any such
term that is a pronoun, whenever the context may require, include the
corresponding masculine, feminine and neuter forms.
"Additional Global Assets " shall have the meaning assigned to
such term in Section 2.1(d) of the Formation Agreement.
"Additional Weatherford Assets " shall have the meaning
assigned to such term in Section 2.1(c) of the Formation Agreement.
"Adjusted Capital Account Deficit" shall mean, with respect to
any Partner, the deficit balance, if any, in such Partner's Capital Account as
of the relevant Partnership Fiscal Year, after giving effect to the following
adjustments: (i) crediting to such Capital Account any amounts which such
Partner is obligated to restore pursuant to any provision of the LP Agreement or
is deemed obligated to restore pursuant to the penultimate sentences of
Regulations Section 1.704- 2(g)(1) and 1.704-2(i)(5); and (ii) debiting to such
Capital Account the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted
Capital Account Deficit is intended to comply with the provisions of Regulations
Section 1.704- 1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjustment Amount" shall have the meaning assigned to such
term in Section 11.3.2 of the LP Agreement.
"Affiliate" shall mean, with respect to any Person, a second
Person that, directly or indirectly, is in control of, is controlled by,
controls or is under common control with such first Person or is an officer,
director, general partner, managing member or trustee of such Person or
Affiliate of such Person. For purposes of this definition, control shall include
the ownership of 50% or more of the legal or beneficial interest in any Person
or the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; provided that for purposes of Sections 5.2 and 5.9 of the LP
Agreement and Section 4.6 of the LLC Agreement only, such percentage shall be
10%.
"Annual Business Plan" shall mean, with respect to any
Partnership Fiscal Year, the annual business plan of the Partnership for such
Partnership Fiscal Year that the Partnership is required to operate under
pursuant to the terms of the LP Agreement.
66
"Assumed Retention and Severance Obligations" shall mean those
obligations set forth on Schedule 6.3 to the LP Agreement.
"Auditors" shall have the meaning assigned to such term in
Section 7.2 of the LP Agreement.
"Available Cash" shall mean, on any date of determination, the
cash and cash equivalents (i.e., investments with a maturity of one year or
less) of the Partnership on hand on such date (other than Capital Contributions
of a Partner) less such amounts as the General Partner shall, in good faith,
determine to be necessary to be set aside for (i) the payment of liabilities and
obligations of the Partnership, contingent or otherwise (including the Lease
Payments, the Contributed Global Note and the Payment Obligation, (ii) working
capital purposes and (iii) Capital Budget Expenditures.
"Bankruptcy Action" shall mean:
(a) Taking any action that might cause the Partnership or the
General Partner to become insolvent; or
(b) (i) Commencing any case, proceeding or other action by or
on behalf of the Partnership or the General Partner under any existing or future
law of any jurisdiction relating to bankruptcy, insolvency, reorganization or
relief of debtors;
(ii) Instituting proceedings to have the Partnership
or the General Partner adjudicated a bankrupt or insolvent;
(iii) Consenting to, or acquiescing in, the
institution of bankruptcy, insolvency or reorganization proceedings against the
Partnership or the General Partner;
(iv) Filing a petition or consent to a petition
seeking reorganization, arrangement, adjustment or other relief on behalf of the
Partnership or the General Partner of its debts under any existing or future law
of any jurisdiction relating to bankruptcy, insolvency or reorganization;
(v) Seeking or consenting to the appointment of a
receiver, liquidator, conservator, assignee, trustee, sequestrator, custodian or
any similar official for the Partnership or the General Partner or a substantial
portion of the assets or properties of the Partnership or the General Partner;
(vi) Making any assignment for the benefit of the
Partnership's or the General Partner's creditors; or
(vii) Taking any action or causing the Partnership or
the General Partner to take any action in furtherance of any of the foregoing.
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"Board" and "Board of Directors" shall mean the Board of
Directors of Limited, as appointed pursuant to the terms of the LLC Agreement.
"Book Item" shall have the meaning set forth in Section
4.6(a)(i) of the LP Agreement.
"Business" shall mean (i) the manufacture, fabrication, sale,
rental, lease, servicing and disposition of compression equipment, (ii) the
provision of compression and related services, (iii) the entering into and
performance of contracts and agreements relating to the foregoing and (iv) other
activities incidental thereto, as a continuation of the Weatherford Compression
Business and the Global Compression Business, in each case as contributed to the
Partnership pursuant to and in accordance with the terms of the Formation
Agreement, the LP Agreement and the LLC Agreement.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in Houston, Texas are authorized
or required to close.
"Capital Account" shall mean:
(a) with respect to any Partner, the Capital Account
maintained for such Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contribution, such Partner's distributive share
of Net Profit or any item in the nature of income or gain which are specially
allocated pursuant to Section 4.3 of the LP Agreement, and the amount of any
Partnership liabilities assumed by such Partner or which are secured by any
property distributed to such Partner;
(ii) To each Partner's Capital Account there shall
be debited the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of the LP Agreement, such
Partner's distributive share of Net Loss and any item in the nature of expenses
or losses which are specially allocated pursuant to Section 4.3 of the LP
Agreement, and the amount of any liabilities of such Partner assumed by the
Partnership or which are secured by any property contributed by such Partner to
the Partnership;
(iii) In the event all or a portion of a Partnership
Interest is transferred in accordance with the terms of the LP Agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
that it relates to the transferred Partnership Interest; and
(iv) In determining the amount of any liability
for purposes of subparagraphs (a)(i) and (a)(ii) there shall be taken into
account Code Section 752(c) and any other applicable provisions of the Code and
Regulations; and
(b) with respect to any Member, the Capital Account maintained
for such Member in accordance with the following provisions:
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(i) To each Member's Capital Account there shall be
credited such Member's Capital Contribution, such Member's distributive share of
Net Profit or any item in the nature of income or gain which are specially
allocated pursuant to Section 3.5.2 of the LLC Agreement, and the amount of any
Limited liabilities assumed by such Member or which are secured by any property
distributed to such Member;
(ii) To each Member's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any property distributed
to such Member pursuant to any provision of the LLC Agreement, such Member's
distributive share of Net Loss and any item in the nature of expenses or losses
which are specially allocated pursuant to Section 3.5.2 of the LLC Agreement,
and the amount of any liabilities of such Member assumed by Limited or which are
secured by any property contributed by such Member to Limited;
(iii) In the event all or a portion of a Membership
Interest is transferred in accordance with the terms of the LLC Agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
that it relates to the transferred Membership Interest; and
(iv) In determining the amount of any liability for
purposes of subparagraphs (b)(i) and (b)(ii) there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
The foregoing provision and other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations Section
1.704-1(b) and shall be interpreted and applied in a manner consistent with such
Regulations.
"Capital Budget Expenditures" shall mean, for any period of
determination, the aggregate amount expended or to be expended by the
Partnership (in any case as provided for in the Partnership's Annual Business
Plan) during such period for purchasing new or used equipment for sale or lease
during such period, including capitalized repairs and modifications and facility
repairs and modifications.
"Capital Contribution" shall mean, with respect to any
Partner, the amount of money and the initial Gross Asset Value of any asset
(other than money) contributed to the Partnership by such Partner (or its
predecessors in interest) with respect to the Partnership Interests held by such
Partner.
"Certificate of Formation" shall mean the Certificate of
Formation of Limited to be filed with the Secretary of State of Delaware on the
Closing Date, in the form and substance attached as Exhibit A to the Formation
Agreement.
"Certificate of Limited Partnership" shall mean the
Certificate of Limited Partnership of the Partnership to be filed with the
Secretary of State of Delaware on the Closing Date, in the form and substance
attached as Exhibit B to the Formation Agreement.
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"CFD" shall have the meaning assigned to such term in Section
4.8 of the LP Agreement.
"Claim" shall have the meaning assigned to such term in
Section 9.2(a) of the Formation Agreement.
"Closing" shall have the meaning assigned to such term in
Section 2.2 of the Formation Agreement.
"Closing Date" shall mean February 2, 1999, or such other date
as all Parties shall agree to in writing.
"Code" shall mean the Internal Revenue Code of 1986, as it may
be amended from time to time, or any successor statute.
"Commission" shall have the meaning assigned to such term in
Section 11.1 of the LP Agreement.
"Consolidated Interest Expense" shall mean, for any period of
determination, and without duplication, the aggregate amount of interest
recognized by the Partnership and its subsidiaries on a consolidated basis in
respect of Indebtedness of the Partnership and such subsidiaries, determined on
a consolidated basis in accordance with GAAP, plus the portion of the Lease
Payments that is equivalent to interest for such period.
"Consolidated Net Income" shall mean, for any period of
determination, the aggregate net income (or loss, as the case may be) of the
Partnership and its subsidiaries for such period on a consolidated basis,
determined in accordance with GAAP, excluding any extraordinary or non-recurring
items.
"Contracts" shall mean, with respect to any Person, any
contract, agreement, commitment, arrangement or instrument of any type
whatsoever, whether oral or written, express or implied, including without
limitation any mortgages, security agreements, deeds of trust, notes,
warranties, guaranties, leases, pledge agreements, license agreements,
non-competition agreements, conditional sales agreements or purchase and sales
orders to which such Person is a party or by which any of its properties or
assets may be bound.
"Contractual Obligation" shall mean, with respect to any
Person, any security issued by such Person or any agreement, contract,
understanding, instrument or undertaking to which such Person is a party or by
which it or any of its property is bound, or any provision of any of the
foregoing.
"Contributed Global Note" shall mean the promissory note
payable by Global to Global Compression Holdings, Inc. in the principal amount
of $36,000,000 contributed to the Partnership pursuant to the Formation
Agreement.
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"DBSA" shall have the meaning assigned to such term in Section
4.8 of the LP Agreement.
"Defaulting Member" shall the meaning assigned to such term in
Section 8.1(a) of the LLC Agreement.
"Defaulting Partner" shall have the meaning assigned to such
term in Section 10.1(a) of the LP Agreement.
"Depreciation" shall mean, for each Partnership Fiscal Year or
Limited Fiscal Year, as the case may be, an amount equal to the depreciation,
amortization, or other cost recovery deduction allowable for federal income tax
purposes with respect to an asset for such Partnership Fiscal Year or Limited
Fiscal Year, as the case may be, except that if the Gross Asset Value of an
asset differs from its adjusted tax basis for federal income tax purposes at the
beginning of such Partnership Fiscal Year or Limited Fiscal Year, as the case
may be, Depreciation shall be an amount which bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such Partnership Fiscal Year
or Limited Fiscal Year, as the case may be, bears to such beginning adjusted tax
basis; provided, however, that if the adjusted tax basis for federal income tax
purposes of an asset at the beginning of such Partnership Fiscal Year or Limited
Fiscal Year, as the case may be, is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable method
selected, in the case of the Partnership, by the General Partner, and in the
case of Limited, by the Board of Directors.
"Distribution Date" shall mean the first day of each calendar
quarter, or, if such day is not a Business Day, the next succeeding Business
Day.
"DLLCA" shall have the meaning assigned to such term in
Section 2.1.1 of the LLC Agreement.
"DRULPA" shall have the meaning assigned to such term in
Section 2.1.1 of the LP Agreement.
"EBIT" shall mean, for any period of determination, the
Consolidated Net Income of the Partnership and its subsidiaries for such period
on a consolidated basis, plus, to the extent reflected in the income statement
of the Partnership and its consolidated subsidiaries for such period from which
such Consolidated Net Income is determined, and without duplication, (i) the
Consolidated Interest Expense of the Partnership and its subsidiaries for such
period, and (ii) income and franchise tax expense of the Partnership and its
subsidiaries for such period, in each case determined on a consolidated basis in
accordance with GAAP.
"ECC" shall have the meaning assigned to such term in the
introductory paragraph to the Formation Agreement.
"11.1 Appraisal Process Commencement Date" shall have the
meaning assigned to such term in Section 11.1(b) of the LLC Agreement.
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"11.1 Appraisal Report" shall have the meaning assigned to
such term in Section 11.1(b) of the LLC Agreement.
"11.1 Initial Opinion Values" shall have the meaning assigned
to such term in Section 11.1(b) of the LLC Agreement.
"11.1 Subsequent Appraisal Process Commencement Date" shall
have the meaning assigned to such term in Section 11.1(b) of the LLC Agreement.
"11.1 Third Opinion Value" shall have the meaning assigned to
such term in Section 11.1(b) of the LLC Agreement.
"Employee Lease Agreement" shall mean that certain Employee
Lease Agreement dated as of the Closing Date by and among the Partnership, GE
Capital and Global, in the form and substance attached to the Formation
Agreement as Exhibit ___, as the same may be amended or otherwise modified from
time to time pursuant to the terms thereof.
"Environmental Laws" shall mean any and all applicable Laws
pertaining to or otherwise regulating the environment, natural resources or
human health and safety currently in effect, including without limitation, the
Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"), the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act, as amended
("RCRA"), the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Hazardous & Solid Waste Amendments Act of 1984, as amended,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, the Oil Pollution Act, as
amended, any analogous state laws, any Laws pertaining to or otherwise
regulating the handling of oil and gas exploration and production wastes or the
use, maintenance, and closure of pits and impoundments, and other environmental
conservation or protection laws.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Global Assets" shall have the meaning assigned to
such term in Section 2.1(d)(2) of the Formation Agreement.
"Excluded Global Liabilities" shall mean:
(a) Any liability or obligation relating to the Global
Compression Business (including, without limitation, any Taxes and any liability
or obligation arising under or pursuant to any Environmental Laws or common law
and the employment, failure to employ or termination of employment (including
constructive termination) by any GE Entity of any individual, including an
employee of any GE Entity)) to the extent such liability or obligation arises
from or relates to the ownership or lease of the assets owned or used in
connection with, or the operation of, the Global Compression Business prior to
the Closing Date (other than Warranty Claims), in any case whether known or
unknown, contingent or matured;
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(b) Any litigation or claims (other than Warranty Claims)
involving the Global Compression Business to the extent such litigation or
claims relate to matters that occurred prior to the Closing Date;
(c) Any obligation to indemnify or contribute to another
Person under common law or any Contract of the Global Compression Business to
the extent such obligations relate to matters prior to the Closing Date;
(d) Any claim, liability or obligation under or pursuant to
any Environmental Law or common law relating to any matter or condition
identified in the TRC Reports at any property owned, operated or leased by the
Global Compression Business, provided such claim, liability or obligation does
not result from changes in Environmental Laws that occur subsequent to the
Closing Date;
(e) Any liability or obligation relating to the Global Plans
or Global Benefit Programs and Agreements and all other liability or obligation
under ERISA and the Code in connection with any employee benefit plan as defined
in Section 3(3) of ERISA or any other employee benefit plan, agreement or
arrangement, maintained, sponsored by or contributed to by any corporation,
trade, business or entity under common control with the Global Compression
Business or GE Capital (Thailand) within the meaning of Section 414(b), (c), (m)
or (o) of the Code or Section 4001 of ERISA other than with respect to the
Global Compression Services, Inc. 401(k) Plan;
(f) Any liability or obligation of or relating to the
business, assets or operations of a Global Noncompression Business;
(g) The legal, accounting and investment banking fees and
expenses incurred by the GE Entities, the Global Compression Business or GE
Capital (Thailand) relating to the formation of the Partnership and the other
transactions contemplated by the Formation Agreement;
(h) Except for the Contributed Global Note, any obligation
under any capital lease, sale lease back arrangement or note, bond or other
obligation for borrowed money to any GE Entity or GE Capital (Thailand) or the
Global Compression Business is subject; and
(i) Any liability or obligation relating to an Excluded Global
Asset.
provided, however, that the Excluded Global Liabilities shall not include any
Partnership Assumed Liabilities. All references to the Global Compression
Business or any GE Entity contained in this definition of "Excluded Global
Liabilities" include all predecessors in interest or title to the Global
Compression Business or any GE Entity.
"Excluded Xxxxxxxxxxx Assets" shall have the meaning assigned
to such term in Section 2.1(c)(2) of the Formation Agreement.
"Excluded Xxxxxxxxxxx Liabilities" shall mean:
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(a) any liability or obligation relating to the Xxxxxxxxxxx
Compression Business (including, without limitation any Taxes and any liability
or obligation arising under or pursuant to any Environmental Laws or common law
and the employment, failure to employ or termination of employment (including
constructive termination) by any Xxxxxxxxxxx Entity of any individual (including
an employee of any Xxxxxxxxxxx Entity)) to the extent such liability or
obligation arises from or relates to the ownership or lease of the assets owned
or used in connection with, or the operation of, the Xxxxxxxxxxx Compression
Business, prior to the Closing Date (other than Warranty Claims), in any case
whether known or unknown, contingent or matured;
(b) Any litigation or claims (other than Warranty Claims)
involving the Xxxxxxxxxxx Compression Business to the extent such litigation or
claims relate to matters that occurred prior to the Closing Date;
(c) Any obligation to indemnify or contribute to another
Person under common law or any Contract of the Xxxxxxxxxxx Compression Business
to the extent such obligations relate to matters prior to the Closing Date;
(d) Any claim, liability or obligation under or pursuant to
any Environmental Law or common law relating to any matter or condition
identified in the TRC Reports at any property owned, operated or leased by the
Xxxxxxxxxxx Compression Business, provided such claim, liability or obligation
does not result from changes in Environmental Laws that occur subsequent to the
Closing Date;
(e) Any liability or obligation relating to the Xxxxxxxxxxx
Plans or Xxxxxxxxxxx Benefit Programs and Agreements and all other liability or
obligation under ERISA and the Code in connection with any employee benefit plan
as defined in Section 3(3) of ERISA or any other employee benefit plan,
agreement or arrangement, maintained, sponsored by or contributed to by any
corporation, trade, business or entity under common control with the Xxxxxxxxxxx
Compression Business or the Transferring Xxxxxxxxxxx Entities within the meaning
of Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA;
(f) Any liability or obligation of or relating to the
business, assets or operations of a Xxxxxxxxxxx Noncompression Business;
(g) The legal, accounting and investment banking fees and
expenses incurred by Xxxxxxxxxxx, the Transferring Xxxxxxxxxxx Entities or the
Xxxxxxxxxxx Compression Business relating to the formation of the Partnership
and the other transactions contemplated by the Formation Agreement;
(h) Except for the Master Lease, any obligation under capital
lease, sale lease back arrangement or note, bond or other obligation for
borrowed money to which Xxxxxxxxxxx or any Transferring Weatherford Entity or
the Weatherford Compression Business is subject; and
(i) Any liability or obligation relating to an Excluded
Xxxxxxxxxxx Asset.
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provided, however, that the Excluded Weatherford Liabilities shall not include
any Partnership Assumed Liabilities. All references to the Weatherford
Compression Business or Xxxxxxxxxxx or any Transferring Weatherford Entity
contained in this definition of "Excluded Weatherford Liabilities" include all
predecessors in interest or title to the Weatherford Compression Business or
Xxxxxxxxxxx or any Transferring Weatherford Entity.
"Facilities" means any facilities or equipment used by any
Weatherford Entity or Global, as the case may be, in any location, including
HVAC systems, mechanical systems, elevators, security systems, fire suppression
systems, telecommunications systems, fax machines, copy machines, and equipment,
whether or not Owned thereby.
"Formation Agreement" shall mean that certain Formation
Agreement dated as of February 2, 1999 by and among the Xxxxxxxxxxx Entities on
the one hand, and the GE Entities on the other hand, as the same may be amended
or otherwise modified from time to time pursuant to the terms thereof.
"GAAP" shall have the meaning assigned to such term in Section
7.1 of the LP Agreement.
"GCSI" shall mean Global Compression Services International,
Inc., an Oklahoma corporation.
"GE Capital" shall have the meaning assigned to such term in
the introductory paragraph to the Formation Agreement.
"GE Capital Group" shall mean any group of corporations that
includes GE Capital and the Global Compression Business.
"GE Capital HSR Documents" shall have the meaning assigned to
such term in Section 4.3(c)(ii) of the Formation Agreement.
"GE Capital (Thailand)" shall mean GE Capital (Thailand) Ltd.,
a company incorporated under the laws of the Kingdom of Thailand and a wholly
owned subsidiary of GE Capital.
"GE Entities" shall have the meaning assigned to such term in
the introductory paragraph to the Formation Agreement, and "GE Entity" shall
mean, individually, any of the GE Entities.
"GE Losses" shall have the meaning assigned to such term in
Section 8.2(a) of the Formation Agreement.
"GE Indemnity Party" shall have the meaning assigned to such
term in Section 8.3(a) of the Formation Agreement.
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"General Partner" shall have the meaning assigned to such term
in the introductory paragraph to the LP Agreement.
"Global" shall have the meaning assigned to such term in the
introductory paragraph to the Formation Agreement.
"Global Benefit Program or Agreement" shall have the meaning
set forth in Section 3.2(i)(i)(B) of the Formation Agreement.
"Global Closing Date Balance Sheet" shall have the meaning
assigned to such term in Section 2.3 of the Formation Agreement.
"Global Compression Business" shall mean the compression
business conducted by Global and the compression assets owned by GE Capital
(Thailand).
"Global Compression Business Assumed Contracts" shall have the
meaning assigned to such term in Section 2.1(d)(2)(ii) of the Formation
Agreement.
"Global Compression Business Intellectual Property" shall have
the meaning assigned to such term in Section 2.1(d)(2)(x) of the Formation
Agreement.
"Global Compression Business Inventories" shall have the
meaning assigned to such term in Section 2.1(d)(2)(v) of the Formation
Agreement.
"Global Compression Business Know-How Property" shall have the
meaning assigned to such term in Section 2.1(d)(2)(x) of the Formation
Agreement.
"Global Compression Business Records" shall have the meaning
assigned to such term in Section 2.1(d)(2)(vi) of the Formation Agreement.
"Global Excess" shall have the meaning assigned to such term
in Section 2.3 of the Formation Agreement.
"Global/Limited Assignment and Conveyance Agreement" shall
mean that certain Assignment and Conveyance Agreement dated as of the Closing
Date executed by Global, in the form and substance attached as Exhibit J to the
Formation Agreement.
"Global Noncompression Business" shall mean the businesses
conducted by any Affiliate (including without limitation any subsidiary, whether
or not wholly, directly or indirectly owned), division, unit or segment of GE
Capital other than the Global Compression Business.
"Global/Partnership Assignment and Conveyance Agreement" shall
mean that certain Assignment and Conveyance Agreement dated as of the Closing
Date executed by Global, in the form and substance attached as Exhibit J to the
Formation Agreement.
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"Global Permits" shall have the meaning set forth in Section
3.2(m) of the Formation Agreement.
"Global Plan" shall have the meaning set forth in Section
3.2(i)(i)(d) of the Formation Agreement.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Asset Value" shall mean, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The Gross Asset Value of any asset contributed by a
Partner to the Partnership, or a Member to Limited, as the case may be, is the
gross fair market value of such asset as determined at the time of contribution;
(ii) The Gross Asset Value of all Partnership assets or
all of Limited's assets, as the case may be, shall be adjusted to equal their
respective gross fair market values, as determined by, with respect to the
Partnership, the General Partner, and with respect to Limited, the Board of
Directors, in each case as of the following times: (A) the acquisition of any
additional interest in the Partnership by any new or existing Partner, or in
Limited by any new or existing Member, in exchange for more than a de minimis
Capital Contribution; (B) the distribution by the Partnership to the Partner, or
by Limited to the Member, of more than a de minimis amount of property as
consideration for an interest in the Partnership or Limited, respectively; and
(C) the liquidation of the Partnership or Limited within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that the
adjustments pursuant to clauses (A) and (B) above shall be made only if, with
respect to the Partnership, the General Partner, or with respect to Limited, the
Board of Directors, reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners or the
Members, as the case may be, in the Partnership or Limited, as the case may be;
and
(iii) The Gross Asset Value of any asset of the
Partnership distributed to any Partner, or any asset of Limited distributed to
any Member, shall be adjusted to equal the gross fair market value of such asset
on the date of distribution as determined by, with respect to the Partnership,
the General Partner, or with respect to Limited, the Board of Directors.
If the Gross Asset Value of an asset of the Partnership or
Limited has been determined or adjusted pursuant to clause (A) or (B) above,
such Gross Asset Value shall thereafter be adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing Net Profit or
Net Loss.
"HSR Act" shall have the meaning set forth in Section 3.1(e)
of the Formation Agreement.
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"Included Global Assets" shall have the meaning assigned to
such term in Section 2.1(d)(2) of the Formation Agreement.
"Included Xxxxxxxxxxx Assets" shall have the meaning assigned
to such term in Section 2.1(c)(2) of the Formation Agreement.
"Indebtedness" of a Person shall mean any (a) indebtedness or
liability for borrowed money; (b) obligations evidenced by bonds, debentures,
notes, or other similar instruments; (c) obligations for the deferred purchase
price of property or services (including trade obligations); (d) obligations
under letters of credit; (e) obligations under acceptance facilities; (f)
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase, to provide
funds for payment, to supply funds to invest in any Person, or otherwise to
assure a creditor against loss; (g) obligations under any lease which have been
or should be capitalized under GAAP; and (h) obligations secured by any Liens,
whether or not the obligations have been assumed, but such term shall not
include the obligations of the Partnership under the Master Lease.
"Indemnified Person" shall have the meaning assigned to such
term in Section 4.7.2 of the LLC Agreement.
"Internal MIS Systems" shall mean, with reference to any
Xxxxxxxxxxx Entity or any GE Entity, any computer software and systems
(including hardware, firmware, operating system software, utilities, and
applications software) used in the ordinary course of business by or on behalf
of such Xxxxxxxxxxx Entity or GE Entity, as the case may be, including payroll,
accounting, billing/receivables, inventory, asset tracking, customer service,
human resources, and e-mail systems.
"IPO" shall have the meaning assigned to such term in Section
11.2(a) of the LP Agreement.
"IPO Notice" shall have the meaning assigned to such term in
Section 11.1 of the LP Agreement.
"IRS" shall have the meaning assigned to such term in Section
3.1(i)(iii)(C) of the Formation Agreement.
"Knowledge" shall mean, with respect to any matter stated
herein to be "to the knowledge of any Weatherford Entity," or similar language,
the actual knowledge of the Chairman of the Board, the Chief Executive Officer,
President, any Vice President, Chief Financial Officer or General Counsel of any
Weatherford Entity, and with respect to any matter stated herein to be "to the
knowledge of any GE Entity," or similar language, the actual knowledge of the
Chairman of the Board, the Chief Executive Officer, President, any Vice
President, Chief Financial Officer or Counsel of any such entity.
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"Laws" shall mean, collectively, federal, foreign, state,
provincial, municipal and local laws (including common law), statutes,
ordinances, rules, regulations, orders, determinations or other legal
requirements.
"Lease Payment" shall mean all payments required to be made
under the Master Lease.
"Leased Assets" shall mean those assets used in the
Xxxxxxxxxxx Compression Business or the Global Compression Business that are
leased from a third party pursuant to operating leases entered into in the
ordinary course of business and those assets leased pursuant to the Master
Lease.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or other),
charge, claim, rights of third parties or preference, priority or other pledge
agreement or preferential arrangement of any kind or nature whatsoever,
including without limitation any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in respect of any of the
foregoing.
"Limited" shall mean Xxxxxxxxxxx Global Compression Holding,
L.L.C., a Delaware limited liability company.
"Limited Fiscal Year" shall be the same as the taxable year of
Limited for federal income tax purposes, which taxable year shall be the
calendar year unless otherwise required by the Code.
"Limited Minimum Gain" shall have the same meaning as the term
"partnership minimum gain" set forth in Regulation Sections 1.704-2(b)(2) and
1.704-2(d).
"Limited/Partnership Assignment and Conveyance Agreement"
shall mean that certain Assignment and Conveyance Agreement dated as of the
Closing Date executed by Limited, in the form and substance attached as Exhibit
J to the Formation Agreement.
"Limited Partners" shall have the meaning assigned to such
term in Section 2.4 of the LP Agreement, and "Limited Partner" shall mean,
individually, any of the Limited Partners.
"LLC Agreement" shall mean that certain Limited Liability
Company Agreement of Xxxxxxxxxxx Global Compression Holding, L.L.C., dated as of
the Closing Date, by and between WECC and Global, as Members thereunder, in the
form and substance attached as Exhibit C to the Formation Agreement, as the same
may be amended or otherwise modified from time to time pursuant to the terms
thereof.
"LLC Event of Default" shall have the meaning assigned to such
term in Section 8.1(a) of the LLC Agreement.
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"LLC Event of Withdrawal" shall have the meaning assigned to
such term in Section 8.1(b) of the LLC Agreement.
"LP Agreement" shall mean that certain Limited Partnership
Agreement of the Partnership, dated as of the Closing Date, by and among
Limited, as the sole General Partner thereof, WECC as a Limited Partner thereof,
Global as a Limited Partner thereof, and Xxxxxxxxxxx, solely for purposes of
Section 11.2 thereof, in the form and substance attached as Exhibit D to the
Formation Agreement, as the same may be amended or otherwise modified from time
to time pursuant to the terms thereof.
"LP Event of Default" shall have the meaning assigned to such
term in Section 10.1(a) of the LP Agreement.
"LP Event of Withdrawal" shall have the meaning assigned to
such term in Section 10.1(b) of the LP Agreement.
"Manufacturing Business" shall mean any business line, area or
segment of the Partnership or any direct or indirect wholly owned subsidiary
thereof a majority of the activity of which involves the manufacturing or
fabrication of equipment or component parts thereof, including without
limitation the manufacturing of the Gemini line of compressors, compressor
frames and other components and the fabrication of compressor units or any
components thereof.
"Market Value of Limited" shall have the meaning assigned to
such term in Section 11.1(c) of the LLC Agreement.
"Market Value of the Partnership" shall have the meaning
assigned to such term in Section 13.1(c) of the LP Agreement.
"Master Lease" shall mean that (i) Master Lease Intended as
Security dated as of December 8, 1998, between WECC and ABN AMRO Bank N.A., as
Administrative Agent for the Lessors, (ii) Participation Agreement dated as of
December 8, 1998, between WECC, as Lessee, ABN AMRO Bank, not individually,
except as expressly set forth therein, but as Administrative Agent, Arranger and
Syndication Agent, Chase Bank of Texas, National Association, as Documentation
Agent, and the Lessors listed on Schedule I to such Participation Agreement, and
(iii) Schedule X to Participation Agreement, (x) as amended by the Assignment
and Assumption and First Amendment to Participation Agreement Master Lease
Intended as Security and Schedule X between WECC, the Lessors named therein, ABN
AMRO Bank N.V., not individually, but solely as Administrative Agent for the
Lessors, Syndication Agent and Arranger, and Chase Bank of Texas, National
Association, as Documentation Agent for the Lessors, and the Partnership, as
Assignee, and (y) as further amended or otherwise modified from time to time
pursuant to the terms thereof.
"Material Adverse Effect" or "material adverse change" shall
mean, when used in connection with any Person, the Xxxxxxxxxxx Compression
Business or the Global Compression Business, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to result in
any change or effect) that is materially adverse to the business, properties,
assets,
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condition (financial or otherwise) or results of operations of that Person and
its subsidiaries, taken as a whole, or of the Xxxxxxxxxxx Compression Business
or the Global Compression Business, as the case may be; provided, however, a
Material Adverse Effect or material adverse change with respect to the
Xxxxxxxxxxx Compression Business or the Global Compression Business shall not
include (i) any effect or change relating to or affecting the oil and gas
service industry, including the contract compression segment thereof, as a
whole, (ii) changes in national or international economic conditions or industry
conditions generally, (iii) changes, or possible changes, in foreign, federal,
state or local statutes and regulations applicable to the Xxxxxxxxxxx
Compression Business or the Global Compression Business, as the case may be, or
(iv) the loss of employees, customers or suppliers thereby as a direct or
indirect consequence of any announcement or expectation of the transactions
contemplated hereby.
"Member" and "Members" shall have the meanings assigned to
such terms in Section 2.1.1 of the LLC Agreement.
"Member Affiliated Purchaser" shall have the meaning assigned
to such term in Section 8.2(b) of the LLC Agreement.
"Member Nonrecourse Debt" shall have the meaning as the term
"partner nonrecourse debt" set forth in Regulation Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Member Nonrecourse Debt, equal to the Limited Minimum Gain that
would result if the Member Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Regulation Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" shall have the same meaning as
the term "partner nonrecourse deduction" set forth in Regulation Sections
1.704-2(i)(1) and 1.704-2(i)(2).
"Membership Interest" shall have the meaning assigned to such
term in Section 3.1.1 of the LLC Agreement.
"Net Assets" shall mean with respect to either the Xxxxxxxxxxx
Compression Business or the Global Compression Business the total assets of such
businesses less the total liabilities of such businesses as reflected in the
Xxxxxxxxxxx Closing Date Balance Sheet and the Global Closing Date Balance
Sheet, respectively; provided, however, in calculating Net Assets: (i) the
increase in the value of any assets or the reduction in any liabilities since
December 31, 1998 as a result of the reversal of any accruals associated with
such assets or liabilities shall not be included except to the extent such
accruals are actually utilized, (ii) there shall not be included any increases
in assets since December 31, 1998 as a result of any write up of such assets,
(iii) there shall be no adjustments to the assets or liabilities of either of
such businesses as a result of any changes in accounting practices or policies
since December 31, 1998, (iv) there shall not be included any liabilities of
either entity for which Xxxxxxxxxxx or GE Capital shall have assumed the payment
thereof, including without limitation, the Excluded Weatherford Liabilities and
the Excluded Global Liabilities, (v) there shall not be included as assets any
Excluded Xxxxxxxxxxx Assets or Excluded Global Assets, (vi) there
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shall be recorded as a liability or obligation the amount of any deposits or
payments that are received by the Xxxxxxxxxxx Compression Business or the Global
Compression Business prior to the Closing for goods or services to be provided
after the Closing or for rental periods after the Closing to the extent such
sales or rentals shall not have been as of the Closing, (vii) there shall not be
included any amounts for deferred taxes, (viii) the obligations under the Master
Lease shall be excluded from the Weatherford Closing Date Balance Sheet as a
liability, (ix) the difference between the prior book value of the assets of
WECC that are now subject to the Master Lease and the funds made available under
the Master Lease ($119,000,000) with respect to those assets will be reflected
as a liability on the Weatherford Closing Date Balance Sheet; (x) the difference
between the funds made available under the Master Lease ($119,000,000) and $100
million will be reflected as an asset on the Weatherford Closing Date Balance
Sheet; (xi) the fees and expenses of the Weatherford Entities in connection with
the establishment and assignment of the Master Lease shall be included as an
asset on the Weatherford Closing Date Balance Sheet; (xii) the full amount of
the Contributed Global Note and the Payment Obligation will be reflected as a
liability on the Global Closing Date Balance Sheet; (xiii) the net book value as
of the Closing Date of the Additional Weatherford Assets will be included as an
asset on the Weatherford Closing Date Balance Sheet; (xiv) the net book value as
of the Closing Date of the Additional Global Assets will be included as an asset
on the Global Closing Date Balance Sheet; and (xv) all applications of GAAP as
applied to the Weatherford Compression Business and the Global Compression
Business shall be applied in the identical manner in which such accounting
principles were applied for purposes of the audited financial statements of such
Businesses as of December 31, 1997 and for the year then ended.
"Net Book Value" shall mean, with respect to any Partnership
Interests, the net book value thereof as of the date of calculation determined
in accordance with GAAP.
"Net Loss" and "Net Profits" shall mean, for each Partnership
Fiscal Year, Limited Fiscal Year or other period, an amount equal to, with
respect to the Partnership, the Partnership's taxable income or loss for such
Partnership Fiscal Year or period, and with respect to Limited, Limited's
taxable income or loss for such Limited Fiscal Year or period, in each case
determined in accordance with Section 703(a) of the Code (for this purpose, all
items of income, gain, loss, deduction or credit required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss) with the following adjustments:
(a) any income of the Partnership, or Limited, as the
case may be, for such period that is exempt from federal income tax and not
otherwise taken into account in computing Net Profit or Net Loss pursuant to
this definition shall be added to such taxable income or loss;
(b) any expenditures of the Partnership, or Limited,
as the case may be, described in Section 705(a)(2)(B) of the Code or treated as
Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net
Profit or Net Loss pursuant to this definition, shall be subtracted from such
taxable income or loss;
(c) in the event the Gross Asset Value of any asset
of the Partnership or Limited, as the case may be, is adjusted pursuant to
subparagraphs (ii)(A) or (ii)(B) of the definition
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of "Gross Asset Value" the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for purposes of computing Net
Profit or Net Loss;
(d) gain or loss resulting from any disposition of
assets of the Partnership or Limited, as the case may be, with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its Gross Asset Value;
(e) in lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Partnership Fiscal Year, Limited Fiscal Year or other period, computed in
accordance with the definition of "Depreciation"; and
(f) any items specially allocated in respect of such
period pursuant to Section 4.3 of the LP Agreement or Section 3.5.2 of the LLC
Agreement shall not be considered in determining Net Profits and Net Loss.
The amounts of any Partnership income, gain, loss or
deduction available to be specially allocated pursuant to Section 4.3 of the LP
Agreement, or Limited income, gain, loss or deduction available to be specially
allocated pursuant to Section 3.5.2 of the LLC Agreement, shall be determined by
applying rules analogous to those set forth in such paragraphs (i) through (vi)
above.
"Newco" shall have the meaning assigned to such term in the
Registration Rights Agreement.
"Nondefaulting Member" shall have the meaning assigned to such
term in Section 8.1(a) of the LLC Agreement.
"Nondefaulting Partner" shall have the meaning assigned to
such term in Section 10.1(a) of the LP Agreement.
"Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704-2(b)(1) and 1.704-2(c) of the Regulations.
"Nonrecourse Liability" has the meaning set forth in
Regulation Section 1.704-2(b)(3) of the Regulations.
"Nonsurviving Member" shall have the meaning assigned to such
term in Section 8.5 of the LLC Agreement.
"Nonwithdrawing Member" shall have the meaning assigned to
such term in Section 8.1(b) of the LLC Agreement.
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"Nonwithdrawing Partner" shall have the meaning assigned to
such term in Section 10.1(b) of the LP Agreement.
"Organizational Restructure" shall have the meaning assigned
to such term in the Registration Rights Agreement.
"Outside the Ordinary Course of Business" shall mean, (i) with
respect to any acquisition of assets or properties by the Partnership or any
Subsidiary thereof, or any capital expenditure by the Partnership or any
Subsidiary thereof, (A) any such acquisition or expenditure for such purpose
that, together with all other such acquisitions or expenditures during such
Partnership Fiscal Year, exceeds 150% of the Partnership's depreciation and
amortization of assets under GAAP plus the depreciation and amortization that
would have been realized under GAAP for any such assets subject to a
sale/leaseback arrangement but for that sale/leaseback arrangement for the
immediately preceding Partnership Fiscal Year; provided that, for the first
year, such amount shall be $64,185,000, or (B) any such acquisition or
expenditure not in the Same Line of Business; and (ii) with respect to any
transfer, sale, assignment, conveyance or other disposition, or any pledge,
mortgage, hypothecation or other encumbrance, or any lease, of any assets or
properties of the Partnership or any Subsidiary thereof, (A) any such transfer,
sale, assignment, conveyance or other disposition, or any such pledge, mortgage,
hypothecation or other encumbrance, or any such lease, of the Manufacturing
Business or any part of the Manufacturing Business (other than an individual
component thereof that is not material to the Manufacturing Business) or (B) any
such transfer, sale, assignment, conveyance or other disposition, or any such
pledge, mortgage, hypothecation or other encumbrance, or any such lease, other
than ordinary course sales or rentals of inventory to customers, during any
Partnership Fiscal Year having a value in excess of the greater of (1) 200% of
the average dollar amount of dispositions effected by Global and WECC during the
three calendar years prior to the formation of the Partnership on a pro forma
basis or (2) 50% of the Partnership's average capital expenditures for the prior
two Partnership Fiscal Years.
"Owned" shall mean, with respect to any Person, those assets,
properties, rights, titles, interests, contracts, claims and estates owned,
leased, licensed or otherwise held by such Person, but if jointly owned, leased,
licensed or held with another Person, then in each such case only to the extent
of the ownership interest of the Person identified in the Formation Agreement as
the owner.
"Parties" shall mean, collectively, all parties to the
Formation Agreement, and "Party" shall mean, individually, any one of the
Parties.
"Partner Affiliated Purchaser" shall have the meaning assigned
to such term in Section 10.2(b) of the LP Agreement.
"Partner Nonrecourse Debt" shall have the meaning set forth in
Section 1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Debt Minimum Gain" shall mean an amount,
with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum
Gain that would result if the
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Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Section 1.704-2(i)(3) of the Regulations.
"Partner Nonrecourse Deductions" shall have the meaning set
forth in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
"Partners" shall have the meaning assigned to such term in
Section 2.4 of the LP Agreement.
"Partnership" shall mean Xxxxxxxxxxx Global Compression
Services, L.P., a Delaware limited partnership.
"Partnership Assumed Liabilities" shall mean:
(a) Obligations under contracts and agreements of the
Weatherford Compression Business and the Global Compression Business to the
extent (i) such obligations have been accrued and reflected as current
liabilities on the Weatherford Closing Date Balance Sheet or the Global Closing
Date Balance Sheet, or (ii) involve obligations to be performed after the
Closing Date (excluding indemnity and similar obligations that are attributable
to the ownership, lease or operation of the Weatherford Compression Business and
the Global Compression Business prior to the Closing Date);
(b) Any claim by an employee of the Weatherford Compression
Business or the Global Compression Business to the extent such person continues
as an employee of the Business after the Closing Date and to the extent such
claim relates to matters occurring after the Closing Date and including the
Assumed Retention and Severance Obligations;
(c) The obligations under the Master Lease and the Contributed
Global Note, the obligations under the contracts and agreements listed in
Schedules 2.1(c)(2)(ii) and 3.2(n) and the contracts and agreements of the
Weatherford Compression Business and the Global Compression Business, and all
obligations relating to the future performance under the operating leases
associated with the Leased Assets;
(d) All sales and rental obligations of the Weatherford
Compression Business and the Global Compression Business; provided, however,
that if any deposits or payments are received by the Weatherford Compression
Business or the Global Compression Business prior to the Closing for goods or
services to be provided after the Closing or for rental periods after the
Closing, the amount of such deposit or prepayment shall be recorded as a current
liability or obligation as provided in the definition of Net Assets; and
(e) All Warranty Claims with respect to the Weatherford
Compression Business and the Global Compression Business.
"Partnership Expenses" shall mean all costs, expenses,
liabilities, damages, obligations and charges of any nature whatsoever incurred
by the Partnership relating to the Partnership's
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business or properties, including without limitation, (i) all costs and expenses
arising from or pertaining to the transactions contemplated by the Formation
Agreement, the LP Agreement, the LLC Agreement, the Registration Rights
Agreement, the Shared Services Agreement and the Transition Agreement; (ii)
costs for Capital Budget Expenditures; (iii) operating costs relating to the
Properties of the Partnership; (iv) all costs and expenses arising under the
indemnity provisions of the LP Agreement, and (v) the legal and accounting fees,
charges and expenses incurred by the Partnership in connection with any of the
foregoing (but excluding any such fees, charges and expenses incurred by the
Partners or their Affiliates in connection with the consummation of the
transactions contemplated by the Formation Agreement but not excluding such
fees, charges and expenses incurred in connection with the Master Lease).
"Partnership Fiscal Year" shall be the same as the taxable
year of the Partnership for federal income tax purposes, which taxable year
shall be the calendar year unless otherwise required by the Code.
"Partnership 401(k) Plan" shall mean the Xxxxxxxxxxx Global
Compression Services, L.P. 401(k) Plan.
"Partnership Interests" shall have the meaning assigned to
such term in Section 3.3 of the LP Agreement.
"Partnership Minimum Gain" shall have the meaning set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
"Payment Obligation" shall mean the obligation of the
Partnership to make a payment of $20,250,000 to Global pursuant to Section 2.4
of the Formation Agreement and Section 6.1(__) of the LP Agreement.
"Percentage Interest" shall mean, (i) with respect to any
Partner, such Partner's percentage interest in the Partnership, which shall mean
such Partner's Partnership Interest percentages (as set forth on Schedule 3.1 to
the LP Agreement), as the same may change from time to time pursuant to a
Transfer of all or any portion of such Partner's Partnership Interests in
accordance with Article IX of the LP Agreement, and (ii) with respect to any
Member, such Member's percentage interest in Limited, which shall mean such
Member's Membership Interest percentage (as set forth in Section 3.1.1 of the
LLC Agreement), as the same may change from time to time pursuant to a Transfer
of all or any portion of such Member's Membership Interests in accordance with
Article VII of the LLC Agreement.
"Person" shall mean an individual, partnership, corporation,
business trust, limited liability company, limited liability partnership, joint
stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"Preapproved Contracts" shall mean the documents governing the
Master Lease, the Shared Services Agreement, the Transition Services Agreement,
the Employee Lease Agreement and all contracts between the Partnership and any
Partner or Affiliate thereof approved unanimously in
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86
writing by the Partners pursuant to a blanket approval of a particular type of
arrangement with specified contractual parameters; provided that, all
modifications, amendments or other changes to any Preapproved Contract must be
unanimously approved by all Partners except to the extent such modifications,
amendments or other changes are within such preapproved contractual parameters.
"Products" shall mean any products offered or furnished by any
Transferring Weatherford Entity or Global, as the case may be, or any
predecessor in interest thereof, currently or at any time in the past, including
without limitation each item of hardware, software, or firmware; any system,
equipment, or products consisting of or containing one or more thereof; and any
and all enhancements, upgrades, customizations, modifications, and maintenance
thereto.
"Properties" shall mean all assets and properties of the
Partnership, whether tangible or intangible, real or personal.
"Registrant" shall have the meaning assigned to such term in
the Registration Rights Agreement.
"Registration Rights Agreement" shall mean that certain
Registration Rights Agreement dated as of the Closing Date by and among WECC,
Global and the Partnership, in the form and substance attached as Exhibit E to
the Formation Agreement, as the same may be amended or otherwise modified from
time to time pursuant to the terms thereof.
"Regulation" or "Regulations" shall mean the United States
Treasury Regulations promulgated under the Code.
"Release" shall have the meaning ascribed to it in CERCLA
unless the state law of a jurisdiction in which a property is located has a
broader meaning, in which case the broader meaning shall apply.
"Requisite Approvals" shall have the meaning assigned to such
term in Section 11.2(b) of the LP Agreement.
"resign" shall mean, with respect to any Partner or Member,
the resignation or withdrawal thereof from the Partnership or Limited, as the
case may be.
"Same Line of Business" shall mean any of (i) the
manufacturing, fabrication, leasing or servicing of and disposition of
compressors and related equipment and components and (ii) the provision of
compressor related services.
"Securities Act" shall have the meaning assigned to such term
in Section 11.1 of the LP Agreement.
"Services" shall mean any compression services offered or
furnished by any Weatherford Entity or Global, as the case may be, or any
predecessor in interest thereof, currently or at any time in the past.
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"Shared Services Agreement" shall mean that certain Shared
Services Agreement dated as of the Closing Date by and among Weatherford and the
Partnership, in the form and substance attached to the Formation Agreement as
Exhibit H, as the same may be amended or otherwise modified from time to time
pursuant to the terms thereof.
"Significant subsidiary" has the meaning assigned to such term
in the Securities Exchange Act of 1934, as amended.
"Significant Transaction" shall have the meaning assigned to
such term in Section 11.3.2 of the LP Agreement.
"subsidiary"" of a Person means any corporation, partnership
or other legal entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
Persons performing similar functions are directly or indirectly owned by such
first mentioned Person.
"Surviving Member" shall have the meaning assigned to such
term in Section 8.5 of the LLC Agreement.
"Tax" or "Taxes" shall mean all federal, state, local or
foreign taxes, assessments, duties, levies or similar charges of any kind,
including, without limitation, those on or measured by or referred to as income,
gross receipt, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, estimated, excise, severance, stamp, occupation, premium,
value added, property or windfall profits taxes, customs, duties or similar
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
Governmental Authority, domestic or foreign, whether disputed or not.
"Tax Indemnified Party" shall have the meaning assigned to
such term in Section 7.1(d)(l) of the Formation Agreement.
"Tax Indemnifying Party" shall have the meaning assigned to
such term in Section 7.1(d)(l) of the Formation Agreement.
"Tax Losses" shall have the meaning assigned to such term in
Section 7.1(b) of the Formation Agreement.
"Tax Return" shall mean any return, report, declaration,
statement, claim for refund or information return or statement required to be
filed with any Governmental Authority with respect to Taxes, or any amendment
thereto, including any schedule or attachment thereto.
"13.1 Appraisal Process Commencement Date" shall have the
meaning assigned to such term in Section 13.1(b) of the LP Agreement.
"13.1 Appraisal Report" shall have the meaning assigned to
such term in Section 13.1(b) of the LP Agreement.
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"13.1 Initial Opinion Values" shall have the meaning assigned
to such term in Section 13.1(b) of the LP Agreement.
"13.1 Subsequent Appraisal Process Commencement Date" shall
have the meaning assigned to such term in Section 13.1(b) of the LP Agreement.
"13.1 Third Opinion Value" shall have the meaning assigned to
such term in Section 13.1(b) of the LP Agreement.
"Transaction Documents" shall mean, collectively, the
Formation Agreement, the LLC Agreement, the LP Agreement, the Registration
Rights Agreement, the Transition Services Agreement, the Shared Services
Agreement and the Employee Lease Agreement.
"Transfer" shall mean, with respect to all or any part of any
Partnership Interest or any Membership Interest, the direct or indirect sale,
transfer, assignment, pledge, hypothecation or other disposition thereof, and
shall include with respect to all or any part of any Partnership Interest of any
Partner, or any Membership Interest of any Member, any merger, consolidation,
reorganization or share exchange involving such Partner or Member, as the case
may be, or any change of control of such Partner or Member, as the case may be;
provided, however, that in no event shall "Transfer" include (i) any merger,
consolidation, reorganization or share exchange involving, or any change of
control of, Xxxxxxxxxxx, XX Capital or General Electric Company, a New York
corporation, or (ii) any merger, consolidation, reorganization, share exchange
or similar transactions so long as after such transaction, all Partnership
Interests indirectly owned by Weatherford or GE Capital continue to be owned by
an entity, the ownership interest of which is wholly owned directly or
indirectly by Weatherford or GE Capital.
"Transferring Weatherford Entities" shall mean, collectively,
WECC and each of Enterra Compression Company, a Delaware corporation,
Weatherford Compression Canada, Ltd., an Alberta corporation, Weatherford Canada
Ltd., an Alberta corporation, Weatherford Latin American, S.A., a Venezuela
corporation, Weatherford Enterra S.A., an Argentina corporation, and Weatherford
Australia Pty. Limited, an Australia corporation.
"Transition Services Agreement" shall mean that certain
Transition Agreement dated as of the Closing Date by and among the Parties, in
the form and substance attached to the Formation Agreement as Exhibit I, as the
same may be amended or otherwise modified from time to time pursuant to the
terms thereof.
"TRC Reports" shall mean that certain Phase I Environmental,
Health and Safety Assessment dated October 1998 and that certain Phase II Site
Investigation Report dated December 1998, prepared by TRC Environmental
Corporation for the use and benefit of GE Capital and Weatherford.
"Unanimous Consent of Directors" shall mean the Unanimous
Consent of Directors of the General Partner in the form and substance attached
to the Formation Agreement as Exhibit F.
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"Unreturned Capital" shall have the meaning assigned to such
term in Section 3.1(e) of the LP Agreement.
"Used" shall mean, with respect to the Business, Assets,
Contracts or Governmental Authorizations of any Person, those Owned by such
Person that are used, have been acquired for use but not yet placed in use, or
that were formerly used and now held for disposition, by such Person.
"WAP" shall have the meaning assigned to such term in the
introductory paragraph of the Formation Agreement.
"Warranty Claims" shall mean any claim (whether made before or
after the Closing Date) by a customer, distributor, wholesaler or end user of a
product manufactured, fabricated, assembled, distributed, sold or serviced, or
of any services provided thereto in which a warranty is provided on the material
or workmanship of such service, in any case manufactured, fabricated, assembled,
distributed, sold, serviced or provided prior to the Closing Date by any
Transferring Weatherford Entity, or the Weatherford Compression Business (or any
of the respective predecessors thereto), or by Global or the Global Compression
Business (or any of the respective predecessors thereto), which claim relates
directly or indirectly to an express or implied warranty of material and/or
workmanship, or any product liability claims, applicable to such product or
service.
"Weatherford" shall have the meaning assigned to such term in
the introductory paragraph to the Formation Agreement.
"Weatherford Benefit Program or Agreement" shall have the
meaning assigned to such term in Section 3.1(i)(i)(B) of the Formation
Agreement.
"Weatherford Closing Date Balance Sheet" shall have the
meaning assigned to such term in Section 2.3 of the Formation Agreement.
"Weatherford Compression Business" shall mean, collectively,
the compression businesses conducted by WECC and each other Transferring
Weatherford Entity.
"Weatherford Compression Business Assumed Contracts" shall
have the meaning assigned to such term in Section 2.1(c)(2)(ii) of the Formation
Agreement.
"Weatherford Compression Business Intellectual Property" shall
have the meaning assigned to such term in Section 2.1(c)(2)(x) of the Formation
Agreement.
"Weatherford Compression Business Inventories" shall have the
meaning assigned to such term in Section 2.1(c)(2)(v) of the Formation
Agreement.
"Weatherford Compression Business Know-How Property" shall
have the meaning assigned to such term in Section 2.1(c)(2)(x) of the Formation
Agreement.
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"Weatherford Compression Business Permits" shall have the
meaning set forth in Section 3.1(m) of the Formation Agreement.
"Weatherford Compression Business Records" shall have the
meaning assigned to such term in Section 2.1(c)(2)(vi) of the Formation
Agreement.
"Weatherford Entities" shall have the meaning assigned to such
term in the introductory paragraph to the Formation Agreement, and "Weatherford
Entity" shall mean, individually, any of the Weatherford Entities.
"Weatherford Financial Statements" shall have the meaning
assigned to such term in Section 3.1(b) of the Formation Agreement.
"Weatherford Group" shall mean any group of entities that
includes any Weatherford Entity or the Weatherford Compression Business.
"Weatherford HSR Documents" shall have the meaning assigned to
such term in Section 4.3(c)(ii) of the Formation Agreement.
"Weatherford Indemnity Party" shall have the meaning assigned
to such term in Section 8.2(a) of the Formation Agreement.
"Xxxxxxxxxxx/Limited Assignment and Conveyance Agreement"
shall mean that certain Assignment and Conveyance Agreement dated as of the
Closing Date executed by WECC and each other Transferring Weatherford Entity, in
the form and substance attached as Exhibit J to the Formation Agreement.
"Weatherford Losses" shall have the meaning assigned to such
term in Section 8.3(a) of the Formation Agreement.
"Weatherford Noncompression Business" shall mean the
businesses conducted by any subsidiary or division of Weatherford other than the
Weatherford Compression Businesses.
"Weatherford/Partnership Assignment and Conveyance Agreement"
shall mean that certain Assignment and Conveyance Agreement dated as of the
Closing Date executed by WECC and each other Transferring Weatherford Entity, in
the form and substance attached as Exhibit J to the Formation Agreement.
"Weatherford Plan" shall have the meaning assigned to such
term in Section 3.1(i)(i)(A) of the Formation Agreement.
"WECC" shall have the meaning assigned to such term in the
introductory paragraph to the Formation Agreement.
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"Withdrawing Member" shall have the meaning assigned to such
term in Section 8.1(b) of the LLC Agreement.
"Withdrawing Partner" shall have the meaning assigned to such
term in Section 10.1(b) of the Formation Agreement.
"Year 2000 Compliant" shall mean, with respect to any Person,
that (1) the products, services, or other item(s) at issue accurately process,
provide and/or receive all date/time data (including calculating, comparing,
sequencing, processing, and outputting) within, from, into, and between
centuries (including the twentieth and twenty-first centuries and the years 1999
and 2000), including leap year calculations, and (2) neither the performance nor
the functionality nor provision by such Person of the products, services, and
other item(s) at issue will be affected by any dates/times prior to, on, after,
or spanning January 1, 2000. The design of the products, services, and other
item(s) at issue to ensure compliance with the foregoing warranties and
representations includes proper date/time data century recognition and
recognition of 1999 and 2000, calculations that accommodate single century and
multi-century formulae and date/time values before, on, after, and spanning
January 1, 2000, and date/time data interface values that reflect the century,
1999, and 2000. In particular, but without limitation, (i) no value for current
date/time will cause any error, interruption, or decreased performance in or for
such product(s), service(s), and other item(s), (ii) all manipulations of date
and time related data (including calculating, comparing, sequencing, processing,
and outputting) will produce correct results for all valid dates and times when
used independently or in combination with other products, services, and/or
items, (iii) date/time elements in interfaces and data storage will specify the
century to eliminate date ambiguity without human intervention, including leap
year calculations, (iv) where any date/time element is represented without a
century, the correct century will be unambiguous for all manipulations involving
that element, (v) authorization codes, passwords, and zaps (purge functions)
will function normally and in the same manner during, prior to, on, and after
January 1, 2000, including the manner in which they function with respect to
expiration dates and CPU serial numbers, and (vi) such Person's supply of the
product(s), service(s), and other item(s) will not be interrupted, delayed,
decreased, or otherwise affected by the advent of the year 2000.
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The Company has not filed any schedules or exhibits with this Exhibit No. 10.1.
Listed below is a brief description of the omitted schedules and exhibits. The
Company agrees to furnish supplementally a copy of any of such omitted schedules
and exhibits to the Commission upon request.
EXHIBITS
Exhibit A Certificate of Formation
Exhibit B Certificate of Limited Partnership
Exhibit C LLC Agreement (see Exhibit 10.3)
Exhibit D LP Agreement (see Exhibit 10.2)
Exhibit E Registration Rights Agreement
Exhibit F Unanimous Consent of Directors
Exhibit G [Reserved]
Exhibit H Shared Services Agreement
Exhibit I Transition Agreement
Exhibit J Assignment, Conveyance and Assumption Documents
SCHEDULES
Schedule 2.1(c)(2)(A) - Included Xxxxxxxxxxx Assets
Schedule 2.1(c)(2)(B) - Excluded Xxxxxxxxxxx Assets
Schedule 2.1(c)(2)(i) - Xxxxxxxxxxx Real Property Interests
Schedule 2.1(c)(2)(ii) - Xxxxxxxxxxx Contracts
Schedule 2.1(c)(2)(iii) - Xxxxxxxxxxx Other Property Interests
Schedule 2.1(c)(2)(vi) - Xxxxxxxxxxx Business Records
Schedule 2.1(c)(2)(vii) - Xxxxxxxxxxx Miscellaneous Assets
Schedule 2.1(c)(2)(ix) - Xxxxxxxxxxx Licenses
Schedule 2.1(c)(2)(x) - Xxxxxxxxxxx Intellectual Property
Schedule 2.1(c)(2)(xii) - Xxxxxxxxxxx Bank Accounts
Schedule 2.1(c)(3) - "Twelve-Step" Transfer
Schedule 2.1(d)(2)(A) - Excluded Global Assets
Schedule 2.1(d)(2)(i) - Global Real Property Interests
Schedule 2.1(d)(2)(ii) - Global Contracts
Schedule 2.1(d)(2)(iii) - Global Other Property Interests
Schedule 2.1(d)(2)(vi) - Global Business Records
Schedule 2.1(d)(2)(vii) - Global Miscellaneous Assets
Schedule 2.1(d)(2)(ix) - Global Licenses
Schedule 2.1(d)(2)(x) - Global Intellectual Property
Schedule 2.1(d)(2)(xii) - Global Bank Accounts
93
Schedule 2.3 - Calculation of Net Assets
Schedule 3.1(a) - Xxxxxxxxxxx Foreign Qualifications
Schedule 3.1(b) - Xxxxxxxxxxx Financial Statements
Schedule 3.1(f) - Xxxxxxxxxxx Business Exceptions
Schedule 3.1(h) - Xxxxxxxxxxx Litigation
Schedule 3.1(i) - Xxxxxxxxxxx Employee Benefit Matters
Schedule 3.1(j) - Xxxxxxxxxxx Tax Matters
Schedule 3.1(l) - Xxxxxxxxxxx Environmental Matters
Schedule 3.1(n) - Xxxxxxxxxxx Material Contracts and Agreements
Schedule 3.1(o) - Xxxxxxxxxxx Property Encumbrances
Schedule 3.1(q) - Xxxxxxxxxxx Labor Matters
Schedule 3.1(r) - Xxxxxxxxxxx Insurance Policies
Schedule 3.1(s) - Xxxxxxxxxxx Undisclosed Liabilities
Schedule 3.1(t) - Xxxxxxxxxxx Year 2000 Compliance
Schedule 3.2(a) - Global Foreign Qualifications
Schedule 3.2(b) - Global Financial Statements
Schedule 3.2(f) - Global Business Exceptions
Schedule 3.2(h) - Global Litigation
Schedule 3.2(i) - Global Employee Benefit Matters
Schedule 3.2(j) - Global Tax Matters
Schedule 3.2(l) - Global Environmental Matters
Schedule 3.2(n) - Global Material Contracts and Agreements
Schedule 3.2(o) - Global Property Encumbrances
Schedule 3.2(r) - Global Insurance Policies
Schedule 3.2(s) - Global Undisclosed Liabilities
Schedule 3.2(t) - Global Year 2000 Compliance
Schedule 4.1(a)(iv) - Xxxxxxxxxxx Acquisition Transactions
Schedule 4.2(a)(iv) - Global Acquisition Transactions
Schedule 4.2(a)(viii) - Global Contemplated Transactions
